76 
MONEY 
what it would be if prices were kept as stable as 
possible. The same thing happens with currency, 
though it is not nearly so obvious. If there is a 
predominating impression that prices in general are 
going to rise, there will be a predominating tendency 
to hold commodities for the rise, which will itself 
raise prices at once. Every one can see this, but 
few notice that this tendency to hold goods back, 
resulting in a rise of prices, is the same thing as a 
diminution in the demand for currency.! Currency 
becomes the depreciating article which people in 
general are less willing to hold. Vice versa, if it is 
generally expected that prices will fall, most people 
are more eager to get rid of goods and are more 
willing to hold currency. 
We must not expect to find evidence of increased 
or decreased willingness to hold currency in actually 
increased or decreased stocks of currency. If the 
total is a fixed amount it cannot vary in that way. 
The evidence is to be looked for in the fact that 
more or less goods are actually being given for the 
unit of currency. We can have an increased and a 
1 The statement in the text seems at first sight to be 
contradicted by the fact that sometimes, as in Germany in 
1922 and 1923, it has happened that a sudden access of belief 
that prices are going to rise higher has caused a rush to the 
banks by depositors anxious to draw out cash to spend. But 
though this has often been spoken of as if it were a demand 
for currency, it is not a demand for currency to hold, and 
is no more the effective demand which raises the purchasing 
power of the currency than is the corresponding rush, which 
is going on at the same time, to money-boxes and other 
places of storage for cash. In such circumstances A asks B 
to pay the money which is due to him, not because he wants 
the money to keep, but because he wants to get rid of it in 
exchange for something more likely to retain its value. If 
additional currency is printed to prevent the banks being 
broken by the run, the depreciation simply becomes worse 
than ever.