MONEY AND THE MECHANISM OF EXCHANGE 179

money. The relation of the latter part to monetary functions
proper is, indeed, mainly a question of time. It will, in due
course, be once more either in circulation or forming a
necessary part of a reserve. The same may be said of
private hoards, or Government military hoards. If we
regard matters over a sufficiently long period, what is
temporarily hoarded is merely circulating slowly. From
the extended standpoint of a generation or a century, it is
needed for monetary work. From the narrow standpoint of
a year or two it plays a part like that of temporarily unused
coin in the purse of a citizen. The latter will be required
within a few days to perform actual exchange work. The
former will not be similarly called on to act as an intermediary
 in exchanges for years or even decades. In fact,
the amount of money needed in circulation is a question
less directly of the exchanges to be accomplished, than of
the habits of men in regard to the amount of cash they
tegard as necessary to provide them conveniently with the
means of payment in those everyday transactions in which
they customarily employ money. But that amount is
directly dependent on the number and price-level of the
transactions which are likely to call for money in the course
of the day, or week, or month, or whatever the interval may
be between the consecutive replenishings of their supply of
loose cash, Thus, though the money needed is needed to
hold ready for use, the amount so held is determined by the
anticipated calls for its use, in accordance with what has
been stated earlier in the chapter. This digression is aimed
at removing a doubt as to the validity of those statements
regarding the connection between the general level of prices,
the volume of exchange transactions in which money
habitually plays a part, and the quantity of money in
Crculation, The actual use in exchange of the money takes
Place in moments of activity between more or less extended
Periods of rest, which periods we may, if we please, call
Periods of hoarding, and thus bring out the point that the
formation of hoards to be maintained for years, or even for
Centuries, is not a phenomenon differing in more than degree
from the common phenomena of circulation. The non-