THE “ QUANTITY THEORY * 69 
weekly wage, if his real earnings (reckoned in com- 
modities and services) are unaltered, so that his wage 
will buy the same collection of things as before, his 
wage and his holding of currency must be doubled 
when prices are doubled. From this it appears quite 
plainly that the average holding of currency at any 
time must normally equal in value a particular 
collection of goods and services. It is only simple 
arithmetic to infer that the aggregate holding of 
currency, alias the ‘quantity of money,” must 
normally equal in value a certain definite aggregate 
of commodities and services. 
This is now so well recognized that it has been 
made the basis of prognostications of the future 
which have been realized in practice. When we have 
found that some rapidly depreciating currency, 
though nominally immense, has worked out at a 
ridiculously small sum in pounds or dollars, we have 
said, “Of course this is an impossible situation ; 
either the value of the currency will go up again or 
more of it will be issued,” and we have turned out 
right. 
But while it is reasonable to assume that we should 
expect the elasticity of the demand for currency to 
be equal to unity, we should beware of accepting the 
doctrine too readily. Great doubt is thrown on it 
when we reflect that if it were universally true, 
issuers of legal tender could go on buying goods and 
services with new issues indefinitely. The process of 
doubling the currency in, say, the first month, would 
indeed gradually bring the purchasing power of the 
unit down to one-half, but as the issuer at the 
beginning would be buying very near old prices, and 
only at the end at the new prices, he would have 
acquired goods and services worth over three-quarters 
of the value of the total of the old currency. By 
another issue equal to the old currency he would