230 MODERN MONETARY SYSTEMS 
very simple hypothesis ; over against a stationary supply it 
sets a variable demand corresponding directly to the 
quantity of money brought on the market. It is not 
possible without important reservations to compare such 
a market to a whole country in which goods continually 
appear on the market and where there is no such direct re- 
lation between changes in the volume of currency and the 
amount of income and capital thrown on the market. In the 
first case the disequilibrium between supply and demand 
is necessary and evident, even in the case of small changes 
in the volume of currency. In the second case the position 
is different. For the adjustment of supply to demand is 
not a priori impossible. It may take place because a 
swollen stock of currency may circulate more slowly; or, 
again, production may be stimulated in so far as the agents 
of production allow, by an increase in the actual monetary 
circulation. Therefore the Quantity Theory is only applic- 
able when an increase in the volume of currency is accom- 
panied by an increase in demand—and this is not always 
evident a priori—and when the rise in demand exceeds any 
possible increase in production. 
The Quantity Theory is obvious in cases where currency 
has been widely expanded. But it is no longer so in cases 
where there have been moderate changes in the circulation. 
It is therefore impossible to construct theories based on 
the supposition that changes in the volume of currency 
exercise a continuous action, whatever the quantities in- 
volved. Although it may be painful to abandon so con- 
venient a rule, we are convinced that scientific work can 
lose nothing by giving up ‘‘certainties” which are more real 
than the facts themselves. Such easy certainties have only 
served as a basis for approximate or erroneous explana- 
tions. We have shown that more often than not in cases 
where the Quantity Theory taken in the abstract no longer 
gives the desired explanation, the old law of supply and 
demand, which is at the basis of the Quantity Theory, 
supplies, on the contrary, a clear and accurate explanation 
when it is applied to the exact data of the problem. For 
we have shown that most monetary phenomena are