THE DEMAND FOR CURRENCY 71 
the extreme limit, the policy would put a stop to 
the circulation of the currency, as it would all be 
hoarded, and exchanges of goods would be made by 
barter. But things are never pushed so far, because 
long before that happens substitutes for the existing 
currency are always introduced and check the rise 
of purchasing power. For example, as soon as a 
reduction of our present paper currency went so far 
as to make £1 worth more than 113 grains of fine gold, 
substitutes for it, in the shape of sovereigns and half- 
sovereigns brought from Sou!li Africa and elsewhere, 
would begin to come into use. 
Hence the doctrine of the elasticity of the demand 
for currency being equal to unity, though it may be 
usefully put forward as a first approximation for 
expository purposes, must not be taken as universally 
true. It certainly is not when rapid change of 
quantity and intelligent anticipation of the future 
exist. 
§ 2. The Demand for Currency. 
Early in the preceding section I pointed out that 
while the supply of quickly consumable articles of 
which the annual output is large compared to the 
stock-in-hand at any moment can most conveniently 
be taken to be the periodical output, yet when we 
have to deal with things which last a long time, and 
therefore in ordinary language are said to be *“ used 
rather than “ consumed,” we often, as, for instance, 
in the case of houses, treat the quantity in existence 
rather than the periodical output as the * supply.” 
A corresponding distinction exists in regard to 
demand. The demand for houses and farms is not 
in most .iiscussions conveniently conceived as the 
demand for =ew houses to add to or replace the old 
and for ne’ arms just created on the outskirts of 
civilization. ™t - “".¢ demand of persons who wish 
Lb.