MONEY

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are  inseparable  from  cabs,  so  our  inquiries
lead  us  to  the  cost  of  production  of  cabs  and
an  equation  connecting  the  supplies  of  conveyance ­
  or  transport  obtainable  from  cabs
with  different  quantities  of  them.  The  equation ­
  sought  expresses  indirectly  the  rapidity
of  circulation  of  cabs,  so  to  speak.  Now  the
problem  of  money  is  very  like  this  problem.
In  the  case  of  money,  the  thing  demanded
is  facility  for  effecting  exchanges,  and  the
quantity  of  this  facility  depends  upon  the
number  of  things  with  which  it  is  associated
(that  is  the  quantity  of  coins  of  each  sort),  and
their  rapidity  of  circulation.  Broadly  speaking ­
  we  may  say  that  rapidity  of  circulation
refers  to  the  number  of  times  that  a  thing
can  repeat  in  a  given  period  the  services
associated  with  it.  It  is  true  that  the  demand
for  money  is  a  derived  demand  reflecting  the
demand  for  other  things,  but  so  is  the  demand
for  many  articles.
Coming  back  to  the  case  of  the  cabs,  we
may  say  that  the  price  of  cabs  is  settled  by  the
demand  for  them  in  relation  to  the  marginal
cost  of  production  of  different  quantities  of
them  ;  but  the  demand  for  them  is  derived
from  the  consumers’  demand  for  rides,  and  the
supply  forces,  while  expressing  directly  the  cost
of  production  of  different  quantities  of  cabs,