124

POLITICAL  ECONOMY

time  ;  and  there  is  no  reason  to  suppose  that
rapidity  of  circulation  will  be  affected  by
variations  in  the  supply  of  coins.  Moreover,
it  is  apparent  that  the  quantity  of  exchanging
which  each  unit  of  money  will  effect  in  any  one
transaction  must  depend  on  the  quantity  of
exchanging  to  be  done.  The  agency  intended
to  be  employed  in  carrying  out  exchanges  is
used  up,  and  just  used  up,  in  carrying  them
out,  owing  to  competition  on  the  part  of
people  possessing  money  with  which  they
intend  to  make  purchases.  And  the  quantity
of  exchanging  to  be  done  cannot  be  altered
by  variations  in  the  extent  of  the  means
for  effecting  exchanges.  So  the  purchasing
power  of  money  must  vary  inversely  and  in
the  same  proportion  as  the  supply  of  monetary
units.  This  doctrine,  it  will  be  observed,
is  implied  in  our  earlier  exposition,  but
something  is  gained  by  making  it  explicit.
Countless  illustrations  of  the  truth  of  the
quantity  theory  might  be  gleaned  from  the
pages  of  history.  Prescott,  in  his  History  of
the  Conquest  of  Peru,  writes  thus  of  what
happened  after  the  division  of  the  spoil
among  Pizarro’s  followers  at  Cuzco  :—“  The
effect  of  such  a  surfeit  of  the  precious  metals
was  instantly  felt  on  prices.  The  most
ordinary  articles  were  only  to  be  had  for