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Full text of "War-time financial problems"

296               MONEY   OR  GOODS?

materials would have benefited the manufacturer,
and it is just possible that production, instead of
being limited, might have been stimulated by
cheapness due to scarcity of currency and credit,
or, at least, might have gone on just as well on a
lower all-round level of prices. On the whole, it
is perhaps more probable that a steady rise in prices
caused by a gradual increase in the volume of cur-
rency and credit would have the more beneficial
effect in stimulating the energies of producers. But
Mr Kitson's argument that the volume of currency
and credit imposes an absolute limit on the volume
of production is surely much too clean-cut an
assumption. This absolute limit may be true, if
currency cannot be increased, with regard to the
aggregate value in money of the goods produced.
But money value and volume are two quite different
things. If our credit system had not been developed
as it has, and we had had to rely on actual gold and
silver for carrying on all production and trade, it
does not by any means follow that trade and pro-
duction might not have been on something like their
present scale in the matter of volume and turnover ;
but the money value would have been much smaller
because prices would have been all round at a much
lower level.

This contention is based on what is called the
" Quantity Theory of Money/1 This theory Mr
Kitson wholeheartedly believes, so that this is not
a point that has to be argued with him. "The
value of money/1 he says, "as every student of
economics knows, is determined by the quantity