MONEY FALLACIES. 
365 
whether the total money be of great amount or small. For 
instance, take the obvious fact of an abundance of money 
in the great commercial cities and its apparent scarcity in 
the rural districts. The cause is obvious and would con¬ 
tinue to operate in the same way whether the total volume 
of the circulation were great or small. Or again, take the 
apparent scarcity of money, even in great cities, during hard 
times and its apparent abundance almost everywhere, even 
in the country, during good times. There is little or no dif¬ 
ference in either case as to the actual amount of money in 
the country; but, in hard times, the money circulates very 
slowly and with difficulty, while in good times it circulates 
rapidly and with ease. By far the greater portion of the 
money function in this country is accomplished by transfers 
of credits. But, in hard times, credits are neither sought nor 
offered so abundantly, because there is little promise of profit 
either to borrower or lender, or in the use of credit by its 
owner. These and other examples of the same fallacy will 
be discussed a little more in detail hereafter. 
We may also disclose the same fallacy by pointing out 
the fact that the quantity of money in circulation is only 
one of several factors which determine its general effective¬ 
ness for performing the money function of the country in 
the best possible manner. The efficiency of the same quan¬ 
tity of currency may vary enormously under varying con¬ 
ditions, and so long as there is any considerable quantity in 
use the efficiency is governed by economic laws and forces 
which are independent of the amount. So, too, is the dis¬ 
tribution of money throughout the country and throughout 
the world. 
There is a prevailing belief among many people that an 
increase in the amount of money must increase the avail¬ 
able purchasing power of a country and thereby stimulate 
the demand for produce; that this increased demand must 
lead to greater production and a more rapid increase and 
consumption of wealth. If there were more money there 
would be more to spend and more to lend. This looks very 
