Knowledge that Transforms

The quantity theory of the value of money is now widely accepted. Nevertheless, a number of earnest students still decline to indorse it, and its mastery over its competitor is not complete unless all issues between the two have been decided in its favor. The present paper has the object of comparing the validity of the two theories that account for the value of money. According to the quantity theory, the value of money is regulated by the supply of and the demand for money. An increase of the supply of money as well as a reduction of the demand for it is followed by a lowering of its value, manifested by a rise of the general price level, and vice versa. In the "supply of money" is embraced all of our medium of exchange that is freely used in the market and generally accepted in payment for goods delivered and services rendered. It comprises, not only all of our currency in actual circulation, but also all deposit currency, that is, depositors' bank accounts subject to check. The "demand for money" is measured by the volume of trade, that is, by the sum total of goods and services sold during a certain period, say one year. Two forms of demonstration are offered for this law. The one is a process of mathematical deduction that will be discussed below. The other consists in showing from history that a rise of prices has invariably attended an increase in the quantity of currency, and vice versa. With this theory goes the theory that the interest paid for a loan of money is really a payment for the advantages afforded by the use of the capital that can be bought with the borrowed money. There is still some disagreement on the cause to which the power of invested capital to return interest should be attributed. Some authorities trace this power to the final productivity of capital used in the industries, while others attribute it to the marginal preference of present over future goods, or the service rendered by "waiting," that is, by a person's abstinence from consuming after producing

The last eight years have seen the adoption by a number of the younger leaders of the British trade-union movement of the ideal of industrial self-government. In June, I914, the annual meeting of the National Union of Railwaymen resolved unanimously, that this congress, while reaffirming previous decisions in favor of nationalization of the railways, declares that no system of state ownership of the railways will be acceptable to organized railwaymen which does not . . . . allow them a due measure of responsibility and control in the safe and efficient working of the railway system.' At the annual conference in May, i919, of the Postal and Telegraph Clerks' Association, it was emphatically pointed out that the control demanded by the postal employees included participation in directing the technical improvement of the service for the good of the community.2 In i9i9 the Miners' Federation brought formally before the Coal Industry Commission a request not only for the nationalization of the mines, but of joint control by the