prices of commodities, the value of the quantity of gold which serves as a unit of measure, or the value of gold, is assumed to be given. Under that assumption the quantity of gold necessary for circulation is determined first of all by the sum total of the prices of commodities that are to be realized. But this sum is itself determined: 1. By the level of prices, the relatively high or low exchange value of commodities estimated in gold; and 2. By the mass of commodities circulating at fixed prices, i. e. by the number of purchases and sales at given prices.[1] If one quarter of wheat is worth 60 shillings, then twice as much gold is required to circulate it or to realize its price as would be the case if it were worth only 30 shillings. To circulate 500 quarters of wheat at 60 shillings, twice as much gold is necessary as for the circulation of 250 quarters at the same price. Finally, to circulate 10 quarters at 100 shillings only half as much money is necessary as when circu-
- ↑ The quantity of money is immaterial "pourvu qu'il y en ait assez pour maintenir les prix contractés par les denrées" (as long as it is sufficient to maintain the existing prices of commodities). Boisguillebert, l. c. p. 210.
"If the circulation of commodities of four hundred millions required a currency of forty millions, and . . . this proportion of one-tenth was the due level, estimating both currency and commodities in gold; then, if the value of commodities to be circulated increased to four hundred and fifty millions, from natural causes . . . I should say the currency, in order to continue at its level, must be increased to forty-five millions." (William Blake, "Observations on the Effects Produced by the Expenditure of Government, etc.," London, 1823, p. 80.)
