Chapter 1b: Effective Demand and the demand motive

12The amount of commodities human industry can buy or produce is naturally regulated by the effective demand in every country.


When the amount of gold and silver imported into any country exceeds the effective demand, no government vigilance can prevent their exportation.

14 It is partly due to the easy transportation of gold and silver that their price does not fluctuate like the price of other commodities.

15 If gold and silver should fall short in a country which can buy them, there would be more expedients for supplying them than almost any other commodity.

The Scarcity of Money


The scarcity of money is the most common complaint.

When profits are greater than usual, over-trading becomes a general error among big and small dealers.

17It would be too ridiculous to prove that wealth only consists in goods and not in money.

Selling Vs. Buying


Merchants can buy goods more easily with money than buy money with goods, not because money is wealth.

A merchant might be ruined by not being able to sell his goods in time.

A merchant's capital frequently consists in perishable goods destined for buying money.

In the long run, goods draw money more than money draws goods.

It is not for its own sake that men desire money, but for the sake of what they can buy with it.

Next:Book 4, Chapter 1c Metal money supply