In conclusion we may summarize our chief objections to the quantity theory under the following heads: -

1. It is based upon the fallacious assumption that a valuable commodity standard is not a necessity in a money economy.

2. It reverses the true relations of cause and effect in the explanation of the connection between the volume of the currency and prices.

3. It is utterly inadequate to the explanation of certain changes in prices which are really caused by modifications in the currency, and is incapable of explaining the facts in any case.

4. It has been a most fruitful source of false doctrines regarding monetary matters, and is constantly and successfully employed in defence of harmful legislation and as a means of preventing needed monetary reforms.

References

The quantity theory has been expressed in a variety of forms and with varying degrees of accuracy. The best expositions of it are given by Walker, Political Economy, §§ 169 to 175, Money, chs. iii-viii, and "The Quantity Theory," Quart. Jour. Econ., v IX; by Nicholson, Money and Monetary Problems, chs. v-vii; and by Mill, Political Economy, bk. III, chs. viii and ix. Older and less perfect statements of this theory may be found in John Locke's essay, "Considerations on the Lowering of the Rate of Interest," Locke's Works, v. II; and in David Hume's "Essay on Money" in Essays Moral, Political, and Literary, v. I, pt. II, essay 3.

For criticisms of the theory see Miss Hardy's "The Quantity of Money and Prices," Jour. of Pol.Econ., March, 1895; Mitchell's "Quantity Theory of the Value of Money," ibid., March, 1896; Willis's "Credit Devices and the Quantity Theory," ibid., June, 1896; Hazell's "Quantity Theory of Money from the Marxist Standpoint," ibid., December, 1898; Scott's "The Quantity Theory," Annals, March, 1897; Farrer's Studies in Currency, ch. v; White's Money and Banking, bk. II, ch. xvii; and Schoen-hof's The History of Money and Prices.

Other discussions of this subject worthy of attention may be found in Hildebrand's Theorie des Geldes; Launhardt's Die Quantitdts-Theorie; Schraut's Currency and International Banking, ch. iii, and Willis's "History of the Quantity Theory," Jour. of Pol. Econ., September, 1896.