The equation of exchange as given above is a modified form of the quantity theory of money. That theory states that an increase or decrease in the amount of money in circulation is followed by a proportionate increase or decrease in the level of prices. Or, as stated by John Stuart Mill, "if the whole money in circulation was doubled, prices would be doubled. If h was only increased one-fourth, prices would rise one-fourth. . . . When there had been time for the increased supply of money to reach all markets, or (according to the conventional metaphor) to permeate all the channels of circulation, all prices would have risen one-fourth." In the discussion which follows this extract Mill makes allowance for the influence of changes in the rapidity of circulation, but he does not appreciate the importance of money substitutes as affecting changes in the general level of prices. If, in the equation in the preceding paragraph, we assume that M increases from 2 to 4, we shall not find that P increases from 1 to 2. But if M increases from 2 to 4 and M' also is doubled (i.e. increases from 8 to 16), P will, other things being equal, increase from 1 to 2. There is, however, no reason for believing that a doubling of the amount of money in circulation will normally result in doubling the amount of money substitutes. Therefore the quantity theory in its extreme form is untenable.