PBEFACE

In Books III. and IV. of this Treatise I propose anovel means of approach to the fundamental prob-lems of monetary theory. My object has been tofind a method which is useful in describing, notmerely the characteristics of static equilibrium, butalso those of disequilibrium, and to discover thedynamical laws governing the passage of a monetarysystem from one position of equilibrium to another.This discussion constitutes the kernel of Volume I.on “ The Pure Theory of Money ”. In Volume II.,on “ The Applied Theory of Money ”, I have en-deavoured to combine the quantitative methodwith the qualitative, and have made as good anestimate as I can of the order of magnitude of thequantities entering into the argument, on the basis,mainly, of present-day facts in Great Britain andthe United States . In this volume I have alsodescribed the salient features of modern bankingand monetary systems, and have discussed theobjects and methods of Monetary Management inthe practical sphere.

As I read through the page proofs of this book I amacutely conscious of its defects. It has occupied mefor several years, not free from other occupations, dur-ing which my ideas have been developing and changing,with the result that its parts are not all entirely har-