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OH. 3

THE ANALYSIS OF BANK-MONEY

47

and renewal of Treasury Bills, or changes of invest-ments.

Now of these (i.), like the transactions in respect ofincome-deposits, will be a fairly stable function of themoney-value of current output; (i.a) indeed will beexactly equal to the receipts placed to the credit ofthe income-deposits, since every cheque paid in to theincome-deposits will be a cheque paid out of thebusiness-deposits and vice versa —except where thereis a direct purchase by a consumer from a producerwhich is the case with some personal services. Cate-gory (i.6) will also fluctuate on the whole with themoney-value of a year’s output, though it will alsochange gradually with the character and technique ofproduction, and, over short periods, according towhether entrepreneurs are or are not anticipating theirrequirements. Further, as we shall see subsequently,the price-level appropriate to (i.6) will not moveprecisely with the price-level appropriate to the con-sumption paid for out of the income-deposits, withthe result that the changes in the money-value oftransactions (i.6) may not correspond accurately to themoney-value of expenditure by consumers at the sametime. In the language of Chapter 15 below, business-deposits held for the purposes of transactions (i.a)and (i.6) make up, together with the income-deposits,what we shall call the Industrial Circulation.

Transactions in categories (ii.) and (iii.), on theother hand, need not be, and are not, governed bythe volume of current output. The pace at whicha circle of financiers, speculators and investors handround one to another particular pieces of wealth, ortitles to such, which they are neither producing norconsuming but merely exchanging, bears no definiterelation to the rate of current production. Thevolume of such transactions is subject to very wideand incalculable fluctuations, easily double at onetime what it is at another, depending on such factors