)

CHAPTER 15

TIIE INDUSTRIAL CIRCULATION AND THEFINANCIAL CIRCULATION

(i.) Industry and Finance distinguished

AND DEFINED

We must now devote ourselves to the analysis of thefactors which tend to bring about changes in thevalue of money and to their mode of operation.

For this purpose it is necessary to make yet afurther classification cutting, to a certain extent, acrossour division of the total quantity of money (in Chapter3) into the Income-deposits, the Business-deposits andthe Savings-deposits,—namely a division between thedeposits used for the purposes of Industry, which weshall call the Industrial Circulation, and those usedfor the purposes of Finance, which we shall call theFinancial Circulation.

By Industry we mean the business of maintainingthe normal process of current output, distribution andexchange and paying the factors of production theirincomes for the various duties which they performfrom the first beginning of production to the finalsatisfaction of the consumer. By Finance, on the otherhand, we mean the business of holding and exchangingexisting titles to wealth (other than exchanges result-ing from the specialisation of industry), includingStock Exchange and Money Market transactions,speculation and the process of conveying currentsavings and profits into the hands of entrepreneurs.

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