e of ways, in complexity of
industry, modes of exchange, transportation, wealth, and income. These
changes require, some larger, others smaller, per capita amounts
of money to maintain the same level of prices. For example, the
substitution of cash payments for book-credit in retail trade calls
for a larger per capita stock of money; whereas an increased use of
banks and checking accounts, by economizing the use of money, enables
a smaller amount of money to maintain the same level.[9]

(4) Tho applied originally to standard money, the quantity theory
applies to all other kinds of money circulating side by side and at
a parity of value, so far as these fulfil the definition of money and
are not merely supplementary aids of money. These substitutes for, or
supplements to, money enable each dollar to do more work, to circulate
more rapidly. If the standard money alone were doubled in quantity,
while the various forms of fiduciary money (smaller coins, bank notes,
government notes) remained unchanged, the quantity of money as a whole
would not be doubled. Indeed, in such a case, the method of exchange
would be greatly altered. According to the quantity theory, therefore,
prices would not be expected to double.

Sec. 12. #Practical application of the quantity theory#. Despite the
number of changing factors affecting the methods of exchange and
the amount of business, the quantity theory is a rule unable at any
moment. These various factors change slowly, and the quantity theory
answers the question: What general change occurs in prices as a result
of the increase or decrease of the money in a given community at a
given moment? Like the law of gravitation and the law of projectiles,
the theory must be interpreted with relation to actual conditions.

The quantity theory makes intelligible the great and rapid changes in
prices which have followed sudden changes in the quantity of money.
Inductive demonstration of broadly stated economic principles is
usually difficult, but there have been many "monetary experiments"
to teach their lessons. Many inflations and contractions of the
circulating medium have occurred, now in a single country, again
in the whole world; and the local or general results have helped
to exemplify richly the working of the quantity principle. With the
scanty yield of silver and gold mines during the Middle Ages, prices
were low. After the discovery of America, especially in the sixteenth
century, quant