I£ we consider our total volume of internal trade we must first realize that this in reality is an expression of the flow and counter-flow of effort. A thousand units of effort exerted in California flow Eastward in return for a thousand units of effort exerted in Pittsburgh, which in the form of steel products are promptly drawn Westward by demand. Now if we consider this compound transaction we shall see that if the Pittsburgh banker credits the steel maker with 75 per cent of the estimated value of his goods, and the California banker credits the asparagus canner with 75 per cent of the estimated value of his goods, then for the remaining 25 per cent at each end some valid token such as currency must exist to extend the terminals. Let us say that the interval involved between the initiation and the closing of this exchange of effort is 60 days. The contemplation of this simple hypothetical case shows us that a certain percentage of the volume of trade must be provided for during a definite interval of time. With a valid unit of measurement there is no reason why a definite volume of currency could not be scientifically calculated, based upon the total volume of internal trade and the average interval of time involved in the exchange.
If we insist upon utilizing discretion instead of facts, these considerations, and not the evangelic yearnings of a statesman from Nebraska or Oklahoma, should govern the volume of currency. The problem is essentially one of providing extended terminals to reinforce credit. Until this need has been considered upon a logical and scientific basis, just as an engineer estimates his conducting area with relation to his initial energy, and the interval it has to traverse, we cannot do better than depend upon the facilities for the expansion and contraction of currency now provided by the Federal Reserve System.
On January 1st, 1922, we had in circulation $53.03 per capita, or a total of $5,775,400,315. On January 1st, 1921, we had $59.12 per capita, or a total of $6,340,436,718.[1] Let us assume, for the sake of argument, that 6 billion dollars is
- ↑ Circulation Statement, January 1, 1922. U. S. Treasury. Department, Washington, D. C.
