Irving Fisher

“ It is evident that if all localities were exactly alike in their natural resources and in their comparative costs of production little or no trade would be set up between them. It is equally true that the greater the difference in the costs of production of different articles in different localities, the more likely is there to be trade between them and the greater the amount of that trade. Primitive trade had its raison d'être in the fact that the regions of this earth are unlike in their products. ”

“ The greater and the more productive the stock or capital in any community, the more goods it can put into the currents of trade. A mill will make a town a center of trade. Docks, elevators, warehouses and railway terminals help to transform a harbor into a port of commerce. ”

“ In the system of cash payments, a man must keep money idle in advance lest he be caught in the embarrassing position of lacking it when he most needs it. With book credit, he knows that even if he should be caught without a cent in his pocket, he can still get supplies on credit. ”

“ Trade barriers are not only physical but legal. A tariff between countries has the same influence in decreasing trade as a chain of mountains. The freer the trade, the more of it there will be. In France, many communities have a local tariff (octroi) which tends to interfere with local trade. In the United States trade is free within the country itself, but between the United States and other countries there is a high protective tariff. ”

“ Equally obvious is the influence of the division of labor. Division of labor is based in part on differences in comparative costs or efforts as between men,—corresponding to geographic differences as between countries. ”

“ The habit of using checks rather than money will also affect the velocity of circulation; because a depositor's surplus money will immediately be put into the bank in return for a right to draw by check. ”

“ Anything which facilitates intercourse tends to increase trade. Anything that interferes with intercourse tends to decrease trade. First of all, there are the mechanical facilities for transport. As Macaulay said, with the exception of the alphabet and the printing press, no set of inventions has tended to alter civilization so much as those which abridge distance,—such as the railway, the steamship, the telephone, the telegraph, and that conveyer of information and advertisements, the newspaper. ”

“ Where payments such as rent, interest, insurance and taxes occur at periods irrespective of the times of receipts of money, it is often necessary to accumulate money or deposits in advance, thus increasing the average on hand, withdrawing money from use for a time, and decreasing the velocity of circulation. ”

“ Besides local and personal differentiation, the state of knowledge of production will affect trade. The mines of Africa and Australia were left unworked for centuries by ignorant natives but were opened by white men possessing a knowledge of metallurgy. Vast coal fields in China await development, largely for lack of knowledge of how to extract and market the coal. Egypt awaits the advent of scientific agriculture, to usher in trade expansion. Nowadays, trade schools in Germany, England, and the United States are increasing and diffusing knowledge of productive technique. ”

“ Moreover, a community can to some extent cover the relative scarcity of money of a period when business is large with the relative surplus of a period when fewer demands are made on its supply of money. ”

“ The more frequently money or checks are received and disbursed, the shorter is the average interval between the receipt and the expenditure of money or checks and the more rapid is the velocity of circulation. ”

“ It goes without saying that a banking system must be devised and developed before it can be used. The invention of banking has made deposit currency possible, and its adoption has undoubtedly led to a great increase in deposits and consequent rise of prices. Even in the last decade the extension in the United States of deposit banking has been an exceedingly powerful influence in that direction. In Europe deposit banking is still in its infancy.
V.43 2. "Charging" is often a preliminary to payment by check, rather than by cash. ”

“ Tariffs not only tend to decrease the frequency of exchanges, but to the extent that they prevent international or interlocal division of labor and make countries more alike as well as less productive, they also tend to decrease the amounts of goods which can be exchanged. ”

“ Regularity of payment also facilitates the turnover. When the workingman can be fairly certain of both his receipts and expenditures, he can, by close calculation, adjust them so precisely as safely to end each payment cycle with an empty pocket. This habit is extremely common among certain classes of city laborers. ”

“ Changes in commercial geography still produce changes in the distribution and volume of trade. The exhaustion of gold and silver mines in Nevada and of lumber in Michigan have tended to reduce the volume of trade of these regions, both external and internal. Contrariwise, cattle raising in Texas, the production of coal in Pennsylvania, of oranges in Florida, and of apples in Oregon have increased the volume of trade for these communities respectively. ”

“ V.15 We see, then, that prices will tend to fall through increase in trade, which may in turn be brought about by improved transportation, by increased freedom of trade, by improved monetary and banking systems, and by business confidence. ”

“ V.10 The increase of wants, by leading to an increase in trade, tends to lower the price level. Historically, during recent times through invention, education, and the emulation coming from increased contact in centers of population, there has been a great intensification and diversification of human wants and therefore increased trade. ”

“ For instance, a laborer receiving and spending $7 a week, if he cannot "charge," must make his week's wages last through the week. If he spends $1 a day, his weekly cycle must show on successive days at least as much as $7, $6, $5, $4, $3, $2, and $1, at which time another $7 comes in. ”

“ Thus, suppose that a workman spends at the rate of $1 a day and receives at the average rate of $1 a day. The average amount that he will require to keep on hand will be less if his receipts occur once every fortnight than if they occur at intervals of three weeks and one week respectively in alternation. ”

“ V.9 Wants are, as it were, the mainsprings of economic activity which in the last analysis keep the economic world in motion. The desire to have clothes as fine as the clothes of others, or finer, or different, leads to the multiplicity of silks, satins, laces, etc. ”

“ On the other hand, if the receipts and expenditures are irregular, either in amount or in time, prudence requires the worker to keep a larger sum on hand, to insure against mishaps.*57 Even when fore-known with certainty, irregular receipts require a larger average sum to be kept on hand. ”