Readings in Money and Banking / Selected and Adapted

by Chester Arthur Phillips

[323] E. W. Kemmerer, America's Chance of Holding World Purse-Strings, The Annalist, Vol. 7, No. 158, Jan. 24, 1916, pp. 119-121, 144.

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APPENDIX A

AN APPROXIMATE FORMULA FOR DETERMINING THE VELOCITY OF THE CIRCULATION OF MONEY

[324]For the purpose of tracing the circulation of money, and measuring it by bank records,[325] we may classify the persons who use money in purchase of goods into three groups:

1. Commercial depositors, i. e., all engaged in business—firms, companies, and others—who have bank deposits mainly or wholly apart from personal accounts.

2. All other depositors, chiefly private persons.

3. All who, like most wage earners, are not depositors at all.

These three classes we shall distinguish as "Commercial depositors," "Other depositors," and "Nondepositors," or C, O, and N. The money in the possession of "Commercial depositors" we shall call "till money," and the rest "pocket money."