In short, one of the three circuits (Bo Oc Cb) shows money circulating once out of bank. Both the others pass through N, and show money circulating twice out of bank. The diagram, then, represents all circulating money as springing from and returning to the banks; all of it as circulating at least once in the interim; and that portion handled by "nondepositors" as circulating once in addition. Therefore, the total circulation exceeds the total flow from and to banks by the amount flowing through "nondepositors." In other words, the total circulation in the diagram is simply the sum of the annual money flowing from and to banks and the money handled by "nondepositors." The quotient of this sum divided by the amount of money in circulation will give approximately the velocity of circulation of money....
FOOTNOTES:
[324] Irving Fisher, Purchasing Power of Money, Appendix XII. pp. 448-454. The Macmillan Company. New York. 1911.
[325] For a complete formula for determining the velocity of the circulation of money see pages 448-460, of the Purchasing Power of Money.
[326] The term "depositors," as here used, does not, of course, include savings bank depositors. A savings bank is not a true bank of deposit, providing circulating credit.
APPENDIX B
SOME REGULATIONS OF THE FEDERAL RESERVE BOARD
Federal Reserve Board