§ 6. #Concept of the community's monetary demand.# The monetary demand
of a community at a given time is the sum of the monetary demands of
the various individuals and enterprises. It is that stock of money
which is necessarily present to effect the exchanges of the community
in the prevailing manner at the existing price level. A single
dollar as it circulates helps to supply the monetary demand of many
individuals in turn: the more quickly each person spends the piece
of money he receives, the greater its rapidity of circulation. Let us
suppose that every piece of money passed from one person to another
once each day. Then a dollar would, in the course of a business year
(about 300 days), serve to buy (and at the same time to sell) $300
worth of goods. If the average purchases of each individual amounted
to $1000 a year, the average monetary demand of each would be about
3-1/3 dollars.

But every moment beyond the average time that any one kept money would
increase his monetary demand. If he delayed a day, a week, or a
month in spending the money, waiting until he could buy in some other
market, or until a better time to buy, he would thus increase insomuch
the amount of money needed to make the trade (on that scale of
prices). It requires more slow dollars than swift dollars to make a
given volume of purchases.

Evidently the times of maximum monetary demand of the different
individuals do not coincide; rather they alternate with each other,
and the community's total monetary demand at a given time is a
composite of the many individual variations. The amount of money that
will remain in circulation in a community depends on several factors,
the chief among them being the amount of goods to exchange, the