230 THE GENERAL THEORY OF EMPLOYMENT bk. iv

acterise money as we know it, are capable of justifyingit. To the extent that the established standard of valuehas these peculiarities, the summary statement, that itis the money-rate of interest which is the significantrate of interest, will hold good.

(i) The first characteristic which tends towards theabove conclusion is the fact that money has, both in thelong and in the short period, a zero, or at any rate a verysmall, elasticity of production, so far as the power ofprivate enterprise is concerned, as distinct from themonetary authority;—elasticity of production 1 mean-ing, in this context, the response of the quantity oflabour applied to producing it to a rise in the quantityof labour which a unit of it will command. Money,that is to say, cannot be readily produced;—labour can-not be turned on at will by entrepreneurs to producemoney in increasing quantities as its price rises interms of the wage-unit. In the case of an inconvertiblemanaged currency this condition is strictly satisfied.But in the case of a gold-standard currency it is alsoapproximately so, in the sense that the maximum pro-portional addition to the quantity of labour which canbe thus employed is very small, except indeed in acountry of which gold-mining is the major industry.

Now, in the case of assets having an elasticity ofproduction, the reason why we assumed their own-rateof interest to decline was because we assumed thestock of them to increase as the result of a higher rateof output. In the case of money, however—post-poning, for the moment, our consideration of theeffects of reducing the wage-unit or of a deliberateincrease in its supply by the monetary authority—thesupply is fixed. Thus the characteristic that moneycannot be readily produced by labour gives at once someprima facie presumption for the view that its own-rateof interest will be relatively reluctant to fall; whereasif money could be grown like a crop or manufactured

1 See Chapter 20 .