234 THE GENERAL THEORY OF EMPLOYMENT bk. iv

Hence, after a certain point is reached, there is neces-sarily a loss in holding a greater stock.

In the case of money, however, this, as we haveseen, is not so,—and for a variety of reasons, namely,those which constitute money as being, in the estima-tion of the public, far excellence “liquid.” Thus thosereformers, who look for a remedy by creating artificialcarrying-costs for money through the device of requir-ing legal-tender currency to be periodically stamped ata prescribed cost in order to retain its quality as money,or in analogous ways, have been on the right track;and the practical value of their proposals deservesconsideration.

The significance of the money-rate of interest arises,therefore, out of the combination of the characteristicsthat, through the working of the liquidity-motive, thisrate of interest may be somewhat unresponsive to achange in the proportion which the quantity of moneybears to other forms of wealth measured in money, andthat money has (or may have) zero (or negligible)elasticities both of production and of substitution. Thefirst condition means that demand may be predom-inantly directed to money, the second that when thisoccurs labour cannot be employed in producing moremoney, and the third that there is no mitigation at anypoint through some other factor being capable, if it issufficiently cheap, of doing money’s duty equally well.The only relief—apart from changes in the marginalefficiency of capital—can come (so long as the pro-pensity towards liquidity is unchanged) from an increasein the quantity of money, or—which is formally thesame thing—a rise in the value of money which enablesa given quantity to provide increased money-services.

Thus a rise in the money-rate of interest retards theoutput of all the objects of which the production iselastic without being capable of stimulating the outputof money (the production of which is, by hypothesis,