§ 12 (to Chapter XII, § 17) Credit and Cash Transactions. Comparison with Kinley's Estimates

These figures agree surprisingly well with what might be expected from a rougher calculation from Kinley's investigations. For July 1, 1896, he found that money deposits constituted 7.4 per cent of all deposits and, on March 16, 1909, 5.9 per cent. Both of these figures are too low to represent the percentage of money transactions, for the reason that money often circulates more than once before being deposited, whereas checks in general circulate but once. The figure for 1896, especially, is too low, because of the excessive amounts of checks deposited on July 1. In fact, it was largely because the 1896 figures had been criticized in this respect that Kinley made the 1909 investigation. He did not, of course, take the figures of deposits as indicating exactly the ratios of check and money transactions. He recognized the fact that these would give too low a ratio for money and too high a ratio for checks. He expressed the belief that a safe minimum for check transactions in 1896 was 75 per centand in 1909, 88 per cent, implying that 25 per cent and 12 per cent were safe maxima for monetary circulation. Professor Kinley's purpose seems to be to establish safe maxima rather than to attempt exact estimates. Tabulating Kinley's figures, we have for money transactions expressed in percentage of all transactions:—

According to this table, if we take the percentage of money in bank deposits as a lower limit of the percentage of money transactions, and if we take Kinley's estimates as a safe upper limit, and if we split the difference between these two limits, we shall reach almostthe same results as already reached by the more exact calculations in this book, which results are given, for comparison, in the last column. Thus the results of this book strikingly confirm those of Professor Kinley. They also agree remarkably well with the prevailing impression among business men that about 90 per cent of trade is now performed by means of checks.