In this section the author reviews several of his conclusions from the analysis of money in Chapter XIII. In many cases money and securities function as close substitutes for one another. While securities pay interest and money does not, people still prefer to hold some money. As the author notes, "Even the safest and most negotiable securities, which are not money, involve some risks to their holders, and some costs of acquisition and disposal, from which money is free."
Thus the demand for money depends strongly on the rate of interest (or, as the author elaborates, "on the system of interest rates"). Because of the existence of a wide variety of securities which "form a chain of very close substitutes" between money and other securities, money and securities tend to "behave as very close substitutes, from the point of view of the economy as a whole." A rise in the interest rate would tend to decrease the demand for money (and increase the demand for securities).
The author closes the section by asking, "If rates of interest are given, what determines the way in which an individual will distribute his funds between money and securities?" He then previews the discussion in upcoming sections by noting that this question can be approached "most easily if we consider a number of special cases."
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