The second case relates to the demand for money and its supply. We have already seen how the problem of its origin is solved. Alongside of that problem is now placed another, namely, how is the quantity in circulation regulated to meet the requirements of exchange? Smith’s first task was to expose the popular fallacy concerning this topic.[187] According to one school of thinkers, money was wealth _par excellence_, and it was all the more important that he should get rid of this view seeing that it constituted the very foundation of the Mercantile theory, the overthrow of which was the immediate object in publishing the _Wealth of Nations_. The Mercantilists contended that a country should export more than it imports, receiving the balance in money. If it can be proved that this balance is useless because money is a mere commodity possessing no greater and no less utility than any other, then the Mercantilist foundation is completely destroyed. Smith thought that money was less indispensable than some other goods, seeing that we are anxious to pass it on as often as we can. The disdain with which Smith regarded money was the result of a reaction against Mercantilism, and it led some of his followers to over-emphasise his point of view and to misconceive the special character of monetary phenomena. A nation’s true wealth “consists,” Smith tells us, “not in its gold and silver only, but in its lands, houses, and consumable goods of all different kinds.”[188] “It is the annual produce of the land and labour of the society.”[189] Hence in evaluating a country’s net revenue we must omit money because it is not consumed. It only serves as an instrument for the circulation of wealth and for the measurement of value. It is the “great wheel of circulation.”[190] In virtue of this title, although Smith himself classed money along with circulating capital, he remarks that it might be likened to the fixed capital of an industry, to machinery or workshops. The greater the economy in the use of fixed capital, provided there is no diminution in production, the better, for the larger will be the net product. This is equally true of money—a necessary but a very costly instrument of social production. “Every saving in the expence of collecting and supporting that part of the circulating capital which consists in money is an improvement of exactly the same kind”[191] as that which reduces the fixed capital of industry.[192]