one method to evade a crushing burden left open to the public, who discover for themselves, sooner than the financiers, that the law of unit elasticity in their demand for money can be escaped. Nevertheless, it is evident that so long as the public use money at all, the Government can continue to raise resources by inflation. Moreover, the conveniences of using money in daily life are so great that the public are prepared, rather than forego them, to pay the inflationary tax, provided it is not raised to a prohibitive level. Like other conveniences of life the use of money is taxable, and, although for various reasons this particular form of taxation is highly inexpedient, a Government can get resources by a _continuous_ practice of inflation, even when this is foreseen by the public generally, unless the sums they seek to raise in this way are very grossly excessive. Just as a toll can be levied on the use of roads or a turnover tax on business transactions, so also on the use of money. The higher the toll and the tax, the less traffic on the roads, and the less business transacted, so also the less money carried. But some traffic is so indispensable, some business so profitable, some money-payments so convenient, that only a very high levy will stop completely all traffic, all business, all payments. A Government has to remember, however, that even if a tax is not prohibitive it may be unprofitable, and that a medium, rather than an extreme, imposition will yield the greatest gain. Suppose that the rate of inflation is such that the value of the money falls by half every year, and suppose that the cash used by the public for retail purchases in shops is turned over 100 times a year (_i.e._ stays in one pocket for half a week on the average); then this is only equivalent to a turnover tax of ½ per cent on each transaction. The public will gladly pay such a tax rather than suffer the trouble and inconvenience of barter with trams and tradesmen. Even if the value of the money falls by half every month, the public, by keeping their pocket-money so low that they turn it over once a day on the average instead of only twice a week, can still keep the tax down to the equivalent of less than 2 per cent on each transaction, or more precisely 4d. in the £. Even such a terrific rate of depreciation as this is not sufficient, therefore, to counterbalance the advantages of using money rather than barter in the trifling business of daily life. This is the explanation why, even in Germany and in Russia, the Government’s notes remained current for many retail transactions.