ABSTRACT
The liquidity preference embodied in gold being universal, it forms an ideal guarantee for the liquidity of all forms of representative money. Liquidity preference, or the desire to hold ready money, is an essential and an invaluable factor in all administrative and commercial operations. The primary quality of the immense accumulation of stored money is liquidity, its potential capacity to be used as purchasing power, its quality of being ready money. To maintain the liquidity of representative money, something more than custom, and convention, and confidence in the integrity and efficiency of governments and banking systems is needed. The liquidity of legal tender money is conferred by law. The liquidity of such forms of representative money as deposits and short-term funds is a complex in which custom, convention and confidence in government and in the banking system are constituent parts.
