ABSTRACT
Despite Steuart’s many celebrated achievements,1 it is not quite as well known how resolutely he refuted the sort of quantity theory of money shared by Locke, Montesquieu and Hume (and probably Smith after him), and how successfully he put forward his own alternative theory. These writers held that there are certain proportional relations between the quantity of money, the price level and the level of output in the monetary economy. Steuart criticized the above doctrine, which we might call a quantity theory of money, incisively as follows: ‘nothing is so easy in an hypothesis, as to establish proportions between things, which in themselves are beyond all the powers of computation’ (Steuart [1805] 1967:2 104).
