so many words that the rate of interest is the reward for parting with liquidity for a specified period. To which Jacob Viner retorted that: By analogous reasoning he could deny that wages are the reward for labor, or that profit is the reward for risk-taking, because labor is sometimes done without anticipation or realization of a return, and men who assume financial risks have been known to incur losses as a result instead of profits. Keynes goes on to claim that the demand for money is a function of the interest rate alone on the grounds that: The rate of interest is... the "price" which equilibrates the desire to hold wealth in the form of cash with the available quantity of cash. Frank Knight commented that this seems to assume that demand is simply an inverse function of price. The upshot from these reasonings is that: Liquidity-preference is a potentiality or functional tendency, which fixes the quantity of money which the public will hold when the rate of interest is given; so that if r is the rate of interest, M the quantity of money and L the function of liquidity-preference, we have M = L(r). This is where, and how, the quantity of money enters into the economic scheme. And specifically it determines the rate of interest, which therefore cannot be determined by the traditional factors of 'productivity and thrift'. Chapter 15 looks in more detail at the three motives Keynes ascribes for the holding of money: the 'transactions motive', the 'precautionary motive', and the 'speculative motive'. He considers that demand arising from the first two motives 'mainly depends on the level of income' (p199), while the interest rate is 'likely to be a minor factor' (p196). Keynes treats the speculative demand for money as a function of r alone without justifying its independence of income. He says that... what matters is not the absolute level of r but the degree of its divergence from what is considered a fairly safe level... but gives reasons to suppose that demand will nonetheless tend to decrease as r increases. He thus writes liquidity preference in the form L1(Y)+L2(r) where L1 is the sum of transaction and precautionary demands and L2 measures speculative demand. The structure of Keynes's expression plays no part in his subsequent theory, so it does no harm to follow Hicks by writing liquidity preference simply as L(Y,r).