Quarterly data for the period from 1961 to 1986 suggest that the real quantity of money (defined as M2) demanded relative to income is positively r elated to the deflated price of equities (Standard and Poor's composi te) three quarters earlier and negatively related to the contemporane ous real stock price. The positive relation appears to reflect a weal th effect; the negative, a substitution effect. The wealth effect app ears stronger than the substitution effect. The volume of transaction s has an appreciable effect on M1 velocity but not on M2 velocity. An nual data for a century suggest that the apparent dominance of the we alth effect is the exception, not the rule. Copyright 1988 by University of Chicago Press.