The Economy of Capital, or Gold and Trade. Amended Ed (Paperback)

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1865 Excerpt: ...as will be seen, do not correspond in any way with the variations of the amount of loanable capital. For example, in 1857, when the great monetary crisis occurred, the loanable capital in the possession of the banks was 20 per cent larger than in the previous year; and 3 per cent larger than in the year following, when the rate was lowered to 3 and 2 per cent. Again, during the last twelve months, for the greater part of which time the Bank-rate has been kept at 7, 8, and 9 per cent, the amount of loanable capital has been fully 25 per cent larger than in 1862, when the rate was only 2 and 2 per cent. The theory of " loss of capital," therefore, whether in its wider or its narrower form, is contradicted at all points by the testimony of experience and facts. Evidently there must be some other reason than this for the high rates of discount which are imposed by the Bank at times when a portion of our gold is heing exported. The real explanation of these high rates is, not that there is less capital than before, but because there is Scarcity Of a deficiency in the means of transferring Money. It is not Capital that is diminished, but Money. Money is the chief medium by which loans of capital are made--by which property of all kinds is transferred; and it is a deficiency of this medium which is occasioned (under Act of 1844) when the Bank's stock of gold is reduced. Nothing more. We do not here discuss whether the Bank, under the present system, does not unnecessarily aggravate this deficiency of money; or whether, but for the Bank Act, there need be any such deficiency at all. We need not observe that although a want of Capital cannot be supplied, a want of Money may. We simply desire clearly to point out that the cause of the high...