usual term of credit in their trade, unless they had been able to obtain advances from bankers, which, if the expectation of a rise of price had still continued, they probably could have done.
Since, then, credit in the form of bank notes is a more potent instrument for raising prices than book credits, an unrestrained power of resorting to this instrument may contribute to prolong and heighten the speculative rise of prices, and hence to aggravate the subsequent recoil. But in what degree? and what importance ought we to ascribe to this possibility? It may help us to form some judgment on this point, if we consider the proportion which the utmost increase of bank notes in a period of speculation, bears, I do not say to the whole mass of credit in the country, but to the bills of exchange alone. The average amount of bills in existence at any one time is supposed greatly to exceed a hundred millions sterling.[1] The bank note circulation of Great Britain and Ireland seldom exceeds forty millions, and the increase in speculative periods at most two or three. And even this, as we have seen, hardly ever comes into play until that ad-
- ↑ The most approved estimate is that of Mr. Leatham, grounded on the official returns of bill stamps issued. The following are the results—:
Year. Bills created in Great Britain
and Ireland, founded on
returns of Bill Stamps
issued from the Stamp Office.Average amount in
circulation at one time in
each year.1832 ₤ 356,153,409 ₤ 89,038,352 1833 383,659,585 95,914,896 1834 379,155,052 94,788,763 1835 405,403,051 101,350,762 1836 485,943,473 121,485,868 1837 455,084,445 118,771,111 1838 465,504,041 116,376,010 1839 528,493,842 132,123,460 "Mr. Leatham," says Mr. Tooke, "gives the process by which, upon the data furnished by the returns of stamps, he arrives at these results; and I am disposed to think that they are as near an approximation to the truth as the
