372 REMARKS ON SPECIE RESERVES AND BANK DEPOSITS. 
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cannot return for several days; or to those who, employing many hands, will pay out 
to them small sums in small bills, which, thus passing into the general circulation, 
cannot be collected and brought back at least for several days,— these exceptional 
cases, I say, besides being too few and small to be of much account any way, also 
operate only to expand the circulation of a few banks through contracting to an equal 
extent the circulation of others, thus leaving the aggregate circulation of all the banks, 
taken collectively, just what it was. 
2. The circulation is not expanded in times of prosperity and ease in the money 
market, being then even lower than usual. 
3. As a consequence of 2, the circulation is not contracted during a period of 
pressure, but is then almost invariably about ten per cent larger than when no 
pressure exists.* 
4. Money crises may be, and have been, as frequent and severe in countries (Cali- 
fornia and Australia, for instance) where no banks of circulation existed, and where, 
consequently,no expansion or contraction of bank currency was possible, as here in 
Massachusetts, where we have a surfeit of banks. | 
5. The characteristic feature of a crisis in the money-market is not a scarcity of 
money in circulation, whether paper or metallic, but a deficiency of credit. There is 
money enough, — there is as much money as ever, and even more, as we have just 
shown; but the owners of it, through a want of confidence, will not lend it; some 
of them will not lend at all, others only at usurious rates. The relative abundance or 
scarcity of money, as such, does not even affect the rate of interest; for, paradoxical 
as the assertion may seem, money neither yields profit nor pays interest. In whose 
possession soever it may be, private person or corporation, it forms a part of his 
dead capital, and therefore he always aims to get along with as little of it as possible. 
What really yields interest is the merchandise or property purchased with the money, 
and retained in possession of the borrower during the period of the loan, while the 
money obtained through that loan is paid away, usually on the very day on which it 
is received. 
6. The undue expansion of credit is not produced by a previous undue expansion 
of the currency. Rather the reverse is true. A previous expansion of credit produces 
ultimately, or after some time, an expansion, relatively a small expansion, of the cur- 
- * That this is the general result is proved by statistics, as any one may see by examining the bank returns. 
But as will be shown hereafter, there is one cause which tends to lessen the circulation during a crisis. The 
operation of this cause, however, is limited and trifling in amount, and is therefore overborne and concealed 
by the more general tendency to an expansion under such circumstances. 
