12 



Minnie Throop England 



Table \'I 

 Rise in Prices of Sean ities Before a Crisis 



Inflation is aided, moreover, not only by the rise in the prices 

 of securities, but also in turn by the formation of new companies 

 which offer their securities to the market. The amount of col- 

 lateral is thereby still further increased. The creation and issu- 

 ance of capital is, of course, going on all the time, but the rate 

 is greatly accelerated in prosperous periods. Comparing the 

 minimum and maximum years before a crisis, the increase in 

 England and elsewhere of the total amount of capital created and 

 issued was as follows : 



Table VII 

 • Ina'ease of Capital Applications Before a Crisis 



That the expansion of bank credit is now chiefly due to the 

 practice of the banks advancing credit upon securities is becom- 

 ing recognized in some small degree. Professor Cleveland says^ 

 in answer to the question as to what has brought about the re- 

 markable development of bank credit : "The answer must at 

 once come to the mind of any observer of finance that the princi- 



' Cleveland, F. A. The Bank and the Treasury. New York, 1905, pp. 6-7. 



52 



