──────────────────────────────────────────────────────────────────────────── Busy Jan. to Aug. to Nov. to Feb. to April Feb. to March Nov. April April to June July ──────────────────────────────────────────────────────────────────────────── Slack April to Dec. to May to May to July to April to Dec. July Oct. Aug. Sept. Dec. ──────────────────────────────────────────────────────────────────────────── Busy — — — Sept. to Oct. to — Nov. March ──────────────────────────────────────────────────────────────────────────── Slack — — — Dec. to — — Jan. ────────────────────────────────────────────────────────────────────────────
¹²³ The rate of discount of the Bank of Bengal for private paper running thirty days and after was altered—
In 1876 16 times, with 6½ per cent. as minimum and 13½ per cent. as maximum. In 1877 21 times, with 7½ per cent. as minimum and 14½ per cent. as maximum. In 1878 10 times, with 5½ per cent. as minimum and 11½ per cent. as maximum. In 1879 15 times, with 6½ per cent. as minimum and 11½ per cent. as maximum. In 1880 8 times, with 5½ per cent. as minimum and 9½ per cent. as maximum. In 1881 9 times, with 5½ per cent. as minimum and 10½ per cent. as maximum. In 1882 9 times, with 6½ per cent. as minimum and 12½ per cent. as maximum. In 1883 14 times, with 7½ per cent. as minimum and 10½ per cent. as maximum.
The explanation for such a market phenomenon is to be sought in the irregularity of the money supply of the country. In order that money may be had at a uniform price, its supply should be regulated according to the variations in the demand for it. It is well to recognize that the demand for money is never fixed. But it will avail nothing until it is realized that the changes in the demand for money [pg 62] which take place from year to year with the growth of population, trade, etc., belong essentially to a different category from the fluctuations in the demand for money which occur within the course of a year owing to seasonal influences. In any well-regulated currency it is necessary to distinguish these two categories of changes in monetary demand, the one requiring steadiness and expansibility and the other elasticity. On a comparative view it seems more than plausible that a metallic money is as especially adapted to furnish this element of steadiness and stability as paper money is to furnish that of elasticity. Indeed, so appropriate seem to be their respective functions that it has been insisted¹²⁴ that in an ideal system these two forms of money cannot interchange their functions without making the currency burdensome or dangerous. The proof of the soundness of this view, it may be said, is found in the fact that, excluding the small transactions which take place by direct barter, the purchasing medium of any commercially advanced country is always a compound of money and credit.