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as if the mere manufacture of bank credit performed a faith-cure. But closer reflection dispels this notion. For this bank credit is based upon and limited by considerations of concrete industrial fact. The merchants and financiers, 'whose skilled prevision sets the ball a-rolling,' are not mere gamblers. They see that the trade depression is nearly worked out, in the sense that the congested stocks held by manufacturers and speculators have been almost entirely unloaded, and that the actual available supplies are becoming insufficient to meet what may be termed the current irreducible demand. In a word, the waste of the stoppage has gone on so far as to exhibit a temporary condition of general under-production. Recognising that the rate of effective supply has fallen below the minimum effective demand, and that prices must rise, they set in train, as we see, a series of industrial activities, by means of increased credits. These increased credits express and measure the belief of bankers in the renewal of industrial activity. But their belief is based upon the actual evidence of reviving trade furnished to them by their customers, and it is on the strength of this that they extend banking facilities.

The limits set on such extension depend upon two conditions: first, the conviction of bankers that trade will continue on the up-grade with rising prices and profits; second, the quantity of cash at their command in relation to the quantity of credit advances they have made. These two conditions are not entirely separate. When confidence in trade prosperity is strong, banks will be freer with credit facilities than