deja vu
http://www.marxists.org/archive/marx/works/1894-c3/ch33.htm
'Once the crisis has broken out, it becomes from then on only a question of
means of payment. But since every one is dependent upon someone else for the
receipt of these means of payment, and no one knows whether the next one will
be able to meet his payments when due, a regular stampede ensues for those
means of payment available on the market, that is, for bank-notes. Everyone
hoards as many of them as he can lay hand on, and thus the notes disappear from
circulation on the very day when they are most needed.'
longer quote
[As long as the state of business is such that returns of loans made come in
regularly and credit thus remains unshaken, the expansion and contraction of
circulation depend simply upon the requirements of industrialists and
merchants. Since gold, at least in England, does not come into question in the
wholesale trade and the circulation of gold, aside from seasonal fluctuations,
may be regarded as rather constant over a long period of time, the note
circulation of the Bank of England constitutes a sufficiently accurate measure
of these changes. In the period of stagnation following a crisis, circulation
is smallest; with the renewed demand, a greater need for circulating medium
develops, which increases with rising prosperity; the quantity of circulating
medium reaches its apex in the period of over-tension and over-speculation —
the crisis precipitously breaks out and overnight bank-notes which yesterday
were still so plentiful disappear from the
market and with them the discounters of bills, lenders of money on securities,
and buyers of commodities. The Bank of England is called upon for help — but
even its powers are soon exhausted, for the Bank Act of 1844 compels it to
contract its note circulation at the very moment when the whole world cries out
for notes; when owners of commodities cannot sell, yet are called upon to pay
and are prepared for any sacrifice, if only they can secure bank-notes.
"During an alarm," says the earlier mentioned banker Wright (loc. cit., No.
2930), "the country requires twice as much circulation as in ordinary times,
because the circulation is hoarded by bankers and others."
Once the crisis has broken out, it becomes from then on only a question of
means of payment. But since every one is dependent upon someone else for the
receipt of these means of payment, and no one knows whether the next one will
be able to meet his payments when due, a regular stampede ensues for those
means of payment available on the market, that is, for bank-notes. Everyone
hoards as many of them as he can lay hand on, and thus the notes disappear from
circulation on the very day when they are most needed. Samuel Gurney (C. D.
1848/57, No. 1116) estimates the amount of bank notes brought under lock and
key in October 1847, at a time of such alarm, to have reached £4 to £5 million.
— F.E.)
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