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EXCHANGE VALUE OF MONEY 171

This measure, however, is of course very imperfect in its social aspects as a means of stabilizing commodity prices, even from the point of view now under discussion. Note issues are only one of the means which the banks have at their disposal for increasing the total amount of exchange media or the velocity of circulation of money and of thereby raising prices, and the example of England shows best to what extent other means may be increasingly employed when the issue of notes is too severely restricted. Of the business transacted through the English banks only a small portion is discharged by notes or cash, by far the greater part consists of payment by cheques on current account. The same developments are to be observed, though to a less extent, in other countries, such as Germany and the U.S.A. But if, on the one hand, current banking law is for this reason unable to prevent an incipient rise in prices as a result of inflationary credit policy-to say nothing of the rise which would be produced by an increase in the supplies of coin itself-on the other hand it imposes unnecessarily severe restrictions on an increase of the note issue at times when such an increase is desirable in order to avoid a heavy fall in the prices of goods and commodities, as, for example, in crises when other credit instruments refuse to function in consequence of a general lack of confidence between individuals. That Peel’s Bank Act has not for this reason given rise to greater commercial misfortunes is entirely due to the fact that the banks, and especially the Central Banks, have more and more adopted the practice of keeping in reserve large amounts of unused loan money, a practice which was not contemplated in the original plan of Peel’s Bank Act, for which reason it had to be suspended several times during the first period of its operation.