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MONEY

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bank  rate  would  be  called  for.  At  the
present  time  in  more  than  one  country  the
problem  of  the  reserve  is  engaging  the
attention  of  statesmen,  bankers,  and  other
business  men.
The  manner  in  which  banks  in  the  ordinary
course  of  their  business,  which  may  be  tersely
described  as  dealing  in  credit,  can  augment  or
diminish  the  quantity  of  money,  broadly
regarded,  in  a  country,  is  of  particular  importance ­
  in  relation  to  a  curious  phenomenon
known  as  the  trade  cycle.  Trade  does  not
flow  along  uninterruptedly  in  any  modern
community.  It  has  its  ups  and  downs  even
if  it  is  viewed  in  the  mass.  Many  of  the
fluctuations  in  business  briskness,  which  one
would  naturally  expect,  take  place  in  different
industries  at  about  the  same  time,  as  one
would  not  so  readily  expect.  In  other  words
fluctuations  in  trade  tend  to  synchronise  in  the
different  industries,  so  that  at  any  one  time  the
business  of  a  country  in  the  aggregate  tends  to
be  depressed  or  the  reverse.  This  synchronism ­
  may  be  accounted  for  as  follows.  The
business  of  a  modern  community  makes  up  an
organic  whole,  every  part  of  which  is  directly
or  indirectly  connected  with  every  other
part.  If  engineers  are  slack  the  demand  for