The most admirable feature of the note issue is its quality of elasticity. In every country, more especially every new country where the agricultural interests naturally predominate, the alternations of the seasons and the succession of the various agricultural and lumbering products, have an important influence on the currency requirements of the nation. In Canada the machinery of the circulation system is such that it expands and contracts automatically according to the wants of the country. It will expand to pay for the making of butter and cheese, the moving of the crops, and for lumbering operations, but when it has performed these duties it will contract silently and without disturbing the money market or any of the banks' numerous functions.

Dunbar, in his "Economic Essays," thus defines elasticity in currency:

It means responsiveness to present increase or diminution of demand - the power of adaptation to the needs of the month, the week, or the day, whether rising or falling. . . . Elasticity implies the operation of counter forces, in a currency as well as in a steel spring. That a currency may be responsive to demand, it is necessary that the forces tending respectively to expand or to restrict, should be forces at work in the daily business of the bank, where it is brought into contact with the community by the stream of loans, deposits and payments.