Of coarse all these companies were not floated. Since the Companies Acts were passed 33,901 companies have been registered with a capital of £3,740,520,000. The year 1895 gave the following stupendous figures: 18,362 companies in existence with a capital of £1,035,029,835.

Mr. Giffen has estimated the capital of the country to be £10,000,000,000, and we observe that the figures for 1889 are very large, viz., about one-fortieth of the total amount. Although it does not represent capital paid up, yet the amount is very large.

Some of this capital would be sunk in railways, mines, docks and kindred undertakings, and would not be reproduced for a long term of years.

When there is a great increase in the number of joint-stock companies, it may happen that the savings of the country are not sufficient to meet the great demand, and then the value of money must be high. Shareholders are unable to pay their calls without the assistance of banks, and consequently the rate of interest rises.

Besides the fluctuations due to the increased demand for capital in order to meet the requirements of trade, there are changes which occur annually.

Of these periodical changes, the most important is the autumnal demand, which is principally a currency requirement.

The cause of this demand is, that after the ingathering of the harvest a great number of transactions take place. Corn is sold and other commodities are purchased. All this tends to an absorption of capital.

The weekly returns of the Bank of England for the third and fourth quarters of the year show the result of these transactions, in a marked decrease in the bullion and loanable capital.

There is also the autumnal demand for gold from Scotland, due to the fact that rents, salaries, etc., are paid on the Scotch quarter day, viz., 11th November.

At this period of the year the Scotch banks exceed their authorised issue of notes and are therefore obliged by the Act of 1845 to hold gold in reserve against any excess. After the demand has subsided, this hypothecated gold soon finds its way back to the Bank of England.

Professor Jevons speaks of the autumnal demand as follows : "To sum up, then, the October drain is due like many others to economic disturbances, to a concurrent of causes. The dispersion of money in wages during the summer and the absorption of money and capital in buying up the produce of the harvest occasion a general autumnal drain upon the resources of the banks, causing the private deposits, the bullion and the reserve of notes to fall. Then the general quarterly payment of rents, bills, and especially the dividends at the beginning of October, cause a sudden extra run upon the resources of the banks quite sufficient in many states of the money market to engender a panic, unless indeed its normal and temporary nature be well understood. The result of this autumnal demand is that we find the value of money higher for the last six months of the year."

This is shown by the following analysis of bank rates: -

The Bank of England pays the interest on the National Debt by quarterly instalments on 5th January, 5th April, 5th July and 5th October. The effect of these payments is shown in the weekly balance sheets: (1) A rapid decrease in Government deposits.

(2) A decrease in the reserve of notes.

(3) A decrease in the private securities.

(4) A slight decrease in the bullion.

(5) An increase in the private deposits.

(6) An increase in the note circulation.

When the dividend money, now about £5,250,000 per quarter, is released, it has the effect of increasing the supply of capital, and consequently at these periods we may expect the rate of interest to fall.

The financial requirements of the Chancellor of the Exchequer frequently cause changes in the value of money. This is especially the case when there is a large sum floating in the market in the form of Treasury or Exchequer bills. The repayment or renewal of such obligations has an effect upon the value of money, especially at times when capital is scarce. The rates at which these obligations are renewed, would be an indication to the Bank directors as to the position of the outside market.

In the financial papers reference is made to certain payments or calls which fall due. For example, an instalment on an Indian loan of say £1,000,000 has to be paid, and consequently the market is denuded of that amount of capital. Again a large company makes a call upon its shareholders, who are obliged to find capital to meet the same. Then at the same time we might have the Government borrowing £1,000,000 on Treasury bills. These bills are issued at various dates, and if they are applied for at low rates, it would indicate that the market expects a low average rate for money.

The effect of all these calls upon the market would be to raise the rate of interest.

We often see it stated that the Bank of England has been borrowing on stock. This means that it borrows capital in the market, like the bill brokers. The weekly reports show this by a decrease in Government securities. The Bank directors endeavour to make their rate more effective, or, as it is stated, to get control of the market.

It is difficult to understand how capital so obtained by the Bank can be utilised at a profit, but when the Bank gets control of the market, it is able to get more discount business; which no doubt would more than compensate it for the amount paid as interest on loans.

The rates for money prevailing on the Stock Exchange form a guide to the Bank directors in fixing their rate. They study closely the events which are taking place in the great market for securities.

A large portion of the business transacted on the Stock Exchange is of a speculative nature. Stock is purchased, but not paid for, so that when the fortnightly settlement arrives, the buyer has to obtain a loan on his stock, or, as it is termed, "carried over n to the next settlement. This is done.by the broker, who charges his client interest for the transaction. The rate of interest charged affords some indication as to the scarcity of capital or otherwise.