But though the value of money is not settled in an exceptional way,
there is nevertheless a peculiarity about it, as there is about many
articles. It is a commodity subject to great fluctuations of value,
and those fluctuations are easily produced by a slight excess or a
slight deficiency of quantity. Up to a certain point money is a
necessity. If a merchant has acceptances to meet to-morrow, money he
must and will find today at some price or other. And it is this
urgent need of the whole body of merchants which runs up the value
of money so wildly and to such a height in a great panic. On the
other hand, money easily becomes a 'drug,' as the phrase is, and
there is soon too much of it. The number of accepted securities is
limited, and cannot be rapidly increased; if the amount of money
seeking these accepted securities is more than can be lent on them
the value of money soon goes down. You may often hear in the market
that bills are not to be had, meaning good bills of course, and when
you hear this you may be sure that the value of money is very low.

If money were all held by the owners of it, or by banks which did
not pay an interest for it, the value of money might not fall so
fast. Money would, in the market phrase, be 'well held.' The
possessors would be under no necessity to employ it all; they might
employ part at a high rate rather than all at a low rate. But in
Lombard Street money is very largely held by those who do pay an
interest for it, and such persons must employ it all, or almost all,
for they have much to pay out with one hand, and unless they receive
much with the other they will be ruined. Such persons do not so much
care what is the rate of interest at which they employ their money:
they can reduce the interest they pay in proportion to that which
they can make. The vital points to them is to employ it at some