In consequence, a long-continued low rate of interest is almost always followed by a rapid rise in that rate.  Till the available trade is found it lies idle, and can scarcely be lent at all; some of it is not lent.  But the moment the available trade is discoveredthe moment that prices have risen—­the demand for loanable capital becomes keen.  For the most part, men of business must carry on their regular trade; if it cannot be carried on without borrowing 10 per cent more capital, 10 per cent more capital they must borrow.  Very often they have incurred obligations which must be met; and if that is so the rate of interest which they pay is comparatively indifferent.  What is necessary to meet their acceptances they will borrow, pay for it what they may; they had better pay any price than permit those acceptances to be dishonoured.  And in less extreme eases men of business have a fixed capital, which cannot lie idle except at a great loss; a set of labourers which must be, if possible, kept together; a steady connection of customers, which they would very unwillingly lose.  To keep all these, they borrow; and in a period of high prices many merchants are peculiarly anxious to borrow, because the augmentation of the price of the article in which they deal makes them really see, or imagine that they see, peculiar opportunities of profit.  An immense new borrowing soon follows upon the new and great trade, and the rate of interest rises at once, and generally rises rapidly.

This is the surer to happen that Lombard Street is, as has been shown before, a very delicate market.  A large amount of money is held there by bankers and by bill-brokers at interest:  this they must employ, or they will be ruined.  It is better for them to reduce the rate they charge, and compensate themselves by reducing the rate they pay, rather than to keep up the rate of charge, if by so doing they cannot employ all their money.  It is vital to them to employ all the money on which they pay interest.  A little excess therefore forces down the rate of interest very much.  But if that low rate of interest should cause, or should aid in causing, a great growth of trade, the rise is sure to be quick, and is apt to be violent.  The figures of trade are reckoned by hundreds of millions, where those of loanable capital count only by millions.  A great increase in the borrowing demands of English commerce almost always changes an excess of loanable capital above the demand to a greater deficiency below the demand.  That deficiency causes adversity, or apparent adversity, in trade, just as, and in the same manner, that the previous excess caused prosperity, or apparent prosperity.  It causes a fall of price that runs through society; that fall causes a decline of activity and a diminution of profitsa painful contraction instead of the previous pleasant expansion.