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THE following pages begin with an attempt to overthrow one of the fundamental principles of the reigning system of Political Economy. That principle is, that the accumulation of capital cannot proceed too fast, and its governing law is supposed to be that of uniform increase, retarded only by the diminishing returns obtained from new investments in the cultivation of the soil. It is here attempted to show that the true law is wholly different. The increase and changes of the capital which consists of real commodities are entirely regulated by the fluctuations in the quantity of that other kind of capital which is commonly known as money (quite a different thing from the currency); and the law of the increase of money, where habits of thrift are so strong as they are in England, is, that it constantly tends to excess, which excess passes off periodically in some more or less delusive industrial excitement, in the progress of which it, for a time, and only for a time, disappears.
The working of this law was discerned and expressed as a law by Lord Overstone, in his well-known passage descriptive of the cycles of alternate commercial ex