OH. 15 INDUSTRIAL & FINANCIAL CIRCULATIONS 251

is unchanged. And if security-prices go still higherthan this, then the volume of savings-deposits willbe actually increased. But (apart from compensatingvariations in the requirements of the IndustrialCirculation) the volume of savings-deposits can onlybe maintained or increased in face of an increase ofbullish sentiment, if the banking system directlybrings about the rise in security-prices by itselfbuying securities or if it takes advantage of thefact that differences of opinion exist between differentsections of the public so that, if one section is temptedby easy credit to borrow for the purpose of buyingsecurities speculatively, security-prices can be raisedto a level at which another section of the public willprefer savings-deposits. Thus the actual level ofsecurity-prices is, as we have seen in Chapter 10, theresultant of the degree of bullishness of opinion and ofthe behaviour of the banking system.

It follows that any abnormal fall in the Savings-deposits, accompanied by a rise of security-prices, willprobably indicate a consensus of opinion in favour ofsecurities as against cash due to a bullishness of senti-ment which is insufficiently offset by the rise insecurity-prices ; whilst an abnormal rise in the samecircumstances may indicate a difference of opinion asto the prospects of securities, the party on the “ bull ”tack in effect buying securities and borrowing moneyvia the banking system from the party on the “bear”tack ; such as appeared to exist on a large scale—togive an example—in the United States in 1928 and1929. Thus during the Wall Street boom of 1929attention was rightly paid to increases and decreasesin the volume of “ brokers’ loans ” ; for an increasemeant that the rise of security-prices had gone stillfurther beyond the point at which it would be justenough to offset the bullishness of average sentiment,in the sense that it had led to an increase in the“ bear ” position.