CH. I 5 INDUSTRIAL & FINANCIAL CIRCULATIONS 253

M 3 is falling, and “ bears ” are closing their positionson a rising market.

(ii.) A “ bull ” market with a division of opinion,i.e. security-prices rising more than sufficiently so thatM 3 is rising, and “ bears ” are increasing their positionson a rising market.

(iii.) A “ bear ” market with a division of opinion,i.e. security-prices falling more than sufficiently sothat M 3 is falling, and “bears” are closing their posi-tions on a falling market.

(iv.) A “ bear ” market with a consensus of opinion,i.e. security-prices falling insufficiently so that M 3 isrising, and “ bears ” are increasing their positions ona falling market.

Since an increase in the Savings-deposits, notbalanced by an increase in the total assets of the Banks of an amount equal to this increase, will diminish theamount of money available for the Industrial Circula-tion, it follows that, failing compensatory action bythe Banking System , speculations of type (i.) and type(iii.) both have the same effect on Industry as anincrease in the supply of money, whilst those oftype (ii.) and type (iv.) both have the same effect asa decrease in the supply of money.

On the other hand, when security-prices are rising,this is likely—in general but not necessarily—to stimu-late a rise in P', the price-level of new investment,and when security-prices are falling, the opposite islikely to be the case. Accordingly speculations oftype (i.) tend to reduce the purchasing power of moneyon both headings, since by increasing the supply ofmoney for the Industrial Circulation they allow in-creased investment, and by raising P' they increasethe attractiveness of investment. Similarly, those oftype (iv.) tend to raise the purchasing power of moneyon both headings. But those of types (ii.) and (iii.)pull in opposite directions ; type (ii.), for instance,