The circulating library flourished in the later eighteenth century as the reading public of fiction, in particular, exploded. Remember that the paperback is a twentieth-century invention and that public lending libraries exist but not on the scale (and easy of access) that we know today. Several of our texts have refered to the triple-decker (three volume) format in which many books appeared; not surprisingly, the more volumes the more expensive the book. To buy a copy of a triple-decker outright might cost--in modern terms--somewhere between $70 and $100, depending on how you estimate inflation. Not surprisingly, paying (or subscribing) to a lending or circulating library proved a better option for most readers. It is important to note that the lending library emerges alongside Gothic fiction in the 1790s: the institution enables the spread of such works (making them broadly availble to the public) and profits considerably from their popularity.
Follow this link for a few choice words on Jane Austen and the circulating library:
http://janeaustensworld.wordpress.com/2010/08/30/the-circulating-library-in-regency-times/
A few words on the most successful of all 19th-c circulating libraries, Mudie's:
http://www.victorianweb.org/economics/mudie.html
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