The Collaborative International Dictionary of English v.0.48:

Circulate \Cir"cu*late\, v. i. [imp. & p. p. Circulated; p.
   pr. & vb. n. Circulating.] [L. circulatus, p. p. of
   circulare, v. t., to surround, make round, circulari, v. i.,
   to gather into a circle. See Circle.]
   [1913 Webster]
   1. To move in a circle or circuitously; to move round and
      return to the same point; as, the blood circulates in the
      body. --Boyle.
      [1913 Webster]

   2. To pass from place to place, from person to person, or
      from hand to hand; to be diffused; as, money circulates; a
      story circulates.
      [1913 Webster]

   Circulating decimal. See Decimal.

   Circulating library, a library whose books are loaned to
      the public, usually at certain fixed rates.

   Circulating medium. See Medium.
      [1913 Webster]

WordNet (r) 3.0 (2006):

circulating library
    n 1: library that provides books for use outside the building
         [syn: lending library, circulating library]