The war and our financial fabric

Treatises innumerable have been written about money. Famous and non-famous political economists have attempted a definition of money. These definitions have been divergent, and...

What is the money that is bought and sold in the money market? Who are the merchants there? Who are the middlemen? Who are the sellers and buyers? What sort of a place is this m...

A simple illustration has been given of how we entrust our money with a bank and how a bank employs it. Let us in our next step analyse a typical balance sheet of a big bank, fo...

Credit, which banks are said to create, has several connotations. It has a social, an ethical, and a financial connotation, and it is necessary to examine awhile these connotati...

If it is indisputable, therefore, that the confidence of the individual, and therefore the confidence of the nation, is based in the soundness of banking, we must see if that co...

In our loose and indefinite way--as a result, maybe, of our defective vision--we talk of a vast superstructure of credit erected on a tiny gold basis. We gaze upon this mighty f...

The loanable fund in Lombard Street is said to be the totality of the deposits in the possession of the joint stock and other banks, plus the deposits in the Bank of England. We...

This is because of the character of legal tender currency, and a legal tender currency, however desirable and however great its merits, must necessarily have its shortcomings in...

What I call the Central loanable fund is the fund in what financial journalists call the Central Institution. This is not to be regarded as an institution standing in the centre...

The Central Reserve is the reserve held by the Bank of England. Not only is it the Central Reserve, but it must be regarded as the National Reserve, the sole reserve. This is re...

In speaking of the fiduciary currency of the country I will confine myself for the moment to that portion of it represented by Bank of England notes. The war-emergency Treasury...

Having proceeded so far we may now be able to test, perhaps, with more sureness the kind of wealth a bank does transform, and the kind of wealth it should transform. On the char...

One of the great subjects of controversy, on which it seems impossible to arrive at a common agreement, is whether the so-called loanable fund is elastic or inelastic. It is adm...

If what is called the loanable fund were perfectly elastic and “promptly adjusted itself to the demands upon it,” how is it that the value of money, called the rate of interest,...

It will be clear, I think, from the analyses in the foregoing chapters that banks have not only a delicate, but a most difficult task to perform. So difficult is the task that i...

It has been said, and said truly, that the law can exercise much restraint upon the freedom of the individual. It is powerless, however, to restrain madness. Yet it is precisely...

If gold reserves alone are to be the test of sound banking, and if gold reserves alone are to save banks in the hour of crisis or panic, then the obligations of banks towards th...

It may now pertinently be asked: Is it possible to keep high gold reserves in the joint stock banks, taking them as a unit, and simultaneously a high reserve in the Bank of Engl...

If there must be in the country, for the benefit of the country’s trade and commerce, for ensuring its prosperity, a loanable fund, why should no provision be made for what I ca...

I have endeavoured to argue that our banking system and a purely credit system are not identical. A perfect credit system would be based entirely on faith, or profound belief in...

Confidence, I have said, is, in the production of economic wealth, the vitalizing element. In economics it plays the part that faith plays in religion. Confidence and credit hav...

We are now in a position to look more closely into the wealth of the banks and at their position in the early days of the crisis, and to regard them from what I call the standpo...

In writing this work I need hardly say--for it will be apparent to all who have laboured through it--that I have had two main purposes in view. I have written it as a guide to t...