THE NATURE OF BANK DEPOSITS 123

money left with the bank subject to draft by checks involves in
itself an act of creation. The man who deposited the money has
not thereby lessened the amount of purchasing power, or media
of payment, at his immediate disposal. He has simply converted
the media of payment into another form, the possession of which
makes him no less effective a factor in the market. He has loaned
the bank nothing; he has postponed neither his right, nor, probably,
 his intention to spend. The fact that he is willing to accept
a book credit at the bank in lieu of lawful money, in the confidence
that he can make equal use of either, is another matter altogether:
it merely explains why it is that the cash deposit enables the bank
to make a loan that duplicates the original depositor’s undiminished
 command of media of payment. The significant point is
that, to the extent that the people of a community are willing to
keep their current purchasing power in the form of balances in
their check accounts, even the individual bank is able to cause
two units of media of payment, each as active as legal tender
money itself would be, to exist where there was one before. We
might, to be sure, regard the check as merely transferring by
proxy the primary deposit which made the created deposit possible,
 and insist that simply an increase in the velocity of circulation
of the original deposit is involved. But there is no more reason to
do this than there is to regard bank notes as mere proxies that
accelerate the circulation of other forms of cash, instead of treating
 them as being themselves media of payment.
Nor is it a helpful point of view to contend that, since the initial
depositor could, by pressing his demand claim upon the bank,
destroy the latter’s ability to continue the new loan, the bank has
borrowed from this man that which it lends to another. For, aside
from the fact that the bank has already given an equivalent for
the cash received, it is with the deposit in the generic sense that
we are concerned — with the sum totals of deposits and of cash
reserves rather than with specific ones. If a depositor withdraws
cash that is soon replaced by another patron, no essential change
has been made with reference to the lending ability of the bank.
To be sure, the bank is able to make loans only because its depositors
 as a group refrain from withdrawing the reserves upon