BORROWERS AND LENDERS 
85 
total of media of payment to the level indicated by international 
conditions, those who were thus favored finally relinquish, by 
yielding them up for exportation, the monetary units they have 
acquired, the old distribution of purchasing power is not restored. 
Nor, of course, is it in fact restored. Without pursuing the sub- 
ject into too treacherous realms of abstraction, we may safely say 
that it is the community at large, as consumer of the imported 
articles (or, perhaps, of the products of imported capital goods), 
which yields a claim upon the nation’s goods, by purchasing some 
foreign goods instead.! 
Thus banks do more than simply transfer to their borrowers 
the “claim checks” upon the community’s wealth of which de- 
positors do not for the moment care to make use. The theory that 
such transfers exhaust the significance of their lending operations 
is illogical in yet another respect. It resorts to the quantity 
theory to prove that any attempt on the part of banks to lend 
more monetary units than they have actually received from de- 
positors and shareholders, can result but in depreciation of the 
monetary standard. Yet precisely the same line of reasoning 
would indicate that no advantage is gained from the service of 
banks in intervening between borrowers and lenders to prevent 
the spare cash of the latter from lying idle. Exception must be 
made, of course, of the benefit derived from the facts that media 
of payment are costly and that more effective use of the supply 
already in existence renders a smaller quantity of them necessary. 
But most of the writers had in mind, not the economy of money, 
but its more constant and effective use. From this point of view, 
adding to the money in active circulation those funds which, 
but for banking, would lie idle, is essentially the same in its in- 
fluence as increasing the currency through bank-note expansion. 
With reference to the activities of banks as intermediaries be- 
tween borrowers and lenders, media of payment were commonly 
regarded as real capital in a sense in which the same writers did 
not so regard them when referring to the increase of their quan- 
tity through the expansion of bank credit. 
t For some further discussion, see Chapter X. 
! John R. Hurd stated that one of the evils resulting from the depreciation of 
bank notes that are distant from their place of issue is that they are frequently still