BANKS AND PRICES 
81 
situation of the world would be different. We must 
beware of any assumption that the amount of the 
economy is indicated by the magnitude of the aggre- 
gate of bank deposits. Even if the aggregate of 
bank deposits excluded all double reckonings by 
which it may be swelled beyond the net amount 
due to persons who have credit balances, it would 
probably be greatly in excess of the amount which 
those persons would hold in currency if no banking 
facilities were available. If the facility were not 
there, each of us would set about devising means for 
making our incomings coincide more nearly with our 
outgoings rather than keep in the house sums of 
currency as large as our present bank balances. 
A still worse error, which has, unfortunately, been 
countenanced by many high monetary authorities in 
recent years, is to suppose that the aggregate of 
deposits is a kind of money (sometimes it is called 
‘“ bank-money "’) which should be added to the actual 
stock of coin and notes existing at any moment. 
The individual, no doubt, finds ‘money in the 
bank ’ much the same as ‘‘ cash in the house,” but 
the aggregate of all the individuals’ balances at their 
banks is only an amount which the bankers are 
liable to pay, but which they could not possibly pay 
in cash all at one moment. A liability to pay cash 
is certainly not cash : both debtors and creditors are 
painfully aware of the fact. When additional 
currency is put on the market by some one who has 
the power of issuing it, prices are raised, because the 
issuer's offer of money in exchange for goods and 
services Is additional, the power of nobody else to 
spend money having been redu~ed. When, on the 
other hand, a person increases his balance at his 
bank he increases the bank’s power to len? only at 
most by the amount which he forgoes, s- iliat the 
aggregate money-spending is not increesz: