178 ECONOMIC PRINCIPLES

Inasmuch as the actual reserves of some banks exceed at
times, if not habitually, the amounts necessary to guarantee
their operations, they partake in part of the character of
private hoards. Thus the large accumulations of some
European national banks exceed what would amply
guarantee all their business, and may probably be looked on
as in reality, so far as the bulk of such excess is concerned,
simply military hoards, which the banks accumulate for the
convenience of the Governments of the countries concerned.
How much is the one, how much the other, cannot easily be
stated, since no general rule can be laid down as to what is,
and what is not, an adequate business reserve. The amount
required for this purpose must be estimated by those in
contact with the local circumstances, and in accordance with
their changes.
The accumulation of money in banks at dull times
affords another illustration of the keeping of reserves beyond
what would suffice for amply securing solvency. In part
the banks, at such times, take charge of money no longer
needed for circulation, on account of the diminished volume
of transactions. This circumstance does not imply that
increased supplies of money would not be able to be put into
circulation, though it does imply that the means by which
such supplies enter circulation are not such as can be called
into operation promptly, at any moment. The revival
of business which, in due time, succeeds a period of dull
trade, is partly stimulated by the increase of accumulations
of money beyond what can find monetary use in the dull
state of business. In strictness, such accumulations should
be said to be potential money rather than actual money,
though no physical distinction exist between the part
of the reserve which is doing monetary work as a
necessary reserve, and that which is in excess of such
necessary amount and is merely hoarded till it can find
a use.
Perhaps the recognition of the function of a store of value
would enable such cases to be treated without that apparent
artificiality which attaches to the division of a homogeneous
mass into two parts of which the one is, the other is not,