lO 



W. G. Langzvortky Taylor 



and is illus- 

 trated by 

 ambiguous use 

 of word 

 " money." 



Bank 

 " deposit " is 

 another am- 

 biguous term, 

 leading to the 

 idea that a 

 bank loans 

 out money 

 " again." 



delivery ; and in that way he made loans, but these operations 

 were looked upon purely from the materialistic side. The notes 

 and deposits that he learned to give in making his loans were 

 soon also called " money." The financial world, even up to the 

 top, has always been obsessed by the tyranny of this verbal con- 

 fusion between the bailment of material money in a case of hire, 

 analogous to the hiring of a horse at a livery stable, and the 

 making of promises for future delivery of money. It has not 

 perceived that the latter were not meant to be carried out literally, 

 but were simply used by business men as a guaranty for the 

 fulfilment of business contracts. Money theories have kept as 

 closely as they could along popular, materialistic lines, and have 

 treated notes and deposits as money, and looked upon their value 

 as subject to the same laws as those to which a commodity is 

 subject. Among the inflationists, the fallacy persists in a crude 

 form, " that money is what money does," that is to say, if the 

 circulating function is established, the standard of value function 

 will take care of itself. And the further fallacy persists that a 

 bank " deposit " is practically money, because it is supposed to 

 represent money deposited in a bank, whereas the literal deposit 

 of money is but a survival of an ancient and superseded business, 

 out of which banking indeed sprung. However, so far as ap- 

 plication today is concerned, the notion is as fallacious as is the 

 other that a laboring man is a slave because, in ancient times, 

 labor was done by slaves, and because it may be historically true 

 that the laboring class is evolved from the servile. 



It is along this line of popular thought that everyday language 

 calls a bank loan a loan of "money," thereby assimilating it, as 

 above remarked, to the hiring of a livery team. The banker is 

 popularly supposed to be a dealer who takes persons' money on 

 deposit, that is, for safe-keeping, and loans it out again^ (lay 



' " The commercial portfolio of the credit establishments is in fact 

 nothing but the money of the public temporarily turned into drafts." Lysis, 

 Contre I'oUgarchie financiere en France, p. 204. Excellent illustration of 

 the capacity of emotional writers to put the cart before the horse. "In 

 fact" it is the discount of the banks which furnishes money to the public. 

 Correcter view is taken by Testis, Le role des etablissements de credit en 



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