In this way the banks became on all sides lenders of money to persons without security, and it became exceedingly important to any trader whether he could or could not get the banks to back him up in this fashion. The thing went farther. A man might have no capital at all, but a good idea. He might have discovered, for instance, a mine of copper-ore in some colony. He would come to the banks and say: “I have not the money to pay labourers to dig for this ore, but if you will advance the money to me and go shares in the profit the ore can be got out.” The banks would look at the “proposition,” as it is called, and if they thought it a good thing they would advance the money and share the subsequent profits with the borrower. All over the world the banks were thus “financing,” as it is called, every kind of enterprise. The system went farther still--and here it is that we come upon the modern trouble. Hitherto when they gave an over-draft to anybody, whether with or without security, or even when they gave a loan to a man who had no capital at all, and “backed” him in his enterprise which they thought likely to prove successful, they had used the money which other clients had left with them. But it occurred to the banks after a certain time that there was no need to use anybody else’s money at all. _They could themselves offer to honour the cheques of the man to whom they lent the money, without having any real money with which to pay those cheques._ Why was this? It was because, with the growth of the banking system, hardly any of the payments were, by this time, actually made in gold. Real money only passed in a very small degree. Of the myriad transactions all but a tiny proportion were “_instruments of credit_.” Just as a bank-note issued by the Bank of England is a promise to pay in gold, and yet a promise to pay a million pounds in bank-notes could always be made with much less than a million real pounds to redeem the notes so _the banks could create paper money, or its equivalent, in the form of over-drafts_. If they said to a man who had _no_ money deposited with them: “We will honour your cheques up to £1,000” _what they were really doing was increasing the paper currency to the extent of £1,000_. They were issuing promises to pay, exactly like bank-notes, knowing that of the total amount out only a small proportion at any moment would be required in real money.