of the Joint Stock Banks, whose reserves are largely secret. The statement _supra_ quoted from Keynes, together with the testimony of European bankers, may be considered in connection with this point, also, as to the factors determining the reserve policies of the great European banks. The extent to which custom really binds is doubtful. (c) _Direct regulation by law_, peculiar to the United States. Here again, a minimum, rather than a fixed ratio, is indicated. Some _limitation_ on credit expansion by the banks is caused by this at times, but Fisher's argument would require vastly more. (d) _The interaction in the use of deposits, notes, and other constituents in the circulating medium._ The point involved here is that different kinds of business call for different kind of media. Small retail business is not done with hundred dollar bills, nor are stocks and bonds bought with pennies. Limiting the size of bank-notes to five pounds in England compels the use of a large amount of gold for smaller transactions, and keeps a larger amount of gold in use than would otherwise be the case. Expanding business draws cash from the banks for circulation, trenching on reserves. That Professor Taussig has a point here is not to be doubted, but how closely it limits the expansion of credit will depend on the degree to which different kinds of media of exchange really _are_ thus specialized. In a country like the United States, where checks may be used for virtually any transaction of over a dollar, and where small change for less than a dollar will be increased by the Government to meet the demands of trade, the point would not seem to involve a practically serious limitation. Finally, Professor Taussig recognizes a coefficient with the quantity of specie in the _temper of the business community_. Whether or not deposits are to expand, depends not only on reserves, but also on the attitude of borrowers. Taussig concludes: "Thus there is only a rough and uncertain correspondence of bank expansion with bank reserves; much play for ups and downs which have no close relation to the amount of cash in bank vaults, _and still less direct relation to the amount of money afloat in the community at large_. Where bank media, whether in the form of deposits or notes, are an important part of total purchasing power, the connection between general prices and quantity of 'money' is irregular and uncertain." (Italics mine.)