CREDIT--BANK ASSETS AND BANK RESERVES Traditional view that liquid commercial loans normal and dominant type of bank asset disproved; cannot exceed 11-1/2 per cent of assets of American banks; analysis of bank assets: "other loans and discounts"; stock collateral loans; loans on "other collateral security"; stocks and bonds held by banks; classes of banks; various combinations; excluding real estate loans, more than half of credit extended by State and national banks and trust companies is to stock market; rapid development of stock collateral loans: New York; Europe 498-512 Activity of different types of loans: banking assets get liquidity chiefly from stock market, and from produce speculators 512-516 Credit extended to Wall Street not at expense of ordinary commerce; country banks and Wall Street 516-518 Federal Reserve Banks should rediscount stock collateral loans; "Money Trust" a trust in financing corporations, not ordinary commerce; panics and Federal Reserve System 520 Quantity theory, putting all exchanges on a par, grotesque: volume of trade and prices in the stock market 520-523 Direct and indirect financing of corporations by banks; "margin dealer" as "banker" 523-526 Adam Smith's view of banker's functions, and of safe bank loans 526 Correct on basis of facts of his day, but corporate organization and organized stock market have made smelting house as liquid as consumers' goods 527 Division of labor in banking: America _vs._ Germany 527-528 Agriculture in money market 528-529 Reserve problem: special case of problem of liquid assets; many flexible substitutes for cash 529-532 Causal relation runs from deposits to reserves; gold production and reserve-ratio 532-535 No static law or "normal ratio" possible; reserve function entirely dynamic function; reserve not needed in "static state"; illustrated by London money market; "ideal credit economy" 536-544 _PART IV. THE RECONCILIATION OF STATICS AND DYNAMICS_ CHAPTER XXV THE RECONCILIATION OF STATICS AND DYNAMICS Theory of money as focus of general economic theory, exhibiting interdependence of doctrines; basis of further unification of statics and dynamics in higher synthesis 547-548