Lombard Street is an organism, essential to the vitality, health, and welfare of the body politic, as the heart and the lungs are necessary to the complete life-preservation of the human body. The nation could, of course, live without Lombard Street. But without it, it would be a corpse-like, moribund life in comparison with the vitality and energy imparted to it by this economic organism. In Lombard Street money is made. What kind of money? Some strongly insist that no money is made, but only what is called credit. This, too, is a highly controversial subject, on which divergent views are held and are likely to be held. Instead of hoarding our money, placing our golden sovereigns in bags and old tea-pots, and burying them in our cellars, we have reached that stage in our economic development when we place them in the keeping of banks. We have several purposes in view in doing this. We place money in the keeping of the banks for absolute safety; we place it there for convenience; and we place it there to earn what we call interest on it. Hoarding, we are intelligent enough to know, would be unsafe, inconvenient, and unprofitable. Yet we really obey the instinct of hoarding when we place our savings and surplus money in the keeping of banks. But we have a secondary motive in this action which we will call greed or avarice. We desire our hoards to be fruitful. It is like placing seed in the ground from which to gather future harvests. But the banks do not hoard our money. If we think they do we labour under a delusion. They employ it in various ways. They lend it to a variety of borrowers at interest, they invest it in all kinds of securities and property, and earn interest on it by this varied employment. Out of this interest they maintain their vast and expensive establishments, pay the salaries to their servants, and pay the interest on the money we, as individuals, place in their keeping. The position might be illustrated in a simple way. I have saved up two hundred pounds. These two hundred sovereigns I place on deposit at the bank, and am allowed, say, 2½ per cent. interest. I prefer the small interest because I believe the principal will be safe always, safer than if invested in any security or property. Moreover, I know that I can draw this money out whenever I please, but were it locked up in some security or mortgage, I should not feel sure of getting possession of it again in a moment of need. But the bank, lawfully, must return me intact the two hundred sovereigns when I ask for it. Now the bank re-lends this £200 at, say, 4 per cent. interest, making a profit of 1½ per cent. interest. Out of this interest it must pay salaries, rent, and all working expenses. How can it do it?