It doesn’t do it, and it couldn’t do it. No such miracle could be done. This £200 is multiplied greatly. The bank can make that £200 into £1000 or £2000, and actually lend £2000. If I went one day to ask for the £200, the bank might tell me it could let me have only £10 or £20, and if I insisted on having the £200, it might have to close its doors and go into the bankruptcy court. How is this £200 made into a fund of £2000? Do the sovereigns actually multiply in the bank’s coffers? Is there a bank fairy that can make sovereigns out of nothing? No. There is no bank fairy, and no sovereigns are multiplied. Yet the bank says it has £2000 to lend, and lends £2000. That which it lends over and above the original sum of £200 is said to be the bank’s credit. The bank is said, in the terminology of the money market, to create credit to this extent. It keeps, say, ten or twenty sovereigns in its till to provide for the emergencies of a sudden demand, and lends the rest of the gold and something beyond it. This something else is called credit. Some people say it is to all intents and purposes actually money; others declare it is not. And in discussions on this subject a lot of anger has been wasted and more vanity wounded. Anyway, whether we call it money or whether we call it credit, the fact is indisputable that this is the tangible or intangible something with which banks benefit the trade and commerce of the nation, and help us all to become wealthier. This is the so-called money of Lombard Street. They risk, however, grave dangers, and the community risks grave dangers in setting up this machinery to facilitate and smooth national and international commercial dealings. These dangers will be unfolded gradually in subsequent chapters. Already it has been hinted where one danger lies. If of that £200 I place £100 on deposit and £100 on current account at the bank, the bank has still a total of 200 sovereigns, and can multiply this sum into £1000 or £2000. But it pays interest then only on half the sum--the sum on deposit. On the other half it pays no interest, but it can lend the whole. If I desire to withdraw the £200, I can by law draw half on demand. The bank, however, can insist on some days’ notice before allowing me to withdraw the amount on deposit. But if I insisted on having £100 and the bank had only £20 and could not get the other £80 quickly, it might have to close its doors. This would be a run on the bank that might bring it to ruin. The bank hopes, of course, that I shall not demand my money in a lump sum at a moment’s notice; that there will be no run. It also hopes that if I do demand it, it will at once demand the return of its loan, or part of its loan, from those who have borrowed from it, and thereby get the two hundred sovereigns it owes to me. It will then be in a position of having still on loan money, or credit, based apparently on no gold.