If it is not based on gold, it is based, however, on some kind of wealth. Those who have borrowed from the bank leave securities, Consols, say, as collateral for the loan. If they do not repay the loan, the bank has the securities, which it can sell in the market for cash. If it has no gold, it has something it can exchange for gold. It now becomes a little clearer that what the bank has actually done is not to create £1800 out of nothing, but to liquefy £1800 of the nation’s wealth. Is this process of liquefaction granting credit or creating currency? It looks more like a creation of currency than a creation of credit. If the bank lent without security, then it could with greater logic and reason be called a creation of credit. But it does not so lend. If gold is wealth and Consols are wealth, then it lends wealth, whether it lends gold or Consols. Therefore, what the banks apparently do is to lend one man’s wealth to another man, taking a commission from the borrower for the services rendered. If Consols were made legal tender, like sovereigns, we should not say that lending Consols was creating credit. Selling Consols in the market is not creating credit. The selling of Consols to a banker for a consideration is not different essentially from selling them in the market. The borrower virtually sells them to the banker, and so long as the banker holds them he is not creating credit. If a man hands over to me his mansion for a loan, that mansion is mine till he repays the loan. He has sold it to me temporarily. By lending him the money I possess I do not lend him credit. I may part with all my money, but I have the mansion, which I can sell for money. If I cannot sell it, I may lose much. But that will depend upon my wisdom and foresight. I, at least, have something of some value in the shape of the mansion. It is so with banks. Their security depends upon the nature of the wealth they liquefy. If it be the best wealth their security is sounder than if it be the worst wealth. It is not necessary, and it should certainly never be necessary, in the real interests of the community, to liquefy only one kind of wealth. Banking security should rest, therefore, chiefly upon the highest wealth of the nation and not solely, as some contend, upon that limited species called legal tender. This aspect of the problem will be elaborated in later chapters. Let us take another look at our modest current account. We draw cheques against this current account. We pay our income tax, our rent, our tradesmen, with these cheques. The cheques are accepted readily and unquestionably by all. Why? Because the cheques, the paper, have intrinsic value? No. But because they have trust in our _best_ banks and trust in our possession of the money in these banks. A cheque on the _worst_ banks would not be so readily accepted.