Others argue that this is a matter of quite secondary and even third-rate importance. They contend that the matter of supreme and vital importance is the amount of gold a bank holds in proportion to its liabilities in deposits. Should there be some differentiation here? Should it be the amount of gold held in proportion to its pure deposits, and not in proportion to its aggregation of pure deposits and loan deposits? For the loans, as we have seen, are automatically redeemable. If, say, a bank habitually holds gold to the proportion of 15 per cent. of its aggregate deposits, and if half these deposits are loans, then the gold Will be equal to 30 per cent. of its pure deposits, a proportion much higher than the figure advocated by those who agitate seriously and zealously for higher gold reserves. We have seen many small banks go under in recent years. This was in some cases because they lent their money on what I will call bad wealth. In other words, because they gambled and speculated with the money of their depositors. Here we have some evidence that the general public are unable to discriminate between sound and unsound banking. This may be deplorable ignorance, but it is not culpable ignorance. It is to a great degree inevitable ignorance. The matter is dismissed by the quidnuncs saying that fools deserve their misfortune, they should have placed their money in sound banks. We should not so readily denounce them as fools. The Government is not without its most serious responsibility in the matter. It should not allow such money-lending establishments to describe themselves as banks. The Government has a moral duty to protect the public, and it would not be at all difficult to take steps to this end. It should allow only those establishments to call themselves banks that are conducted upon sound banking principles. Joint stock banks have a legal safeguard. Though they are under compulsion to repay deposits, they are under no legal compulsion to repay them in gold. They must repay them in legal tender, and they can fulfil their legal obligations by paying out in legal tender notes. These, of course, are Bank of England notes and now the new Treasury emergency notes. This being so it is immaterial, or it should be immaterial, whether the reserve of a bank consists of gold or legal tender notes. If it can redeem its liabilities in notes and has sufficient notes for its purpose, it can consider itself safe and can securely stand in a crisis. The notes can, of course, be taken to the Bank of England and be exchanged there for gold; but this is immaterial to a bank which has successfully met the peril of a run. Soundness of banking consists in the soundness of the wealth that constitutes a bank’s assets. We know there are infinite degrees and categories of wealth. But it is easily possible to discriminate and know exactly which is the highest class of wealth in the country.