Now pure deposits are loaned to banks. Therefore the pure deposits, if they are credit, are the credit of the depositors. If I exchange gold for notes at the Bank of England and deposit those notes with a bank, the bank has not created these notes and, therefore, has not created credit. And the legal tender notes are, as I have already said, no part of the structure of credit. The legal tender notes are loaned to borrowers, or exchanged for other people’s wealth, and in ordinary business transactions there is no credit when there is equal exchange. Credit comes in when there is no direct exchange, or when there is unequal exchange. No wonder the views on this complicated problem are irreconcilable. I may recall what Mr. A. C. Cole, a director of the Bank of England, said years ago, in an argument between him and Mr. Tritton, the President of the Institute of Bankers. “Now, I was very much surprised, on reading Mr. Tritton’s paper, to find him stating that the commonly accepted opinion that a bank can create credit is a pure fallacy. In my opinion, if a bank does not create credit, it cannot make a profit; in fact, it is by the creation of credit that banks earn their dividends. While I was surprised at the above-mentioned statement, I was equally surprised to find that a number of the bankers who took part in the discussion which followed his paper seemed to accept the statement as correct.” Banks seem to me to make their profits by taking a share of the profits earned by the merchants and tradesmen of this country. The profits of the country are divided, as we all know, amongst the capitalists, the retailers, and the working people. If there were no such division of profits industry would come to a standstill, and the community would starve. The producers share their profits with the consumers, and the consumers with the producers. It is impossible for one branch of the community to amass all the profits and the other branches to have none. The banks form one branch of the community that takes a due share of the aggregate profits of the community. The banker says _de facto_ to the merchant who borrows from him: “I will help you to make your capital liquid so that you can continually earn profits by the use of it, if you will remunerate me by giving me a portion of your profits.” The merchant readily agrees to the bargain, knowing that it would be a bad bargain for him if he did not earn with his mobile capital larger profits than he would hand over to the bank. If he makes ten per cent., say, he gives the bank two or three per cent. If the bank made no charge for its services, the merchant would then have the greater part of the ten per cent. The merchant is the middleman between the capitalist--that is, the banker--and the consumer, and the middleman gets the profits of the middleman. Unless the bank provided him with the capital he would be helpless.