This is why, the aggregate being the same, or even less, the potential loanable fund is greater in inactive than in active times of trade. The gold reserves increase and the proportion of the reserves to the aggregate deposits rises. When this proportion rises, the banks say they can afford to let it fall, and therefore they can liquefy more wealth if there were more wealth to liquefy. But there is less wealth to liquefy, and therefore money is now said to be abundant and cheap. The banks are willing to take less interest, that is to say, a smaller share of the profits earned by liquefied capital. But depositors also have to take a smaller share of these profits. The banks divide their smaller share of the profits with the pure depositors, and, therefore, can give only a smaller rate of interest on the deposits. Dissatisfied with this small rate of interest, depositors seek for other channels of use, other forms of investment, and when they find these other channels, they withdraw their deposits and reconvert them into fixed or frozen capital. They may speculate with them in mining or rubber shares, or invest them in Consols or War Loans. When this is done, gold is automatically withdrawn from the banks and the proportion may drop. Should the proportion drop, banks can lend less, and the potential resources for liquefying capital becoming less, they can begin to charge more for these services. When the pure deposits increase the reserve of gold automatically increases. Therefore, though the risks of the banks increase, because the liabilities on demand increase, so the power to meet those risks automatically increases. This being so, the necessity for increasing gold reserves is less apparent; for they increase automatically. When the pure deposits decrease and the loan deposits increase the proportion falls, but it falls at a time when the risks are lessened if set against the pure deposits as distinct from the loans owing to the bank. It will be seen, therefore, owing to the constantly fluctuating character of a bank’s liabilities, or risks, it is impossible to maintain a fixed, undeviating reserve, whether it be a high reserve or a low reserve. And we know that this impossibility is demonstrated every day in Lombard Street. It is demonstrated at the end of each month, when the banks cease lending, and when they compel their loan depositors to pay in their loans. This is proof that a proportion of the deposits are loans to the bank. As these loan deposits thereby contract, banks cannot compel the pure depositors to withdraw their deposits, therefore the proportion of the gold reserve to the _whole_ rises, and the wish of those who clamour for high reserves is fulfilled.