One of the great subjects of controversy, on which it seems impossible to arrive at a common agreement, is whether the so-called loanable fund is elastic or inelastic. It is admitted, I think, in a general sense that in order best to help the trade of the country, it should be elastic, that is, should be able to meet all the needs upon it. This certainly should be the province of banking, and, what is more, it should be the province of Governments to provide sufficient money to meet the expansion of trade. It would be a foolish policy to shackle and bind trade, to arrest its growth, by restricting facilities for its growth. It would be like a foolish parent binding the limbs of his child to stay their natural growth and to keep him a dwarf and a freak, unable to do the work of a mature man. As the banking system practically performs the duties which in its non-existence would have to be performed by a Government, then it devolves upon this system to feed and succour commerce and to give it every facility and every means for expansion. When I said in Chapter XI that the transforming machinery should work with a pace equalling the creation of wealth, it was tantamount to the view expressed by others that the loanable fund of Lombard Street should be elastic. Instead of calling it a loanable fund, a vast pool of money into which borrowers dip, a pool always filled by a perennial spring, I prefer to call it machinery for transforming fixed wealth into mobile capital, or currency. When I take my wealth to a bank I take it there because I cannot use it fruitfully as capital in its fixed form. As I wish to use it fruitfully the bank temporarily changes it into money for me, and in this new shape I can make full use of it. Now, all who have practical experience of the banking system know there are times when the banks refuse to perform this office for wealth possessors. The machinery comes to a temporary stop. When we inquire why it has stopped, we learn that it is because the proportion of the reserve to the liabilities has fallen to too low a point. Others would say, it is because the pool had been drained too far, was being dried up, and that time must be given for money to flow in again. If we liken it to a pool we find that instead of it having been drained, it is really over-filled, and that what the banks desire to do is to stop the overflow and to let the water sink. The banks say they have lent too much, and must now lend no more for awhile; so they not only stop lending, but call in loans, which again shows that the fund is overflowing; it must be allowed to subside.