We also see at times, when the fund is overflowing, that banks are so eager to lend, that money is said to be a glut on the market and exceedingly cheap. It is offered at nominal rates of interest. Why, then, are there times when banks are eager to lend when the fund is supposed to be overflowing, and times when, with an overflowing fund, they refuse to lend? Why is it that at times when the fund is low they are willing to lend, and why at other times when the fund is low they are unwilling to lend? These phenomena prove, I think, that it is not a fund of money in the real sense of the word. We can never tell merely by looking at the aggregate deposits of the banks whether they are able to lend at any given moment or not. We can easily delude ourselves by looking at the bulk of that fund. What governs what we may call the transforming capacity of banks is the quantity of gold they individually possess and general financial and international conditions. In times of uncertainty and apprehension, no matter from what circumstances or events these arise, banks may refuse to lend, no matter what the condition of the so-called loan fund may be. So far from lending when their deposits appear to be very high, they are anxious to diminish these deposits and gather in gold. It follows that the more gold they hoard the less becomes the loanable fund. Therefore the more legal tender they accumulate at these times, the less money they lend. Which seems anomalous and paradoxical. The more money banks have at certain times the less they have. When the hour of nervousness passes they begin to lend again. The money in the shape of gold diminishes in proportionate quantity, therefore the loanable fund of Lombard Street apparently increases as gold apparently diminishes. This fund is, at times, like a spring in a desert. The thirsty traveller sees it shimmering in the distance and hurries towards it in profound gratitude, thankful that his thirst is to be slaked and his sufferings are to be relieved at last. But just as he is about to put his lips to the tempting waters, a voice of warning stops him. He is not to drink, for the waters are too precious and must be preserved. Not a drop can be spared. So he does not slake his thirst, and perhaps afterwards succumbs to the torture he is suffering. The spring is there, but he is forbidden to drink! In the banks the source of money is there, but the gold must be preserved, and the community must depart unsatisfied, no matter what the consequences may be. The banks will not lend because they must keep and increase, not their deposits, their so-called loanable fund, but their gold.