These deposits, then, are not strictly a loanable fund, otherwise the more they grew the greater would be the fund. In fact, the fund would be inexhaustible, increased and not diminished by the demands made upon it. We know they are increased by loans. Therefore the best means of increasing the fund would be by increasing the loans, and we could then witness money actually piling up mountain-high in our midst. This could put all fables of money-making by magic into the shade. Instead, however, of increasing the fund by lending as fast as physical resources will permit, the banks adopt the contrary policy. They stop making loans and simultaneously diminish the loans they have already made. Whatever views the public may hold, bankers labour under no delusions as to the real nature of the loan-fund. They know well enough they do not lend out of that fund at all, for if they lent out of it they would inordinately increase it by lending and so make more profit. It helps to shed more light on the nature of the deposits. Why are banks anxious to diminish the deposits in times of anxiety and apprehension? That is to say, the loan deposits, and not the pure deposits? Why are they anxious to diminish the aggregate of the so-called money fund? They wish to take away from their borrowers their power to withdraw, even temporarily, gold. If they take this power from them the banks know they will be in a far stronger position, even should the deposits diminish by fifty per cent. In their own language bankers say: “We must strengthen our cash position.” This means, then, that the cash fund and the deposit fund are not one and the same thing. The cash fund is strengthened by weakening the deposit fund. Cash grows as the loanable fund falls. If the loan deposits are thereby greatly diminished until the deposits are mainly what I have called pure deposits, it shows how the banks safeguard themselves when they think danger is coming. Their assets change. Gold takes the place of other wealth, and the banks are able the better to meet a run on the part of their depositors. They have automatically met the danger from the presence of the loan-deposits, and now they have only to face the danger from the pure deposits. They have fortified themselves for this by differentiating between the characters of their deposits, which in their aggregate are misleadingly called the loan fund of Lombard Street. The gold is the real lending fund.