were deprived of all claims on the general wealth of the community. An idle man, with pockets filled with gold, is a burden on the community. He is no helper, no benefactor. So a nation, idle, with mighty safes filled with gold, will become stagnant if this gold is not scattered broadcast in the shape of capital that energizes the productive and consumptive capacity of man and the land. The value of gold will ever inhere in its wise use, not in its non-use. “It has been well said,” remarked Sir Felix Schuster, in his recent annual address, “that it is one of the paradoxes of finance, that at the moment when the world’s capital is being squandered in war the value of loanable capital in Lombard Street has actually depreciated.” Sir Felix meant, of course, that there was no great demand for capital, that it was greatly in excess of needs, that loans consequently were cheap, and that banks could hardly lend profitably. I see no paradox in this. If the creation of bank money is to be regulated by the supply of gold only, it is an orthodox consequence. Since the outbreak of the war the inflow of gold has been greater than ever experienced. This has given the banks power to lend more, to liquefy more wealth, because their reserves have increased, and the proportion of these to the liabilities has correspondingly risen. But though a great deal of wealth has come into existence, it must not be overlooked that a great portion of it is not the kind of wealth banks lend on. This was partly due to the closing of the Stock Exchange, the subsequent restrictions on business there, and the destruction of trade between the belligerent and other countries. Securities of a high class were scarce, and bills of exchange became scarce, and while many industries, notably the cotton industry, severely suffered, other industries, especially war-provisioning industries, became abnormally busy. There was deadlock for months in some of the foreign exchanges, especially the New York and Russian exchanges. While the kind of wealth on which banks lend fell off, the mines continued to produce gold, thus showing again how independent this output is of real wealth production. Had the gold mines also ceased working at the beginning of the war, have suspended operations for many months, we should not have seen, perhaps, loanable capital in Lombard Street so excessive and so depreciated as it was. Sir Felix saw a great danger in this great mass of money and its cheapness: the danger of its turning the exchanges against us. But this danger could have done no more harm than the stoppage of the gold mines had the rebellion spread in South Africa. The danger can be easily exaggerated, especially at a moment when we can see far ahead, and see the gold still coming to us in an uninterrupted stream from the mines.