CH. 2

BANK-MONEY

31

(ii.) Current Money is predominantlyBank-Money

The proportionate importance of State-Money andof Member Bank-Money , created as above, in makingup the aggregate of Current Money varies widely atdifferent periods and in different countries, accordingto the stage which has been reached in the evolutionof monetary practice. But the tendency is towards apreponderant importance for Bank-Money —which insuch countries as Great Britain and the United States constitutes perhaps nine-tenths of the aggregate ofCurrent Money —and towards State-Money occupyinga definitely subsidiary position.

It will, therefore, simplify the argument, withoutseriously detracting from its generality, if we assumenot only that all the Central Bank-Money is heldby the Member Banks , but also that all the CurrentMoney in the hands of the public is Member Bank-Money , i.e. Bank Deposits. This simplified versiondoes not, of course, represent the actual facts. Butit will save many unnecessary words and is easilyadapted to the actual facts. Moreover, the conse-quences of such an assumption will be nearly identicalwith the actual facts, in so far as the proportions, inwhich the total stock of State-Money is held by thePublic, the Member Banks and the Central Bank, tend to be constant. When the actual facts differfrom this simplified scheme in a relevant way, Iwill do my best to bring them back again into thepicture.

In the case of the United States fairly exactestimates are available as to the proportion of demand-deposits, or, as I shall call them, cash-deposits, to notesand coin circulating outside the banks and in thehands of the public, as follows :

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