CHAPTER 3

THE ANALYSIS OE BANK-MONEY

(i.) Income-Deposits, Business-Deposits, andSayings-Deposits

Let us now consider Bank-Money (or any other kindof money) from the standpoint of the depositor (orholder of it). A man holds a stock of money, whetherin the form of Bank-Deposits or in any other form,for one or other of three reasons.

He may hold it to cover the interval between thedates when he receives his personal income and thedates when he spends it. If his receipt of income andhis expenditure against it were nearly simultaneous,the average amount which he would need to hold forthis purpose would be inappreciable. If everyone re-ceived all his income on Quarter-Days and paid hisbills the same day, all cheques being drawn at the samemoment in anticipation that the cheques paid inwould be cleared just in time to meet the chequespaid out, the bank-deposits required to finance thenormal circle of exchange between earnings and con-sumption would be next door to nothing ; whilst ifbills were paid, not simultaneously, but within a fewdays, the aggregate bank deposits of private individuals,whilst standing at a high figure for a few days, wouldbe very low on the average of the quarter. Themoney balances of the working classes approximate,indeed, to this situation, in so far as they receive their

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