CH. 3

THE ANALYSIS OF BANK-MONEY

39

two types of deposit. In the United States the per-centage of Time Deposits to Total Deposits varieswidely in different Federal Reserve Districts, beingabout twice as high in San Francisco as in NewYork , whilst the average for the whole country hasbeen undergoing a progressive change, rising from23 per cent in 1918 to about 40 per cent in 1928.In Great Britain it used to be said before the warthat the total deposits of the banks were aboutequally divided between deposit-accounts and current-accounts. 1 During the war investments in governmentissues, under the stimulus of official propaganda,probably drained away some of the most permanentof the deposit-accounts, with the result that the pro-portion of deposit-accounts fell to about one-third ofthe total. During the last ten years, however, theproportion has been gradually returning to the pre-war proportion of about one-half. If, therefore, weallow for interest-bearing current-accounts and for“ minimum balances ” held to remunerate the bank,it would appear that in Great Britain the truesavings-deposits may be somewhat in excess of one-half of the total; though we must on the other sideallow for the fact that deposit-account rules (sevendays’ notice) are not always expected to be adheredto strictly.

Let the reader remember that these percentagesare given merely as indications of the order ofmagnitude of the quantities in question. The pro-portions of the two types of deposit to the totaldeposits are by no means constant, and it is pre-cisely this liability to variation which will giveimportance to the above analysis in our subsequentargument.

The foregoing classification naturally includes Notes

1 I have also heard the pre-war proportion of deposit-accounts estimated .at nearer a third than a half. Leaf (Banking, p. 124), writing in 1926,says that current-accounts are as a rule in excess in England, but deposit-accounts considerably in excess in Scotland and Ireland.