CH. 3

THE ANALYSIS OF BANK-MONEY

43

of Bank-Money of growing importance, of which wehave no statistical record whatever, whether as regardsthe absolute aggregate amount of it or as regards thefluctuations in this amount from time to time.

Thus the Cash Facilities, which are truly cash forthe purposes of the Theory of the Value of Money, byno means correspond to the Bank Deposits which arepublished. The latter include an important proportionof something which is scarcely money at all (not muchmore than e.g. a Treasury Bill is), namely the savings-deposits ; whilst, on the other hand, they take noaccount of something which is a Cash Facility, in thefullest sense of the term, namely unused overdraftfacilities. So long as savings-deposits and unusedoverdraft facilities are both of them a nearly constantproportion of the total deposits, the figures of BankDeposits as published are a sufficiently satisfactoryindex of the amount of Cash available. But if, as weshall see subsequently, these proportions are capableof wide fluctuations, then we may be seriously misled,as indeed many people have been misled, by treatingBank Deposits as identical with Cash.

(iv.) The Volume of Deposits in relation tothe Volume of Transactions

We have seen that the Cash-deposits, whetherIncome-deposits or Business-deposits, are held forthe purpose of making payments—in distinction fromSavings-deposits which are held for a different purpose.The next question is, therefore, as to the relationshipbetween the amount of such cash-deposits and thevolume of the payments on which they are employed.We shall deal with this question statistically inVolume ii. ; but it will be convenient to make somepreliminary observations at once.

Let us begin with the Income-deposits. In thiscase the volume of payments out is easily specified.