g
capital during the winter. Again, the proceeds of the spring sales of
goods and machinery may tide the farmers over the season of growth.

In this way labor of every kind is sustained by labor of every other kind.
In all these ways the banking power of a country is extended to several
times the coin money in circulation, and that with perfect safety. But it
is possible for banks to be tempted through the very perfection of their
own credit. The note of an individual has no established market value. A
deposit in the bank is valued as cash. It is possible to secure the credit
of having a bank deposit by discounting an individual note. If that note
is a time note the bank has increased its immediate liabilities by the
amount of a nominal deposit, with only a promise to pay in the future to
rest upon. To lend to an individual is practically to enter into
partnership with his fortune. The fortunes of the group of individuals
representing the bank is less doubtful than that of any one person. The
borrower in this instance pays in the discount of his note the difference
in risk between his fortune and that of the combination. Such deposits
purchased upon credit must be distinguished from deposits of cash, lest
the bank should nominally increase its power to lend while in fact it has
already lent up to its ability. Sometimes such nominal deposits are
maintained by persons deeply in debt for the sake of paying a larger rate
of interest than is allowed by law.

_Safety of banking._--In times of business prosperity a bank with usual
business caution as to customers, is safe for all concerned. And yet, in
the very nature of extended credit, it has promised to pay on any
particular day, if demanded, far more than it has cash in hand. Its
liabilities embrace the whole of its deposits except a small portion made
for a definite time, and all its issues of currency subject to redemption.
To meet these engagements its immediate resources are whatever currency in
any form of coin or bills it may have at hand. This amount, since its
profits are made from lending, not from holding, must be small in
proportion to its liabilities. The bulk of its means of payment is in
notes not yet due, and to be collected when due. Of other property it is
likely to have bonds of municipalities or of great corporations, and these
are supposed to be a more available form of resources than individual
notes, because they usually have a definite market value a