Chapter XXIV: Credit--Bank Assets and Bank Reserves

Traditional view that liquid commercial loans normal and
dominant type of bank asset disproved; cannot exceed
11-1/2 per cent of assets of American banks; analysis of
bank assets: "other loans and discounts"; stock collateral
loans; loans on "other collateral security";
stocks and bonds held by banks; classes of banks; various
combinations; excluding real estate loans, more
than half of credit extended by State and national
banks and trust companies is to stock market; rapid
development of stock collateral loans: New York;
Europe 498-512

Activity of different types of loans: banking assets get
liquidity chiefly from stock market, and from produce
speculators 512-516

Credit extended to Wall Street not at expense of ordinary
commerce; country banks and Wall Street 516-518

Federal Reserve Banks should rediscount stock collateral
loans; "Money Trust" a trust in financing corporations,
not ordinary commerce; panics and Federal Reserve System 520

Quantity theory, putting all exchanges on a par, grotesque:
volume of trade and prices in the stock market 520-523

Direct and indirect financing of corporations by banks;
"margin dealer" as "banker" 523-526

Adam Smith's view of banker's functions, and of safe bank
loans 526

Correct on basis of facts of his day, but corporate
organization and organized stock market have made
smelting house as liquid as consumers' goods 527

Division of labor in banking: America _vs._ Germany 527-528

Agriculture in money market 528-529

Reserve problem: special case of problem of liquid assets;
many flexible substitutes for cash 529-532

Causal relation runs from deposits to reserves; gold
production and reserve-ratio 532-535

No static law or "normal ratio" possible; reserve function
entirely dynamic function; reserve not needed in "static
state"; illustrated by London money market; "ideal
credit economy" 536-544

_PART IV. THE RECONCILIATION OF STATICS AND DYNAMICS_