Explore "The War and Our Financial Fabric" by Walter William Wall on Textopian. Read with annotations and highlights.
The loanable fund in Lombard Street is said to be the totality of the deposits in the possession of the joint stock and other banks, plus the deposits in the Bank of England. We will, however, for the moment leave out the Bank of England as being immaterial in the present stage of our argument. Let us confine ourselves to the deposits in the joint stock banks, and let us assume that these total £800,000,000. What is called the loanable fund, therefore, is a mass of money aggregating £800,000,000. If a merchant or any other person desires to get a loan he gets a portion of this huge sum, and the commerce and industries of the country are financed thereout.
It has been likened by the imaginative to a vast reservoir of money, into which money is constantly flowing from many channels, and out of which it flows into a great number of channels. In fact, these channels form a mighty network, like the veins of the human body, and as the steady flow of blood to all parts of the body is essential to health and life, so the steady flow of money throughout the economic organism is essential to its health and life.