176 STATE MONOPOLY IN BANKING

owned and directed by shareholders, and ran for
their profit; or whether they might not, in some cases,
be owned and directed by the great industrial associations
and combinations that the Government is now promoting
in the various industries, and be ran for the advantage
of the industries as wholes, may be a matter for con-
sideration and possible experiment. In either case, the
concerns to which the Government would lend its
capital would, of course, have to be of undoubted financial
stability to be secured, it may be, by large uncalled
capital, or by the joint and several guarantees of a
numerous membership ; coupled, possibly, with a charge
on the assets."

At first sight this proposal to differentiate the
functions of banking is somewhat startling, and one
wonders whether it could possibly work. On con-
sideration, however, there seems to be nothing
actually impracticable about the scheme. The
Government would presumably take over all the
offices and branches of the banks of the country, and
would therein accept money on deposit and current
account, making itself liable to pay the money out
on demand or at notice, as the case may be, just as
is done by the existing banks; it would hold the
necessary cash reserve, and it would apparently
itself invest a certain proportion of the money in
Government securities, as the banks do at present.
The more difficult part of the banking business, the
advancing of money to borrowing customers, it
would hand over to financial institutions, created for
this purpose presumably out of the ashes of the
nationalised banking business. These institutions
would make themselves responsible for the lending