The Creature

Q. What are banks for? 

A. To make money. 

Q. For the customers? 

A. For the banks. 

Q. Why doesn't bank advertis- 
ing mention this? 

A. It would not be in good taste. 
But it is mentioned by implica- 
tion in references to reserves of 
$249,000,000 or thereabouts. 
That is the money that they have 
made. 

Q. Out of the customers? 

A. I suppose so. 

Q. They also mention Assets of 
$500,000,000 or thereabouts. 
Have they made that too? 

A. Not exactly. That is the 
money they use to make money. 

Q. I see. And they keep it in a 
safe somewhere? 

A. Not at all. They lend it to 
customers. 

Q. Then they haven't got it? 

A. No. 

Q. Then how is it Assets? 

A. They maintain that it would 
be if they got it back. 

Q. But they must have some 
money in a safe somewhere? 

A. Yes, usually $500,000,000 or 
thereabouts. This is called 
Liabilities. 

Q. But if they've got it, how can 
they be liable for it? 

A. Because it isn't theirs. 

Q. Then why do they have it? 

A. It has been lent to them by 
customers. 

Q. You mean customers lend 
banks money? 

A. In effect. They put money 
into their accounts, so it is really 
lent to the banks. 

Q. And what do the banks do 
with it? 

A. Lend it to other customers. 

Q. But you said that money they 
lent to other people was Assets? 

A. Yes. 

Q. Then Assets and Liabilities 
must be the same thing? 

A. You can't really say that. 

Q. But you've just said it. If I put 
$100 into my account the bank is 
liable to have to pay it back, so 
it's Liabilities. But they go and 
lend it to someone else, and he is 
liable to have to pay it back, so 
it's Assets. It's the same $100, 
isn't it? 

A. Yes. But... 

Q. Then it cancels out. It means, 
doesn't it, that banks haven't 
really any money at all? 

A. Theoretically.... 

Q. Never mind theoretically. 
And if they haven't any money, 
where do they get their 
Reserves of $249,000,000 or 
thereabouts? 

A. I told you. That is the money 
they have made. 

Q. How? 

A. Well, when they lend your 
$100 to someone they charge 
him interest. 

Q. How much? 

A. It depends on the Bank Rate. 
Say five and a-half per cent. 
That's their profit. 

Q. Why isn't it my profit? Isn't it 
my money? 

A. It's the theory of banking 
practice that... 

Q. When I lend them my $100 
why don't I charge them inter- 
est? 

A. You do. 

Q. You don't say. How much? 

A. It depends on the Bank Rate. 
Say half a per cent. 

Q. Grasping of me, rather? 

A. But that's only if you're not 
going to draw the money out 
again. 

Q. But of course, I'm going to 
draw it out again. If I hadn't 
wanted to draw it out again I 
could have buried it in the gar- 
den, couldn't I? 

A. They wouldn't like you to 
draw it out again. 

Q. Why not? If I keep it there 
you say it's a Liability. Wouldn't 
they be glad if I reduced their 
Liabilities by removing it? 

A. No. Because if you remove it 
they can't lend it to anyone else. 

Q. But if I wanted to remove it 
they'd have to let me? 

A. Certainly. 

Q. But suppose they've already 
lent it to another customer? 

A. Then they'll let you have 
someone else's money. 

Q. But suppose he wants his too 
... and they've let me have it? 

A. You're being purposely ob- 
tuse. 

Q. I think I'm being acute. What 
if everyone wanted their money 
at once? 

A. It's the theory of banking 
practice that they never would. 

Q. So what banks bank on is not 
having to meet their commit- 
ments? 

A. I wouldn't say that. 

Q. Naturally. Well, if there's 
nothing else you think you can 
tell me...? 

A. Quite so. Now you can go off 
and open a banking account. 

Q. Just one last question. 

A. Of course. 

Q. Wouldn't I do better to go off 
and open up a bank? 

facebook comments: