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 The fact that really roused his enthusiasm, when he contemplated the Federal Reserve system, was the huge possibility of expansion that it brought with it.

After analysing the balance sheet of the Federal Reserve Banks, "Let us see," he said, "how much further the banks can extend their loans and create credits on their present cash reserves. The Law requires the notes to be covered by a minimum of 40 per cent. in gold, and the deposits by at least 35 per cent. in gold or lawful money. By reducing the present ratios to the legal minima of 4o per cent. and 35 per cent. respectively, the Reserve Banks would be able to create additional loans for member banks to the extent of about £400,000,000. These additional credits of £400,000,000 would form the base for the creation of additional loans and credits by the member banks of over £3,000,000,000, thus placing them in a position of being able to assist to a marvellous extent in the financing of the industries and any future War Loans."

Certainly, if the creation of more banking credit really makes it possible just by book-keeping entries in the banks of a country to increase its wealth and happiness, the system of the Federal Reserve Board seemed to offer most attractive possibilities; and as will be