The federal reserve notes also seem as safe as they can be made. They are direct obligations of the United States government, which retains a first lien on all the assets of the federal reserve bank, to protect the federal reserve notes and federal reserve bank notes. The bank is required to maintain a reserve of 40 per cent in gold, and to pledge commercial paper for the remaining 60 per cent, or so much of it as is not covered by gold. This paper, by definition of the board, is restricted to the very best forms of commercial paper, resting upon actual commercial transactions, running for short terms, and bearing two names. These facts, in conjunction with the limitations on inflation, seem to make the federal reserve notes as safe as the credit of the government plus the credit of the business world. The advances based on United States securities, it may be remarked, make the element of government credit still more important in the safety of the notes.