The nature of this liability has been fully explained in Chapter V (Deposit Business) (Note Issues And The Branch System. 1. Monetary System). It will be noticed that the amount given in the statement is less than the paid-up capital. No bank, especially one with numerous branches, would feel safe in increasing its circulation over this margin except during the period of emergency currency. During that period, namely, September first to February twenty-eighth, the circulation could be increased to $9.19.

In addition to the protection offered to the noteholder by the general five per cent redemption fund of all the banks, the statement shows that the circulation of $6.54 is protected by the total assets of the bank and the double liability of the shareholder, $120.39, or practically over $91 for every $5 in circulation. Both the emergency currency and the central gold reserves will, under certain conditions, prove of great advantage both to the public and the banks, but neither will be profitable to the banks. The emergency currency bearing interest at five per cent will be availed of at a decided loss, while the central gold reserve will result in a small loss.