Money and credit, the metallic gold coin, and the promise to pay a gold coin printed on a note or written on the page of a bank's ledger – a bank deposit – these are the money and credit to which I refer to-night.

Note and deposit identical

The note, and the deposit payable on demand, are synonymous: they each express the same thing, demand credit, a promise to pay a gold coin on demand to the holder of them. But it is a curious fact, indicative of the very small amount of knowledge of the subject possessed by our legislators, that whilst nearly all democratic Governments have legislated regarding the note they have ignored the deposit altogether. Thus the Commonwealth Government removed from the banks the issue of notes – promises to pay on demand, which was regarded as the function of the Treasury; and yet left with the banks the right to create and issue deposits – promises to pay on demand. But obviously the vital, essential thing is the promise to pay on demand, and not the mere paper on which the promise to pay is expressed, the note or the bank ledger on the page of which the promise is recorded. It is absolutely certain that the reason why the Government legislated regarding the note is that they thought they understood it, and the reason the Government did not legislate regarding the deposit is because they had no clear understanding about it at all.