ii INFLATION AND DEFLATION 171

percentages for the “margin” as being reason-ably safe in all ordinary circumstances. Theamount will, of course, vary in different caseswithin wide limits. But for marketable assetsa “margin” of 20 per cent to 30 per cent isconventionally considered as adequate, and a“margin” of as much as 50 per cent as highlyconservative. Thus provided the amount of thedownward change in the money value of assetsis well within these conventional figures, thedirect interest of the banks is not excessive;—they owe money to their depositors on one sideof their balance-sheet and are owed it on theother, and it is no vital concern of theirs justwhat the money is worth. But consider whathappens when the downward change in themoney value of assets within a brief period oftime exceeds the amount of the conventional“margin” over a large part of the assets againstwhich money has been borrowed. The horriblepossibilities to the banks are -immediately ob-vious. Fortunately, this is a very rare, indeeda unique event. For it had never occurred inthe modern history of the world prior to theyear 1931. There have been large upwardmovements in the money value of assets inthose countries where inflation has proceededto great lengths. But this, however disastrousin other ways, did nothing to jeopardise theposition of the banks; for it increased theamount of their “margins.” There was a largedownward movement in the slump of 1921,but that was from an exceptionally high level