The basic function of a commercial bank is that it acts as a financial intermediary between borrower and lender. To the lender it offers a place of safe deposit where interest can be earned, while providing loans and credits to the borrower. By using a bank the borrower and lender do not have to know each other personally, and the bank itself incurs much of the risk involved in making a loan. A bank is able to employ specialist staff, building up a great deal of expertise over time. The resultant economies of scale enable it to make a contribution to economic welfare by ensuring the wider dispersal and utilisation of savings. A bank will have its own proprietors’ capital, of course, and this, too, can be lent to borrowers. But for the great majority of banks, even in the nineteenth century, proprietors’ capital provided but a small proportion of the funds available for bank loans. Fundamentally, nineteenth–century banks (as now) lent other people's money, not their own. Thus, the modern British banking system is a ‘fractional reserve system’ in the sense that, of the funds attracted from depositors only a very small percentage is retained in the form of cash, the rest is passed on to borrowers. In essence, this was the case throughout the nineteenth century, too: the UK had already developed the ‘fractional reserve system’ by 1826.