"The whole profit of the issuance of money has provided the capital of the great banking business as it exists today"

Frederick Soddy’s observation draws attention to the origins and structure of modern banking and finance by emphasizing the profound significance of the money-issuance process. Money, before it enters circulation, is created, either by governments or central banks, and increasingly by private banks through the mechanism of credit expansion. The act of issuing money, essentially creating purchasing power out of nothing, confers a substantial economic benefit, known as "seigniorage", to the issuer. Rather than merely distributing coins or bills backed by their material value, banks and financial institutions have developed the privilege to generate money in the form of loans, which borrowers are obliged to repay with interest.

This privilege operates as a source of profit far exceeding the mere “service charge” for managing money. When a bank issues a loan, it creates a deposit in the borrower's account, effectively new money in the economy, which is spent and circulated, yet the bank expects repayment from the borrower, plus additional interest. Over time, this cycle accumulates tremendous profit for the banking sector, not simply from the fees charged but from the very structure of the money system itself. That profit, derived from the creation of money, forms the foundational capital for the growth and perpetuation of banking enterprises.

According to Soddy, the profits realized from this system, not primarily from thrift, industry, or straightforward investment, constitute the real foundation of modern banking’s wealth and dominance. The transformative power rests not with the producers or traders but with the institutions that control money’s creation and allocation. These immense profits, once reserved to sovereign treasuries or public coffers, have, through the decades, increasingly underpinned enormous private fortunes and the expansion of financial empires. Soddy’s statement reveals a fundamental dynamic: that the architecture and very legitimacy of modern banking owe their existence to the lucrative exercise of issuing money, a process with profound implications for economic justice and the distribution of wealth.