The duplicate notes were lent out at interest to generate income to pay for the storage costs and provide a profit. The issue of duplicate notes is how the banking system creates money . When a bank makes loan, the bank creates the funds with simple strokes of a pen or computer key to print notes, establish an deposit account for the borrower to draw upon, or provide an overdraft. Notes, and accounts which provide the borrower with funds become a liability in the balance sheet of the bank. To keep the books balanced, the bank creates a matching asset which is the loan agreement with the borrower to pay back the funds.
Banks expand the money supply by lending notes.
This process creates both notes, which are a bank liability, and loans which become a matching asset. If the loans are not used to expand the production and consumption of goods and services then inflation results. Too much money becomes available for too few goods and services. To avoid inflation, the banking system requires a mechanism to channel the expansion of credit into activities which increase productivity. Today, none exists.