a good reserve against a time of panic, but to use that reserve effectually when that time of panic comes. The keepers of the banking reserve, whether one or many, are obliged then to use that reserve for their own safety. If they permit all other forms of credit to perish, their own will perish immediately, and in consequence.
As to the Bank of England, however, this is denied. It is alleged that the Bank of England can keep aloof in a panic; that it can, if it will, let other banks and trades fail; that, if it chooses, it can stand alone, and survive intact while all else perishes around it. On various occasions, most influential persons, both in the government of the Bank and out of it, have said that such was their opinion. And we must at once see whether this opinion is true or false, for it is absurd to attempt to estimate the conduct of the Bank of England during panics before we know what the precise position of the Bank in a panic really is.
The holders of this opinion in its most extreme form say that in a panic the Bank of England can stay its hand at any time; that, though it has advanced much, it may refuse to advance more; that, though the reserve may have been reduced by such advances, it may refuse to lessen it still further: that it can refuse to make any further discounts; that the bills which it has discounted will become due; that it can refill its reserve by the
