In October, 1878, came the crash of the failure of the City of Glasgow Bank. The Bank of England was in a good position to meet the emergency, and the threatened crisis passed away. The rate was never raised above 6 per cent.: many thought it should have gone higher, following the precedents of 1872-3, bat in doing so they did not recognise the fact that the circumstances connected with these periods were entirely different.

"In the year 1873 the stringent action on the part of the Bank was with a view to put a stop to the discounting of certain financial bills, and in the year 1878 the main object of the Bank was to avoid all unnecessary cause for alarm; and, the foreign exchanges being in favour of this country, the Bank could show a bold front to the difficulties of the situation, and did so, and I venture to think its action met with general approbation."

This is a very important declaration on the part of the governor of the Bank, showing that its present policy is to assist the money market within reasonable limits. In the year 1890 the directors even went a step further in order to prevent a great disaster. When the great house of Baring was in difficulties, the directors called a meeting of the representatives of the principal banks, and agreed with them to guarantee all the outstanding acceptances of the above-mentioned firm. This action on the part of the Bank no doubt prevented a great commercial disaster. We think the policy was possibly wise under the circumstances, but whether the Bank of England should guarantee the solvency of houses of repute when in difficulties is a question for serious consideration. A crisis might have been avoided in 1866 when the house of Overend, Gurney & Co. failed, but when a bad system of finance exists it is better that firms who embark in reckless speculation should not be assisted, Of course this is a different policy from that of refusing to assist the market when it may be the means of avoiding a panic.

The Bank has recently made concessions to its rivals in the money market, viz., the bill brokers. The Bank has agreed to discount bills for them which have not more than fifteen days to ran at not less than bank rate, but of course it reserves the right to charge a higher rate. No doubt this will tend to make the Bank of England rate more in harmony with that of the outer market.

The position of the Bank of England is unique, in fact no country has an institution wielding such power over the supply and demand of capital.

It is satisfactory to observe that the great powers entrusted to the Bank have not been abused. To promote the prosperity of the country has been its aim rather than to pay high dividends to the stockholders.