And if the taking out of the gold for exports proceeded still further, and the requirements of this trade in corn absolutely required an additional supply, what so easy or so unobjectionable as that the Bank should buy gold in some adjoining country? No unsoundness of trade would be existing under the circumstances supposed, no danger of commercial failures or revelations of unsound banking; a particular commodity would, from special causes, be in deficient supply, and the Bank would be required to buy an increase of gold when it could be procured. Well does the Times remark, on October 15, 1873, "gold being a commodity which is always obtainable in unlimited quantities and with singular speed by the highest bidder among commercial nations, there can never be such difficulty in attracting it as to cause the slightest inconvenience to any community whose transactions have been based on legitimate credit." What but the terror of ignorance and prejudice could associate the idea of danger, or, as some phrase it, of ignominy, with such an operation? Good banking is the King of the Money-market, banking which lends intelligently and wisely: under its rule, what happens, to gold matters nothing, either for danger or for crises.

I may be allowed, I trust, to repeat that which appeared in the Times of Nov. 15, 1873 : the quotation it commences with shows that even in the City a sense of shame broke out at the deplorable irrationality of City doctrines and practices about gold.

"Sir, - Your City article of to-day contains the following remarkable sentence:

"' That the events which have been witnessed should have actually occurred is a disgrace to the intelligence of all parties concerned.'

" And what has been the cause of this disgrace? One which is implied in the remainder of the sentence- ' and this fact becomes still more apparent when it is considered that, but for the service of the electric telegraph in announcing each parcel of gold about to be shipped hither, the panic would have gone on until its mere prolongation might have spread alarm in other quarters and led to serious disasters. There can be no doubt of the truth of this remark, but is it possible to describe more vividly wilful, self-made calamity and ruin brought on by an artificial cause artificially believed in? The City has trained itself to believe that a quantity of a particular metal called gold, lying in a vault unused and unusable, is the physical cause of the rate of discount, profoundly regardless of the fact, which a reference to the Reports of the Bank of England would at once have pointed out, that all sorts of rates of discount have accompanied and do accompany all sorts of reserves of gold. Instead of studying the state of trade and speculation in other countries as well as in England, its eyes are fixed on the glittering heap, and when it declines the usual consequences of unscientific and purely imaginative beliefs arise, blind terror seizes upon the mind, and men perform deeds which are nothing less than simple suicides. Every man frightens his neighbour: every one sees impossibility to obtain advances hanging over his head, and rushes off forthwith to make himself safe by borrowing from the banks long before he has need of their loans: the banks become shy of lending, and up flies the charge for that discount which is the foundation of modern trade. And what is the parent of all this agony and this disaster? A diminished heap in the Bank's cellar, as if the Bank was going to stop payment, if for a few days it had only half of its accustomed mass - a mass, I repeat, which does nothing for commerce except prevent banking from coming to a stand-still. The movements of gold to or from the Bank may be important as tending to reveal forces which are acting upon trade, just as the foreign exchanges teach us whether England has bought more or less abroad than she has sold. But these movements as merely making the stock of gold in the Bank larger or smaller are not the power which makes discount cheap or dear. If they have this effect it is not from their own intrinsic action, but from the fictitious and absurd significance given to them by unscientific ignorance, and the absence of the ability to analyse facts, which is the basis of all knowledge. That the traders of England should, from utter helplessness of thinking and their consequent surrendering of themselves to all sorts of artificial dogmas, build up by their own act, against themselves, such rates as eight, ten, and twelve per cent, as we have lately seen, is a wonder at which I never cease to marvel.

Bonamy Price." "Oxford, Nov. 14, 1873."

The convulsion began in September with a reserve in the Bank of 13,238,000, and a rise in the rate of discount from 3 to 4 per cent. It culminated in November, when the reserve had fallen to 8,071,000-and the rate risen to 9 per cent, as the minimum, but when the majority of the loans granted by the bank had exacted a rate actually of 12 per cent. The ratio of reserve to liabilities on September 24th was 44 per cent, on November 5, 36. Upon the doctrine of the City, a reserve of eight millions of stored-up gold, capable of paying off 36 per cent, of what the Bank owed, justified a blistering charge of nominally 9, really of 12 per cent, on the loans taken out by the trade of the nation from banks, and a crisis was averted by the news that gold had been put on board of ships on the other side of the Atlantic Ocean. What kind of conception of the action of currency, and the nature of banking, must those have had who found comfort in this preposterous belief? That corn should fall in price in a famished town when a fleet of corn ships is announced to be in the offing is intelligible; food to eat is at hand: but what can gold do when it-comes?

Other causes than the amount of gold at the Bank, we may be quite sure, - causes arising out of the state of the wealth of the nation, out of the destruction of property, and the agonizing uncertainty by whom the loss would have to be borne - generated this violent commotion in the money market: but neither bankers nor traders think of these causes, and one result is the wanton imposition of a heavier charge for discount if some insignificant sum of gold has been withdrawn from the Bank. Thus the attention is called away from wealth itself to the machinery which transfers its ownership, and what constitutes sound and safe banking is made to depend on an empirical, unscientific and false rule. 8