It may be objected that those banks require the money in their own vaults to meet their notes. A great part of it, no doubt, they always require for that purpose, but there will be no danger of having a portion abroad; even in the times of crises what was wanted in London has always been the Bank-note, not the sovereign, and the Bank-note they would have, for the gold belonging to the Bank of England would be counted as assets in the ' issue department,' whether it lies in Threadneedle Street, Paris, Amsterdam, or Berlin. Moreover, if the treasure itself should be wanted, it would not take many hours to bring it from either of those places.

The gold drains on the Bank of England from 1844 to 1866 have never exceeded eight millions, and only four times five millions, and yet what an influence did they exercise on the Bank rate! - an influence which certainly would have been greatly diminished by an arrangement such as that suggested, which would save us the trouble and risk of the frequent shipments to or fro, and, what is of far greater moment as regards their influence on the money market, would hide the operations from the view of those who do not understand them.

We have seen above that the rise in the Bank rate must be comparatively considerable in order to attract bullion from abroad, and that while this process is being gone through of recovering the required amount which serves as the basis for the paper circulation the country needs, all who require discounts or advances have to pay those higher rates.

But if bullion belonging to France or Germany were already in the Bank of England, or if the latter were allowed to keep part of its bullion abroad, a smaller difference in the rates of interest would suffice to induce these countries to part with their treasure, just as on the other hand a slight fall in the value of money in England below that ruling on the Continent would have the effect of diminishing the bullion at the Bank of England. The specie points would thus be brought nearer together, and, if we do not take the legal ' remediums' into account and base our calculations of the above given prices of £3 17s. 9d. and £3 17s. l1d. they would be as follows :

The proposed arrangement would therefore make a change of the rate of discount more effective and tend to do away with the exceptionally high and the exceptionally low rates. We do not say that the changes themselves would cease, but they would be less extreme, which would be a real and substantial advantage. A comparatively steady rate of interest is in the long run better both for bankers and merchants.

There is another advantage which most likely will accrue if the system proposed could be introduced.

If the custom be once established between the principal banks in the countries of Europe which have adopted the gold standard of leaving part of their bullion for a time with another bank, it seems not unlikely that in the course of events by a spontaneous process one principal bank will become the guardian of a considerable portion of the bullion of other banks, and thus assume towards them a similar position as the Bank of England does towards the other London banks. We should then have found a way of making transfers of specie between several countries through this central gold reserve bank, and an opening would be made for the introduction of an 'International Clearing House.'No doubt other writers have thought of such a perfection of the banking system, but, as far as we know, they all imagine that the ultimate goal would be reached by bills on London, i.e., on the centre of commerce, becoming the general recognised medium of payment all over the world. This was already expressed by J. S. Mill more than a quarter of a century ago, but we doubt whether it will be in this manner that the last step in the perfection of the banking system will be made. The tendency, so apparent of late, to bring producers and consumers in more direct intercourse rather tends to increase abroad the market for bills on France, Holland, or Germany, and we doubt whether the claims settled through London are to-day proportionately as large as when Mill wrote.

But in one way or the other we shall some day see the dome of an international clearing system rise as the crowning edifice over the present national banks, and we shall not be surprised if the ultimate consummation takes place in the manner we have suggested,