It is certain that in all of these panics the bank has made very large advances

Deposits are made with the bankers and bill brokers in Lombard Street by the bankers of such counties as Somersetshire and Hampshire, and those bill brokers and bankers employ them in the discount of bills from Yorkshire and Lancashire. First, you establish in some bank or banks a certain reserve; you make of it or them a kind of ultimate treasury, where the last shilling of the country is deposited and kept. The way in which the issue of notes by a banker prepares the way for the deposit of money with him is very plain. These measures were sufficient during the severe crisis of 1908. But no distinct resolution of Parliament has ever enjoined it; scarcely any stray word of any influential statesman. We must not suffer from a dangerous policy because we have inherited an imperfect form of administration. 3–29/32d. He laid it down that a currency is in its most perfect state when it consists of a cheap material, but having an equal value with the gold it professes to represent; and he suggested that convertibility for the purposes of the foreign exchanges should be ensured by the tendering on demand of gold _bars_ (not coin) in exchange for notes,—so that gold might be available for purposes of export only, and would be prevented from entering into the internal circulation of the country.

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