In the operation of this machinery, the most noteworthy features are the reserve system, and the administration of the discount rate of the Bank of England. There is no law on the English statute books prescribing the amount of cash which banking or other financial institutions shall keep in their vaults. The custom of these institutions regarding that matter is to keep on hand relatively small sums and to rely upon the Bank of England or some other London banking house for the replenishment of their supply as needed. For this purpose, London and many provincial banks keep balances with the Bank of England, and other banks maintain balances with other London institutions. These balances may be obtained by the deposit of coin or Bank of England notes or by rediscounts. Another widely used resource is the calling of loans made to bill brokers or discount houses. Such loans or a considerable volume of bills of the kind discounted by the Bank of England, or both, are regularly carried by London banks and counted as a part of their reserves. On account of these practices, surplus cash not needed in the conduct of the current business of the country speedily finds its way into the vaults of the Bank of England, and additional supplies, when needed, come from this source. The administration of the cash reserves of the country thus becomes one of the important duties of the Bank of England, in the performance of which variation of the rate charged on discounts is the most important device. Many years' experience has enabled the Bank to determine with a considerable degree of accuracy the volume of the demands for cash likely to be made upon it from day to day, and consequently the amount that it should keep on hand in the vaults. Whenever this amount approaches the minimum regarded as consistent with safety, the directors raise the rate of discount, and when the amount on hand becomes excessive, they lower it. The efficiency of this procedure in increasing the reserves in the one case and in decreasing them in the other is due to certain conditions and practices which deserve attention at this point.