We contend, then, that neither to restrain the efflux of gold, nor to guard against the over-issue of bank-notes, is legislative interference warranted. If Government will promptly execute the law against all defaulters, the self-interest of bankers and traders will do the rest: such evils as would still result from mercantile dishonesties and imprudences, being evils which legal regulation may augment but cannot prevent. Let the Bank of England, in common with every other bank, simply consult its own safety and its own profits; and there will result just as much check as should be put, on the efflux of gold or the circulation of paper; and the only check that can be put on the doings of speculators. Whatever leads to unusual draughts on the resources of banks, immediately causes a rise in the rate of discount—a rise dictated both by the wish to make increased profits, and the wish to avoid a dangerous decrease of resources. This raised rate of discount prevents the demand from being so great as it would else have been—alike checks undue expansion of the note-circulation; stops speculators from making further engagements; and, if gold is being exported, diminishes the profit of exportation. Successive rises successively increase these effects; until, eventually, none will give the rate of discount asked, save those in peril of stopping payment; the increase of the credit-currency ceases; and the efflux of gold, if it is going on, is arrested by the home-demand out-balancing the foreign demand. And if, in times of great pressure, and under the temptation of high discounts, banks allow their circulation to expand to {347} a somewhat dangerous extent, the course is justified by the necessities. As shown at the outset, the process is one by which banks, on the deposit of good securities, loan their credit to traders who but for loans would be bankrupt. And that banks should run some risks to save hosts of solvent men from inevitable ruin, few will deny. Moreover, during a crisis which thus runs its natural course, there will really occur that purification of the mercantile world which many think can be effected only by some Act-of-Parliament ordeal. Under the circumstances described, men who have adequate securities to offer will get bank-accommodation; but those who, having traded without capital or beyond their means, have not, will be denied it, and will fail. Under a free system the good will be sifted from the bad; whereas the existing restrictions on bank-accommodation, tend to destroy good and bad together. Thus it is not true that there need special regulations to prevent the inconvertibility and depreciation of notes. It is not true that, but for legislative supervision, bankers would let gold drain out of the country to an undue extent. It is not true that these “currency theorists” have discovered a place at which the body-politic would bleed to death but for a State-styptic. * * * * *