The fifth of these provisions allows a loophole by means of which the rules can be made to work in practice less rigorously than appears on paper. Any two names will satisfy the letter of the Presidency Banks Act; but any two names are not necessarily very good security. After getting two names to satisfy the Act, the authorities of the Banks can then proceed to satisfy the dictates of cautious banking by taking, as well, some of the other kinds of security upon which, technically, they are forbidden to lend. It is an excellent instance of the consequences of an attempt to control banking by an elaborate Act forty years old. The last provision has led, I believe, to the Banks establishing a kind of bonded warehouse for the reception of merchandise. In other cases the borrower’s own mill or warehouse is made to serve the purpose by the expedient of the Bank’s paying the wages of his watchman. Where the personal security of the borrower is obviously good, there must be a temptation to allow him to value the goods generously, rather than to put the Bank to the inconvenience of housing or watching a greater bulk of merchandise. As some recompense for these restrictions, the Presidency Banks have been allowed to hold a portion of the Government balances without payment of interest. The use of these balances was first granted them in 1862 as compensation for their being deprived of the right of note issue. Up to 1876 the Presidency Banks held, subject to certain conditions, the _whole_ of the Government balances which would have been “paid in ordinary course into Government Treasuries at the places where the head offices and branch offices of the Banks are established.” But on more than one occasion the Banks made difficulties when the Government desired to withdraw large sums at short notice. In 1876, therefore, the Reserve Treasuries were established, and since that time only a portion of the balances has been placed with the Banks.[95]