the Bank having still a reserve of £7,000,000 of unrepresented notes, which it might issue at 2 per cent. before the issues at 4 per cent. would be called into requisition. We shall also assume that the rate of interest is at its ordinary average of about 4 per cent. In these circumstances, then, we shall suppose that a drain originates from any of the preceding causes to the extent of say £4,000,000;[D] the effect will be as follows:--According as each million of bullion is withdrawn from the Bank, for exportation, the amount of bullion notes, and therefore of circulating medium in the possession of the public, will suffer a corresponding diminution: an increased demand for banking accommodation will therefore arise; but as this can only be accorded by the Bank of England, through a further extension of the issues at 2 per cent., and as any considerable issue of such notes would require a higher rate of interest than 4 per cent. to render it adequately profitable, the effect of this increased demand for accommodation will probably be a rise in the rate of interest from 4 to 4½ or, perhaps, 5 per cent. It is possible that this rise in the rate of discount might not produce any effect upon the demand for accommodation, but the probability is, that it would have some sensible influence, though not very considerable. We shall estimate it, therefore, as likely to diminish the amount of the currency by £1,000,000 of the £4,000,000 exported. The total issues would then have undergone the following change:-- Issued on bullion £20,000,000 ” at 1 per cent. 11,000,000 ” at 2 per cent. 7,000,000 ---------- £38,000,000 [D] In order to guard against misapprehension, it may be necessary to observe, that when speaking of the amount of any drain of bullion, we invariably mean the excess of the treasure exported over that imported during the given period. For example, should the efflux amount to £6,000,000 and the influx to only £2,000,000, the effect would be the same as if there had been an efflux of £4,000,000 and no simultaneous influx: we should, therefore, assign £4,000,000 and not £6,000.000, as the actual drain in such a case. and we should have a rise in the rate of interest to 4½ or perhaps 5 per cent., accompanied by a contraction in the total circulation to the extent of £1,000,000, as a means of correcting the exchanges, which there is little doubt it would suffice to do, if the drain were one of only slight severity.