The reserve fund speaks for itself. It is generally a fund accumulated annually out of profits and invested in the best securities. The larger the reserve in proportion to the capital and business the stronger is the bank’s position. It is a provision against future contingencies and is not touched except for these contingencies. One purpose is to meet depreciation in investments or other losses. The money being invested in the highest securities these can be sold for cash whenever the need for it arises. The acceptances on behalf of customers are also practically covered by securities deposited by customers, until they lodge the funds to meet the bank’s liabilities in this direction. The net profit is the fund due to the shareholders of the bank, who receive their dividends therefrom. On the asset side, the cash in hand and at the Bank of England consists of coin and notes. A portion of this is in the tills and safes of the bank in order to meet the ordinary daily needs, the incomings and outgoings, while the rest is money deposited with the Bank of England in precisely the same way as an individual deposits money with a joint stock bank. It serves two purposes. It composes an additional reserve there in legal tender, and facilitates the clearings between the various banks, debits and credits being daily adjusted in the books of the Bank of England. It is contended by many that the banks do not keep reserves large enough in proportion to their liabilities--reserves, that is to say, in actual legal tender. It is contended that they trade on too slight a margin of gold, or legal tender; but this question must be threshed out when the way has been cleared for it. The next item is the money at call and short notice. This is practically the money lent by the banks to money brokers, stock brokers, and discount houses. Money at call practically means that the bulk of it is lent from day to day and that banks can demand its repayment at a moment’s notice. The money is also borrowed on security, so that while the banks owe the money to the borrowers and the borrowers owe the money to the banks, the banks have the securities. These securities thereby become currency. They can also become currency if the public will accept them as currency, but the public prefers cheques to securities. The greater convenience of cheques need not, of course, be emphasized. It will be seen that a bank’s “investments” are a large sum. They include the reserve fund, and the bank’s annual income is, of course, swollen by the interest it receives on these investments, in the same way as an individual’s income is increased. These investments are of the very highest class and strengthen the assets the bank possesses against its liabilities on deposits. It is presumed, of course, that they can be readily sold for cash should the need for the conversion arise.