The rates charged by the joint stock banks are always well below Bank rates, except on the rarest of occasions, and therefore bill brokers and borrowers of money generally naturally go to the cheapest market, and when they are forced to go into the dearest market in Threadneedle Street they go there from necessity and not from choice. We are able now to grasp in some measure what the Central Fund is. The Bank of England, when other sources are dried up, is always able and willing to lend _at a price_. This price is regulated by the calls upon it, by the state of its reserve, by the condition of the foreign exchanges, and by a general survey of financial conditions. The rate is an instrument for limiting borrowing, for correcting the foreign exchange, for drawing gold to England, and for replenishing its reserve, if the proportion has fallen to what is considered below the average ratio of prudence, or safety. The loanable fund of the Bank of England, therefore, is identical with the loanable fund of what is called the outside market. It is the highest class of wealth liquefied, but to the Bank is given the sole power of attracting gold from abroad as a basis to this fund when that gold is needed. CHAPTER X THE CENTRAL RESERVE The Central Reserve is the reserve held by the Bank of England. Not only is it the Central Reserve, but it must be regarded as the National Reserve, the sole reserve. This is regarded by many as the chief weakness of the banking system. Let us first of all distinguish between reserve and reserve. This Central Reserve is the national legal tender reserve. The joint stock banks have other reserves, as we have seen, composed of the highest wealth in the kingdom, and though there may be some reason, there does not appear to me to be the soundest, deepest reason why the foundation of the system should be considered unsound because of our moderate legal tender reserve, dependent as it is upon independent forces, and because we place minor importance upon the country’s store of wealth. To me it would seem the soundest reason to plant our banking system chiefly upon the solid basis of wealth, and not let that system be in the capricious control of a force that has no direct connection with the country’s real wealth, especially when we have now found it to be easily possible to meet that most remote contingency, a national panic. The nation lives like a parent whose obsession is that in some far-off day his son may meet with a serious accident that will affect his brain and make him an imbecile. What will he do, then, when his son becomes mad? He broods over the possibility; it darkens his life; it keeps away joy and happiness; his health suffers; his energies, mental and physical, become paralysed, and death gathers him while his son is still in the prime of healthy manhood.