After all, what panics have we had in this country? Not one but what has been quickly assuaged since the banking system developed into its present stage of soundness. As it is insisted in many quarters that the system is far away from being sound enough simply because we have not large enough gold reserves, we must examine the national reserve from this point of view. This reserve is not only the Bank of England’s reserve against its own liabilities, but is the reserve against the aggregate liabilities of all the banks of the kingdom. The joint stock banks, as has been explained, keep their reserves at the Bank of England, the gold they keep in their tills and in their strong rooms being too small to take into serious consideration. If we take the average fluctuation of the Bank of England’s reserve to its own liabilities as from 40 to 50 per cent. throughout the year--this is quite a fair average variation of the proportion,--we should probably find that the proportion of this reserve to the total liabilities of all the banks would be as low as from 1 to 3 or 4 per cent. This is, of course, a very low proportion, but low as it is, it has served us well enough in the past, and as we cannot ignore experience, it should continue to serve us well in the future. When the proportion, say, falls below 40 per cent., and is approaching 30 per cent., the Bank of England takes steps to restore it to what is considered the normal or prudent level. The proportion, as is inevitable, begins to fall as borrowers are driven to the Bank of England when the joint stock banks have ceased giving accommodation. Though not a single note may be withdrawn from the reserve the proportion must necessarily fall as the liabilities rise. But it by no means always follows that when the proportion falls from this cause alone the Bank will raise its rate. This will depend upon general circumstances. There will be no need for the step if general circumstances are favourable, for the loan-deposits will in time be paid off and the normal conditions of the market will be restored. As a fact, nothing is more familiar and certain in Lombard Street than these recurring phenomena. At the end of quarters, especially the March quarter, when the taxes are flowing into the Exchequer, there is a considerable amount of borrowing from the Bank of England. When the money flows back into the market through Treasury disbursements, the borrowers are able to repay their loans to the Bank.