In these times we see the Bank’s liabilities grow in twofold fashion. The Public Deposits grow owing to the tax-ingathering, and the Other Deposits grow because of the borrowing on the part of what is called the outside market. At the same time, a counter-active influence is at work. As the taxes are paid in to the Government they come indirectly out of the Other Deposits, because they come out of the deposits of the joint stock banks and out of their reserves, so this puts a check upon the growth of the Other Deposits. The Bank of England generally raises its rate when a large export of gold abroad takes place. There are two main channels through which gold flows from the reserve of the Bank of England. The one channel is that which takes gold into national circulation, to the provincial banks and to Scotland and Ireland at certain seasons of the year; and the other is the channel by which gold is taken to foreign countries. The internal drain, as it is called, rarely has any influence upon the movements of the Bank rate. This is because gold is known to be in the country, and if it is not in the Bank’s own reserve, it is practically in the total reserves of the other banks, and it will all return to the central reserve in due course. A foreign drain of gold arises from quite other causes. It will arise from a complication of causes. Gold may be taken from the Bank in order to liquidate the country’s balance of debt to other countries. It is a common phenomenon, for instance, to see at certain seasons of the year large exports of gold to New York, Egypt, and South America. These exports are expected, and occasion no surprise. But sometimes they are supplemented by large unexpected withdrawals, there and elsewhere. As an offset to these withdrawals, the Bank can replenish the reserve by purchases of gold in the open market. Each week gold comes to London from South Africa and often from India, and if the Bank can buy this gold it may obviate the necessity of raising the Bank rate. Sometimes, however, there is keen competition for these arrivals of gold, keen competition from the Continent or New York, and the Bank may be unable to outbid its competitors. The Bank is bound to take all gold offered to it at the statutory price of 77_s._ 9_d._ per ounce. But competition will sometimes drive the price well beyond this figure, and continental countries sometimes buy the gold at a loss, as Germany did in 1914, if they are determined to have it at any price. For many months before the outbreak of the war, the competition was exceedingly keen, so keen that for a long period the Bank of England was unable to purchase an ounce of gold. This competition was chiefly on the part of Germany and Russia, especially Germany, thereby affording presumptive evidence of her deliberate plans for war. But this competition and buying must be regarded as abnormal.