The normal buying and the normal competition arise when gold is wanted in the normal course of trading between different countries. If, for instance, the New York exchange is driven down to such a point that it is cheaper to send gold than to buy drafts, or exchange, then gold is bought and shipped. This applies equally when other exchanges are against this country. Sometimes we can spare the gold so well, that it is better to let it go than to keep it; which proves the futility of having a greater mass of gold in the country than the country needs. At other times we may have too little, and cannot spare more, and it is at such times that another kind of competition starts: the competition of bank rates in the various European centres. The object of raising the Bank rate is to raise interest here. When the rate is advanced, the joint stock banks immediately raise the interest they give on their deposits, and the rate of discount simultaneously rises. The latter, however, is not always instantaneously responsive, for the rise in the Bank rate may have been foreseen for some time, and rates may have risen already in anticipation. It is often possible to judge, in the light of experience, when the Bank rate will be raised. The competition takes the form, therefore, of raising rates of interest; in other words, of making money more remunerative here than elsewhere. The Continent will probably send gold here, or keep gold here in order to earn the higher interest, especially in discounting bills, and therefore the export of gold may be stopped, and gold, at the same time, attracted here. It does not follow that this is the inevitable consequence. This will depend, not entirely upon conditions here, but may be ruled by conditions elsewhere. There is no hard and fast rule, no sure working of the law of cause and effect. If other countries are determined to have the gold, they will take it, no matter how high the rate may be raised here, and in latter years the rate has not been so effective, probably, as in former years. Whether it be effective or ineffective at given moments, it is one means we possess--some call it a weapon--of trying to replenish our national reserve from other centres, and of increasing the power of the Bank to buy gold in the open market. We do not like the reserve to run down too low, because we fancy that a low reserve would create too much nervousness in the financial community. We do not imagine it would create a panic, but it may prevent undue nervousness should the Bank take measures to stop the drain. If gold flows here, it will in course of time make bank, or market money, more plentiful and cheap.