How agreeable it would be if we could settle this matter in a scientific way, calculating with mathematical precision how much strain the banking system will stand, and to a nicety what proportion of the reserve to the liabilities will for ever avert a panic. Unfortunately, mathematics will not help us in this. If we could only lay down a theoretic line of safety, knowing precisely how far to go and where to stop, how happy and contented we could be. The Philosopher’s Stone could perform no greater miracle. The banks would then know exactly how much to lend, exactly how much deposits to receive, irrespective of gold production and wealth production, and the trade and commerce of this country could be governed perfectly in true keeping with our needs and the progress of civilization by that ideal law, rule-o’-thumb. It would be impossible to imagine then to what heights of greatness England would rise, or the reposeful content in which she would live. As, however, scientific precision is impossible, we must rule out this haphazard law. We must still trust as well as we can to experience. So far experience has not failed us. This much can be said in its favour. It is impossible to say what proportion of reserve will save banks in a possible panic. Perhaps eighty or ninety per cent, would not save them. Perhaps they might go under with a thirty per cent. proportion, when a thirty-one per cent. would have averted the disaster. Nor must we rule out of consideration when contemplating the theoretic line of safety the composite character of the deposits. Banks are counselled to adopt two extreme policies. That is to say, to do the impossible. They are asked to lend freely to assist trade, and at the same time are asked not to lend or to lend sparely. During the early weeks of the war, for instance, they were urged to give liberal assistance to commercial men and others, and at the same time to increase their reserves and to be ultra-cautious. Some critics, and the most distinguished amongst them is Mr. Walter Bagehot, urge them always to keep high reserves against the day of panic, and yet when the panic comes to lend freely. They cannot lend freely and simultaneously maintain high reserves. They cannot have high and low reserves at one and the same time. They cannot lend sparingly and cautiously in the same moment as they lend liberally and incautiously. They must either keep high reserves and assist commerce as sparingly as possible, or they must keep modest reserves and help commerce as liberally as possible. They cannot adopt contrary policies. What should we say of the farmer who kept his seed in the barn and feared to sow it to-day lest a storm should arise to-morrow and destroy it? He must take his chances of a storm. And the country must take its chances of a panic.