Practically, we suppose, the danger is slight, because if a
great panic set in the Bank would be allowed to issue incon- vertible paper, that is, bank-notes guaranteed by the whole credit of the State. Theoretically, however, we can imagine a demand for gold which would in twenty-four hours close every bank in London. The volume of business has been expanded to an incredible degree without any similar increase in the cash reserve, either of the Bank of England, or of the general body of bankers. It is as if a big shop kept buying and selling with only ten shillings in the till. That is the weak place in English finance, otherwise so strong, and we are by no means sure that it ought not to be looked to before any panic occurs. If the weak place is imaginary, why do we compel the Bank of England to retain even a proportion of gold to meet its notes ? That hoard is, as Sir M. Hicks- Beach says, expensive to keep, yet we think it _necessary to incur the expense.
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