986 REMARKS ON SPECIE RESERVES AND BANK DEPOSITS. 
a heavy sacrifice. Still, its regulating power is very great, and its prompt action has 
often rescued, though at great peril to itself, half of the banks in the country, and a 
large portion of the trading community, from total bankruptcy. Indirectly its action 
limits the amount of the currency, and its declarations establish from time to time the 
rates of interest; though in this respect, of course, it follows rather than leads the 
action of the market. Yet its action is much feebler than it might be; for its depos- 
its, however large, are vastly below the aggregate deposit fund of the country, and it 
is much hampered by its close connection with the government, and by the unwise 
regulation already adverted to, which establishes an arbitrary limit to its specie reserve. 
In so far, also, as it performs the functions of an ordinary bank, by issuing its own 
notes payable on demand, and holding a fixed amount of specie reserve for the redemp- i 
tion of them, it is not a regulator, but is itself an institution needing to be regulated. 
But with all these drawbacks upon its efficiency, the relief which it affords to the 
trading community in times of commercial distress is very great. The crisis which 
occurred in the autumn of 1857 was severe and widely extended, being felt with 
almost equal stringency in England, Northern Germany, and the United States; and 
we possess the history of it in a complete and trustworthy form, through the evidence 
which was taken before a committee of the House of Commons early in 1858. It 
appears from the testimony of the Governor of the Bank of England, and others, that 
the Dank deems itself bound, on such emergencies, * as a public institution, to- make 
common cause with commerce," so as * not to refuse accommodation to any person 
who brought good securities," and *that the notion appears to be so thoroughly 
ingrained in the minds of the commercial world, that, whenever you have good secu- 
rity, it ought to be convertible at the Bank in some shape or way, that I have very 
great doubt indeed whether the Bank can ever take a position to refuse to assist persons 
who have good commercial securities to offer." The only hard condition upon which 
this help is afforded is a rapid and considerable rise in the rate of interest charged, 
dependent upon the extent and urgency of the demand. The ordinary rate of discount, 
which varies in quiet times from two to three per cent, rises quickly during a period of 
pressure to eight, and even ten, per cent. Subject to this condition, the Bank appears in 
times of great pressure to discount all the unexceptionable short paper — i. e. paper 
having but a short time to run — which is offered to it, and also to make large 
advances to other banks upon the security of such paper which they had previously 
discounted. : 
` Of course, the amount of its loans and advances guia such a crisis increases very 
rapidly. Late in July, 1857, before any pressure began to be felt, the aggregate was 
