REMARKS ON SPECIE RESERVES AND BANK DEPOSITS. 387 
less than 74 millions; October 24, it was 10 millions; and on the 25th of November, 
it exceeded 21 millions, being an increase within one month of 11 millions sterling, 
or over 53 millions of dollars. A portion of the fund which enabled the Bank to 
make this enormous increase of the loans was supplied by the enlarged amount of 
bankers’ deposits, which were only 21 millions in July, but rose to 51 millions 
late in November. The total amount of the deposits rose within the same period 
from 14 to 201 millions. The Governor stated to the Committee, as “the ordinary 
course, when commercial alarm is engendered, that the bankers’ deposits, and even 
the traders' deposits, increase" ; that is, *the bankers, in order to meet a possible 
demand upon them, strengthen their deposits at the Bank of England, the Bank of 
| England being the bankers’ bank.” y 
But if the Bank of England during a crisis, with no other help than an addition 
of six or seven millions to its deposits, is able to afford thus much relief to the trading 
community, how vastly more efficient might its action be, if aided by a greater con- 
centration of the deposits on the plan here proposed. While the pressure was at 
its height in the autumn of 1857, it appears that the aggregate deposits in the three 
principal Joint-Stock Banks, — viz. the London and Westminster, the London Joint- 
Stock, and the Union, — exceeded thirty-three millions sterling. This enormous sum 
might have been added to the resources of the Bank of England without withdrawing 
a shilling of it from the institutions in which it was actually lodged ; and then, with a 
deposit fund exceeding fifty-three millions at its command, the loans and advances might 
have been indefinitely increased without hazard, and even without raising the rate of 
interest to more than six or seven per cent. So large a deposit fund, though not equal, 
of course, to the aggregate of all the deposits made at the various banking institutions 
in London, amounted probably to so large a fraction of them all, that it would have 
been safe to expect that at least three fourths of the loans and advances made out of it 
would only occasion equivalent payments info if, or, in other words, that the loan 
would amount only to a transfer on the books from the credit of one person to that 
of another. 
Under such a system, alarm in the mercantile community might be made to coun- 
teract the pressure in the money market, instead of being, as at present, the sole cause 
of that pressure. Now, when commercial distress is impending, every prudent mer- 
chant and bank director must fortify his position by increasing his deposits; and as 
these deposits are scattered among many institutions, every such action *ties up" a 
portion of the immediate bank debt, which is the only fund of any importance from 
which commercial payments can be made. The very act which lessens the peril for 
