THE BANK OF ENGLAND'S DANGER.

Nelson Evening Mail, Volume XIII, Issue 171, 17 July 1878, Page 4

THE BANK OF ENGLAND'S DANGER.

The Statist obs°rves that to Bug_rrßt even thp Dfieeibiluv of danger to the Bank of England Kpem? tin absurdity. But no system ia stroncp.r than its weakest essential part. Tiie iWk of England, nft'^r all, is not "isolate. 1 ,, but it is the Vfid n*d representative of a freafc hnnkin? svst^m which is defer*tivo in many ways, nnd from the e'frVtn •of whose deficiencies even the Bank of England itself must suffer. The Bark •of England, by -a lacit arrangement, "keeps the caah reserve, not merely of. tbe London banks, but of. the banks of the United Kingdom, as well as of foreign bants to some extent. The solvency of the whole system depends uoon it. The point where the Bank of England fails is in (he maintenance of a cash reserve. The reeerve is in fact, co small that one cannot think of the possibility of a " comer " by some enifern'risinj? capitalists without a ehtidder. Ona or two millionaire*?, or even ona only wanting t» $jW 8 an interest to lifo, ami to add tn his millions as well, could easily make a great coup. Tbey have only to realise ten millions of securities, *rbich not only a Rothschild but one or two more could" easily do, and the market is at their mercy. In a motnent money would be tight, the reserve in the Bank wonld sink rapidly below ten millions, and the fear of a catastrope would be general. Probably nothing more need be done, apprehension and panic doing the rest; but, in point of fact, such a capitalist would be able to shut the doors of the Banking Department, unless some desperate measure like the suspension of the Bank Act. or a sudden borrowing of a lew millions from the Bank of Eranee, were resorted to. In any case the fall in securiti es would probably be such thafc the account Would probably be covered, and a repurchase of what had been sold gradually could be made afc a cheap rate. Some day or other we may have Jay Goulds among us, who have the skill and daring and resources necessary for tbe operation, and its possibility should _ot be pooh-poohed. The Bank of England should never be so weak as to a give a chance to unscrupulous operations of the sort described.