That the amount of the liabilities of a bank is a principal element in determining the proper amount of its reserve is plainly true; but that it is the only element by which that amount is determined is plainly false.  The intrinsic nature of these liabilities must be considered, as well as their numerical quantity.  For example, no one would say that the same amount of reserve ought to be kept against acceptances which cannot be paid except at a certain day, and against deposits at call, which may be demanded at any moment.  If a bank groups these liabilities together in the balance-sheet, you cannot tell the amount of reserve it ought to keep.  The necessary information is not given you.

Nor can you certainly determine the amount of reserve necessary to be kept against deposits unless you know something as to the nature of these deposits.  If out of 3,000,000 L. of money, one depositor has 1,000,000 L. to his credit, and may draw it out when he pleases, a much larger reserve will be necessary against that liability of 1,000,000 L. than against the remaining 2,000,000 L. The intensity of the liability, so to say, is much greater; and therefore the provision in store must be much greater also.  On the other hand, supposing that this single depositor is one of calculable habitssuppose that it is a public body, the time of whose demands is known, and the time of whose receipts is known alsothis single liability requires a less reserve than that of an equal amount of ordinary liabilities.  The danger that it win be called for is much less; and therefore the security taken against it may be much less too.  Unless the quality of the liabilities is considered as well as their quantity, the due provision for their payment cannot be determined.

These are general truths as to all banks, and they have a very particular application to the Bank of England.  The first application is favourable to the Bank; for it shows the danger of one of the principal liabilities to be much smaller than it seems.  The largest account at the Bank of England is that of the English Government; and probably there has never been any account of which it was so easy in time of peace to calculate the course.  All the material facts relative to the English revenue, and the English expenditure, are exceedingly well known; and the amount of the coming payments to and from this account are always, except in war times, to be calculated with wonderful accuracy.  In war, no doubt, this is all reversed; the account of a government at war is probably the most uncertain of all accounts, especially of a government of a scattered empire, like the English, whose places of outlay in time of war are so many and so distant, and the amount of whose payments is therefore so incalculable.  Ordinarily, however, there is no account of which the course can be so easily predicted; and therefore no account which needs in ordinary times so little reserve.  The principal payments, when they are