I should say that at the present time the mind of the monetary world would become feverish and fearful if the reserve in the Banking department of the Bank of England went below 10,000,000 L. Estimated by the idea of old times, by the idea even of ten years ago, that sum, I know, sounds extremely large.  My own nerves were educated to smaller figures, because I was trained in times when the demands on us were less, when neither was so much reserve wanted nor did the public expect so much.  But I judge from such observations as I can make of the present state of men’s minds, that in fact, and whether justifiably or not, the important and intelligent part of the public which watches the Bank reserve becomes anxious and dissatisfied if that reserve falls below 10,000,000 L. That sum, therefore, I call the ‘apprehension minimum’ for the present times.  Circumstances may change and may make it less or more, but according to the most careful estimate I can make, that is what I should call it now.

It will be said that this estimate is arbitrary and these figures are conjectures.  I reply that I only submit them for the judgment of others.  The main question is one of fact—­Does not the public mind begin to be anxious and timorous just where I have placed the apprehension point? and the deductions from that are comparatively simple questions of mixed fact and reasoning.  The final appeal in such cases necessarily is to those who are conversant with and who closely watch the facts.

I shall perhaps be told also that a body like the Court of the Directors of the Bank of England cannot act on estimates like these:  that such a body must have a plain rule and keep to it.  I say in reply, that if the correct framing of such estimates is necessary for the good guidance of the Bank, we must make a governing body which can correctly frame such estimates.  We must not suffer from a dangerous policy because we have inherited an imperfect form of administration.  I have before explained in what manner the government of the Bank of England should, I consider, be strengthened, and that government so strengthened would, I believe, be altogether competent to a wise policy.

Then I should say, putting the foregoing reasoning into figures, that the Bank ought never to keep less than 11,000,000 L.. or 11,500,000 L. since experience shows that a million, or a million and a half, may be taken from us at any time.  I should regard this as the practical minimum at which, roughly of course, the Bank should aim, and which it should try never to be below.  And, in order not to be below 11,500,000 L., the Bank must begin to take precautions when the reserve is between 14,000,000 L. and 15,000,000 l.; for experience shows that between 2,000,000 L. and 3,000,000 L. may, probably enough, be withdrawn from the Bank store before the right rate of interest is found which will attract money from abroad, and before that rate has had time to attract it.  When the reserve is between 14,000,000 L. and 15,000,000 L., and when it begins to be diminished by foreign demand, the Bank of England should, I think, begin to act, and to raise the rate of interest.