First.  There should be a clear understanding between the Bank and the public that, since the Bank hold out ultimate banking reserve, they will recognise and act on the obligations which this implies; that they will replenish it in times of foreign demand as fully, and Lend it in times of internal panic as freely and readily, as plain principles of banking require.

This looks very different from the French plan, but it is not so different in reality.  In England we can often effect, by the indirect compulsion of opinion, what other countries must effect by the direct compulsion of Government.  We can do so in this case.  The Bank directors now fear public opinion exceedingly; probably no kind of persons are so sensitive to newspaper criticism.  And this is very natural.  Our statesmen, it is true, are much more blamed, but they have generally served a long apprenticeship to sharp criticism.  If they still care for it (and some do after years of experience much more than the world thinks), they care less for it than at first, and have come to regard it as an unavoidable and incessant irritant, of which they shall never be rid.  But a bank director undergoes no similar training and hardening.  His functions at the Bank fill a very small part of his time; all the rest of his life (unless he be in Parliament) is spent in retired and mercantile industry.  He is not subjected to keen and public criticism, and is not taught to bear it.  Especially when once in his life he becomes, by rotation, governor, he is most anxious that the two years of office shall ’go off well.’  He is apt to be irritated even by objections to principles on which he acts, and cannot bear with equanimity censure which is pointed and personal.  At present I am not sure if this sensitiveness is beneficial.  As the exact position of the Bank of England in the Money Market is indistinctly seen, there is no standard to which a Bank governor can appeal.  He is always in fear that ‘something may be said;’ but not quite knowing on what side that ‘something’ may be, his fear is but an indifferent guide to him.  But if the cardinal doctrine were accepted, if it were acknowledged that the Bank is charged with the custody of our sole banking reserve, and is bound to deal with it according to admitted principles, then a governor of the Bank could look to those principles.  He would know which way criticism was coming.  If he was guided by the code, he would have a plain defence.  And then we may be sure that old men of business would not deviate from the code.  At present the Board of Directors are a sort of semi-trustees for the nation.  I would have them real trustees, and with a good trust deed.

Secondly.  The government of the Bank should be improved in a manner to be explained.  We should diminish the ‘amateur’ element; we should augment the trained banking element; and we should ensure more constancy in the administration.

Thirdly.  As these two suggestions are designed to make the Bank as strong as possible, we should look at the rest of our banking system, and try to reduce the demands on the Bank as much as we can.  The central machinery being inevitably frail, we should carefully and as much as possible diminish the strain upon it.