But this system is nearly the opposite to that which the law and circumstances have created for us in England.  The English Government, far from keeping cash from the money market till the position of that market was reasonably secure, at a very early moment, and while credit of all kinds was most insecure, for its own interests entered into the Money Market.  In order to effect loans better, it gave the custody and profit of its own money (along with other privileges) to a single bank, and therefore practically and in fact it is identified with the Bank of this hour.  It cannot let the money market take care of itself because it has deposited much money in that market, and it cannot pay its way if it loses that money.

Nor would any English statesman propose to ‘wind up’ the Bank of England.  A theorist might put such a suggestion on paper, but no responsible government would think of it.  At the worst crisis and in the worst misconduct of the Bank, no such plea has been thought of:  in 1825 when its till was empty, in 1837 when it had to ask aid from the Bank of France, no such idea was suggested.  By irresistible tradition the English Government was obliged to deposit its money in the money market and to deposit with this particular Bank.

And this system has plain and grave evils.

1st.  Because being created by state aid, it is more likely than a natural system to require state help.

2ndly.  Because, being a one-reserve system, it reduces the spare cash of the Money Market to a smaller amount than any other system, and so makes that market more delicate.  There being a less hoard to meet liabilities, any error in the management of that reserve has a proportionately greater effect.

3rdly.  Because, our one reserve is, by the necessity of its nature, given over to one board of directors, and we are therefore dependent on the wisdom of that one only, and cannot, as in most trades, strike an average of the wisdom and the folly, the discretion and the indiscretion, of many competitors.

Lastly.  Because that board of directors is, like every other board, pressed on by its shareholders to make a high dividend, and therefore to keep a small reserve, whereas the public interest imperatively requires that they shall keep a large one.

These four evils were inseparable from the system, but there is besides an additional and accidental evil.  The English Government not only created this singular system, but it proceeded to impair it, and demoralise all the public opinion respecting it.  For more than a century after its creation (notwithstanding occasional errors) the Bank of England, in the main, acted with judgment and with caution.  Its business was but small as we should now reckon, but for the most part it conducted that business with prudence and discretion.  In 1696, it had been involved in the most serious difficulties, and had been obliged to refuse to pay some of its notes.  For a long