Whatever theory may prescribe, the logic of facts seems peremptory so far.  And these principles taken together amount to saying that, by the doctrine of the directors, the Bank of England ought, as far as they can, to manage a panic with the Act of 1844, pretty much as they would manage one without it—­in the early stage of the panic because then they are not fettered, and in the latter because then the fetter has been removed.

We can therefore estimate the policy of the Bank of England in the three panics which have happened since the Act of 1844, without inquiring into the effect of the Act itself.  It is certain that in all of these panics the Bank has made very large advances indeed.  It is certain, too, that in all of them the Bank has been quicker than it was in 1825; that in all of them it has less hesitated to use its banking reserve in making the advances which it is one principal object of maintaining that reserve to make, and to make at once.  But there is still a considerable evil.  No one knows on what kind of securities the Bank of England will at such periods make the advances which it is necessary to make.

As we have seen, principle requires that such advances, if made at all for the purpose of curing panic, should be made in the manner most likely to cure that panic.  And for this purpose, they should be made on everything which in common times is good ‘banking security.’  The evil is, that owing to terror, what is commonly good security has ceased to be so; and the true policy is so to use the Banking reserve, that if possible the temporary evil may be stayed, and the common course of business be restored.  And this can only be effected by advancing on all good Banking securities.

Unfortunately, the Bank of England do not take this course.  The Discount office is open for the discount of good bills, and makes immense advances accordingly.  The Bank also advances on consols and India securities, though there was, in the crisis of 1866, believed to be for a moment a hesitation in so doing.  But these are only a small part of the securities on which money in ordinary times can be readily obtained, and by which its repayment is fully secured.  Railway debenture stock is as good a security as a commercial bill, and many people, of whom I own I am one, think it safer than India stock; on the whole, a great railway is, we think, less liable to unforeseen accidents than the strange Empire of India.  But I doubt if the Bank of England in a panic would advance on railway debenture stock, at any rate no one has any authorised reason for saying that it would.  And there are many other such securities.