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 period it was in wholesome dread of public
opinion, and the necessity of retaining public confidence made it
cautious. But the English Government removed that necessity. In
1797, Mr. Pitt feared that he might not be able to obtain sufficient
species for foreign payments, in consequence of the low state of the
Bank reserve, and he therefore required the Bank not to pay in cash.