This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1865 edition. Excerpt: ... a few weeks' time. Why, then, should these temporary ebbs of gold put us in a flutter? And yet, when they occur, we actually allow them to shake down our whole fabric of trade and industry. In order to check these merely temporary ebbs of gold, the Bank adopts measures which not only (as we Internal nave shown) inflict serious injury upon the Drains. country, but also which in many cases imperil its own position. In trying to stop an external drain upon its resources, it produces an internal one. The means which the Bank employs to check a drain upon its gold for export, are such as inevitably create an increased demand for both gold and notes at home. It does so in this way. By raising the Bank-rate to 9 or 10 per cent, a great fall of prices is produced in the home markets, occasioning heavy losses to the holders of produce and goods of all kinds. Many failures take place; distrust spreads; notes in many cases are required in payment, instead of bills or cheques; and hence a drain of notes takes place upon the Bank. A drain for notes, under our present system, is as fatal to the Bank as a drain for gold. And the more the Bank raises its rate, in order to check this demand for its notes, the more numerous become the failures, the more widespread becomes the distrust, and the greater the drain upon its reserve of notes. And also of gold, --because many of the banks, in order to meet the panic, have to provide themselves with a larger supply of specie--by cashing their securities, and withdrawing the amount in gold from the Bank. In this way, under the present system, an external drain inevitably produces an internal drain also, --which is like lighting a candle at both ends. Indeed, during the last crisis (1857), the amount of gold withdrawn from.