checking the drain in its commencement, the same or a still greater limitation must take place afterwards, in order, by acting on prices, to bring back this large quantity of gold, for the indispensable purpose of replenishing the Bank reserve. But in this argument several things are overlooked. In the first place, the gold might be brought back, not by a fall of prices, but by the much more rapid and convenient medium of a rise of the rate of interest, involving no fall of any prices except the price of securities. Either English securities would be bought on account of foreigners, or foreign securities held in England would be sent abroad for sale, both which operations took place largely during the mercantile difficulties of 1847, and not only checked the efflux of gold, but turned the tide and brought the metal back. It was not, therefore, brought back by a contraction of the currency, though in this case it certainly was so by a contraction of loans. But even this is not always indispensable. For in the second place, it is not necessary that the gold should return with the same suddenness with which it went out. A great portion would probably return in the ordinary way of commerce, in payment for exported commodities. The extra gains made by dealers and producers in foreign countries through the extra payments they receive from this country, are very likely to be partly expended in increased purchases of English commodities, either for consumption or on specu-
department being less than it otherwise would be by the entire amount of the bullion in the issue department, and the whole amount of the drain falling in the first instance on that diminished reserve, the pressure of the whole drain on the half reserve is as much felt, and requires as strong measures to stop it, as a pressure of twice the amount on the entire reserve. As I have said elsewhere, (Evidence before the Committee of the House of Commons on the Bank Acts, in 1857.) "it is as if a man having to lift a weight were restricted from using both hands to do it, and were only allowed to use one ham! at a time: in which case it would be necessary that each of his hands should be as strong as the two together."
