Iacknowledge，（andtheexperienceof1847hasprovedtothosewhooverlookeditbefore，）thatthemischiefnowdescribed，maybewrought，andinlargemeasure，bytheBankofEngland，throughitsdepositsalone。Itmaycontinueorevenincreaseitsdiscountsandadvances，whenitoughttocontractthem:withtheultimateeffectofmakingthecontractionmuchmoresevereandsuddenthannecessary。Icannotbutthink，however，thatbankswhichcommitthiserrorwiththeirdeposits，wouldcommititstillmoreiftheywereatlibertytomakeincreasedloanswiththeirissuesaswellastheirdeposits。Iamcompelledtothinkthatthebeingrestrictedfromincreasingtheirissues，isarealimpedimenttotheirmakingthoseadvanceswhicharrestthetideatitsturn，andmakeitrushlikeatorrentafterwards……andwhentheActisblamedforinterposingobstaclesatatimewhennotobstaclesbutfacilitiesareneeded，itmustinjusticereceivecreditforinterposingthemwhentheyareanacknowledgedbenefit。Inthisparticular，therefore，Ithinkitcannotbedenied，thatthenewsystemisarealimprovementupontheold。
4。Buthoweverthismaybe，itseemstomecertainthattheseadvantages，whatevervaluemaybeputonthem，arepurchasedbystillgreaterdisadvantages。Inthefirstplace，alargeextensionofcreditbybankers，thoughmosthurtfulwhen，creditbeingalreadyinaninflatedstate，itcanonlyservetoretardandaggravatethecollapse，ismostsalutarywhenthecollapsehascome，andwhencreditinsteadofbeinginexcessisindistressingdeficiency，andincreasedadvancesbybankers，insteadofbeinganadditiontotheordinaryamountoffloatingcredit，servetoreplaceamassofothercreditwhichhasbeensuddenlydestroyed。Antecedentlyto1844，iftheBankofEnglandoccasionallyaggravatedtheseverityofacommercialrevulsionbyrenderingthecollapseofcreditmoretardyandhencemoreviolentthannecessary，itinreturnrenderedinvaluableservicesduringtherevulsionitself，bycomingforwardwithadvancestosupportsolventfirms，atatimewhenallotherpaperandalmostallmercantilecredithadbecomecomparativelyvalueless。Thisservicewaseminentlyconspicuousinthecrisisof1825—6，theseverestprobablyeverexperienced;duringwhichtheBankincreasedwhatiscalleditscirculationbymanymillions，inadvancestothosemercantilefirmsofwhoseultimatesolvencyitfeltnodoubt;advanceswhichifithadbeenobligedtowithhold，theseverityofthecrisiswouldhavebeenstillgreaterthanitwas。IftheBank，itisjustlyremarkedbyMrFullarton，（4*）
complieswithsuchapplications，\"itmustcomplywiththembyanissueofnotes，fornotesconstitutetheonlyinstrumentalitythroughwhichtheBankisinthepracticeoflendingitscredit。
Butthosenotesarenotintendedtocirculate，nordotheycirculate。Thereisnomoredemandforcirculationthantherewasbefore。Onthecontrary，therapiddeclineofpriceswhichthecaseinsuppositionpresumes，wouldnecessarilycontractthedemandforcirculation。ThenoteswouldeitherbereturnedtotheBankofEngland，asfastastheywereissued，intheshapeofdeposits，orwouldbelockedupinthedrawersoftheprivateLondonbankers，ordistributedbythemtotheircorrespondentsinthecountry，orinterceptedbyothercapitalists，who，duringthefervourofthepreviousexcitement，hadcontractedliabilitieswhichtheymightbeimperfectlypreparedonthesuddentoencounter。Insuchemergencies，everymanconnectedwithbusiness，whohasbeentradingonothermeansthanhisown，isplacedonthedefensive，andhiswholeobjectistomakehimselfasstrongaspossible，anobjectwhichcannotbemoreeffectuallyansweredthanbykeepingbyhimaslargeareserveaspossibleinpaperwhichthelawhasmadealegaltender。Thenotesthemselvesneverfindtheirwayintotheproducemarket;andiftheyatallcontributetoretard\"（or，asIshouldrathersay，tomoderate）
\"thefallofprices，itisnotbypromotingintheslightestdegreetheeffectivedemandforcommodities，notbyenablingconsumerstobuymorelargelyforconsumption，andsogivingbrisknesstocommerce，butbyaprocessexactlythereverse，byenablingtheholdersofcommoditiestoholdon，byobstructingtrafficandrepressingconsumption。\"