for loans would be exactly the same as before, although differently distributed. Bank reserve would cease to be the National reserve, but there would not be a single coin less in the country available for every purpose of internal and foreign exchange.

When the gold in the country is reduced by exportation the case is very different. Not merely is there a direct reduction in the bankers' stock of loanable capital, but, owing to the extremely narrow basis of bullion upon which the enormous totals of our bank-note currency and commercial liabilities rest, even a slight export of gold has an exaggerated effect upon the entire superstructure of commerce. Just observe from the following figures the fluctuations in the rate in France and Germany, compared with those of the Bank Rate in England * :—

If our banking authorities, like those of France and Germany, kept an ample gold reserve, more than barely sufficient for the commercial conditions of the time, we could afford to part with a portion of the stock without disturbing commercial credit and confidence, making the top-heavy structure rock from top to bottom. "Cutting it fine" in a vital matter of this sort should be avoided by all prudent bankers; error, if any, ought to be on the side of safety. A larger reserve than might possibly be made to suffice means only a trifling loss of profit; whilst anything less than is absolutely necessary means not loss, but utter ruin. Such precarious profits are purchased at too dear a price.

Banks are not the only sufferers by this method of shaving the rocks and shoals where many a good ship went down. For the want of a million or two of additional gold reserve, the interest of which only would be lost, Government and other securities have to be sold at depreciated prices, at a loss of twenty times the amount. The mercantile section of the community are obliged to make forced sales, and the timid and nervous among the investing public rush into the falling market in the hope to save something out of the wreck. The profits of these transactions drop into the deep pockets of "bearing" stock-jobbers and other "birds of prey."

How, then, may this National gold reserve be strengthened and maintained, as Mr. Goschen recently advocated? The answer of Mr. Bagehot and some other authorities is that, the Bank of England having charge of the National reserve, to it belongs the duty of seeing to its sufficiency. But surely, if this reserve is held not merely against the bank-note circulation, but also against all banking and commercial liabilities, it ought to be maintained by those who incur the liabilities. Is it reasonable or fair to load one bank, however distinguished, with the entire burden of providing the National reserve of gold, because for pure convenience it chances to be its custodian? The discharge of this duty and responsibility lies at the door of every bank throughout the three kingdoms, to provide its fair share in adequate proportion to its resources and liabilities.

Then it is said that if the Bank of England were obliged to keep all bankers' balances intact, without being permitted to use any portion of them, the reserve would be sufficient. But the Bank of England is not the only bank in London that keeps other bankers' balances. Would the private and joint stock banks of London who hold balances of provincial, foreign, and colonial banks do likewise? Would they take all the trouble and risk of keeping these accounts for the honour and fun

of the thing, without any compensation whatever? If these banks would refuse to do anything of the sort, is it fair to ask the Bank of England to do so on so much larger a scale?

Every one admired the wisdom and courage of the Bank of England authorities in strengthening the National reserve of gold by borrowing £3,000,000 from the Bank of France during the Baring crisis; but it would have been much more creditable to the entire banking community if, by each bank holding a larger cash reserve, such a humiliating incident had not been necessary. There can be no question but that this timely precaution, along with the joint guarantee voluntarily entered into by so many London, English, Scottish, Foreign, and Colonial banks, under the bold leadership of the Rt. Hon. William Lidderdale, the late Governor of the Bank of England, averted a commercial and banking panic that would have completely thrown into the shade the memorable "Black Friday" of May 1866.

There are several notable events for which the year 1894 will not fail to be remembered. The completion by the Bank of England of its honourable record of two hundred years' service to the Commerce and the Government of the country. The entire justification by recent events of those who undertook the Baring Liquidation, whose conduct was so widely questioned at the time, though now the goal is well in sight. Last, but not least, during its long and chequered history the vaults of the Bank of England have never contained so large a stock of gold. How far this may be owing to the long-continued stagnation of trade, or whether the banking community has at last woke up to realise its heavy responsibilities, time alone can tell.

AN EXPERT.

THE WIND AND THE LEAVES.

THE

HE wind through the trees came merrily,
In the springtime fair,

He sang to the leaves and soft went he

Thro' the sunlit air;

He sang to the leaves, and his song was kind
As he journeyed on,

And they murmured, Stay with us, O Wind"-
But the wind was gone.

The wind thro' the trees came merrily,
In the autumn drear,

Said the leaves, Now will we happy be,

For our friend is here."

He sang to the leaves, but his song was grim
With a ruder breath;

And what was a merry sport to him,

To the leaves was death.

M. C. E.

T was a hot day in August, when
the only perceptible current of

air now and again stirred the face of
Dornochy Frith.

The inhabitants of a tiny fishing village, which looked as if it had been casually

jammed into the side of a hill, were lazily loafing about. Some of them lay on the shore, aimlessly whittling sticks with clasp-knives; others had made temporary pillows of dark seaweed and were sleeping heavily in the broad sunshine; for industry. was not the strong point of these good people-the Italians themselves could not find more pleasure in the fact of merely existing. Through this peaceful scene there strolled a fair-haired and fair-bearded man of about thirty-five years of age. He was the Laird of the place, and had wandered down from the house hidden in trees at the top of the hill, to survey his little world, and to have a word on the pier with any passenger by the ferry-boat or a stray fisherman who might have had a rough experience in the recent squall.

The head of the Frith, a few hundred yards beyond this village, was separated from the next Frith by two headlands which stood facing each other like great sea-gates, leaving what at a distance seemed to be a narrow, but on near approach proved to be a fairly broad waterway for craft of all kinds, from Her Majesty's gun-boats down to merchant vessels and fishing-boats.

The Laird of Dornochy as he was called, otherwise Allan Muir, went on his way humming a Scotch tune. He wore a dark kilt with a sporan made out of a badger's skin, a grey tweed coat and waistcoat, and had a broad blue bonnet on his head. On arriving at the pier he leant on a rail close to the flight of steps leading to the water and looked out to sea with watchful eyes.

At length he gave a murmur of satisfaction, the cause of which was the appearance of a small steam launch which was coming gaily along in the direction of the pier.

As the launch neared the pier, a girl, wrapped in a long red cloak, and with a straw hat trimmed with red ribbon, rose and waved a hand in recognition of the man on the pier; and the blue bonnet was doffed in response. Allan Muir ran down the steps and helped to make fast the launch, which bumped gently against the wooden stakes below, saying,

"I thought perhaps you would choose to-day for coming to sketch, as it is so fine! Let me take your things," and Muir picked up rug, umbrella, and bag of painting apparatus, which he spied on the table of the tiny cabin.

They started for the hill; a few steps brought them to the main and only street of the village of Dornochy.

The women of the place, who for the most part were congregated on their doorsteps knitting, or dandling babies in their arms, smiled from ear to ear and uttered some cheery Gaelic greeting as the two passed by; some older women and boys, who were rapidly and dexterously baiting long sea-lines with shell-fish and

then flinging them with never a tangle into large circular heaps by their doorsteps, thrust the matted blue-black hair from their thick eyebrows and deep grey eyes, and stared in a mixture of friendliness and curiosity with the rest.

One or two houses in the so-called street stood out a little from the rest by reason of greater neatness, recent whitewashing of the walls and thatching of the roofs. Moreover, their inmates had a love for flowers, and had trained creepers up the walls two or three of the cottages were half hidden in striped convolvulus, or in cascades of delicate scarlet tropeolum. Some of their doorsteps were stained with blue, but the beauty of this finishing touch was questionable.

The windows in those cottages, alas! were not made to open, and they were rarely clean enough to see through; but the doors made up for this by being always wide open, to admit air and neighbours, children and chickens!

To the left of the village was a low plateau decked with oak and ash and bonnie elm tree; to the right, a steep face of rock with tufts of heather and fern peeping out here and there; down below a deep cleft in the centre of the rock, where a tiny, trickling burn fell from pool to pool. Shading one of these pools was a large rowan tree, its scarlet berries looking like clusters of coral beads.

A few steps higher, and they stood on the open heather. It was in wonderful bloom that year, and spread like a great sheet of amethyst as far as the eye could see. About a hundred yards from where they stood the silver stems of a small plantation of birch trees rose out of this purple mist; they were twisted into strange shapes, bending and leaning every way, as if on stormy nights they had danced. to the piping of the hoarse Northern blasts. For the moment, though distorted, they were at peace, and shimmerings of their own delicate leaves flashed tremulously up and down their white stems as they bent their heads to the rustling summer breeze. Kate Rothes gave a low exclamation of delight.

"This is too beautiful!" she said, her cheek flushing with excitement. "Listen to the bees; they seem everywhere. They will sting me if I stay here and sketch." "Don't be afraid," said Muir. "I will find you a quiet corner."

He threw down the rug and sketching umbrella, then arranged them snugly close to a large grey boulder which was sprinkled with long grey moss and surrounded by heather mixed with clumps of blackberry undergrowth thickly studded with. black-purple berries.

The girl seated herself very deliberately, and gave a condescending glance of scrutiny at the scene of action. She screwed up both eyes to begin with, then she shaded them with her hand; finally she held out a pencil at arm's length and took measurements.

"Now I can begin," she said resolutely. "Would you mind getting me some water in this tin bottle?

When Muir returned with his supply, he found that the pencil had already suggested a very charming little picture in the sketch-book.

Muir lay on the heather watching her face. The face was only eighteen years old, but it evidently aimed at being inspired by a mind at least twice that age. Its outline was childish; the eyes were full of charm and fancy, and now and then a sparkle of mischief was to be seen in them. It was a strange and new sensation to Allan Muir to be so intensely occupied in pondering over a girl's looks and ways to find himself absorbed in them. As a rule, he had been very civil to the girls of his acquaintance, but he had not wasted much time on them.

Kate sketched rapidly, occasionally asking her companion's advice as to colour, and nodding gravely at his replies.