Very commonly the panic extends as far, or almost as far, as the bank or banks which hold the reserve, but does not touch it or them at all.

In this case it is enough if the dominant bank or banks, so to speak, pledge their credit for those who want it.

Under our present system it is often quite enough that a merchant or a banker gets the advance made to him put to his credit in the books of the Bank of England; he may never draw a cheque on it, or, if he does, that cheque may come in again to the credit of some other customer, who lets it remain on his account.

An increase of loans at such times is often an increase of the liabilities of the bank, not a diminution of its reserve.

Just so before 1844, an issue of notes, as in to quell a panic entirely internal did not diminish the bullion reserve.