The amount of bad business in commercial countries is an infinitesimally small fraction of the whole business.

That in a panic the bank, or banks, holding the ultimate reserve should refuse bad bills or bad securities will not make the panic really worse; the 'unsound' people are a feeble minority, and they are afraid even to look frightened for fear their unsoundness may be detected.

The great majority, the majority to be protected, are the 'sound' people, the people who have good security to offer.
If it is known that the Bank of England is freely advancing on what in ordinary times is reckoned a good security--on what is then commonly pledged and easily convertible--the alarm of the solvent merchants and bankers will be stayed.

But if securities, really good and usually convertible, are refused by the Bank, the alarm will not abate, the other loans made will fail in obtaining their end, and the panic will become worse and worse.
It may be said that the reserve in the Banking Department will not be enough for all such loans.

If that be so, the Banking Department must fail.