CASH RESERVES 167

large holdings of shares, or because of their ancestral or
personal connection with banking, but because of then-
reputation or influence, commercial, social or political.
The result is that, along with the process of amalgama-
tion, there has been going on a transfer of the whole
management of banking to the hierarchy of salaried
officials; whilst the supreme decisions on financial
policy are in the hands, in practice, of a very small
group of salaried general managers, only partially in
consultation with an equally small group of chairmen of
boards of directors, themselves usually drawing not
inconsiderable salaries."

It seems to me that Mr Webb exaggerates in
rather a dangerous degree the reduction, through
amalgamation, of the necessity which obliges a bank
to keep a considerable reserve of cash. It is quite
true that under normal circumstances cash with-
drawn from one bank finds its way in due course to
another, and that with regard to these mere " till
money" transfers there might be a considerable
reduction in the amount of cash required if all the
banking of the country were in the hands of one
business, so that what was withdrawn from one
branch would be paid into another. But this fact
would not alter the need which compels a bank to
keep considerable reserves in cash in order to provide
against the possibility of a run. A State bank, if
the public takes it into its head that it prefers to have
a larger proportion of currency in its own pocket
rather than in its bank, may find itself pulled at for
cash just as vigorously as a bank managed by private
enterprise. This was shown in August, 1914, when
very large sums were withdrawn from the Post Office