"I am not very well acquainted with the practice of banking," said T. B., "and I should be grateful if you would explain why it is impossible for a bank to fail."
If Sir George Calliper had been a little less sure of himself, he would have detected the monstrous inaccuracy of T. B.'s confession of ignorance.
"I assure you," said T. B. seriously, "that I regard this matter as being one of life and death."
"Well," said the banker, with a perplexed frown, "I will explain. The solvency of a bank, as of an individual, is merely a matter of assets and liabilities. The liabilities are the elementary debts, deposits, loans, calls, and such like that are due from the bank to its clients and shareholders. Sometimes the liability takes the form of a guarantee for the performance of certain obligations--that is clear enough?"
"Assets may be represented as gold, Government securities and stock convertible into gold, properties, freehold, leasehold, land; but you know, of course, the exact significance of the word assets?"
"Well, it is a matter of balance," said the banker, "allowing a liberal margin for the fluctuation of securities, we endeavour and succeed in keeping a balance of assets in excess of our liabilities."
"Do you keep gold in any quantity on the premises?--what would be the result, say, of a successful burglary that cleared your vaults?"
"It would be inconvenient," said Sir George, with a dry smile, "but it would not be disastrous."
"What is your greatest outstanding liability?" demanded T. B.
"It is queer that you should ask," he said slowly; "it was the subject of a discussion at my hoard meeting this afternoon--it is the Wady Semlik Barrage."
"The Egyptian irrigation scheme?" asked T. B. quickly.
"Yes, the bank's liability was very limited until a short time ago. There was always a danger that the physical disabilities of the Soudan would bring about a fiasco. So we farmed our liability, if you understand the phrase. But with the completion of the dam, and the report of our engineer that it had been submitted to the severest test, we curtailed the expensive insurance."
"When are the works to be handed over to the Egyptian Government?"
"That I cannot tell you," he said; "it is a secret known only to the directors and myself."