If, for example, money can be employed in india at the high rate for one month

│ │ Year. For several weeks following, at a time of year when the demand for Council Bills is usually strong, he sold none at all. There never was so much borrowed money collected in the world as is now collected in London. Such a system reduces to a minimum the risk that is caused by the deposit. A few weeks later the bills reach England, are duly accepted, and are capable of being rediscounted if the Bank needs additional free funds to buy more Council Bills and turn its money over again in another transaction of the same kind.

49) the gold portion of the reserve. Such a state, therefore, by reforming its coin, will not always be able to reform its currency. 3rdly.

We shall soon hold in Lombard Street far less of the money of foreign governments; but we shall hold more and more of the money of private persons; for the deposit at a clearing-house necessary to settle the balance of commerce must tend to increase as that commerce itself increases. Since the Franco-German war, we have become to a much larger extent than before the Bankers of Europe. Our friends whispered about that we were acting quite in a different manner from that in which Mr. │ In India. By old usage, the directors of the Bank of England cannot be themselves by trade bankers. The German Government is only a conspicuous example of a foreign power which happens lately to have had an unusual command of good securities, and an unusually continuous wish to use them in England. And a London banker can also have the most intellectual society in the world if he chooses it. This discussion will have served to make clear a distinction highly important to the problem of the Indian Bank Rate. If we are to make a guess, the Banks may have held in 1910 about £13,000,000 on current account outside India; but by no means all of this (in the case of the Chartered and National Banks especially) would be held in London. Even in large cities, as cities then were, it was possible for most persons to ascertain with fair certainty the real position of conspicuous persons, and to learn all which was material in fixing their credit. A uniform remedy for many diseases often ends by killing the patient. But the effect of this is to throw additional business on the Bank of England. When the rupee became an artificially valued token, rupees tacitly remained the legitimate form of the reserve (although after a time sovereigns were added as an optional alternative).

No result could be worse than that the conduct of the Bank and the management should be made a matter of party politics, and men of all parties would agree in this, even if they agreed in almost nothing else. Thus these bars are worth more than an equivalent weight of sovereigns, and consequently importation of bullion in this form takes place throughout the year. But the number of our attainable bank notes is not, like American ‘greenbacks,’ dependent on the will of the State; it is limited by the provisions of the Act of 1844. It is certainly the case that it is a disadvantageous thing for India to have so large a part of her currency in the form of expensive tokens,—the issue of rupees strengthens the reserves by less than a half of their nominal value.

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