The real introductory function which deposit banks at first perform is much more popular, and it

The great private banks will have, I believe, to appoint in some form or other, and under some name or other, some species of general manager who will watch, contrive, and arrange the detail for them. [61] It is possible that when this figure has been reached, some part of its income may be applied to capital expenditure on railways. Thirdly. We must examine the system on which these great masses of money are manipulated, and assure ourselves that it is safe and right. The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others.

Such a notification, as is suggested above, would be much more in the true spirit of the Indian currency system than the establishment of a gold mint would be; and it would serve the convenience of the public just as efficiently, at less expense to Government.

But the main point can be put briefly thus:—If funds are to be attracted from abroad for a short period (say three months), the rate of interest must be high enough to repay the cost of remittance _both_ ways, which in the case of places so remote from one another as India and London is considerable. A startling series of failures will do much to retard it. I may be asked, ‘What does all this reasoning in practice come to? At the present moment how much reserve do you say the Bank of England should keep? state your recommendation clearly (I know it will be said) if you wish to have it attended to. │. per rupee more than Council Bills.

A little excess therefore forces down the rate of interest very much. It is certain, too, that in all of them the Bank has been quicker than it was in 1825; that in all of them it has less hesitated to use its banking reserve in making the advances which it is one principal object of maintaining that reserve to make, and to make at once. I do not advocate the lending out in India of any part of this reserve, or of the Cash Balances, at the expense of the stability of the Gold Standard, or until adequate measures can be taken in other ways to ensure this.

The augmented production, which is the reason of the real prosperity, depends on the full working of the whole industrial organisation–of all capitalists and labourers; that prosperity was caused by that full working, and will cease with it.

The last of them—the making it easier to turn hoards into money—is very likely desirable. Dickson, celebrated (in his own time) for pre–eminent ability as Secretary and Treasurer of the Bank of Bengal.

; but there is there a considerable circulation in country bank-notes, principally optional notes. Secondly. They completely corroborate the above summary. A large sum is just then paid from the Government balance to the bankers’ balances, and if you permitted the Bank to lend it while it was still in the hands of the Government, but forbad them to lend it when it came into the hands of the bankers, a great tilt upwards in the value of money would be the consequence, for a most important amount of it would suddenly have become ineffective.

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