Those who have passed the chair–that is, who have served the office of governor–always remain

What their action would be in a situation of acute stringency bordering on financial panic, it is not easy to predict. The awkwardness of the situation is intrinsic, and cannot be avoided so long as the present divorce is maintained between the banking and the currency authorities. 28. And at such instant the recovery of money is as hard for the Bank of England as for any one else, probably even harder. rather than some other gold value has been determined, that the volume of currency in circulation depends in the least upon the policy of the Government or the caprice of an official. The expectation that the Government will bring some of its gold to the rescue in extreme circumstances, has always been said to exert an enervating influence on the banks themselves in the matter of the precautions they take for times of crisis. To pay his own bill to the maker of the goods, he must discount the bills he has received from the shopkeepers to whom he has sold the goods; but if there is a sudden cessation in the means of discount, he will not be able to discount them.

Accordingly, Bank directors, when first chosen by the board, are always young men.

But you must not on this account seal up the Bank hermetically against living information; you must make a fair body of directors upon the whole, and trust that the bias of some individual interests will disappear and be lost in the whole. They speculate with it in bubble companies and in worthless shares, just as they did in the time of the South Sea mania, when there were no banks, and as they would again in England supposing that banks ceased to exist. Of all institutions in the world the Bank of England is now probably the most remote from party politics and from ‘financing. The board of directors would almost certainly be demoralised by having to choose a sovereign, and there is no certainty, nor any great likelihood, indeed, that they would choose a good one. by regulation, does not affect the level of prices differently from the way in which it would be affected by a system in which the rupee was a gold coin worth 1s. │ │ │of Council Bills. This value is remitted to England by selling for sterling in London bills which can be cashed in rupees in Calcutta. This conclusion brings us to the statistical problem.

Macculloch, following Ricardo, used to teach that all old nations had a special aptitude for trades in which much capital is required. And the method proposed above is, I believe, the right way in which to approach the problem’s solution. When it became necessary to contract the volume of currency, Government would be in a _worse_ position than at present, unless the greater part of what was withdrawn came from the gold portion of the circulation and not from the rupee or paper portion. The Indian branches obtain immediately the funds enabling them to take the trade bills, the offer of which had seemed to them to be at sufficiently satisfactory rates to make the transaction taken as a whole worth while.

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