The conditions prevailing in the Indian Money Market in the period immediately preceding 1898 were in many respects very abnormal. ) The absence of a central banking authority leads to a general lack of direction in the banking policy of the country: it is no one’s business to look at the matter as a whole, to know the position of the market’s component units, or to enforce prudence when it is needed. It appears from these that, while some are withdrawn in the winter months during the busy season, when the demand for currency and for hoarding (since it is then that the cultivators sell their crops and realise their savings in coin) is at its height, there is in the summer also, when it is most improbable that an extra supply is required for these purposes, a steady and, in the aggregate, a heavy drain. And Mr. In such great and close civil dangers a nation is always demoralised; everyone looks to himself, and everyone likes to possess himself of the precious metals. They send the money to London, invest a part of it in securities, and keep the rest with the London bankers and the bill brokers. In detail, of course, there are a number of differences. And, in spite of the restrictions, the Presidency Banks have shown great vitality and a power of expansion hardly less than that of the Exchange Banks in the happier circumstances of the last decade. The amount normally placed with the Head Offices of the Banks has fluctuated for some time in the neighbourhood of £1,000,000. If they were to start the busy season with a surplus of 500 or 600 lakhs over what was considered a safe minimum, the reasonable demands of prudence would have been fully satisfied.
and 3,000,000 L. I do not believe, however, that a conclusion can fairly be drawn from these figures as to any startling change in the position of the sovereign in India has experienced two very good seasons and has been able, therefore, to accumulate savings unusually large extent for investment in gold ornaments and hoards. 19. They lend large sums on foreign bonds or railway shares or other such securities, and borrow those sums from bankers, depositing the securities with the bankers, and generally, though not always, giving their guarantee. In these two ways sudden loans by an issuer of notes, though they may temporarily lower the value of money, do not lower it permanently, because they generate their own counteraction. But the currency continued to consist mainly of silver and paper. They had in their till an exceedingly good reserve according to the estimate of that time–a sufficient reserve, in all probability, to have coped with the crises of 1847 and 1857. But although India was not the first country to lead the way to a Gold–Exchange Standard, she was the first to adopt it in a complete form. If a foreign creditor is so kind as to wait his time and buy the bullion as it comes into the country, he may be paid without troubling the Bank or distressing the money market. For Exchange Banks of both groups—the Banks primarily Indian and the agencies of huge European institutions doing business in many parts of the world—are lumped together, so that the total includes the whole of the French deposits of the Comptoir National d’Escompte and of the deposits, in whatever country, of the other Banks with Indian agencies enumerated on p.