At one period the bank directors even went farther: they made a distinct step in advance

│. The Exchange trade is carried on by a small and special body of foreign bill-brokers, of whom Messrs.

If they permit all other forms of credit to perish, their own will perish immediately, and in consequence. On the other hand, money easily becomes a ‘drug,’ as the phrase is, and there is soon too much of it. That discussion was terminated by the Act of 1844. I have now completed my discussion of these questions. Thus at that date this reserve stood at about £19,750,000, allowing for depreciation. In one respect, however, I admit that I am about to take perhaps an unfair advantage.

Let me first give a short account of the nature of the seasonal demand for money in India; and then discuss the salient respects in which her system of note issue differs from those of typical note–using countries. That in a panic the bank, or banks, holding the ultimate reserve should refuse bad bills or bad securities will not make the panic really worse; the ‘unsound’ people are a feeble minority, and they are afraid even to look frightened for fear their unsoundness may be detected. e. d. In any case the reason why the Indian and London Bank Rates can differ from one another for short periods by large amounts is adequately explained. Under a natural system of banking it would have every facility. There is, therefore, no ground for believing, as is so common, that the value of money is settled by different causes than those which affect the value of other commodities, or that the Bank of England has any despotism in that matter. In a country such as India, however, there may be great stagnancy in a part of the circulation, and the coins finding their way to the Government Treasuries may be a sample rather of the floating surplus of coinage, which has a relatively high velocity of circulation, than of the total stock, which includes semi–hoards passing from hand to hand comparatively seldom. The result was a period of frantic and almost inconceivable violence; scarcely any one knew whom to trust; credit was almost suspended; the country was, as Mr. The time may not be far distant when Europe, having perfected her mechanism of exchange on the basis of a gold standard, will find it possible to regulate her standard of value on a more rational and stable basis. Under this shifting chief executive, there are indeed very valuable heads of departments. 1st. The City of London and the House of Commons both approved of what they said; those who dissented were said to be abstract thinkers and unpractical men.

It was in the main well advised, and considerate in its action; and did not take nearly as much from the Bank as it might, or as would have been dangerous. And with the Bank of England, as with other Banks in the same case, these advances, if they are to be made at all, should be made so as if possible to obtain the object for which they are made.

I suppose almost everyone thinks that our system of savings’ banks is sound and good.

It was not unnatural that in this state of things a certain degree of alarm should have taken possession of the public mind, and that those who required accommodation from the Bank should have gone to the Chancellor of the Exchequer and requested the Government to empower us to issue notes beyond the statutory amount, if we should think that such a measure was desirable.

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