‘experience, as shown by plain figures, confirms these conclusions

But advantage has not been taken of these powers recently. I can imagine nothing better in theory or more successful in practice than private banks as they were in the beginning.

Every year immense sums would be remitted from London to India in the busy season and brought back again at the end of it, since the fact which now diminishes the profitableness of such transactions would have ceased to exist. On the other hand, supposing that this single depositor is one of calculable habits–suppose that it is a public body, the time of whose demands is known, and the time of whose receipts is known also–this single liability requires a less reserve than that of an equal amount of ordinary liabilities. But there is another variable cause which produces far more of apparent than of real prosperity and of which the effect is in actual life mostly confused with those of the others. The Joint Stock Banks. There are very many men of good means, of great sagacity and great experience in business, who are obliged to be in the City every day, and to remain there during the day, but who have very much time on their hands.

This deduction is in accordance with the practice of the reports of the Currency Department.

And such a constant difference indicates, I conceive, that the two are not managed on the same principle. It may be added to complete the story, that in August and September 1909 there was a short period of weakness when it was again necessary to offer sterling bills in Calcutta. What was the effect of the Act of 1844 on the panic of 1866 is a question on which opinion will be long divided; but I think it will be generally agreed that, acting under the provisions of that law, the directors of the Bank of England had in their banking department in that year a fairly large reserve quite as large a reserve as anyone expected them to keep–to meet unexpected and painful contingencies. Speaking broadly, two things happened: during the war England was the best place of shelter for foreign money, and this made money more cheap here than it would otherwise have been; after the war England became the most convenient paying place, and the most convenient resting place for money, and this again has made money cheaper. It can stop discounting, of course, at pleasure. │. The rules governing the Reserve were framed (see § 3) at a time which, to the modern student of currency, is almost prehistoric, under the influence of the Bank of England’s system of note issue and of the British Bank Act,—an Act which had the effect of destroying the importance of notes as a form of currency in England, and which it has been found impossible, in spite of some attempts, to imitate in the note–using countries of Europe.

The Bank of England used to be a predominant, and is still a most important, dealer in money.

A single bad harvest diffused over the world, a succession of two or three bad harvests, even in England only, will raise the price of corn exceedingly, and will keep it high.

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