For deposits fixed for a year the rate offered varies, as a rule, from 4½ to

[77] My conclusion, rather, is that the reserves should be allowed to reach some such figure as this by the natural processes of growth, before sums are diverted from them to other purposes. Secondly, the rate of interest which the Secretary of State can earn on loans in London is appreciably lower, on account of the short period for which he lends and the nature of the security he requires, than the normal rate at which the Exchange Banks would raise their funds there, and a good deal lower than what would be obtained by direct lending in India.

According to the saying, you ‘can sell Consols on a Sunday.

5. 10. The question of its use as a Banking Reserve raises two problems—a problem of policy and a problem of statistics.

10) might be safely universalised, without risk (on account of the trouble involved) of their being used for remittance on a large scale. Since 1797, the public have always expected the Government to help the Bank if necessary. It was at the same time enacted, that all bills drawn upon or negotiated at Amsterdam of the value of six hundred guilders and upwards should be paid in bank money, which at once took away all uncertainty in the value of those bills. But they had done nothing; if at least they had only prevented farther losses, the firm might have been in existence and in the highest credit now. During the last twelve years the Government have been able to accumulate a sum of about £21,000,000 sterling from the profits of rupee coinage; and the interest on the invested portion of the Paper Currency Reserve is now about £300,000 annually. 5. 13. 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 great evil to be feared was an indistinct conception of the fact, and that is now avoided.

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

The richest partners had least concern in the management; and when they found that incredible losses were ruining them, they stopped the concern and turned it into a company. But their sterling reserves were nevertheless fairly high. During the period of Bank restriction, from 1797 to 1819, the Bank of England could not absolutely control the Money Market, any more than it could after 1819, when it was compelled to pay its notes in coin. [16] For large payments, therefore, it is important to encourage the use of notes to the utmost extent possible,—from the point of view of economy, because by these means the Government may obtain a large part of the reserves necessary for the support of a Gold–Exchange Standard, and also because only thus will it be possible to introduce a proper degree of elasticity in the seasonal supply of currency. The rate ordinarily charged for fine bills of two or three months’ currency may be either higher or lower than the published minimum Bank Rate.

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