Weguelin says: ‘If the amount of the reserve kept by the Bank of England be contrasted with the reserve kept by the joint stock banks, a new and hitherto little considered source of danger to the credit of the country will present itself. If the cash balances in London are not sufficient to stand the drain on them, gold at the Bank of England may be “un–earmarked” and placed to the Secretary of State’s current account, rupees in India being transferred at the same time from the Government balances to the silver portion of the Paper Currency Reserve—the reverse process from that which has been described already as the result of exceptionally large sales of Council Bills.
. As a Bill to amend this Act has been to the front for some time, discussion has naturally centred round the question whether this opportunity should not be taken of introducing some suitable restrictions relating specifically to Banks. It is painful to have to doubt of the continuance of such a class, and yet, I fear, we must doubt of it. ) It leads also to a want of elasticity in the system, since in modern conditions this elasticity is most commonly provided by exactly that co–operation between banking and note issue which is lacking in India.
The Bank of England could not sell ‘securities,’ for in an extreme panic there is no one else to buy securities.
By the end of February 1913, the total Government Balances in India had risen to £17,400,000, and the end of March to £19,300,000, of which £8,000,000 lay in the Reserve Treasuries. What is wanted at the Bank is not a new clerk to the directors–they have excellent clerks of great experience now–but a permanent equal to the directors, who shall be able to discuss on equal terms with them the business of the Bank, and have this advantage over them in discussion, that he has no other business than that of the Bank to think of. 3–29/32d. If the Bank had not made loans to the Government, which we should now think dubious, the Bank would not have existed, for the Government would never have permitted it. Two points connected with the above may be emphasised before we pass on to the statistical problem. Given the wholesale price of most articles, you can commonly tell their retail price.
But it will be well to say a few words at once with a view to avoiding misunderstandings on two points. │. Now, the only source from which large sums of cash can be withdrawn in countries where banking is at all developed, is a ‘bank reserve. Our friends whispered about that we were acting quite in a different manner from that in which Mr.
First, it will be useful to have before us the statistical information referred to above:— ┌──────────┬────────────┬────────────┬───────────┬─────────┬──────────┐ │ │ (1)=(2)+(3)│ (2) │(3)=(4)+(5)│ (4) │ (5) │ │ │ │Net Addition│ │ │ │ │ │ │ to Gold │ Net │ Net │ Net │ │ │Net Addition│ in Paper │ Addition │Addition │ Addition │ │ │to Stock of │ Currency │ to Stock │ to │ to │ │ │ Gold:— │ Reserve │ of │ Bullion │Sovereigns│ │ │ Imports – │ and │ Gold │ in Hands│ in │ │ │ Exports + │ Treasuries.