Provisions for due publicity will probably lead in the long–run to the best results—though care must

In 1893 four possible bases of currency seemed to hold the field: debased and depreciating currencies usually of paper; silver; bimetallism; and gold. He may make a theory that, since we admit and we know that the House of Commons is the real sovereign, any other sovereign is superfluous; but for practical purposes, it is not even worth while to examine these arguments.

[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.

That, I have every hope, will come in time, but we cannot force it. The Joint Stock Banks of this country are a most remarkable success. But in this work I have said so much on the subject that I need say little now. Gauntlett); and I have made free use of these in what follows. To the authorities in India it presented its other face. Difficulties very soon arose (in 1863) through the Government’s requiring the use of its funds at a time when the Bank of Bengal could only sell out the securities in which it had invested them at a considerable loss.

In that way the Bank knew easily what to do and the public knew easily what to foresee. The interest thus accruing on the invested portion of the reserve, less the expenses of the Paper Currency Department, is credited to the general revenues of the Government under the head “Profits of Note Circulation. In the first place there would be an elimination of risk. ) In particular it leads to the keeping of two distinct reserves—the Government’s reserves and the bankers’ reserves—with no clearly defined relation between them, so that the reserves of the latter may be insufficient, without the assumption by the former of the fact or the machinery of responsibility. The money market took care of itself. There must have been many occasions under the old system, on which ignorant persons suffered inconvenience through having notes of foreign circles passed off on them; and a long time may pass before distrust of the notes, as things not readily convertible, bred out of the memories of these occasions, entirely disappears. (d) │ │ Public circolation │ of Notes on──────────────────────────────────────–┐ │ March 31. In the second place, the Government can postpone for a short time a demand for rupees by refusing to supply them in return for sovereigns tendered in London and by insisting upon the sovereigns being sent to Calcutta. If we examine the manner in which the Bank of England has fulfilled these duties, we shall find, as we found before, that the true principle has never been grasped; that the policy has been inconsistent; that, though the policy has much improved, there still remain important particulars in which it might be better than it is.

If we manage our business well, we retain our friends; if we do not, we lose them.

Before we consider the adequacy of these reserves for their purposes, it will be useful to recall the circumstances of the two recent occasions on which their resources were severely taxed.

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