No English statesman would consent to be responsible for the choice of the Governor of the Bank of England. These great Banks have not had to keep so large a reserve against their liabilities as it was natural that they should, being of first-rate magnitude, keep. But they are sure to covet all posts of splendid dignity, and can only be kept out of them with the greatest difficulty. The private deposits of the Bank of England then were 9,000,000 L. Mr.
Ordinarily, however, there is no account of which the course can be so easily predicted; and therefore no account which needs in ordinary times so little reserve. The peculiar essence of our banking system is an unprecedented trust between man and man: and when that trust is much weakened by hidden causes, a small accident may greatly hurt it, and a great accident for a moment may almost destroy it.
In countries where the Money Market is neither so highly developed nor, in relation to foreign countries, so self–supporting, the Central Bank, if it is to be secure, must take the matter in hand itself and, by itself entering the international money market as a lender at short notice, place itself in funds, at foreign centres, which can be rapidly withdrawn when they are required.
Though the business of banking has increased so much since 1810, this species of banks is fewer in number than it was then. Indeed, I do not know that they ought to resist it. The underlying explanation is essentially the same as that of the circumstance to which I called attention in § 9 of Chapter II. But no one in London ever dreams of questioning the credit of the Bank, and the Bank never dreams that its own credit is in danger. THE PRESENT POSITION OF THE RUPEE 1. One of the Rothschilds is on the Bank direction, and a foreigner would be apt to think that they were bankers if any one was. I make it out to be, a serious breakdown there may embarrass the Exchange Banks in London, however intrinsically sound the position of these Banks may really be, in their efforts to assist the Indian market.
_, the Government can be required to give 15 rupees in exchange for £1. Apart from the question how far the Secretary of State is really open to such pressure, it may be doubted whether he is likely to be exposed to it, because at a time of real stringency it will prove easy, I believe, for the London Market to get hold of some part of the Indian gold, whether held in London or in India, by perfectly legitimate means. But in the getting of deposits he is passive. │1908. No one in the rural districts (as I know by experience) would ever believe a word against them, say what you might. A changing body cannot have any responsibility. We must look first to the foreign drain, and raise the rate of interest as high as may be necessary. But a sudden trade of import like the import of foreign corn after a bad harvestor (what is much less common, though there are cases of it) the cessation of any great export, causes a balance to become due, which must be paid in cash.