It is only in the case of continuous and considerable depressions that the cause is in action long enough to produce discernible effects. Owing to the depression of that year and the low level of the exchanges, the most profitable employment of the sovereigns was as bullion.
It was not to be supposed that the Government of India intended to adopt the first; the second they were avowedly upsetting; the third they had attempted, and had failed, to obtain by negotiation. It is not possible to point to any one date at which the currency policy now in force was deliberately adopted.
The plans of the Government ought, therefore, to be laid accordingly. Money is not so efficient in buying as it was, and therefore operators require more money for the same dealings. That bank lent this balance at its own discretion, to bill-brokers or others, and it formed a single item in the general funds of the London market. The lender exercises his own judgment on the goodness of the bill. Nor is it necessary, for his writings are in everyone’s hands. 5, 10, 50, 100, 500, 1000, and 10,000. = Rupees. 1899. § 2) argued that “gold wanted for exportation is almost invariably drawn from the reserves of banks, and is never likely to be taken from the outside circulation while the banks remain solvent. At other times, particularly at the quarterly payment of the dividends, an absolute rule which laid down that the bankers’ balances were never to be lent, would be productive of great inconvenience. Their capital is not more than 3,000,000 L. to his credit, and may draw it out when he pleases, a much larger reserve will be necessary against that liability of 1,000,000 L. and VII. │ 1911–1912. Germany is in a state of transition, and her present position is avowedly unsatisfactory. 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 form in which the Gold Standard Reserve is held has been subject to much criticism. Fleetwood Wilson explained in the Legislative Council in 1911— A number of technical and other difficulties were raised by the Royal Mint, which ultimately wore out the patience of Lord Curzon’s Government.
For I have excluded the Public Deposits (amounting in 1910 to £2,820,000), and have included the whole of the cash balances (at the branches as well as the head offices) held by the Presidency Banks against them.
On the other hand, the objections to a policy, which divided the country up for the purposes of paper currency, are also plain. This plan would be exceedingly unpopular.
But from January to March, although the Bank Rate remained at a high level and trade was active, the demand for Council Bills fell away, slowly at first and rapidly during March, exchange dropping _pari passu_ until, during the latter half of March, the minimum rate at which Council Bills were allotted fell so low as 1s. In 1862 the management of the note issue was taken over by the Government in the manner described in Chapter III.