My purpose is, first, to show that the British system is peculiar and is not suited to other conditions; second, that the conventional idea of “sound” currency is chiefly derived from certain superficial aspects of the British system; third, that a somewhat different type of system has been developed in most other countries; and fourth, that in essentials the system which has been evolved in India conforms to this foreign type. 7. to │ Jan. He should have observed that the question is not as to what ‘ought to be,’ but as to what is. to the contrary.
24, 1824, the coin and bullion in the Bank was L 10,721,000 On Dec. The Secretary of State is in effect the ultimate source of supply for bills on India, and the banks, after securing what private bills are available, even up their demands for remittance to India by buying bills from him,—provided he is selling them at a rate which makes this form of remittance cheaper than the alternative one of sending sovereigns. But now the London bankers have another relation to the Bank which did not then exist, and was not then imagined.
Every one else is in want too. You could not have made the directors of the Bank of England do the sort of business which ‘Overends’ at last did, except by a moral miracle–except by changing their nature.
But even on this occasion the adverse balance arose to a considerable extent out of changes in capital transactions under items (ii. The Bank of Bengal has seen the rise and fall of numerous powerful rivals. . It might be proper to prescribe by law the holding of a certain proportion of the reserve (say one–third) in gold or silver coin. For many years past (since 1875) an annual census of rupees has been taken by examining in each Government Treasury a bag containing 2000.
At Dutch auctions an upset or maximum price used to be fixed by the seller, and he came down in his bidding till he found a buyer. But as the Bank of England alone keeps the final banking reserve, the bill-brokers of necessity have to resort to that final reserve; so that at every panic, and by the essential constitution of the money market, the Bank of England has to help, has to maintain in existence, the dealers, who never in return help the Bank at any time, but who are in ordinary times its closest competitors and its keenest rivals.
Closer inquiry elicited further facts unsuspected hitherto. ‘ But Government forgot that doctrine when, by privileges and monopolies, it made a single bank predominant over all others, and established the one-reserve system. The method of telegraphic transfers enables them to act with great despatch on receiving advices from their Indian agents. , in London 1½ in India 2½ │ │ (xii. And the Governor and Deputy-Governor of the Bank cannot well be shadows. (i. If the Government were to attempt to further in any way the circulation of gold in the Bengals, they would be aiming a dangerous blow at their own note issue; whereas if notes could be encouraged in place of rupees in the jute trade, there would be a huge increase in their circulation.