(b) Estimate. The principal restrictions on the Presidency Banks are now the following:— (i. But, as we have seen before, a fixed proportion of the liabilities, even when that proportion is voluntarily chosen by the directors, and not imposed by law, is not the proper standard for a bank reserve. Hankey, one of the most careful and most experienced of them, says in his book on the Bank of England, the best account of the practice and working of the Bank which anywhere exists–‘I do not intend here to enter at any length on the subject of the general management of the Bank, meaning the Banking Department, as the principle upon which the business is conducted does not differ, as far as I am aware, from that of any well-conducted bank in London. It is probable, however, that it would be exceedingly difficult to start a new Exchange Bank at the present time, except under the aegis of some important financial house already established in a strong position in India.
The trouble would probably begin with a boom of the usual type, heavy commitments on the part of the banks, large importations of foreign goods, and (in the future) a good deal of internal company promoting. REICHSBANK’S HOLDINGS OF FOREIGN BILLS AND CREDITS WITH FOREIGN CORRESPONDENTS ON LAST DAY OF EACH YEAR. The Government were very slow to buy more silver and, in fact, do not seem to have taken steps to do so until, in December 1905, their bullion reserve was quite exhausted. 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. In that year the Bank directors allowed their stock of bullion to fall in the most alarming manner: On Dec.
│ £m. In 1867 and the first half of 1868 corn was dear, as the following figures show: GAZETTE AVERAGE PRICE OF WHEAT. But probably up to 1830 in England, or thereabouts, the main profit of banks was derived from the circulation, and for many years after that the deposits were treated as very minor matters, and the whole of so-called banking discussion turned on questions of circulation. In what follows, therefore, I shall leave these five Banks out of account.
3. But the effect of this is to throw additional business on the Bank of England.
The final appeal in such cases necessarily is to those who are conversant with and who closely watch the facts.
At first this has rather a singular effect; a stranger hardly knows what to make of it. And there is no doubt that the publication of the Bank account gives more stability to the money market than any other kind of precaution would give. Hankey’s is the last explanation we have had of the policy of the Bank. A really able and active-minded Governor, being required to sit all day in the bank, in fact does, and can hardly help doing, its principal business. 4d. And if the public and the shareholder knew that there was such a committee, they would have sufficient reasons for the confidence which now is given without such reasons.