‘ a millionaire commonly shrinks from liability, and the essence of great banking is great liability


On the one side a great city opinion–a great national opinion, I may say, for the nation has learnt much from many panics–requires the directors to keep a large reserve. A high average rate and a high maximum rate are likely to call for different explanations and, if a remedy is sought, for different kinds of remedies. Indeed so long as the currency arrangements are at all like those now in force, this maximum range may fairly be said to be determined by forces outside Government control, namely, by the forces governing the cost of remittance of gold. Act rendering Currency notes of Rs. No one has enough money, or anything like enough, but the holders of the bank reserve. .

e. [95] 8.

) the amount of short–period loans afforded to India by the European Money Market. All our mercantile community must obtain new loans to pay old debts.

” Financiers of this type will not admit the feasibility of anything until it has been demonstrated to them by practical experience. These actual figures may be compared with the hypothetical balance–sheet given in § 13. There is a good deal of evidence for supposing that in some parts of the country sovereigns are displacing rupees for the purpose of hoards. ‘ In a time of no alarm, or in any alarm affecting that particular banker only, he can rely on such reserve without misgiving. And in ordinary times nothing can be better.

It is true the Bank of England has to lend the money by which they are filled. [25] For some purposes the _active_ circulation is the most important. A good deal of opinion has been expressed in India lately in favour of loans being made there from the Government’s Cash Balances. But if they miscalculate and mint more than they need, the new rupees must lie in the Government’s own chests until they are wanted, and the date at which they emerge into circulation it is beyond the power of the Government to determine. However, it was a perplexing and unprecedented time for every one, and that it was some weeks before his advisers found their bearings is not to be wondered at.

But they undoubtedly had the result that the authorities published to the public much ampler details than were previously available. The number of such persons is much on the increase. to the contrary.

And in both respects our system causes a stupendous strain.

So great a difference in the management must cause, and does cause, a great difference in the profits.

‘Are not both sets of bills by this means under discount?–No, the bills received from one part of the country are sent down to another part for discount. It appeared at first as if their further object of a gold currency might soon be attained also. Up to 1910 the following arrangements were in force. Dated the 30th December, 1869. On principle, if there was a perfect division of labour, every industry would have to be perfectly prosperous in order that any one might be so. The result is that we have placed the exclusive custody of our entire banking reserve in the hands of a single board of directors not particularly trained for the duty–who might be called ‘amateurs,’ who have no particular interest above other people in keeping it undiminished–who acknowledge no obligation to keep it undiminished who have never been told by any great statesman or public authority that they are so to keep it or that they have anything to do with it who are named by and are agents for a proprietary which would have a greater income if it was diminished, who do not fear, and who need not fear, ruin, even if it were all gone and wasted.

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