It is necessary for the Banks to hold a considerable proportion of these in cash at the branches in question, and this arrangement makes the cash held against the private deposits appear in a somewhat more favourable light than it should. 14. If we are to see the Indian system in its proper perspective, it is necessary to digress for a space to a discussion of currency evolution in general. The direct issue of rupees against the tender of gold also has been regulated by a series of Notifications, of which the first was published in 1893, up to 1906 rupees being issued against either gold coin or gold bullion; and since 1906 against sovereigns and half–sovereigns only. We are now in a position to understand what the Secretary of State means when he says that he has sold bills to meet the needs of trade. What other changes of substance might be made usefully? By far the most important is connected with the proposed power to make advances from the Currency Reserve on bills of exchange and other approved security, as briefly described in Chapter III. With regard to the probable effect this importation of sovereigns may have on exchange, they are of opinion that Government should not rely on the sovereigns that are being absorbed by the districts in exchange for produce and in the shape of savings coming out at any time in any appreciable quantity to support the stability of the rupee. A large amount of money is held there by bankers and by bill-brokers at interest: this they must employ, or they will be ruined.
In other cases the borrower’s own mill or warehouse is made to serve the purpose by the expedient of the Bank’s paying the wages of his watchman.
And besides, bankers have of late begun almost a new business. This account and the return of the Bank of England, it is true, unhappily appear on different days; but except for that accident our knowledge would be perfect; and as it is, for almost all purposes what we know is reasonably sufficient. A large joint stock bank, if well-worked, has that machinery.
The same reasons which make it desirable for a private person to keep a banker make it also desirable for every banker, as respects his reserve, to bank with another banker if he safely can. , embarked upon a new stage of development, and all this is changed. Since then the Bank of England, as a bank, is exempted from the perpetual apprehension that makes other bankers keep a large reserve the apprehension of discredit–it would seem particularly necessary that its managers should be themselves specially interested in keeping that reserve, and specially competent to keep it. 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.
 This part of the system is as perfectly automatic as in any other country. These other sources are either sovereigns in transit from Australia or sovereigns ready for export from Egypt. 1st.