Is this altogether inadequate a partial explanation of the recorded figures? i do not, for the

Whether the times of adversity are well met or ill met depends far more on this than on any other single circumstance. 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. It appears from these that, while some are withdrawn in the winter months during the busy season, when the demand for currency and for hoarding (since it is then that the cultivators sell their crops and realise their savings in coin) is at its height, there is in the summer also, when it is most improbable that an extra supply is required for these purposes, a steady and, in the aggregate, a heavy drain. 8d. The advances from the Currency Reserve, therefore, must be made at a fairly high rate of interest and for periods not exceeding three months; and they should be so arranged that the Government would regain possession of its funds and the advances be reduced to nil in each slack season. By their increasing progress they effectually prevent the foundation of any new private bank. A single monopolist issuer, like the Bank of France, works its way with difficulty through a country, and advertises banking very slowly. The notion that the Bank of England has a control over the Money Market, and can fix the rate of discount as it likes, has survived from the old days before 1844, when the Bank could issue as many notes as it liked. as a reserve, that sets 2,000,000 L. The increase in Mr.

│1910. But these defects and others in the democratic structure of commerce are compensated by one great excellence. But the banking of great cities is little concerned with loans on landed property. 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. .

Payment of dues to the Government could be made in the currency notes of any circle; and railway companies could, if they accepted notes of any circle in payment of fares and freight, recover the value of them from the Government. But the Bank Act did nothing to hinder the use of cheques, and the very remarkable development of this medium of exchange during the next fifty years led in this country, without any important development in the use of notes or tokens, to a monetary organisation more perfectly adapted for the economy of gold than any which exists elsewhere.

During an invasion note-issuing banks must stop payment; a run is nearly inevitable at such a time, and in a revolution too.

The fact that since 1899 the gold value of the rupee has only fluctuated within narrow limits is solely due to administrative measures which the Government are under no compulsion to undertake. The degree of damage to the Government’s reserves, therefore, would be much less if the gold were to supplant rupees than if it were to supplant notes.

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