The second misgiving, which many calm observers more and more feel as to our largest joint

But these figures are not relevant to our present purpose, and we must turn to the figures in the last column, giving the flow of sovereigns into the hands of the public. Thus the lowest note is of the face value of 6s. In spite of the notorious fact that the Bank of England holds less gold than the Central Bank of any other first–class Power,—far less even than the Caja of the Argentine,—the belief will continue that the amount of gold a country holds at home, rather than the degree of promptness and certainty with which at all times it can meet its international engagements, is the measure of its financial strength. Then as industry B buys of C, D, &c. Just as individuals have learnt that it is cheaper and not less safe to keep their ultimate reserves on deposit at their bankers than to keep them at home in cash, so the second stage of monetary evolution is now entered on, and nations are learning that _some part_ of the cash reserves of their banks (we cannot go further than this at present) may be properly kept on deposit in the international money market. In 1905–6 the demand quickened, and from July 1905, when the Government’s silver reserves stood at what was then considered the comfortable figure of 1837 lakhs[63] (£12,250,000), it quite outstript the new supplies arising from the mintage of the uncoined silver reserve. At first, it seems exceedingly strange that so important a responsibility should be unimposed, unacknowledged, and denied; but the explanation is this. The “capital employed in India” seems to be (viii. For example, no one would say that the same amount of reserve ought to be kept against acceptances which cannot be paid except at a certain day, and against deposits at call, which may be demanded at any moment. I have tried to bring out the fact that the Indian system is an exceedingly _coherent_ one. I had always imagined such directors to be men of tried sagacity and long experience, and I was amazed that a cheerful young man should be one of them.

The interest of capital having been reduced in such countries, he argued, by the necessity of continually resorting to inferior soils, they can undersell countries where profit is high in all trades needing great capital.

They do, however, give private information to the Indian authorities of their deposits in India and elsewhere respectively in each year. I shall be at once asked–Do you propose a revolution? Do you propose to abandon the one-reserve system, and create anew a many-reserve system? My plain answer is that I do not propose it.

In 1906 Sir E.

The above figures show conclusively that, as a rule, the Indian Money Market cannot expect substantial assistance from this source at the time of year when it is most needed. The Government of India’s silver policy during the early part of 1907 left them, therefore, in a somewhat worse position to meet the crisis which came at the end of the year, than need have been the case. 9.

8.

On the surface there seems a great inconsistency in all this.

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