[61] it is possible that when this figure has been reached, some part of its income

But of cash in ultimate reserve–cash in reserve against a panic–the savings’ banks have not a sixpence. CURRENCY IN LAKHS OF RUPEES Total Currency in the hands────────────────────────────────────────────–┐ of the Public │ on March 31. Nor did it cease in 1840.

If a bank with a monopoly of note issue suddenly lends (suppose) 2,000,000 L. In this matter India is now enjoying the fruit of past disasters and of conditions in which the struggle for existence was too keen to allow any but the fittest to survive. It is probably the case, however, that if it were desirable to popularise the use of gold, a means could be found of effecting this in some degree. The efficiency of this introduction is proportional to the diffusion of the right of note issue.

As each bill arrived at maturity, the German Government could, if it chose, take the proceeds abroad; and it could do so in bullion, as for coinage purposes it wanted bullion. But even this amount is calculable, for it is always nearly the same.

In addition, the growth of banking in the intervening period has been on a very great scale; and there is, therefore, greater room for disturbance in the short–period loan market.

The merchants, with plenty of currency, could not always find a sufficient quantity of good money to pay their bills of exchange; and the value of those bills, in spite of several regulations which were made to prevent it, became in a great measure uncertain.

At every moment there is a certain minimum which I will call the apprehension minimum,’ below which the reserve cannot fall without great risk of diffused fear; and by this I do not mean absolute panic, but only a vague fright and timorousness which spreads itself instantly, and as if by magic, over the public mind. 3–29/32d. Adie. We cannot appeal, therefore, to experience to prove the safety of our system as it now is, for the present magnitude of that system is entirely new. A changing body cannot have any responsibility. But the imperfection of this remedy is that it fails in the very worst case. This did not happen in former panics, because the case we are considering never arose. At last a scheme was hit upon which would relieve their necessities. There are no high officials whose business it is to make finance the chief study of their life. Three times since 1844 the Banking Department has received assistance, and would have failed without it.

The third and most important point arises out of the first two. I have now completed my discussion of these questions.

12. in London for 1s.

. It is by far the richest corporation in the country; its annual revenue payable in money far surpasses that of any other body or person. What was the effect of the Act of 1844 on the panic of 1866 is a question on which opinion will be long divided; but I think it will be generally agreed that, acting under the provisions of that law, the directors of the Bank of England had in their banking department in that year a fairly large reserve quite as large a reserve as anyone expected them to keep–to meet unexpected and painful contingencies.

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