But this only illustrates the essential difference between our english notions of banking and the continental

Pitt feared that he might not be able to obtain sufficient species for foreign payments, in consequence of the low state of the Bank reserve, and he therefore required the Bank not to pay in cash.

But beyond withdrawing from the market he took no further steps for the support of exchange. We now have the possibilities before us.

There should be a clear understanding between the Bank and the public that, since the Bank hold out ultimate banking reserve, they will recognise and act on the obligations which this implies; that they will replenish it in times of foreign demand as fully, and Lend it in times of internal panic as freely and readily, as plain principles of banking require.

If they permit all other forms of credit to perish, their own will perish immediately, and in consequence. So long as the security of the Money Market is not entirely to be relied on, the Government of a country had much better leave it to itself and keep its own money. Thus the authorities are free, if they like, to hold the whole of the Currency Reserve in rupee–tokens, and this reserve has become, therefore (as we shall see below), an important part of the mechanism by which the supply of silver rupees to the currency is duly regulated. Consequently the Government’s offer to sell sterling drafts in Calcutta, or to release gold from the Currency Reserve would not meet the case. 12. He should have observed that the question is not as to what ‘ought to be,’ but as to what is. But as they are drawn on London houses there is no difficulty in rediscounting them in London. Up to the time of the Mutiny the office of Secretary and Treasurer was held by a Covenanted Civilian.

By the end of October 1907 it had become plain that the Indian harvest would be a bad one, and the financial crisis in the United States was fast developing. The credit of the banker having been efficiently advertised by the note, and accepted by the public, he lives on the credit so gained years after the note issue itself has ceased to be very important to him. J. Is it possible to conceive of any remedy or moderating influence for the somewhat severe seasonal stringency still experienced? 6.

And the object of that regulation was officially stated to be ‘to make them keep their own reserve, and not to be dependent on the Bank of England. Perhaps we may have to wait for the lessons of a severe crisis. We should still see the frequent, the common phenomenon of dull trade and cheap money existing side by side. No English statesman would consent to be responsible for the choice of the Governor of the Bank of England. From these they obtain a large income, and that income swells their profits.

They might be called on to return what they had borrowed in England, and unable at short notice to bring back what they had lent in India. And exactly on that very account the danger of any particular demand on that reserve is augmented, because the magnitude of the fund upon which that demand falls is diminished.

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