Gold reserves, therefore, in great britain are no longer held primarily with a view to emergencies

What is almost a revolution in the policy of the Bank of England necessarily follows: no certain or fixed proportion of its liabilities can in the present times be laid down as that which the Bank ought to keep in reserve. [55] 10. I see no reason why the first—the coinage of sovereigns at Bombay—should have any effect at all towards increasing the use of sovereigns as currency. 18. The governor of the Bank would be a high Parliamentary official, perhaps in the Cabinet, and would change as chance majorities and the strength of parties decide. It is only possible by Royal Charter or Statute Law. ) are lent out at present. Great railway companies are managed upon no other.

A very large gold reserve may be maintained, so that a substantial drain on it may be faced with equanimity; free payments in gold may be partially suspended; or foreign credits and bills may be kept which can be drawn upon when necessary. ‘ The possessors would be under no necessity to employ it all; they might employ part at a high rate rather than all at a low rate. We cannot adopt it if we would. ; but there is there a considerable circulation in country bank-notes, principally optional notes.

Only under some such strong influence as this is it likely that the responsible Government will nerve itself to the task, or the business community acquiesce in it. There must have been many occasions under the old system, on which ignorant persons suffered inconvenience through having notes of foreign circles passed off on them; and a long time may pass before distrust of the notes, as things not readily convertible, bred out of the memories of these occasions, entirely disappears. Provided the Bombay Mint did not offer to coin on more favourable terms than the British Mint, which presumably it would not do, it seems exceedingly unlikely that bar gold would be imported from England on purpose to be coined in India rather than in England.

In 1878 it proved inconvenient to divert from the Banks immediately the whole of the proceeds of a newly raised loan, and the Comptroller–General was told that he “would be at liberty, to the extent to which he could conveniently do so, to accommodate the Banks with temporary advances from the Reserve Treasury, provided they were willing to pay interest on such advances at the current rates. Accordingly London has become the sole great settling-house of exchange transactions in Europe, instead of being formerly one of two. When exchange is falling below par he can support it by greatly restricting his offers; and if he cannot get at least 1s. The actual figures, showing where the gold reserve has been held at certain dates, are given below. would suffice to establish this ratio of exchange. And we may well think this a great deal, if we examine the position of other banks. First, the London bankers should not be altogether excluded from the court of directors. Railway debenture stock is as good a security as a commercial bill, and many people, of whom I own I am one, think it safer than India stock; on the whole, a great railway is, we think, less liable to unforeseen accidents than the strange Empire of India.

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