Indian affairs are so exclusively studied by those whose knowledge and experience is preponderantly indian or

Vague stirrings of the original sin of mercantilism always inherent in the mind of the natural man and urging him to regard gold as beyond everything essential wealth; jealousy of the too powerful magnates of the London Money Market obtaining what should belong to India’s Market for their own purposes; jealousy of the Secretary of State seeming, like a man who invests abroad, to seek in this way an independence of India in case of trouble; jealousy of Great Britain, who might use or regard India’s “ear–marked” gold as her own war–chest;—all combine to make a powerful, natural, and yet unfounded prejudice which it is exceedingly difficult to combat. For the gold could have been kept in England by selling bills at a rate more advantageous than the par of exchange by about this amount. Or, possibly, offices may have changed occupants and the ministry in power at the panic would be the opponents of the ministry which at a former time appointed the Governor. ‘ And if he does say so, the debtor must go to his bank, and draw out the 50,000 L. Apart from the cash, money at call, and investments, which every Bank must hold, a certain part of these funds are employed in making loans either in India or elsewhere. The German Government, as is well known, keeps its account (and a very valuable one it must be) at the London Joint Stock Bank; but the Bank of England has no access to the account of the German Government at that bank; they cannot tell how much German money is lying to the credit there. But even if this were not so, even if the banks were willing to keep their deposits at the Bank while it was not lending, they would soon find that they could not do it. The reserve of the London bankers being on deposit in the Bank of England, the Bank always lends a principal part of it. But Mr. A large part of the ‘indemnity’ was paid by France to Germany in bills on England, and the German Government, as those bills became due, acquired an unprecedented command over the market. (b) Estimate. Altogether, during the period under review, the net assistance obtained by loans amounted, I think, to about £4,500,000; so that the total deterioration in the Secretary of State’s position during the first year of the depression was not far short of £25,000,000. A tendency was noticed for the returns of one year to resemble those of the previous year more closely than they should, and not infrequently a batch of coins would be attributed to a year in which it is known that none were minted. He would be a lender of such magnitude and so much influence, that he might command his own terms. Lord Farrer described it as “far too clever for the ordinary English mind with its ineradicable prejudice for an immediately tangible gold backing to all currencies. ‘It is interesting to compare the facts of joint stock banking with the fears of it which were felt. No doubt it takes time before even this simple reasoning is understood by uneducated minds. And there is also a slower mercantile operation.

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