Let me first give a short account of the nature of the seasonal demand for money

In this case they rely on not being hard pressed in India and in London at the same time. The proper solution for each country must be governed by the nature of its position in the international money market and of its relations to the chief financial centres, and by those national customs in matters of currency which it may be unwise to disturb. But there is a considerable weight of opinion in favour of the view that the time for the establishment of a Central Indian Bank is not yet ripe. Hankey should have observed that we know by the published figures that the joint stock banks of London do not keep one-third, or anything like one-third, of their liabilities in ‘cash’ even meaning by ‘cash’ a deposit at the Bank of England. The more the conduct of the affairs of the Bank is made to assimilate to the conduct of every other well-managed bank in the United Kingdom, the better for the Bank, and the better for the community at large.

‘ And this is as much as to say, that it never ought very closely to approach that point; since, if it gets very near, some accident may easily bring it down to that point and cause the evil that is feared. Weguelin, who was then Governor of the Bank, to Sir George Lewis, who was then Chancellor of the Exchequer. The first two of these constitute what we may term the European Money Market, and the rest, under the leadership of Marwaris and Parsees, the Indian or Native Money Market,—up–country Banks such as the Allahabad Bank and the Alliance Bank of Simla, which are Indian Joint Stock Banks under European management, occupying, perhaps, an intermediate position. 188) the sums lying idle in the Reserve Treasuries were unusually high. Those who think that this tendency to use gold coins should be further encouraged have advocated three methods of doing so: by making arrangements for the coinage of sovereigns at Bombay; by the mintage there of some distinctively Indian coin of the denomination of 10 rupees; by a deliberate attempt on the part of Government, as in 1900–1901, to force sovereigns into circulation and to familiarise parts of the country with them where they are at present unfamiliar, even to the extent of refusing to issue more rupees on demand. If railway stock is 10 per cent dearer this year than last, a speculator who borrows money to enable him to deal must borrow 10 per cent more this year than last, and in consequence there is an augmented demand for loans. Under the natural system, the bill-brokers would be in no respect the rivals of the bankers which kept the ultimate reserve. And then we may be sure that old men of business would not deviate from the code. each, and that is our English banking.

For the most part, agricultural counties do not employ as much money as they save; manufacturing counties, on the other hand, can employ much more than they save; and therefore the money of Norfolk or of Somersetshire is deposited with the London bill-brokers, who use it to discount the bills of Lancashire and Yorkshire.

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