Most of them would not know how to carry through a great ‘exchange operation,’ or to

The great development of Indian Joint Stock Banking since that time on not perfectly sound lines makes it doubtful whether bank troubles will be absent in an equal degree on the next occasion of difficulty. No doubt, other things being equal, a rich man is more likely to pay than a poor man.

This question has been already raised in Chapter III.

India has taken her coinage in great gulps, and it need not have been difficult to see that the demand of 1905–7 was one of these. 13. _, the Government can be required to give 15 rupees in exchange for £1. If the interest of money be raised, it is proved by experience that money does come to Lombard Street, and theory shows that it ought to come.

It is vain to suppose that the advantages of a true gold currency can be obtained by the compromise of somewhat increasing the gold element. Very much of it is repayable at demand, or at very short notice. All country bankers keep their reserve in London. g. ) │(In £ million at 1s. The Indian authorities do not seem to have understood this. The German Government has lately taken large sums in bullion from this country, in part from the Bank of England, and in part not, according as it chose. This account of the matter, however, scarcely does justice to the part played by the British Treasury in defeating the project. ) Trade Bills on │ London negotiated │ (xiii. If it turns out to be so, then a position of adequate strength has been attained already. Of course if the Act of 1844 really were, as is commonly thought, the _primum mobile_ of the English Money Market, the source of all good according to some, and the source of all harm according to others, the extreme irritation excited by an opinion on it would be no reason for not giving a free opinion. It is easy to calculate how the gold export point is affected by fluctuations in the market rate of discount in India on either side of 5 per cent. The question, whether it is worth the purchaser’s while to pay this extra sum, chiefly depends upon the Indian bank rate, because this governs the amount of interest which can be gained by having the money immediately available in India.

But though this un-conceived attempt failed as it deserved, the rule itself could not be maintained. ‘ After a day or two of this treatment, the entire panic subsided, and the ‘City’ was quite calm. We must not suffer from a dangerous policy because we have inherited an imperfect form of administration. In the second place, as there is no Central Bank in India, there is no Government Banker. the rupee without limit. The Presidency Banks had, at first, a semi–official character.

All merchants are under liabilities; they have bills to meet soon, and they can only pay those bills by discounting bills on other merchants. Suppose, a favourable supposition, that the Banking Department holds more than two-fifths of its liabilities in cash–that it lends three-fifths of its deposits and retains in reserve only two-fifths. The ‘reserves’ of London bankers are not such store; they are used cash, not unused; they are part of the Bank deposits, and lent as such.

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