Ordinarily discredit does not at first settle on any particular bank, still less does it at

1 per cent and in the case of some other articles there may be a similar cause operating. Even the great collapse of Overends, though it caused a panic, is beginning to be forgotten. 4d. 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. Deposit banking is a very difficult thing to begin, because people do not like to let their money out of their sight, especially do not like to let it out of sight without security–still more, cannot all at once agree on any single person to whom they are content to trust it unseen and unsecured.

‘ They would not much mind hurting his feelings, and if he resigned they would have themselves a valuable piece of patronage to confer on one of their own friends. Nor is it necessary, for his writings are in everyone’s hands. The Presidency Bank of Bengal was opened in 1806 and received its charter of incorporation from the East India Company in 1809.

No similar system arose elsewhere, and in consequence London is full of money, and all continental cities are empty as compared with it. I have tediously insisted that the natural system of banking is that of many banks keeping their own cash reserve, with the penalty of failure before them if they neglect it. On September 1, 1907, they seem to have been, approximately, as follows:— _Gold_— Currency Reserve in India £4,100,000 Currency Reserve in London 6,200,000 ——————————– £10,300,000 ═══════════ _Money at Short Notice_— Gold Standard Reserve in London £50,000 Cash Balances in London 5,150,000 ——————————– £5,200,000 ═══════════ _Sterling Securities_— In Currency Reserve £1,300,000(a) In Gold Standard Reserve 14,100,000(a) ——————————– £15,400,000 ═══════════ _Aggregate Sterling Reserves_— Gold £10,300,000 Money at Short Notice 5,200,000 Securities 15,400,000 ——————————– £30,900,000 ═══════════ (a) Book value. As our issue of Exchequer Bills would have been useless unless the Bank cashed them, as therefore the intervention of the Bank was in any event absolutely necessary, and as its intervention would be chiefly useful by the effect which it would have in increasing the circulating medium, we advised the Bank to take the whole affair into their own hands at once, to issue their notes on the security of goods, instead of issuing them on Exchequer Bills, such bills being themselves issued on that security. I have given so many illustrations in this book that I fear I must have exhausted my reader’s patience, but I will risk giving another. In the first place a system, in which the rupee is maintained at 1s. And every practical man–every man who knows the scene of action–will agree that our system of banking, based on a single reserve in the Bank of England, cannot be altered, or a system of many banks, each keeping its own reserve, be substituted for it.

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