The ‘loanable capital,’ the lending of which caused the rise of prices, was lent to enable

And exactly on that very account the danger of any particular demand on that reserve is augmented, because the magnitude of the fund upon which that demand falls is diminished. There are not many recognised impossibilities in business, but everybody admits ‘that you cannot found a new private bank. Members asked one another what the Gold Standard Reserve might be, and, when writers in the Press told them, were duly horrified to learn that it contained no gold. But they need not send ‘cash;’ they may send good bills and discount them in Lombard Street and take away any part of the produce, or all the produce, in bullion. : a great alarm pervaded society, and generated an eager controversy, out of which ultimately emerged the Act of 1844.

[52] If the purchaser chooses transfers, the effect to him is that he gets his rupees a fortnight earlier in India and pays for this privilege a sum equal to 5 per cent on the money for a fortnight. That is as much a part of its daily stock-in-trade as its desks or offices; or at any rate, whatever words we may choose to use, we must carefully distinguish between this cash in the till which is wanted every day, and the safety-fund, as we may call it, the special reserve held by the bank to meet extraordinary and unfrequent demands. It is easy to understand the reasons for these restrictions. That body is composed of the Governor and Deputy-Governor and all the directors who have held those offices; but as those offices in the main pass in rotation, this mode of election very much comes to an election by seniority, and there are obvious objections to giving, not only a preponderance to age, but a monopoly to age. It may be added that the Indian cash balances are kept partly in District Treasuries all over the country, partly in Reserve Treasuries, and partly on deposit at the Presidency Banks. per rupee more than Council Bills. In fact, in Lombard Street, the principal depositors of the bill-brokers are the bankers, whether of London, or of provincial England, or of Scotland, or Ireland. The India Office answered thus:— The establishment of a mint for the coinage of gold in India is the clearest outward sign that can be given of the consummation of the new currency system; and to abandon the proposal now must attract attention and provoke criticism and unrest. There is a cardinal difference between banking and other kinds of commerce; you can afford to run much less risk in banking than in commerce, and you must take much greater precautions.

But of cash in ultimate reserve–cash in reserve against a panic–the savings’ banks have not a sixpence. in London for 1s. It is alleged that the Bank of England can keep aloof in a panic; that it can, if it will, let other banks and trades fail; that if it chooses, it can stand alone, and survive intact while all else perishes around it. The foreign drain empties the Bank till, and that emptiness, and the resulting rise in the rate of discount, tend to frighten the market.

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