In the meantime an attempt was made, described in §4, to force sovereigns into circulation

The Deputy-Governor always succeeds the Governor, and usually the oldest director who has not been in office becomes Deputy-Governor. . It was announced that they would sell in India telegraphic transfers on London at a fixed rate. The importance of foreign bills and credits in the policy of the Austro–Hungarian Bank is of longer standing and is better known. 4d. The directors of some of them have been anxious to put away as much as possible and to divide as little as possible. The holders of the reserve have, therefore, to treat two opposite maladies at once–one requiring stringent remedies, and especially a rapid rise in the rate of interest; and the other, an alleviative treatment with large and ready loans. Individuals were not permitted, therefore, to take out more than £10,000 at a time; and in this manner the gold dribbled slowly away over a period of a few months. And they would be canvassed in every way and on every side to appoint a man of mercantile dignity or mercantile influence. Since the surplus balances in India, beyond those required by the District Treasuries and those deposited with the Presidency Banks, are mainly held in notes, we may neglect them for the present purpose. Generally speaking the career of Joint Stock Companies in this country has been chequered. Richardson described it sixty years ago. At Dutch auctions an upset or maximum price used to be fixed by the seller, and he came down in his bidding till he found a buyer.

The London and Westminster has only 13 per cent of its liabilities lying idle. Such an evil is nothing in comparison with that of losing the money necessary for inevitable expence by entrusting it to a bad Bank, or that of recovering this money by identifying the national credit with the bad Bank and so propping it up and perpetuating it. But even then the notion was a mistake. I mean only that the Secretary of State cannot hope to undercut Australian gold, when it is available for export in large quantities, unless he is prepared to put down his price for Council Bills to this level. And when London was by comparison a small city, and when by comparison everyone stuck to his proper business, this practice might have been safe. I have seen no evidence for supposing that the general conditions outlined in this quotation do not still hold; but in recent years the Presidency Bank rates have not risen above 9 per cent, and occasions for the operation of the tendencies described above have been rarer. 4d. ; they now are more than 60,000,000 L.

In 1876, therefore, the Reserve Treasuries were established, and since that time only a portion of the balances has been placed with the Banks.

So long as the security of the Money Market is not entirely to be relied on, the Government of a country had much better leave it to itself and keep its own money. Thus the authorities are free, if they like, to hold the whole of the Currency Reserve in rupee–tokens, and this reserve has become, therefore (as we shall see below), an important part of the mechanism by which the supply of silver rupees to the currency is duly regulated.

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