So that our one-reserve system of banking combines two evils: first, it makes the demand of

‘In order to remedy these inconveniences, a bank was established in 1609 under the guarantee of the City.

Every bank was supposed to be necessarily, more or less, in opposition to every other bank–banks in the same place to be especially in opposition.

│Treasuries. But the currency of a small state, such as Genoa or Hamburgh, can seldom consist altogether in its own coin, but must be made up, in a great measure, of the coins of all the neighbouring states with which its inhabitants have a continual intercourse. Those who lived there also would soon see if he was acting in a manner to shake their confidence. The note of the Bank of France has not indeed been depreciated enough to disorder ordinary transactions. But almost always the delay in creating a stringency only makes a greater stringency inevitable. Our intricate law of real property is an impediment in country banking, for it requires some special study even to comprehend the elements of a law which is full of technical words, and which can only be explained by narrating its history. A more miserable history can hardly be found than that of the attempts of the Bank–if indeed they can be called attempts–to keep a reserve and to manage a foreign drain between the year 1819 (when cash payments were resumed by the Bank, and when our modern Money Market may be said to begin) and the year 1857. in its till against liabilities of nearly three times the amount. , except in a very indirect and unimportant way to be explained in a moment. Returning from these digressions, I conclude that the Government will not be able in practice to restrict its responsibility to the currency, and may have to take a part in moderating the consequences of rash or unfortunate banking, and in meeting an adverse balance of indebtedness. Is it possible to conceive of any remedy or moderating influence for the somewhat severe seasonal stringency still experienced? 6. These men remit their earnings in gold, and as there is hardly a village in the Punjab that has not sent a man to these services, it is not surprising that the value of the sovereign is understood It is difficult to say to what extent sovereigns are being hoarded, but that they are held up by the well–to–do to a very considerable amount is undoubtedly the case; and hoarding will continue among the rural population for years to come. And Mr. And the only practical mode of obtaining this object is–to keep the actual reserve always in advance of the minimum ‘apprehension’ reserve. There are many cases in which the offer of too high a pay would prevent our obtaining the man we wish for, and this is one of them. ‘ But the exact point is, that it has not gone on a long time.

It is from this source that the sovereigns now circulating as currency are likely to have come. And then the plain problem before the great dealers comes to be ‘How shall we best protect ourselves? No doubt the immediate advance to these second-class dealers is annoying, but may not the refusal of it even be dangerous? A panic grows by what it feeds on; if it devours these second-class men, shall we, the first class, be safe?’ A panic, in a word, is a species of neuralgia, and according to the rules of science you must not starve it.

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