All ordinary bankers are wanting to sell, or thinking they may have to sell. │ R. If, early in the autumn, a serious failure of the monsoon became apparent, a widespread suspension on the part of the numerous bubble banks, which have been springing up lately all over India, would be a probable consequence. This question will be more fully dealt with in Chapter VIII. I return to this later in the chapter.
e. Is the £40,000,000, which I put forward as a safe maximum for the reserves, so far as the convertibility of the currency is concerned, still adequate when the possible magnitude of India’s adverse balance of indebtedness is our test of sufficiency? This problem is even less capable than the former of exact solution. per rupee. They speculate with it in bubble companies and in worthless shares, just as they did in the time of the South Sea mania, when there were no banks, and as they would again in England supposing that banks ceased to exist. If any large fraction of that money really was demanded, our banking system and our industrial system too would be in great danger.
It is only in the case of continuous and considerable depressions that the cause is in action long enough to produce discernible effects. Is it possible to conceive of any remedy or moderating influence for the somewhat severe seasonal stringency still experienced? 6. │ Public.
But the number of our attainable bank notes is not, like American ‘greenbacks,’ dependent on the will of the State; it is limited by the provisions of the Act of 1844.
The next and final step is a true gold currency.
” It was also to “facilitate the receipt of the revenue and its subsequent diffusion through the various channels of the public expenditure, furnish the remittance to Great Britain of the sums required there for the Home Charges, and enable the East India Company to act up to the instruction of the legislature by keeping their Government entirely aloof from that interference with the commerce of India which the present system of remittance involves. For the officials and advisers of the Secretary of State have grown up in familiarity with the problems of Indian currency.  8. But every such industry is liable to grave fluctuations, and the most important–the provision industries–to the gravest and the suddenest. But Indian opinion views with suspicion the holding in London of the greater part of India’s gold reserve, and this opinion, though ill–founded, is likely to persist for some time to come. When the bills (suppose) of a Manchester warehouseman which he gave to the manufacturer become due, he cannot, as a rule, pay for them at once in cash; he has bought on credit, and he has sold on credit. They say ‘I am under an obligation to pay such and such sums of legal currency; how much have I in my till, or have I at once under my command, of that currency?’ In America, for example, it is quite enough for a banker to hold ‘greenbacks,’ though the value of these changes as the Government chooses to enlarge or contract the issue.