A note issue of growing importance, the management of the government’s cash balances, the regulation of

The principal precaution is a rise in the rate of discount, and such a rise certainly does attract money from the Continent and from all the world much faster than could have been anticipated. In both cases, the capital is wanted to assure the public and to induce it to trust the concern. Difficulties very soon arose (in 1863) through the Government’s requiring the use of its funds at a time when the Bank of Bengal could only sell out the securities in which it had invested them at a considerable loss. ‘When the reserve in the ultimate bank or banks–those keeping the reserve–runs low, it cannot be augmented by the same means that other and dependent banks commonly adopt to maintain their reserve, for the dependent banks trust that at such moments the ultimate banks will be discounting more than usual and lending more than usual. Gauntlett); and I have made free use of these in what follows. (d) Deducting bills on London sold in India. It has been estimated by the Paper Currency Department[40] that in 1907, as a result of the absorption of earlier years, not less than two millions were in circulation.

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