But to establish a note circulation, a large number of persons need only do nothing

Though the Parliamentary Secretary of State and the Parliamentary Under-Secretary go in and out with each administration, another Under-Secretary remains through all such changes, and is on that account called ‘permanent. . But this system is nearly the opposite to that which the law and circumstances have created for us in England. Bagehot raised in England, many years ago, to an impregnable position in the unwritten constitution of this country—the doctrine, namely, that in a time of panic the reserves of the Bank of England must, at a suitably high rate, be placed at the disposal of the public without stint and without delay. The sovereign, moreover, is fast becoming the international gold coin _par excellence_ far beyond the bounds of the British Empire. _—The facility of transit is the reason why corn merchants prefer sovereigns to silver. The main question is whether this is, in fact, the right policy. ” The Banks may not always be able, that is to say, to do any considerable volume of business at their published minima. On the other hand, the objections to a policy, which divided the country up for the purposes of paper currency, are also plain.

Still less should it give peculiar favour to any one, and by entrusting it with the Government account secure to it a mischievous supremacy above all other banks. A panic is sure to be caused if that reserve is, from whatever cause, exceedingly low. Competition with it is only open in the sense in which competition with the London Tavern is open; anyone that has to do with either will pay dear for it. The value of money is settled, like that of all other commodities, by supply and demand, and only the form is essentially different.

For the following reasons, however, I do not think that this way of looking at the matter would be correct. What then, subject to this preliminary explanation, is the amount of legal tender held by our bankers against their liabilities? The answer is remarkable, and is the key to our whole system. Probably not one-thousandth part of the creditors on security of Overend, Gurney and Co.

had failed, we were in as sound and healthy a position as any banking establishment could hold, and on that day and throughout the succeeding week we made advances which would hardly be credited.

I estimate that in 1910 these Banks may have held _outside India_ about £m23 in deposits and about £m5 cash in hand and at bankers. The principal mode in which money is raised by traders is by ‘bills of exchange;’ the estimated certainty of their paying those bills on the day they fall due is the measure of their credit; and those who estimate that liability best, the only persons indeed who can estimate it exceedingly well, are the bill-brokers.

‘ Accordingly Mr. The _Statistics of British India_ do not lend their aid to ruder hands than those of the historian. Let me first give a short account of the nature of the seasonal demand for money in India; and then discuss the salient respects in which her system of note issue differs from those of typical note–using countries.

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