Mr. In the first place, in the event of a _financial_ crisis, accompanied by numerous bank failures, I do not think it likely that the Government would be overwhelmed with demands for the encashment in sterling of notes and rupees.
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. The Government is necessarily at times possessed of large sums in cash.
A little excess therefore forces down the rate of interest very much.
You might as well, or better, try to alter the English monarchy and substitute a republic, as to alter the present constitution of the English money market, founded on the Bank of England, and substitute for it a system in which each bank shall keep its own reserve. At present the basis of the Bank of Bengal is too narrow for such a customer as the Government.
There must be a great want of system and a great deficiency in skilled assistance if extreme labour is thrown upon the chief.