The next section of the Indian banking world comprises the Indian Joint Stock Banks, _i.
, the Alexandrian exchanges may be at a level which makes it profitable to ship gold from Egypt to India for payment in London, when it is not profitable to ship gold from Egypt to London.
The events of the last two or three years may have done very great harm in the direction of postponing the development of the use of notes in Northern India. But even if this were not so, even if the banks were willing to keep their deposits at the Bank while it was not lending, they would soon find that they could not do it. We give at the foot of this paper a list of articles, comprising most first-rate articles of commerce, and it will be seen that the rise of price, though not universal and not uniform, is nevertheless very striking and very general. The intensity of the demand on the bill-broker is aggravated therefore by our peculiar system of banking.  Even of these reserves the greater part is probably held by the older and more established of the Banks belonging to this class. M. If it is in London, India will be able, by the sale of telegraphic sterling transfers in Calcutta, to discharge her due obligations cheaply and without delay; if it is in Calcutta, additional charges and a loss of time must be incurred. At any rate, I have pointed out what I think grave defects in it. It is true the Bank of England has to lend the money by which they are filled. But, in the first place, this argument assumes that the Banking Department would have enough money to pay the demands on it; and this is a mistake: the Banking Department would not have a hundredth part of the necessary funds.
A new channel of demand is required to take off the new money, or that new money will not raise prices. Gold reserves are meant to be used in times of difficulty, and for the discharge of pressing obligations.
CHAPTER VII. On this account, political Government–the oldest institution in the world–has been the hardest worked.