The last provision has led, i believe, to the banks establishing a kind of bonded warehouse

The bullion reserve is no longer held solely with the object of securing the ability to meet the obligation to cash notes in legal tender (rupees or gold) on demand. Perhaps this is an exaggeration; but confined, as of course it was meant to be, to civilised Governments, it is not much of an exaggeration. It is a commodity subject to great fluctuations of value, and those fluctuations are easily produced by a slight excess or a slight deficiency of quantity. Mr. In Austria, for example, the hoarding was not so much of gold or silver as of notes. ‘ ‘The court,’ says Mr. In 1862 the management of the note issue was taken over by the Government in the manner described in Chapter III. They should form a permanent committee to consult with their general manager, to watch him, and to attend to large loans and points of principle. Nor would the inspection of the bankers’ balances as a whole lead to any certain and sure conclusions.

They are treated as unfunded debt and used for capital expenditure.

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