Gold was originally accumulated in the reserve in india through the automatic working of the rule

But a board has no instincts when it is not getting an income for its members, and when it is only discharging a duty of office.

Since 1900, however, the functions of the Council Bill system have been enlarged, and it has now become a very important part of the general mechanism for the maintenance of the Gold Exchange Standard. I had always imagined such directors to be men of tried sagacity and long experience, and I was amazed that a cheerful young man should be one of them.

An increase of loans at such times is often an increase of the liabilities of the bank, not a diminution of its reserve.

The rough and vulgar structure of English commerce is the secret of its life; for it contains ‘the propensity to variation,’ which, in the social as in the animal kingdom, is the principle of progress.

Four types of occasion can be distinguished on which gold bars might be presented at Bombay for coinage:— (_a_) Gold might be deliberately imported from England for the purpose; or it might occasionally happen that importers of gold bars, having temporarily miscalculated the demand for bars, would wish to sell these bars to the Government. Only under one or other of two conditions could loans from the Cash Balances be important: first, if the proceeds of taxation tended to accumulate in the Government Treasuries in the autumn and winter months so that the balances tended to be above their normal level at the busy season; and second, if the Government were to pursue the foolish policy of habitually keeping more ample balances than they really required. We have linked India with the gold countries of the world, we have reached a gold–exchange standard, which we are steadily developing and improving.

As the majority of the bills are bought by the Banks _in India_, while cash is received for them, either at maturity or through rediscount, _in London_, the Banks are constantly in the position of finding themselves in funds in London and of wishing to have funds (for the purchase of more bills) in India.

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