They would withdraw their deposits from the bank; they would not assist it to stand erect

The first crude attempt in recent times at establishing a standard of this type was made by Holland. But this policy had no effect, except that of exciting a distrust of ‘Overends’: the credit of the Bank of England was not diminished; Overends had to return the money in a few days, and had the dissatisfaction of feeling that they had in vain attempted to assail the solid basis of everyone’s credit, and that everyone disliked them for doing so. If, for example, the German Government brings bills or other good securities to this market, obtains money with them, and removes that money from the market in bullion, that money may, if the German Government choose, be taken wholly from the Bank of England. A more distinct view of abstract principle must be taken before we can fix on the amount of the reserve which the Bank of England ought to keep. In 1867 a specific proposal for the amalgamation of the three Presidency Banks was laid before the Government of India in a memorandum of complete grasp and mastery by Mr. Take, for instance, the iron trade– In the year 1869 we exported 2,568,000 tons 1870 2,716,000 tons ————– 5,284,000 tons 1867 1,881,000 tons 1868 1,944,000 tons ————– 3,826,000 tons ————– Increase 1,458,000 tons that is to say, cheap corn operating throughout the world, created a new demand for many kinds of articles; the production of a large number of such articles being aided by iron in some one of its many forms, iron to that extent was exported. Further inquiry, however, soon convinced me that they had not the power.

As has been already said–but on account of its importance and perhaps its novelty it is worth saying again–whatever bank or banks keep the ultimate banking reserve of the country must lend that reserve most freely in time of apprehension, for that is one of the characteristic uses of the bank reserve, and the mode in which it attains one of the main ends for which it is kept.

The manner in which the rest is dealt with is best described in the words of an official memorandum issued by the India Office in 1913 [Cd.

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