This new policy is likely to be extended in the future

Both of the crises of 1837 and 1839 were severe, but neither terminated in a panic: both were arrested before the alarm reached its final intensity; in neither, therefore, could the policy of the Bank at the last stage of fear be tested. And what is more, the Bank directors are not trained bankers; they were not bred to the trade, and do not in general give the main power of their minds to it. ‘ Now this system seems to me in its principle perfectly applicable to the administration of the Bank of England. The position would be that the Indian Money Market was on the verge of general insolvency with the Presidency Bank Rates at (say) 12 per cent, and that the Indian Government had (say) £40,000,000 sterling resources in hand with demands on only a modest scale for the encashment of notes and rupees. There is a second appetite for large gains to be made by selling the principal which is to yield the interest. The Gold–Exchange Standard arises out of the discovery that, so long as gold is available for payments of _international_ indebtedness at an approximately constant rate in terms of the national currency, it is a matter of comparative indifference whether it actually _forms_ the national currency. But the final step will come when the country is ripe for it.

So far from our being able to rely on the proportional magnitude of our cash in hand, the amount of that cash is so exceedingly small that a bystander almost trembles when he compares its minuteness with the immensity of the credit which rests upon it. But still the detail must be well done; and some one must be specially chosen to watch it and to preside over it, or it will not be well done. Of the Cash Balances in London no more than a working account is kept with the Bank of England. │ 1911–12. ‘s Government was so low in London that it was impossible for it to borrow any large sum; and the evil was the greater, because in consequence of the French war the financial straits of the Government were extreme.

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