But the mass of English country bankers only give bills on places in England or on London, and in London the principal remittance business has escaped out of the hands of the bankers. The advances would be made in notes or rupees, according to the demand. It will lie idle in the banks, as we have often seen it. But in the end common sense conquers.
This abnormally high level in the first half of 1912 gave rise to much criticism in regard both to the amount of the balances and also to the method adopted of lending them out in the London Money Market. The vote of a great Exchange dealer might be objected to for plausible reasons of contrary interest, if any such reasons were worth regarding. It was also most natural that the bill-brokers, having by the constant practice of this lucrative trade obtained high standing and acquired great wealth, should become, more or less, bankers too, and should receive money on deposit without giving any security for it.
3rdly. of coin be deposited in a bank, and it need only keep 1,000,000 L. The Indian Money Market would need to remit funds to London, but, on account of the internal banking crisis and an outbreak of hoarding amongst depositors, would not have even rupee resources with which to do it.
CHAPTER III. But foreign observers seem to have been more impressed by the fact that the Englishman had sovereigns in his pocket than by the fact that he had a cheque–book in his desk; and took more notice of the “efficacy” of the bank rate and of the deliberations of the Court of Directors on Thursdays, than of the peculiar organisation of the brokers and the London Money Market, and of Great Britain’s position as a creditor nation.
If there is great stringency in the London Market and London is in urgent need of funds, the use of the last two methods can be so much restricted that India can be practically forced to pay what is owing in gold.
And the accounts of the Bank of France show why. In either case there is a similar increase in the volume of currency in India not held by the Government.