The season of 1907–8 was a failure, and at the end of 1907 came the crisis in America. Unless the Bank of England lend, no stock will be bought. Let us suppose that exchange between London and Calcutta were fixed at 1s.
The result of these banks, as regards the dividends they pay, is– No. But very few persons are aware how much greater the ready balance–the floating loan-fund which can be lent to anyone or for any purpose–is in England than it is anywhere else in the world. The bankers are pretty sure to keep them there, just because they must keep a reserve, and they consider it one of the best places in which to keep it. And so far from being able to meet it, the bankers who do not keep an extra reserve at that time borrow largely, or do not renew large loans–very likely do both. Every one knows Jevons’s description of India as the sink of the precious metals, always ready to absorb the redundant bullion of the West and to save Europe from the more violent disturbances to her price level.