2$7 



millions Rx. It was found on enquiry that the people living 

 in Simla and the hills had absorbed in 25 years 6'6 crores of 

 rupees worth of silver. The Maharajah of Burdwan had a 

 large hoard, out of which £230,000 were brought out, and 

 the Gwalior regency' invested 3 millions sterhng in Govern- 

 ment securities, out of the hoard which was left by the late 

 Maharajah. A native prince was found to be hoarding at 

 the rate of £40,000 or £50,000 a year. Sir David Barbour 

 was of opinion that the introduction of banking facilities 

 would not affect the habits of the people very much in this 

 respect ; the European banks took deposits from any body, 

 but the hoarding, as a rule, was by men who hoarded so little 

 individually that no bank would accept their deposits ; nor 

 would they themselves be willing to deposit money in a bank. 

 It is obvious, however, that if small banks were established 

 under Government guarantee, like the Swiss land credit 

 banks, small deposits would be received and the reluctance of 

 the people to make deposits would be gradually overcome. 

 The practice of hoarding makes an immense amount of 

 wealth practically useless for industrial purposes, and if 

 even a third part of the wealth thus remaining unutilized 

 were invested in industrial undertakings, it would bring 

 about a great revolution in commerce. Of the entire amount 

 of debt of the Government of India, viz., 218 millions Rx, only 

 25 millions are held by the natives of the country, 1 00 millions 

 Rx. invested in the rupee debt would pay it off almost entirely, 

 and save the country from an annual remittance of 4 millions 

 Rx. on account of interest. The great utility of small banks 

 as contradistinguished from large central banks in this respect 

 has thus been explained by Mr. Bagehot : " A single mono- 

 polist issuer of notes, like the bank of France, advertises bank- 

 ing slowly. On the other hand, the Swiss banks, where 

 there is always one or more in every canton, diflfuse banking 

 rapidly. The reason is that a central bank which is governed 

 in the capital and descends to a country district has much 

 fewer modes of lending money safely than a bank, of which 

 the partners belong to that district and know the men and 



things in it But the mass of loans in a 



rural district are of small amount ; the bills to be discounted 

 are trifling ; the persons borrowing are of small means and 

 only local repute ; the value of any property they wish to 

 pledge depends upon local changes and circumstances. A 

 lender who lives in the district, who has always lived there, 

 whose whole mind is a history of the district and its changes, 

 is easily able to lend money safely there. But a manager de- 

 puted by a single central establishment does so with difl&- 

 culty. The worst people will come to him and ask for loans. 



