834. REPORT—1899. 
sufficient basis makes bankers helpless under panic conditions. Cash not 
habitually used in England except for wages. England greatest money market 
world, slenderest gold basis. ‘Short money’ not reserve, but means of employ- 
ment of funds. Crisis 1890, this point recognised by Chancellor of Exchequer 
as vital. Solidarity of action (1890) induced by Bank of England saved situa- 
tion. Clearing system masterpiece mechanism, needs cash basis. Bank amalga- 
mations—rise few great institutions—banking on Imperial scale means Imperial 
responsibilities. London banks hold vast sums, country bankers’ money, at ‘ call 
and short notice.’ Decline of agency system—London office head great system 
branches takes place of agent, Savings banks no reserves—Government policy a 
mistaken one—and an additional source of danger to Bank of England and 
national finance. Do we need larger stock of goldP If so, where should central 
stock be kept, and do bankers keep a sufficient percentage of loose cash P 
England the free gold market—effect of foreign demand on—danger from 
foreign interference with. Responsibilities England unique—preparation to 
meet responsibilities quite inadequate. Relative position great foreign states. 
Bank of England and Bank of France in 1890. Danger foreign squeeze. No 
State bank in England—must adjust our insular system to meet responsibilities 
by legislation if need be. Varying views of bankers as to responsibility. Suggest 
the habitual holding of a percentage of deposits, say 15 per cent. in Bank of 
England notes. At present English banks only hold 7 per cent. Suggestions as 
to form of bank balance-sheets. London bankers’ movement ve cash reserves— 
committee should include Bank of England. Question of bankers’ balances at 
Bank of England. Effect of the withdrawal of those balances. Costly nature of 
scheme to work without Bank of England. Competition of Bank of England 
with other banks—possible State bank. Bank of England agent of Government. 
Vital point holding of larger percentage of cash, and voluntarily may escape 
legislation. Suggestions for compulsory publication of balance-sheets in special 
form, penalties for not keeping cash, new habit needs forming. Practical con-— 
siderations suggest Bank of England notes as reserve, because they are legal 
tenders—public understand them. Reserves thus kept would: show central stock 
of gold in ‘Issue Department’ Bank of England—this of international importance, 
and preserves individuality of banks. Results in millions of such a scheme for 
establishing central stock of gold and adequate bank reserves. Effect on money 
market of larger reserves—greater steadiness in rates. Possibilities of our 
present position of ‘ unpreparedness,’ and points to be aimed at in any measures 
of reform of present methods. To keep adequate cash reserves is a duty to the 
State. 
3. Indian Currency after the Report of the Commission. 
By HERMANN ScHMIDT. 
The monetary enactments passed a few days ago in India may be considered 
the evolution of the policy adopted in 1893. This policy intended to substitute 
gold for silver as the money of India. It was adopted on the report of the First 
Indian Currency Committee of 1892-3. But the Indian Coinage and Paper 
Currency Act of 1893 was essentially a provisional measure. It left the settlement 
of a permanent rate of exchange between gold and the silver rupee in abeyance. 
Gold was not yet made legal tender. This defect has now been remedied upon 
another exhaustive investigation by a new Currency Committee. India has now a 
zold standard in the sense that a parity has been fixed between gold ard silver, 
and that the mints are open to the coinage of gold and closed to the coinage of 
silver. But the success of the year’s work is still as much in doubt as was that of 
the measures of 1898, 
