In the second place, as there is no Central Bank in India, there is no Government Banker. In the worst part of the crisis of 1866, 50,000 L. 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. The present arrangements, which date from 1896, were made possible by the strong preference of the public for notes over gold and by the provision of the law which permitted the holding of foreign bills as cover for the note issue. A hundred people are talked about, and a thousand think,–‘Am I talked about, or am I not?’ ‘Is my credit as good as it used to be, or is it less?’ And every day, as a panic grows, this floating suspicion becomes both more intense and more diffused; it attacks more persons; and attacks them all more virulently than at first. In all business this is well known by experience: a stimulated market soon becomes a tight market, for so sanguine are enterprising men, that as soon as they get any unusual ease they always fancy that the relaxation is greater than it is, and speculate till they want more than they can obtain. The peculiarity, indeed, of the effects of the one reserve is indeed even greater in this respect. The storm was soon on him. It is probably within the power of the Secretary of State, if he wishes, to regulate the flow of gold direct from London to Bombay by means of the sales of Council Bills. This Act was completely successful in stopping attempts to economise gold by the use of notes. But to this again there is an objection, of little value perhaps in seeming, but of much real influence in practice.
I will conclude this chapter with a brief history in outline of the Gold–Exchange Standard itself.
│ 128 │ 127 │ 169 │ │ 1896 │. But it is important to observe, that the published accounts of the Bank give no such information to the public as will enable them to make their own calculations.