After a commercial crisis, 1866 for example, two things happen: first, we call in the debts which are owing to us in foreign countries; and we require these debts to be paid to us, not in commodities, but in money.
So much for the proper magnitude of the Reserve, regarded as a Currency Reserve. For a long time this was hardly noticed. , or nearly 1/3 rd of their capital, principally out of undivided profits. These are the relevant considerations. As I have explained, remittance is one of the subsidiary conveniences which early banks subserve before deposit banking begins. Many of them will wish to speak on every decision of moment, and some of them–some of the best of them perhaps–will only speak with difficulty and slowly. The question, whether it is worth the purchaser’s while to pay this extra sum, chiefly depends upon the Indian bank rate, because this governs the amount of interest which can be gained by having the money immediately available in India. The principal statistics of the three Presidency Banks are as follows:— ┌────────–┬────────────┬────────────┬────────────────┬──────────────–┐ │ │ Capital, │ │ │ │ │Dec.