6. With the use of substitutes for gold I will deal in Chapter IV. in treating of the proper position of gold in the Indian system. But what props are commonly brought to the support of an “ineffective” Bank Rate in countries other than Great Britain? Roughly speaking, there are three. A very large gold reserve may be maintained, so that a substantial drain on it may be faced with equanimity; free payments in gold may be partially suspended; or foreign credits and bills may be kept which can be drawn upon when necessary. The Central Banks of most European countries depend (in varying degrees) upon all three. The Bank of France uses the first two,[6] and her holdings of foreign bills are not, at normal times, important.[7] Her bank rate is not fixed primarily with a view to foreign conditions, and a change in it is usually intended to affect home affairs (though these may of course depend and react on foreign affairs). Germany is in a state of transition, and her present position is avowedly unsatisfactory. The theory of her arrangements seems to be that she depends on her bank rate after the British model; but in practice her bank rate is not easily rendered effective, and must usually be reinforced by much unseen pressure by the Reichsbank on the other elements of the money market. Her gold reserve is not large enough for the first expedient to be used lightly. Free payment in gold is sometimes, in effect, partially suspended,[8] though covertly and with shame. To an increasing extent the Reichsbank depends on variations in her holding of foreign bills and credits. A few years ago such holdings were of small importance. The table given below shows with what rapidity the part taken by foreign bills and credits in the finance of the Reichsbank has been growing. The authorities of the Reichsbank have now learnt that their position in the international short loan market is not one which permits them to fix the bank rate and then idly to await the course of events. REICHSBANK’S HOLDINGS OF FOREIGN BILLS (EXCLUDING CREDITS). ┌─────────┬─────────────────────┬───────────────┬────────────────┐ │ │ Average for Year. │ Maximum. │ Minimum. │ ├─────────┼─────────────────────┼───────────────┼────────────────┤ │ 1895 │ £120,000 │ £152,000 │ £100,000 │ │ 1900 │ 1,270,000 │ 3,540,000 │ 160,000 │ │ 1905 │ 1,580,000 │ 2,490,000 │ 970,000 │ │ 1906 │ 2,060,000 │ 2,990,000 │ 830,000 │ │ 1907 │ 2,223,000 │ 3,000,000 │ 1,130,000 │ │ 1908 │ 3,544,000 │ 6,366,000 │ 977,800 │ │ 1909 │ 5,362,000 │ 7,978,000 │ 2,824,800 │ │ 1910(a) │ 7,032,000 │ 8,855,000 │ 4,893,300 │ └─────────┴─────────────────────┴───────────────┴────────────────┘ (a): Since 1910 these figures have not been stated in the Reichsbank’s annual reports.