It is a remarkable thing that the two classical pronouncements on the fundamental problems of Indian Finance, which have stood the test of time—Mr. Dickson’s, in 1867, on the question of a Central Bank, and Mr. A. M. Lindsay’s, in 1878 and subsequently, on the regulation of a Gold Standard—should both have come from Secretaries of the Bank of Bengal, not from high officials of State. (Yet this last argument for a State Bank, though I have amplified it in my summary at greatest length, is not at all the most important. The arguments given first are those which govern the question.) 30. On the other hand, a fairly good case can be made out against a State Bank. Several of the defects, outlined above, could be remedied, in part at least, by less drastic proposals. The reasons on this side are mainly, nevertheless, those of conservatism and of caution (or timidity). The question, as soon as one attempts to frame practical suggestions, bristles with difficulties. The Government are naturally afraid of so troublesome a proposal—and one so far removed from what they are used to; while there is no important body which is sufficiently interested in forcing it on their attention. The Banks fear a possible rival; merchants are content with present prosperity; and no one else knows anything about it. I shall be astonished, therefore, if action is taken while times are good. Perhaps we may have to wait for the lessons of a severe crisis. Only under some such strong influence as this is it likely that the responsible Government will nerve itself to the task, or the business community acquiesce in it. 31. If some day sufficient constructive energy is stirred into activity to undertake the task, let the framers of the new Bank’s constitution put far from their minds all thoughts of the Bank of England. It is in the State Banks of Europe, especially in that of Germany, or in those, perhaps, of Holland or Russia, that the proper model is to be found. CHAPTER VIII THE INDIAN RATE OF DISCOUNT 1. The Presidency Banks publish an official minimum rate of discount, in the same manner as the Bank of England. As an effective influence on the Money Market the Presidency Bank Rates do not stand, and do not pretend to stand, in a situation comparable in any respect with the Bank of England’s. They do not attempt to control the market and dictate what the rate ought to be. They, rather, follow the market and supply an index of the general position. It is, therefore, as the best available index to variations in the value of money in India that the Presidency Bank Rates are chiefly interesting; and it is in this capacity that I shall make use of them in this chapter. [Illustration: _H. Bellingham_, _India Office_. ]