At present there is a conflict of interest between the Government, as representing the general public, and the Banks in regard to the internal exchanges. In a large country metallic currency and notes are always at an agio or a discount, as the floods of business advance or recede. The policy of the Government in regard to its treasury balances is to move them at the least expense to the taxpayer, and, while giving a preference to the Presidency Bank as their largest client, to endeavour to treat all comers alike without exacting the last anna of profit obtainable by way of premium. Where, however, the Presidency Banks have a branch and the custody of the Government balances, there is a tendency towards monopoly as against other banks. Strictly speaking, the Bank has to account for Government receipts in the form in which it receives them, and pay out for Government in the form which is reasonable. Practically, this is hardly possible. Suppose, by way of illustration, that 'A' has to pay Government a lakh of rupees as land revenue. If rupees are at a premium, it is to the Bank's interest to get those rupees into its own account and credit Government with a lakh's worth of notes, which are at a slight discount. If notes are at a premium the Bank's interest is reversed. Similarly if payments are to be made. 'B' is a Government contractor and is owed a lakh of rupees. If 'B' is a client of the Bank, it is to the Bank's interest to credit itself with rupees or notes, whichever are at a premium. If 'B' is a client, say, of the National Bank of India, the Presidency Bank branch will pay him in the currency which is at discount, or partly in one form and partly in another. If the interest of Government and that of the Presidency Banks were amalgamated, this undesirable conflict of interest would disappear, and the other Banks could be protected by working the currency so that these agios and discounts would be reduced, viz. by multiplying encashment centres and reducing the rates for transfer drafts. At present, Government treasuries, where there are no branches of the Presidency Banks, are managed by Government officers, whose time is only partially given to treasury work, and whose principal native subordinate is not infrequently in his private capacity himself a banker. The system is not a good one, and I think should be replaced by handing over the treasuries to be worked by the Presidency Banks as a State department, much as a company works a State railway. This change would probably also result in a beneficial extension of the use of paper currency and bank drafts in lieu of cash. The opinion has already been expressed that the tendency should be to leave the balances held in the Reserve treasuries more and more with the Presidency Bank. It is further my view that they should be allowed access to the London money market, the interests of the Exchange Banks being most carefully safeguarded. These changes, viz. the surrender of the district treasuries, the custody of the large cash balances, and the grant of the power to borrow in London, could hardly be carried out without altering materially the constitution of the Presidency Banks. They would require to be stiffened by the addition of official directors; and a goodly proportion of the profits over what is enough to secure present shareholders from loss on their holdings should go to the State. The same result could be obtained by the creation of a Central Bank. There are advantages in the idea, particularly in regard to the currency system. But at present public opinion is distinctly adverse. It is almost always better to improve existing systems than to pull things up by the roots. The proposal is generally accompanied by suggestions to raise the aggregate capital, in order to invite confidence, whereas it is sounder to leave such considerations purely to the touchstone of the volume of profitable business to be done. Moreover, it would be difficult to secure a competent board. The best men cannot be perpetually running off to distant board meetings. Even if competent men be found, they will be constantly changing, to the detriment of continuity of policy and knowledge; for successful men do not stay long in the East. Bank affairs are best run on the spot without much interference from a distance. It is also to be remembered that the main business of each Presidency Bank is very distinct. Jute in Bengal and rice in Burmah occupy the Bank of Bengal, cotton that of Bombay. If the banks are amalgamated, the natural consequence will be the establishment of a London Committee. The relief of the India Office from political attacks may, however, be very dearly purchased by the amount of top-hamper imposed. And the temptation will always be considerable to remove India's resources to London before they are needed, or when they could be locally employed. The question of the changes, if any, advisable in the note system, should the constitution of the Presidency Banks be remodelled, has intentionally been left to the last, because it is the most thorny. The monetary advisers of China, men of great ability and knowledge of the subject, advocate the issue of notes from a Central Bank somewhat on the lines of the Bank of France. The recent United States legislation is on the same lines as regards the principle guiding the note issue, but it creates from eight to twelve Federal Reserve Banks, which correspond more or less closely to the Central Bank suggested for China. The Bank of France has no limit, theoretically, to its issues beyond its lending power. As it is managed with great caution and consummate ability, not merely does no harm result from this freedom, but we get the curious result that in practice its issues are more fully secured in hard cash than they would be under a rigid system. In China and America limits are imposed both in regard to cash held against demand deposits and notes issued. In England and Germany a distinction is in effect drawn between notes and credit. Notes in these countries are really hard money; and it is left to private enterprise to use cheques and other instruments of credit for the immense transactions of the business world. In Germany provision is made for the uncovered issues of notes to meet the greater need for hard money when the tide of business is flowing fast. In England no such provision exists; but in times of crisis, by suspension of the Bank Act, notes would become forced legal tender. Whatever be the advantages of the French system of issuing notes to the extent of bills offering for discount, it would never be practicable to introduce into India a system so unsuitable to a backward country and so alien to British conditions and sentiment. If the system outlined on page 474 is adopted, it should not be impracticable to make it over to the Presidency Banks after they have been remodelled. Difficulties would arise regarding their respective liabilities for notes, especially for the large notes used in remittances. Perhaps it might be necessary for each to mark its respective issues of the high-value notes so that their mutual positions could be adjusted by means of a clearing house at Delhi; or possibly a nexus could be created by a reference in cases of dispute to an annual joint conference presided over by the Financial Member of Council. To recapitulate: India should possess a currency sufficiently rich in gold for it to be available in internal crises and against foreign drains. Such a currency will gradually assume the more economical form of a paper currency backed by gold, which will occupy a less important position in the general circulation. The management of the currency and the custody of the Government balances are best effected by a fusion of State and private interests. England, being only able to retain such gold as her habits and resources permit, need not regard with misgiving a growing absorption of the residue by her greatest dependency. On the contrary, the presence of twenty millions sterling of Indian gold in the vaults of the Bank of England would strengthen incalculably the Bank's precarious hold of its slender store. Should the Straits Settlements, East and West Africa, and other dependencies beyond the seas adopt a similar procedure, the position of the Empire would be strengthened to the common advantage. F. C. HARRISON. Art. 10.-THE NEW GREECE. 1. The Broom of the War God. By H. N. Brailsford. London: Heinemann, 1898. 2. Letters from Greece. By John Mavrogordato. London: Secker, 1914. 3. Greeks, Bulgars, and English Opinion. By Z. Duckett Ferriman. London: Bonner, 1913. 4. Hellas and the Balkan Wars. By D. J. Cassavetti. London: Fisher Unwin, 1914. TWICE before in history there has been a New Greece. In the centuries that followed the conquest of the Greek world by Rome, it looked as if, politically and morally, the race were dead. The poets could write of the supremacy of Greek culture, but the Hellenised Romans of Horace's and Virgil's days saw that the Greeks who were their contemporaries lacked the qualities that make for government-strength of purpose, grit, and staying power. When the New Greece came, hardly two centuries after Horace wrote, it was character that came first. There was a pressure of barbarians upon the eastern frontiers of the Roman Empire; and it was the Hellenised East that stood in the way of invasion. The responsibilities of the situation, the fact that once again, as at Marathon and Salamis, they were the acknowledged bulwark of civilisation against barbarism, helped the Greeks to realise their new political importPlutarch's book of Parallel Lives' is the political tract that ushered in the new era. On the one side he justifies the character, the political capacity, of the ancient Greeks, forgotten in the course of the centuries. He sets the two races, Greek and Roman, man for man, one over against the other, and shows that Greeks too could fight and govern. On the other side he makes his countrymen feel that there was glory to be won in adapting themselves to new conditions and taking their share in the government of the cosmopolitan empire. Before a century was out, Greek officers were commanding Roman troops in a border war, and a Greek was governor of a province. It was the deep-seated public spirit of the race that made possible the long history of the Byzantine Empire, Roman in organisation, Christian in religion, Greek in language. ance. Vol. 220.-No. 439. 2 K |