Political economy

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Monograph

Identifikator:: 867647221

URN:: urn:nbn:de:zbw-retromon-93157

Document type:: Monograph

Author:: Chapman, Sydney John http://d-nb.info/gnd/123743141

Title:: Political economy

Place of publication:: London [u.a.]

Publisher:: Williams & Norgate [u.a.]

Year of publication:: 1912

Scope:: 1 Online-Ressource (255 Seiten)

Collection:: Economics Books

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132 POLITICAL ECONOMY A few words more may be said, never theless, of the problem of the bullion reserve. One advantage of a small reserve is that it compels the bank or banks in charge of it to keep a sharp watch on the state of business and nip in the bud such an excessive issue of credit as would deplete it. But the small reserve has grave countervailing disadvantages. Foreign de mands have to be met out of the reserve, and of exports of bullion over-trading may not have been the cause, but as soon as the reserve begins to shrink, if it is small, it becomes necessary to raise the bank rate with the object of restoring it and reducing the claims that can be made upon it. A rise in the bank rate checks importations of goods, and relatively stimulates exports, because by limiting the quantity of borrowed money in the country it drags down home prices. It may occasionally happen, therefore, that business as a whole has to be excessively dis couraged by a high discount rate at a time when it requires encouragement rather than discouragement. Were the reserve very sub stantial, a small elevation of the bank rate would frequently be all that was necessary after foreign withdrawals of bullion, and possibly in many cases no alteration in the

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