There is, however, one point in Mr. Gladstone's statement to which attention should be directed. He showed clearly how the tendency in recent years has been for the expenditure to grow very rapidly; and the following statement of the expenditure since 1870 will make this very evident :

Several millions of the growth in recent years is due to the exceptional expenditure in connection with the Afghan and the Zulu wars, and may therefore be regarded as temporary. And it is to be remembered also that in the expenditure is included several millions which go to the reduction of debt. Last year, for example, our indebtedness was reduced by fully £7,000,000. But even when all allowance is made for this, the fact remains that the normal expenditure of the country is growing, and growing very quickly. Some growth there must of course be, for with the population of the country increasing, and its wealth developing even more rapidly than the population grows, it is inevitable that the cost of governing the country must also increase. At the same time, however, it can hardly be doubted that the increase in the expenditure is, in some measure at least, due to a laxity of control over the spending departments. For economy in the abstract Parliament is always very zealous; when, however, it comes to an examination of details, this zeal evaporates, partly because there are few members of Parliament who have the leisure or the capacity to go minutely into all the national accounts, and partly because the opportunities for scrutinising or criticising expenditure are insufficient. The estimates are generally hurried through their various parliamentary stages with such hot haste, that their careful examination is really impossible. Mr. Gladstone now thinks that the time has come when this system should be altered, and the House of Commons be given a more potent voice in the settling of the national expenditure; and if the disappointment with the present budget does anything to facilitate this change, it will not have been without good results.

INDIAN BANKING IN 1881.

THERE can be no doubt that nearly all connected with Indian banks-or rather the Anglo-Indian banks- have been much disappointed with the results of the past half-year. Instead of the handsome profits which would, under ordinary circumstances have accrued from the increased demand for money in India, and the marked addition to the export trade of the country; these net results of the year's operations contrast lamentably with those of previous years. No bad debts worth speaking of have been incurred, and silver has risen rather than fallen during the year, so that a depreciation of the Indian currency cannot be blamed for the results shown below:

These figures tell a tale of sadly reduced earnings. It was but natural that between 1876 and 1880, the serious depreciation of silver, and famines, should have curtailed profits; but far from there having been any revival of earnings in 1881, there has only been one of these banks which has maintained its rate of profits for 1880 in 1881, and some have closed the year with actual debit balances.

Yet it cannot be said that a loss of business has caused this curtailment of profits. About the best test is that of the deposits, which at the respective periods stood as under :

Thus, in spite of the Oriental Corporation parting with their valuable South African business there has been collectively an actual gain upon 1876, and at the same time, their notes in circulation and their exchange operations have grown considerably. On the 31st December last these banks had together liabilities upon bills payable to the amount of £11,615,000, against £10,043,000 on the 31st December, 1880, and their resources were far more completely absorbed in business operations towards the close of 1881.

How then, without bad debts, have these losses been incurred? In the first place, there has been a vast amount of gambling in exchange. Not only have rates been run close by competition, but managers have been found selling exchange forward for a considerable period, giving their customers the option of calling for the fulfilment of the transaction at any moment most convenient. Hence when money was tight in India at the close of the year these banks were called upon largely to make telegraphic transfers of funds, and they only did so at a considerable loss. Further than this, some of the banks have been speculatingfor that is the right term to use-in rupee paper. They subscribed largely for the last rupee loan at a high figure, and almost immediately saw a considerable loss on the transaction. The National Bank of India also subscribed for amounts on behalf of clients, who afterwards repudiated the transaction, saddling the bank with the loss. The bank should have known the reputability of its clients better. A bank may rightly enough hold investments, but this buying and selling of rupee paper is a great mistake, and the sooner it is discontinued the better.

We note that on one point a suggestion has been made. The "Economist" on the 22nd April contained the following obser

vations

"What reason is there why the Anglo-Indian Banks should not render their accounts in the currency of the country where their business lies? . Rupee securities are becoming more and more popular over here; and there is room for a converted Anglo-Indian Bank, which instead of taking deposits in sterling would take them in rupees. With the exchange at 1s. 8d., £100 paid to them here would represent 1,200 rupees, and would give the depositor power to call for so many rupees, or their equivalent, at a future date. Better than an Anglo-Indian Bank converted on such principles would be to see all the existing Anglo-Indian banks making such a desirable change in their system of accounting."

That the present system of rendering the accounts of the Indian banks in sterling is attended with many risks and attendant evils, cannot be doubted, but we can well understand. that the Anglo-Indian banks will hesitate long before taking this step, if no outside pressure is brought to bear on them.

With respect to recent amalgamation rumours we need say very little, for the simple reason that we in no way believe in them. With regard to a return to the six months' usance for bills, it can well be understood why the proposition finds favour with the banks; but for all that we shall much regret it.

REMARKS ON GOLD AND SILVER, AND THE PARIS
MONETARY CONFERENCE OF 1881.

IN connection with this subject the question that most concerns this country now is unfortunately not "What is a Pound?" as Mr. Grenfell puts it in the Nineteenth Century, but "Where is the Pound?" "What has he done with it?" Seeing, however, that the sittings of this famous conference came to a close without solving the great silver problem, there is reason to fear that until a solution of that has been reached no other question relating to £. s. d. can be properly answered.

How, therefore, to restore silver again to the position in relation to gold that it had maintained for more than two hundred years, is the question that still remains to be answered. But as France, the United States, Germany, Canada, Denmark, Portugal, Russia, Greece, Austria, Hungary, Sweden, Norway, Switzerland, Great Britain, and India, were all represented at this conference, it is not for a moment to be presumed that the question, so far at least as it relates to the cause of the fall in the price of silver, was to any one of that august assembly in the slightest degree a mystery. The bane indeed would be only too abundantly clear to all; not so, however, it would seem, the antidote. Be that as it may, the change of standard by Germany, France, and the United States from silver to gold does not fail to account fully for the discount at which silver has now to be reckoned as against gold. The metallic currency of each of these great nations, consisting as it did naturally and mainly and so largely of silver, did not admit of the possibility of such a change of standard without the sacrifice of a money capital throughout the world equal to all that silver was made to lose in value thereby. It does not therefore seem likely that France and Germany and the United States can any more than the rest of the world manage much longer without, as heretofore, the aid of silver as money. Ever since its demoralization, they, as well as those other countries

whose wealth consisted as theirs did so largely of silver, are perhaps even yet not fully aware that every pound they have since spent has cost them not twenty shillings as in England but something considerably more. In addition, the monetary system has everywhere become now so disorganised, that a most terrible struggle for gold will assuredly follow, unless it be provided against by a wise and timely readjustment of the monetary standard. It certainly behoves all now therefore, whoever may be to blame, to see to this. Gold without silver as money ceases to be money itself. It cannot be a monetary standard unless silver be computed against it at its proper ratio as money, because silver has that fixed relation to gold as a measure of value that the minute has to the hour as a measure of time. Besides, by itself, gold is totally inadequate to afford base sufficient for the various currencies and credits everywhere held together, and built up upon silver and gold jointly. In ancient as in modern times, silver has ever formed in connection with gold the money of civilised man, and his power over either silver or gold being always only in accordance with his suitable requirements, the supply of the precious metals come to him so adjusted as to mark for long ages together a certain ratio between the two, say 1 to 15. Such ratio therefore being designed, as all experience teaches, to be a lasting measure of value, shows exactly even now— all attempts to set it aside notwithstanding-the true relative value of the precious metals. And it means when reduced to pounds shillings and pence, or their equivalent coins, that £3. 17s. 9d. being the price or value computed in silver of an ounce of gold, the price or value computed in gold of 151 ounces of silver must be the same. Although a rise or fall of prices as regards the hire or loan of money is of frequent occurrence, it seems to be as absurd to talk of a rise or fall in the price of money (whose standard is thus fixed) as it would be to talk of a rise or fall in the measure of the inches that make a foot, or the ounces that make a pound.

The ounce of gold, being thus so constantly equal to a certain quantity of silver, supplies a monetary unit, which, whether it be a franc or a dollar or a sovereign, is everywhere alike a piece of money that shows exactly the true mean or measure of value between gold and silver jointly, and not that therefore of either separately. Although money so defined is the only standard by which commodities of all kinds can be correctly reckoned and paid for, certain of our political economists, Adam Smith among others, have held and taught, and only too successfully so far as this country is concerned, that a rise or fall in the price of commodities means a rise or fall in the price of money. Failing to distinguish the difference between money and merchandise or between the pound composed of gold and silver and that as the phrase is "which people might agree to call a pound," these economists came to regard money as a thing that had no intrinsic value in itself, and a mere