§ 16. Mr. TOUCHEasked whether the Under-Secretary for India has considered the risks involved in the present financial methods of the India Office if within the 990 next few months, in addition to the monetary demands in India to move its crops, there should arise troubles requiring the bulk of the large balances at present lent to banks and approved borrowers in London and the Paper Currency Reserves, to be available for use in India; is he aware that it would necessitate the sudden withdrawal of many millions from the London market and the purchase of enormous sums of silver, which would force up the rate and upset markets; and will he consider a change of policy in future to avoid this risk?
Mr. BAKEROne of the advantages of the present method of holding the India Office balances (which has been in force since 1838) is that the loans and deposits can be called in, if required, at short notice and without difficulty, as is illustrated by the fact that, since 31st March last, they have been reduced by £8,915,000, and the money, if required for the purchase of silver, becomes available at the most convenient place. If the hon. Member wishes to submit proposals for a change of policy, the Secretary of State will be glad to consider them.
§ Mr. TOUCHEDoes the hon. Gentleman consider the effect on the Money Market if the banks and approved borrowers are suddenly called upon to pay out many millions of money, as they are under a technical obligation to do?
Mr. BAKERThat is a very speculative question. I have answered the point already as far as it can be answered.
§ 21. Mr. GWYNNEasked what margin* is required by the India Office over and above the current market value of the securities deposited by the approved borrowers of the cash balances of the Government of India?
Mr. BAKERIndia Sterling Bills, India Bonds and Guaranteed Debentures of the several Indian Railway companies are taken at par. British Treasury Bills, Exchequer Bonds, Metropolitan Water Board Bills and London County Bills are accepted at their market value except when the unexpired period is very short, in which case they are taken at par. The other securities that are accepted are taken at their minimum market value on the day of the loan with a five per cent, cover, which is at once added to if the value of the security falls during the currency of the loan.