In the nature of a postscript to the above proposals, it may be instructive to consider

A provision of the above kind for introducing some degree of elasticity into the Indian currency system would not be very useful in a season such as that of the autumn and winter of 1905–6 or of the autumn of 1912–13, when there was a demand for rupees on so great a scale that it could only be met from the Mint. It cannot pay the interest on its debt if that bank cannot produce the public deposits when that interest becomes due; it cannot pay its salaries, and defray its miscellaneous expenses, if that bank fail at any time. According to the official statement which I quoted before, ‘we,’ that is, the Bank directors, ‘lent money by every possible means, and in modes which we had never adopted before; we took in stock on security, we purchased Exchequer Bills, we made advances on Exchequer Bills, we not only discounted outright, but we made advances on deposits of bills of Exchange to an immense amount–in short, by every possible means consistent with the safety of the Bank.

of new money in the next few days, and its reserve went down to nothing, and the Government had to help.

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