5 and Rs. I do not say that the Government should not lend from the Cash Balances in India whenever exceptional circumstances may lead to their being at an unnecessarily high level in the busy season. The totals of the cash balances at various dates are given below.
Only under one or other of two conditions could loans from the Cash Balances be important: first, if the proceeds of taxation tended to accumulate in the Government Treasuries in the autumn and winter months so that the balances tended to be above their normal level at the busy season; and second, if the Government were to pursue the foolish policy of habitually keeping more ample balances than they really required. When then the legal tender of a country is purely metallic, all that is necessary is that banks should keep a sufficient store of that ‘legal tender. So late as 1845, Sir R. He will say to his debtor, ‘I can only give you your securities if you will give me bank-notes. 2ndly. It is interesting to reflect that India’s love of the precious metals, ruinous though it has been to her own economic development, has flourished in the past to the great advantage of Western nations.