Page:The Economic Journal Volume 1.djvu/749

CIRCULATION OF THE RUPEE 727 'The liability of the Indian money market to extreme pressure at times, the difficulty in adding temporarily to the amount of cash by drawing on other markets, and the magnitude of the trans- actions of Government compared with those of trade, make it desirable that the State should not be exposed, in the event of war, famine, or other unexpected cause, to the risk of meeting sudden and large demands on it for cash.' In consequence of these views prevailing, the Government balances in the Presidency Banks were reduced to a regulated minimum and transferred to reserve treasuries. These vaults are filled by an enforced flow of the currency to the Presidency towns in order to meet the drawals of the Secretary of State and the heavy expenditure at head-quarters. The volume of this stream occasionally contracts through the necessity of diverting funds to purchase food in times of famine, to construct strategic railways on the frontier, and in the case of Burma to replace the ex-king's currency. In addition to these general movements, there is in each province a flow of coin to the district treasuries in payment of the revenue, and a flow outwards in the pockets of traders to finance crops of wheat, seeds, cotton, jute, and opium. The financial oi?icers of Government have gradually and tentatively improved their system of banking by allowing trade to take over their surplus cash at district treasuries in return for a payment per contra in the Presidency-towns. Of late years this method of transfers has grown rapidly through an ingenious manipulation of the currency reserve. The law, though insisting upon silver being held against any issue of paper above seven crores, does not specify where it should be stored. Advantage is now taken of this silence to open what are called currency chests, to which is transferred the cash surplus of a district. while an identical amount is transferred in the opposite direction at the capital from the currency reserve to the reserve treasury. The Finance Minister gave an instance in point in March last year. I quote his words: ' In Bengal the accruing revenue of the opium districts has been allowed to remain in these districts in the charge of a currency agency, an equivalent being immediately released to the treasury in Calcutta. A fortnight hence this money will be wanted for payments to opium cultivators in the districts, but by that time the land revenue from Eastern Bengal will have been received, and being in like manner made over to the currency department will liberate the coin when it is wanted. Expedients ? In Appendix C will be found the specie remittances made for the last three years by the Bank o! Bengal and the Government moneys taken over by it.