Starting from this assumption, I have worked out the details given in the following table as a guide to the probable circulation at the present time. By public circulation, whether of rupees or notes, I mean the whole circulation not in the hands of the Government—i.e., including that in the hands of the banks. I am primarily concerned with the circulation of rupees; but the public circulation of notes has been added in the last column but one, as it is useful to know at the same time the total public circulation of currency.
Currency in Lakhs of Rupees
| Financial Year, April 1– March 31. | Public Circolation of Rupees on April 1. | New Coinage less Recoinage,a etc.b | Rupees released from Currency, Gold Exchange Standard, and Treasury Reserves. | Netc Export | Public Circolation of Rupees on March 31.d | Public Circolation of Notes on March 31. | Total Currency in the hands of the Public on March 31.d | |||
| 1900–1901 | 120,00 | + | 13,60 | – | 4,66 | – | 35 | =128,59 | +23,79 | =152,38 |
| 1901–1902 | 128,59 | + | 2,04 | – | 2,72 | – | 1,42 | =126,49 | +24,24 | =150,73 |
| 1902–1903 | 126,49 | + | 60 | – | 58 | – | 2,23 | =124,28 | +28,87 | =153,15 |
| 1903–1904 | 124,28 | + | 11,42 | – | 45 | + | 40 | =135,65 | +31,54 | =167,19 |
| 1904–1905 | 135,65 | + | 6,88 | + | 55 | – | 61 | =142,47 | +33,73 | =176,20 |
| 1905–1906 | 142,47 | + | 16,11 | – | 2,11 | – | 78 | =155,69 | +37,90 | =193,59 |
| 1906–1907 | 155,69 | + | 22,88 | – | 4,88 | – | 1,28 | =172,41 | +41,20 | =213,61 |
| 1907–1908 | 172.41 | + | 15,48 | – | 11,56 | – | 41 | =175,92 | +38,65 | =214,57 |
| 1908–1909 | 175,92 | + | 2 | – | 14,90 | – | 29 | =160,75 | +39,23 | =199,98 |
| 1909–1910 | 160,75 | + | 8 | + | 13,14 | – | 1,39 | =172,42 | +46,51 | =218,93 |
| 1910–1911 | 172,42 | – | 42 | + | 3,76 | – | 1,72 | =174,04 | +45,68 | =219,72 |
| 1911–1912 | 174,04 | – | 7 | + | 11,61 | – | 1,13 | =184,41 | +53,24 | =237,65 |
| 1912–1913 | 184,41 | |||||||||
(a) This column is derived from the figures given by the Currency Department, and the total of net coinage issued in individual years differs somewhat from the total amount minted as stated in the Mint Statistics.
(b) In one or two of the earlier years deduction is made on account of an appreciable sum in rupees paid out to native states. This deduction is in accordance with the practice of the reports of the Currency Department.
(c) For Bahrain Islands, Ceylon, Arabia, Mauritius, and East African Coast.
(d) Not allowing for natural wastage of rupees (see below).
This calculation makes no allowance for the general wastage through loss and various causes, or for the steady drain of rupees across the land frontiers. This last item is probably considerable and is not adequately accounted for in the trade returns. The recorded statistics of trade overland show a large annual balance against India, which is probably met by an unrecorded export of gold, silver bullion, and rupees. In the case of Nepal, for example, the recorded statistics show a considerable net balance of imports of treasure into India; and in the case of Tibet, Afghanistan and, in fact, all the land frontiers, the official statistics of the export of treasure do not tally with what we know of the circulation of the rupee beyond the frontiers. Taking all these causes of loss together, I do not think we should overestimate the wastage of rupees from the circulation in placing it between half a crore and a crore annually. For the twelve years 1900 to 1912, therefore, I propose to make an aggregate deduction of 941 lakhs.
This leaves us with a public circulation of 175 crores of rupees (£116,500,000) on March 31, 1912, and a total public circulation, including notes, of 228 crores[68] (£152,000,000), being an increase since 1900 of 46 per cent in the rupee circulation and of 58 per cent in the total circulation. If Mr. Atkinson’s estimate of the circulation in 1900 is nearer the truth than Mr. Harrison’s, then the public rupee circulation in 1912 may have been as much as 200 crores. In the course of 1912 there was a good deal of fresh coinage, of which, at the time of writing, accurate statistics are not yet available. For our present purpose it will be quite sufficiently cautious to think of the public rupee and note circulation together as amounting to not more than 250 crores.
21. How much of this could possibly be spared from circulation at a time of crisis? In 1908 the rupee circulation fell (at its lowest point) by somewhat less than 30 crores, or less than 20 per cent of the estimated rupee circulation at that time. The note circulation (see p. 55) fell much less seriously. It does not seem to me likely that the Government could be called on at the present time to redeem more than 25 per cent of the total circulation (notes and rupees together), or, on the basis of the foregoing calculations, 60 crores (say) of rupees (£40,000,000). If the Government were to keep in one way or another a reserve of this amount for purely currency purposes, I think they would have done as much as reasonable prudence could require. I do not say that it is impossible that they should be called on to redeem a greater amount than this. But it would be extravagant to maintain a reserve adequate for all conceivable emergencies, since there is a further resort of which use might fairly be made without great reluctance. Unless the London Money Market has collapsed as well as the Indian, it is always open to the Secretary of State to borrow by means of India Bills. There would be nothing shameful in this—though possibly some expense. But the expense, even if the Secretary of State had to pay a rate of interest appropriate to Turkey or China, would be much less than the expense of maintaining a very great reserve against unlikely emergencies.[69]