[45] At present notes can be issued by currency offices, but only to treasuries on the requisition of the Comptroller–General, in exchange for gold bullion at the rate of 1 rupee for 7·53344 grains troy of fine gold. Since April 1, 1907, the receipt at the Indian Mints of gold bullion and gold coins other than sovereigns and half–sovereigns has, in fact, been stopped by Government of India Notification.
[46] I have, however, seen no evidence which suggests that half–sovereigns are specially popular on account of their lower denomination.
[47] The Manager of the National Bank in the Punjab reported in 1911–1912:—“The fact of currency notes having always been unpopular throughout the Punjab and, excepting in Lahore, being cashed only at a considerable discount, has no doubt conduced to the popularity of the sovereign. A portable medium commanding its full face value was urgently required and the sovereign has for the present met the want.”
[48] £6000 in rupees weighs more than a ton.
[49] The Government should probably instruct its officers to receive and change notes with freedom on every possible occasion, in order to dissipate this idea.
[50] See pp. 113–118 for an account of the cost of transporting bullion to India.
[51] It was operative, however, in the middle of March 1913, when the whole amount offered was not allotted, tenders below 1s. 4d. being rejected; later in the month tenders below 1s. 4d. were accepted.
[52] The rule is supposed to be that the extra charge for transfers is 1–32d. per rupee when the Indian bank rate is below 9 per cent, and 1/16d. when it is 9 per cent or above. The last occasions, on which the difference of 1/16d. was in force, occurred between December 1906 and March 1907. In 1904 and formerly the 1/16d. difference came into force when the Indian bank rate exceeded 6 per cent.
[53] Thus a probable effect of exceptionally large sales of Council Bills is an earmarking of gold on Indian account at the Bank of England. The extent to which the Indian system can be misunderstood is well illustrated by the fact that in a money article recently published in an important newspaper in this country, an increased offering of bills by the India Council was given as a reason for expecting a postponement of the need for earmarking gold at the Bank on Indian account.
[54] On two occasions this practice has been suspended—in January 1900, when the price rose to 1s. 4⅜d., and in December 1906–March 1907, when it rose to 1s. 43/16d. The reason for the suspension in the second case was the operation of the rule by which the premium charged for telegraphic transfers over the rate for bills depends on the Indian bank rate (see p. 105). The statement made in answer to a question on this subject in the House of Commons (April 30, 1912) by the Parliamentary Under–Secretary was not quite correct.