Page:Indian Journal of Economics Volume 2.djvu/293

 OUBBENT NOTES pluses have sales of Council Bills, and are there invested, the them railway free. in fact been accumulated in London by and from Fnance Member states that 20,, are reserved in London for the purchase of material, when markets and ships are again During the past few months a pronounced scarcity of silver has arisen and there has been a heavy drain on the Paper Currency Reserve. Last January there were still 15 crores of silver in the Reserve in India, and 27 crores of gold; but in May ths silver had been reduced to less than 5 crores and the gold to 22 crores, althohgh note circulation during the latter had expanded to month the total over 105 crores. The metallic portion of the reserve in India was still above 25 per cent of the total circulation, and therefore quite satisfactory if Government felt disposed to encash notes in gold. But owing to the existing internal premium of eight to ten per cent on gold they could not do this freely, without risk of losing the whole. The gold is in fact reserved for disbursement for essential war purchases. Consequently there began in Hay a restriction of the encashment, of notes, many treasuries and sub-treasuries being permitted to cash only comparatively small quantifies for each person. Silver consequently rose to a slight premium in the bazars in several places of from one up to three per cent. Early iu June Government found it necessary to instruct all post offices to orders in notes only; but in *July as the arrivals of make payments of money this order was cancelled American silver in the same month, which is now being coined as rapidly as possible, have done a great deal to ease the situa- tion, though silver remains scarce.