Page:Indian Journal of Economics Volume 2.djvu/600

 8 H. STANLEY JEFON$ utilize8 such newly created money to reduce its tedhesS hither by cancelling dost creating an asset o! British loan held in Loudon. in India or bonds owned as the public will It can go on absorb doing this as indeb- and long more currency notes, the only limit imposed by sound finance being the necessity of retaining, say, at active currency coin in India. It India least 15 per circulation as a more paper money reserve, either to India or else to create liquid i8 the Gold Standard Reserve may well be asked why the should be required by law, without adding reduce its own assets in London; this is even now to the probabilities than the were required and larger of 5 millions I have than is trade sterling be no dioulty in the Secretary borrowing a few more millions cent of the total reserve of actual Government when to the indebtedness assets in London. of it issues metallic in It which requires liquid already shown that necessary according If more in conditions. of credit by the financial situation, there of State for in London to Lmndon would India meet till further sales of Revise be .worth for such than to the echoreit development of India. The result of. this argument is it would be a perfectly sound utilize a large part of the new Cunoils while to pay 7 or 8 short term borrowing keep and it would per cent per annum in Lmndon rather money idle which might be used for to suggest that financial policy to money orested by the expansion of the currency note circulation: (I) in temporary loans, made through the existing Presi- dency and big joint stock banks of the country, for the purpose of financing trade and industry, !)to utilize the rest of it as a lock-up investment n the construction of. new puSlie works. The former per-