Indian Currency and Finance

Act authorising the establishment of the Currency Chest of earmarked " gold at the Bank of England as part of the Currency Reserve against notes ' and the investment of a stated part of the Currency Reserve in sterling securities. [...] 4. The essential characteristics of the British"THE GOLD-EXCHANGE STANDARD 19 monetary system are therefore the use of cheques as the principal medium of exchange and the use of the bank rate for regulating the balance of immediate foreign indebtedness (and hence the flow by import and export of gold). [...] But foreign observers seem to have been more impressed by the fact that the Englishman had sovereigns in his pocket than by the fact that he had a chequbook in his desk ; and took more notice of the efficacy " of the bank rate and of the delibertions of the Court of Directors on Thursdays than of the peculiar organisation of the brokers and the London Money Market and of Great Britain's p [...] When in 1893 on the recommendation of the Herschel Committee following upon the agitation of the Indian Currency Association the Mints were closed to the free coinage of silver it was believed that the cessation of coinage and the refusal of the Secretary of State to sell his bills below is. [...] When rupees are issued the Government instead of being able to place to reserve the whole nominal value of the coin is able to retain only the difference between the nominal value and the cost of the silver.' For large payments therfore it is important to encourage the use of notes to the utmost extent possible —from the point of view of economy because by these means the Government may o