John Maynard Keynes

“ If, on the other hand, the India Council had refused to sell bills freely, gold would have been exported to India, taken to the Paper Currency Department, and exchanged for rupees in notes or silver. In either case there is a similar increase in the volume of currency in India not held by the Government. The volume of currency which finds its way into circulation in India is, therefore, quite independent of the Secretary of State's action. Exceptional amounts of Council Bills are only sold when exchange has reached a point at which it is nearly as profitable to remit gold ”

“ The Secretary of State is in effect the ultimate source of supply for bills on India, and the banks, after securing what private bills are available, even up their demands for remittance to India by buying bills from him,— provided he is selling them at a rate which makes this form of remittance cheaper than the alternative one of sending sovereigns. ”

“ So far as Council Bills are sold for the ordinary purposes of remittance of Government funds from India to London, they are cashed in India out of the general balances of Government. But when they are sold in larger quantities, to obviate the necessity of sovereigns being sent, sufficient rupees are not forthcoming from this source. ”