The government were hard pressed to supply sufficient rupees in 1906, and hard pressed to supply

This, however, is no more than an illustration of the point I have already dwelt on and emphasised—the manner in which any increase in the popularity of gold diminishes the stability of the currency. A few of them may have little other business, or they may have other partners in the business, on whose industry they can rely, and whose judgment they can trust; one or two may have retired from business. They are treated as unfunded debt and used for capital expenditure.

There is thus a new want and a new purchase-money to supply that want, and the consequence is the diffused and remarkable rise of price which the figures show to have occurred.

But, in the first place, this argument assumes that the Banking Department would have enough money to pay the demands on it; and this is a mistake: the Banking Department would not have a hundredth part of the necessary funds. [42] From the gross figures of gold imports into India in 1912 even heavier deductions than usual must be made, therefore, before we have an indication of the extent to which additional sovereigns have really found their way into the currency.