384 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
according to all reasonable experience, the paper currency might be expected to fall.”* Estimating on this basis, the limit to the investment portion was fixed at 4 crores in 1861,† at 6 crores in 1871‡ and at 8 crores in 1890.§ But notwithstanding the growing increase in the investment portion, never was the fiduciary issue based thereon so great¶ as to abrogate the essential principle of the Indian Paper Currency Law, the object of which was to so regulate the volume of paper currency that it should always preseve its value by contracting and expanding in the same manner and to the same extent as its metallic counterpart.
Such was the organisation of the mixed currency that existed in India before it underwent a profound change during the closing years of the nineteenth century. Though of a mixed character, the paper portion formed a comparatively small part of the total. The principal reasons why the paper currency did not assume a large proportion are to be found in the organization of the paper currency itself.§§ One such reason was that the lowest denomination of the notes was too large to displace the metallic currency. By the law of 1861 the denomination of notes ranged upwards from Rs. 10 as the lowest to Rs. 20, 50,
100, 500, and 1,000. In a country where the average range of
- Cf. Sir Richard Temple’s speech introducing the Paper Currency Bill, dated March 25, 1870. Supreme Legislative Council proceedings, Vol. IX, pp. 151-52.
† Act XIX, Sec. X.
‡Act III, Sec. 16.
§ Act XV, Sec. I.
¶The following table shows the distribution of the paper currency reserve at three different periods :
| Period | Note Circula- tion | Composition of the Reserve | Col4 | Col5 | Col6 | Percentage of each Component of the Reserve to the Total Circulation | Col8 | Col9 |
|---|---|---|---|---|---|---|---|---|
| Silver | Gold | Secu- rities | Total | Silver | Gold | Secu- rities | ||
| 1862-1871 1872-1881 1882-1891 | 7.63 11.82 15.74 | 4.80 5.98 9.64 | 0.03 … … | 2.80 5.84 6.10 | 7.63 11.82 15.74 | 63 51 61 | … … … | 37 49 39 |
§§ For a clear and concise sketch of the organization of the paper currency in India, see the Note of the Government of India in the Report of the U.S. Director, of the Mint, Washington, 1894, pp. 231-33.