386 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
from which they originated. Notes issued from any agency of issue situated in the territory comprised within a circle of issue were not legal tender in the territory of any other currency circle, nor were they encashable outside their own circle. Nay more, the notes issued from sub-circles subject to the same chief circle were legal tender in one another’s territory, but were not encashable except at their office of issue or at the issue office of their chief circle. The sub-circle notes could thus be cashed at two places, but the notes of the issue office of the chief circle, though legal tender in the entire territory covered by it, were encashable nowhere except at its own counter, not even at any of its own sub-circles.* This want of universal encashability, though it saved the Government from the possibility of embarrassment, proved so great a hindrance to the popularity of the notes that it may be doubted whether the paper currency could have made a progress greater than it did even if the lowest denomination of the notes had been lower than it actually was.
It must, however, be borne in mind that it was not the intention of the Indian Legislature to make the Indian currency as economical† as was desired by the Executive Government. The Legislature was no doubt appealed to by the original author of the paper currency to turn India into a new Peru, where as much currency could be had with as little cost‡ but the Legislature showed a rather prudent reserve on the matter of aiding the consummation of such a policy. As the centres of encashment were so few, and the area included within each so large as to separate the furthest point in a circle by a distance of about
700 miles from the centre of encashment of the circle, it viewed with dread the authorizing of notes of smaller denomination
- For the inconveniences of the “circle” system and the various measures contemplated by Government to facilitate the encashment of notes, see Report of the Bombay Chamber of Commerce for 1868-69, Appendix, pp. 309-16.
† Cf. the whole speech of the Hon. Mr. Sconce dated September 22, 1860, S.L.C.P., Vol. p. 1143 et seq.
‡Cf. the speech of Mr. Wilson, the originator of paper currency in India, dated March 3, 1860, where he says : “ In short, to abstract so much coin from the mere mechanical purpose of the circulation, supplying its place with convertible paper, would be exactly the same in effect as if suddenly, in the centre of the Maidan, a rich silver mine had been discovered which produced silver at little or no cost.” Supreme Legislative Council Proceedings, Vol. VI, p. 250.