the relative advantages of these methods has been discussed in Chapter V. The demand for Council Bills, therefore, chiefly depends on how much new business the Exchange Banks are entering into in India. The method of telegraphic transfers enables them to act with great despatch on receiving advices from their Indian agents. The Indian branches obtain immediately the funds enabling them to take the trade bills, the offer of which had seemed to them to be at sufficiently satisfactory rates to make the transaction taken as a whole worth while. A few weeks later the bills reach England, are duly accepted, and are capable of being rediscounted if the Bank needs additional free funds to buy more Council Bills and turn its money over again in another transaction of the same kind. We are now in a position to understand what the Secretary of State means when he says that he has sold bills to meet the needs of trade. If he withdraws the convenience of telegraphic transfers or forces the Banks to put themselves in funds in India by sending sovereigns, he causes delay or additional expense in the discounting of bills in India. In other words, Indian traders are less easily able to turn the goods they are exporting into money. On the other hand, if the Indian season is a poor one and the exports fall off, the offer of bills for discount is reduced and the need of the Exchange Banks in London to buy Council Bills correspondingly less. It is worth noticing that, from the point of view of the London Money Market as a whole, it is a mere difference of machinery whether the Exchange Banks finance the Indian trade by attracting deposits in London and hold the bills themselves, or whether the Discount Houses and London Banks attract the deposits and use them to rediscount bills for the Exchange Banks. In so far as the Exchange Banks can attract deposits themselves without paying too high a rate for them, this alternative is usually the more profitable for them,—especially since, if they are able to hold in this way a considerable proportion of the bills they discount, they can afford to wait for a favourable moment before rediscounting such bills as they have eventually to dispose of. But, apart from private profits, the important point is the extent to which Indian trade is financed by the purchase of Council Bills in London with borrowed money, whether this money is supplied by the depositors in Exchange Banks or by those who rediscount the bills.