(ii.) In particular it leads to the keeping of two distinct reserves—the Government’s reserves and the bankers’ reserves—with no clearly defined relation between them, so that the reserves of the latter may be insufficient, without the assumption by the former of the fact or the machinery of responsibility. (iii.) It leads also to a want of elasticity in the system, since in modern conditions this elasticity is most commonly provided by exactly that co–operation between banking and note issue which is lacking in India. (iv.) The absence of a State Bank makes it difficult for the Government to use its cash balances or any other part of its liquid funds to the best advantage,—since it cannot prudently place the whole of its free resources in the hands of a private institution. (v.) The absence of a central banking authority leads to a general lack of direction in the banking policy of the country: it is no one’s business to look at the matter as a whole, to know the position of the market’s component units, or to enforce prudence when it is needed. There is a multiple reserve system in theory, but hardly an adequate one in fact; and a danger exists that every one is reckoning, in a crisis, upon every one else. (vi.) The absence of the advice and experience, which the officers of a State Bank would possess, is a source of weakness to Government itself. There are no high officials whose business it is to make finance the chief study of their life. The Financial Secretaryship is an incident in the career of a successful civilian. A Financial Member of Council is apt to come to the peculiar problems of his office with a fresh mind. Thus the financial officers of Government spend five years or so in mastering a difficult subject and have then reached a seniority which warrants promotion to duties of some other kind. So far as the Government of India is concerned, questions of finance and currency are in the hands of intelligent amateurs who begin with the timidity of ignorance and leave off just when they are becoming properly secure of their ground. It is not astonishing that the centre of power in these matters has tended to gravitate to the India Office and the India Council in London. For the officials and advisers of the Secretary of State have grown up in familiarity with the problems of Indian currency. Control from the India Office is always looked on, from an instinct often founded on wisdom, with jealousy and with suspicion; but in questions of currency they are likely, as things now are, to have the wider knowledge and experience. Yet the element of continuity supplied by the India Office—though, as I read the history of the last decade, it has been invaluable in guiding the evolution of the currency—is no proper solution of the difficulty. With Indian banking this authority cannot be adequately in touch, and it would be much better if trained experience were to be found in India herself.