It is dangerous for a writer who is not in touch with the practical side of the Money Market to venture on an explanation of current events. But I will give my explanation for what it is worth. The poor demand for Council Bills in March 1913 is not to be explained by the competition of gold as a means of remittance; for the low level of exchange did not favour the importation of sovereigns (even from Egypt, except earlier in the season), and as a matter of fact the import of them was on a very much smaller scale than in the previous year. It must have been due, therefore, to an unwillingness on the part of the Exchange Banks and others to lay out money in London for the purchase of remittance to India. This unwillingness was due to a variety of causes. The lock–up of funds in silver and opium, and the freedom with which India was purchasing foreign goods, probably had something to do with it; and an important contributory influence was the dearness[127] of money in London combined with a sufficient expectation of cheaper money soon, to provide an incentive to delay, wherever delay was possible. A precise diagnosis of the causes of the unwillingness on the part of the Banks to buy Council Bills is not necessary, however, to the lesson I seek to enforce. For whatever reason, Indian Bank Rates of 7 and 8 per cent, even in combination with a very low level of exchange, did not in fact tempt the Banks to buy Council Bills on any considerable scale. What was the effect on the Government Balances in India? The ordinary method, by which the rupees accumulating in the Reserve Treasuries from the proceeds of taxation are quickly released and given back to the Money Market, the encashment, namely, of large volumes of Council Bills, had failed. The position was aggravated by the large realised surplus, much of which was to be devoted to expenditure only in the _next_ financial year, and which in the meantime was swelling the Government Balances in any case beyond their usual dimensions. So far, therefore, from assisting the market, the Government were busy increasing the stringency by taking off the market, week by week, rupees which for the moment they did not in the least want. Already at the end of 1912 (see table on p. 188) the sums lying idle in the Reserve Treasuries were unusually high. By the end of February 1913, the total Government Balances in India had risen to £17,400,000, and the end of March to £19,300,000, of which £8,000,000 lay in the Reserve Treasuries. What Money Market in the world could have seen such sums taken out of its use and control at one of the busiest moments of the year without suffering a loss of ease?