is still repeated; but by unforeseen chance the words have changed their meanings, and have permitted the old system to acquire through inadvertence a certain degree of usefulness. The coin, in which the greater part of the reserve had to be held, was, of course, the rupee. In 1861 this was a freely minted coin worth no more than its bullion value. When the rupee became an artificially valued token, rupees tacitly remained the legitimate form of the reserve (although after a time sovereigns were added as an optional alternative). Thus the authorities are free, if they like, to hold the whole of the Currency Reserve in rupee–tokens, and this reserve has become, therefore (as we shall see below), an important part of the mechanism by which the supply of silver rupees to the currency is duly regulated. While, however, the note issue has managed to evolve an important function for itself, I think the time has come when the usefulness of the Currency Reserve may be much increased by a deliberate consideration of the place it might fill in the organism of the Indian Money Market. I return to this later in the chapter. In the meantime I pass to a description of the Paper Currency as it now is—insisting, however, that when we come to consider how it may be improved, the circumstances of its origin be not forgotten. 4. For the first forty years of their existence the Government notes, though always of growing importance, took a very minor place in the currency system of the country. This was partly due to an arrangement, now in gradual course of abolition, by which for the purposes of paper currency India has been divided up in effect into several separate countries. These ‘circles,’ as they are called, now seven[21] in number, correspond roughly to the principal provinces of India, the offices of issue being as follows:— Calcutta for Bengal, Eastern Bengal, and Assam. Cawnpore ” the United Provinces. Lahore ” the Punjab and North–West Frontier Province. Madras ” the Madras Presidency and Coorg. Bombay ” Bombay and the Central Provinces. Karachi ” Sind. Rangoon ” Burma. The currency notes[22] are in the form of promissory notes of the Government of India payable to the bearer on demand, and are of the denominations Rs. 5, 10, 50, 100, 500, 1000, and 10,000. Thus the lowest note is of the face value of 6s. 8d. They are issued without limit from any Paper Currency office in exchange for rupees or British gold coin, or (on the requisition of the Comptroller–General) for gold bullion.[23] 5. Up to 1910 the following arrangements were in force. Every note was legal tender in its own circle. Payment of dues to the Government could be made in the currency notes of any circle; and railway companies could, if they accepted notes of any circle in payment of fares and freight, recover the value of them from the Government.