13. The present policy was designed in its main outlines at a time when notes formed an insignificant part of the country’s currency, and when the system of circles still greatly restricted their usefulness. The notes were at first, and were intended to be, little more than silver certificates. The rules governing the Reserve were framed (see § 3) at a time which, to the modern student of currency, is almost prehistoric, under the influence of the Bank of England’s system of note issue and of the British Bank Act,—an Act which had the effect of destroying the importance of notes as a form of currency in England, and which it has been found impossible, in spite of some attempts, to imitate in the note–using countries of Europe. As has been urged in Chapter II., England is in matters of currency the worst possible model for India; for in no country are the conditions so wholly different. A good deal of experience with regard to note issues has now been accumulated elsewhere which ought some day to prove useful to India if her English rulers can sufficiently free themselves from their English traditions and preconceptions. Let me first give a short account of the nature of the seasonal demand for money in India; and then discuss the salient respects in which her system of note issue differs from those of typical note–using countries. 14. In contrast to what happens in the case of most note systems, the _gross_ circulation in India diminishes instead of increasing during the busy seasons of autumn and spring. This is due to the fact that the Government Treasuries, the Presidency Banks, and possibly other banks and large merchants, use the notes as a convenient method of avoiding the custody of large quantities of silver during the slack season when rupees are not wanted.[27] That is to say, they deposit their surplus rupees during the summer in the Currency Reserve, holding their own reserves in the form of notes; and when the drain of rupees begins up country for moving the crops these notes have to be cashed. Thus in the dull season currency is largely in the hands of a class of persons and institutions which finds it most convenient to hold it in the form of notes, and in the busy season it is dissipated through the country and is, temporarily, in the hands of smaller men—cultivators who have sold their crops, small moneylenders and others, who habitually deal in small sums for which the rupee is the most convenient unit, or who do not yet understand the use of notes and still prefer, therefore, to be paid in actual coin.