21. How much of this could possibly be spared from circulation at a time of crisis? In 1908 the rupee circulation fell (at its lowest point) by somewhat less than 30 crores, or less than 20 per cent of the estimated rupee circulation at that time. The note circulation (see p. 55) fell much less seriously. It does not seem to me likely that the Government could be called on at the present time to redeem more than 25 per cent of the total circulation (notes and rupees together), or, on the basis of the foregoing calculations, 60 crores (say) of rupees (£40,000,000). If the Government were to keep in one way or another a reserve of this amount for purely currency purposes, I think they would have done as much as reasonable prudence could require. I do not say that it is impossible that they should be called on to redeem a greater amount than this. But it would be extravagant to maintain a reserve adequate for all conceivable emergencies, since there is a further resort of which use might fairly be made without great reluctance. Unless the London Money Market has collapsed as well as the Indian, it is always open to the Secretary of State to borrow by means of India Bills. There would be nothing shameful in this—though possibly some expense. But the expense, even if the Secretary of State had to pay a rate of interest appropriate to Turkey or China, would be much less than the expense of maintaining a very great reserve against unlikely emergencies.[69] 22. So much for the proper magnitude of the Reserve, regarded as a Currency Reserve. The question of its use as a Banking Reserve raises two problems—a problem of policy and a problem of statistics. Ought the Government to allow its Reserve to be used as a Banking Reserve? If so, how large ought this Reserve to be? Let us consider policy first. 23. There are three kinds of crises by which the Indian Money Market might be assailed—a purely internal crisis, in which the banks have difficulty in meeting a run on them by their Indian depositors; a purely external crisis, in which India owes, and is called on to pay, large sums in the London Market, but is free from serious banking trouble at home; and a general crisis, in which the features of an internal and an external crisis are combined.