But, secondly, assuming a sharp financial crisis to be accompanied by increased hoarding, it would plainly be better if it were a hoarding of rupees and notes rather than of gold. It is not impossible that this might be the case. A trust in the Government’s capacity to meet its obligations will persist some time after all confidence in private institutions has been dissolved. In Austria, for example, the hoarding was not so much of gold or silver as of notes. I believe that in some parts of India, especially in those where gold has made relatively little progress, hoards are sometimes held already to a fair extent in notes. I know, for example, a very conservative Brahmin family, small landowners in Eastern Bengal, where this is the case. Once a week the head of the family will retire privately to a corner of the roof of the house, take out the little hoard of notes with ritual care, count and check them, dust each with a feather brush, and lay them out in the sun to air and to recover from any trace of damp. If a note shows signs of age or wear, it is taken to the nearest currency office and changed for a new one. In troubled times such a family would hoard more notes or silver, not gold. This, however, is no more than an illustration of the point I have already dwelt on and emphasised—the manner in which any increase in the popularity of gold diminishes the stability of the currency. 27. Returning from these digressions, I conclude that the Government will not be able in practice to restrict its responsibility to the currency, and may have to take a part in moderating the consequences of rash or unfortunate banking, and in meeting an adverse balance of indebtedness. This conclusion brings us to the statistical problem. Is the £40,000,000, which I put forward as a safe maximum for the reserves, so far as the convertibility of the currency is concerned, still adequate when the possible magnitude of India’s adverse balance of indebtedness is our test of sufficiency? This problem is even less capable than the former of exact solution. The _variable_ elements in India’s international balance–sheet are chiefly (i.) the excess of exports over imports, including treasure, _i.e._ the trade balance; (ii.) the amount of _new_ fixed capital lent to India by European capitalists; and (iii.) the amount of short–period loans afforded to India by the European Money Market.