“the Government sells drafts against its foreign gold credit (i.e. its gold reserve), when money at home is relatively redundant, as evidenced by exchange having reached the gold export point. Thereby it relieves the redundancy through the withdrawing from circulation and locking up the local money received in payment for the drafts. Under the practice of holding foreign bills to protect the money market, the central bank sells its foreign bills, when money at home is relatively scarce, as means of securing gold for [pg 173] importation or preventing its exportation. In the former case, the sale of drafts takes the place of an exportation of gold, and the resulting withdrawal of local money from circulation is in essentials an exportation; in the latter case the sale of the drafts abroad is part of a process for securing gold for importation, or for preventing its exportation.” The Indian currency system therefore bears no analogy to the European currency systems, as Mr. Keynes would have us believe. But if a parallel is needed, then the true parallel to the Indian system of currency is that system which prevailed in England during the Bank Suspension period (1797–1821). The fundamental likeness between the two systems becomes quite unmistakable if we keep aside for the moment the remittance operations of the Government of India and the Secretary of State, which becloud the true features of the Indian currency system. If we tear this veil and take a closer view, the following appear to be the prominent features of the Indian system:— (1) The gold sovereign is full legal tender. (2) The silver rupee is also full legal tender. (3) The Government undertakes to give rupees for sovereigns, but does not undertake to give sovereigns for rupees, i.e. the rupee is an inconvertible currency unlimited in issue. Turning to the English system of currency during the period of the Bank Suspension, we find:— (1) The gold sovereign was full legal tender. (2) The paper notes of the Bank of England circulated as money of general acceptability by common custom if not by law.²⁹² (3) The Bank of England undertook to give notes for gold or mercantile bills or any other kind of good equivalent, but did not give gold for notes, i.e. the notes formed an inconvertible currency unlimited in issue. ²⁹² Cf. Andréadès, _History of the Bank of England_, p. 198.