All told, the additions to the currency during the first period were negligible as compared to what took place in the second period, 1900–1908. This period was characterized [pg 214] by a phenomenal increase in the volume of currency poured by the Government into circulation. Speaking of the coinage of rupees during this period, Mr. Keynes, anything but an unfriendly critic of the Government’s policy, observed³³⁴:— ³³⁴ Op. cit., pp. 131–35. “The coinage of rupees recommenced on a significant scale in 1900 a steady annual demand for fresh coinage (low in 1901–2, high in 1903–4, but at no time abnormal), and the Mints were able to meet it with time to spare, though there was some slight difficulty in 1903–4. In 1905–6 the demand quickened, and from July 1905 it quite outstripped the new supplies arising from the mintage of the uncoined silver. … This slight scare, however, was more than sufficient to make the Government lose their heads. Having once started on a career of furious coinage, they continued to do so with little regard to considerations of ordinary prudence … without waiting to see how the busy seasons of 1906–7 would turn out, they coined heavily throughout the summer months. … During the summer of 1907, as in the summer of 1906, they continued to coin without waiting until the prosperity of the season 1907–8 was assured.” Evidently in this period the Government framed their policy “as though a community consumed currency with the same steady appetite with which some communities consume beer.” The period also witnessed a material expansion of the paper currency. Up to 1903 the use of the currency notes was limited by reason of the fact that they were not only not legal tender outside their circle of issue, but also because their encashability was restricted to the offices of the circles of their issue. This was a serious limitation on the extension of paper currency in India. By Act VI of 1903 the Rs. 5 was made universal in British India excepting Burma, i.e. was made legal tender in all circles, and also encashable at all offices of issue. Along with this the fiduciary portion of the paper-currency reserve was increased to Rs. 12 crores by Act III of 1905. The first event was only calculated to enlarge the circulation of the [pg 215] notes, but the second event had the direct effect of lowering the value of the rupee currency.