“The paper currency established by the Indian legislator fully answers the purpose, so far as business requires an easier means of exchange than gold or silver coin; but no connection whatever exists between the issue of the fiduciary currency and the wants of the public to have their bills or [pg 63] other commodities converted into a current medium of exchange … and this is the sole cause of the unexpected convulsions and sudden transitions in the money market so utterly detrimental to business to which the British Indian trade is constantly exposed.”¹²⁵ ¹²⁵ Op. cit., p. 7. It may, however, be objected that such a view is only superficial. The Indian Paper Currency Act is a replica of the English Bank Act of 1844 in all its essentials. Like the English Bank Act, it set a definite limit to the fiduciary issue of notes. Like it, it separated the Issue Business from the Banking Business,¹²⁶ and if it made the banks in India mere banks of discount it is because it copied the Bank Charter Act, which deprived banks in England, including the Bank of England, from being banks of issue. And yet it cannot be said that the English money market is affected by such “convulsions and sudden transitions” as has been the case with the Indian money market. On the other hand, it was the considered opinion of Jevons¹²⁷ that “the Bank of England and bankers generally have just the same latitude in increasing or diminishing their advances now (i.e. under the Act of 1844) as they would have under a[n un]restricted system”; for, as he elsewhere argued, if the limitation on fiduciary issue is arbitrary, and if people want more money, “it is always open to them to use metallic money instead. The limitation is imposed not upon money itself, but upon the representative part.”¹²⁸ What, then, is the [pg 64] reason that the Indian Paper Currency Act should produce the evils which its English prototype did not? _À priori_ there need be no such convulsions in a money market subject to such a law. The Act, by limiting the issue of notes, did seem to leave no choice but to use metallic money even for seasonal demand. This would be true if notes were the only form in which credit could be used. As a matter of fact, this is not so. Credit could take the form of a promise to pay issued by a bank as well as it could take the form of an order on the bank to pay, without making any difference to the social economy of the people who used them. Consequently, if under the provisions of the Act banks are restricted from issuing promises to pay, it does not follow that the only way open to them is a resort “to use metallic money instead,” for they are equally free to consent to honour as many orders to pay as they like. Indeed, the success or failure of the Act depends upon which of the two alternatives the banks adopt. It is obvious that those who will submit to the ruling of the Act and resort to metallic money will have to bear