¹⁰⁹ For a clear and concise sketch of the organization of the paper currency in India, _see_ the Note of the Government of India in the Report of the U.S. Director of the Mint, Washington, 1894, pp. 231—33.
¹¹¹ It may be pointed out that although the Presidency banks had ceased to issue notes, yet under the agreements made with the Government in virtue of Act XXIV of 1861 the banks were employed by the Government “for superintending, managing and becoming agents for the issue, payment and exchange of promissory notes of the Government of India, and for the carrying on the business of an agency of issue” on a remuneration of ¾ per cent. per annum “on the daily average amount of Government currency notes outstanding and in circulation through the agency of the bank.” In the conflict that ensued between the Government of India and the Secretary of State as to the propriety of thus employing the banks, the former was in favour of the plan because it believed that it would help the extension and popularization of the notes, while the latter disliked the arrangement because it seemed to him to compromise the principle of complete separation between the business of issue and the business of banking. Neither of the two, however, grasped the fact that the profit on remittances on different centres owing to the prevalence of internal exchange was so great that the commission allowed to the banks was an insufficient inducement to cause them to promote the circulation of notes by providing facilities at their branches for the free encashment of them. So high was the internal exchange, and so reluctant seemed the banks to popularize the notes, that Government finally discharged them from being their agents for paper currency from January 2, 1866. _See_ House of Commons Return, East Indian (Paper Money) 215 of 1862.
¹¹² Cf. the speech of the Hon. Mr. Laing on the Paper Currency Bill dated February 16, 1861, _S.L.C.P._, Vol. VII, pp. 73–74.
¹¹³ Each sub-circle had within it a number of agencies of issue; but the agencies were centres not of encashment but only of issue.
¹¹⁴ For the inconveniences of the “circle” system and the various measures contemplated by Government to facilitate the encashment of notes, see _Report of the Bombay Chamber of Commerce for_ 1868–69, Appendix X, pp. 309–16.