VALUE OF NOTES 
considerable influence upon the value of money, 
reckoned as it is in this restricted coin. For example, 
if at the time the Indian Government was bringing 
the rupee up to 1s. 44. by restriction of coinage, either 
it or banks had been successful in issuing and keeping 
outstanding a large issue of notes (convertible or 
inconvertible) of small denomination, the rise of the 
rupee would have been greatlv obstructed in conse- 
quence of the reduction in the demand for silver 
rupees. When the scheme had attained success such 
an issue might obviously have sent the rupee down 
again to the value of its metallic contents. 
But that is not all. An issue, convertible or 
inconvertible, although circulating at par with the 
coin tends to reduce the value of the coin and raise 
prices even when that coin is like the English sover- 
reign before the War, always on a level with its 
metallic contents, or like the Indian rupee in the case 
just imagined has already been driven down to a 
level with its metallic contents. It does so even 
when the coin may be melted down and exported 
because it tends to reduce the value of its metallic 
contents: the demand for coinage being reduced, 
the demand for and therefore the value of un- 
coined bullion will be reduced, so that the melt- 
ability of the coin will not altogether save it from being 
pulled down by the diminution of demand for it 
caused by the competition of the notes. This, how- 
ever, though important in any large view of the 
subject, is negligible when the effect of a note issue 
confined to any one country is concerned : the bullion 
of which the value is depressed is a mundane commo- 
dity not likely to be very appreciably affected by any 
probable single change in the demand for the coin 
of any one coun*-r- 
At tlis point the power of a convertible issue to 
depress the value of money and raise prices stops,