THE EVOLUTION OF THE STATE BANK OF INDIA: SOME COMMENTS 69 Secretary of State for India did not appreciate this difference in situation. His reply to Wilson clearly reflected the belief that the ongoing scene with private notes must have been characterized by overissue, and an even more elastic medium was not called for, and. at the worst would, 'further——— increase the sensitiveness of the Indian money market* (Quoted in Bagchi's book. Part II, page 4). The contradiction embodied in the conception of the Presidency Banks has also influenced some small but very important details of our banking. The early acceptance of the cash credit system as the dominant instrument for advance and its subsequent continued domination of the banks' asset side to date is an important example. Even though this instrument had the sanction of no smaller an authority than David Hume as an economizer of funds, note that this is an instrument that passes the cost of uncertaintly suited our situation both because of Hume's reason and because of the borrowers' dominating presence in the banking scene. The present essay is not the place to use the information documented in Bagchi's volumes to sharpen understanding of our monetary history-the discussion is merely illustrative. We may make a general observation that the modem joint stock banking in India illustrates an important feature which has survived the passing of power to the national government, namely, the institutionalization of the arrangement whereby private risk is borne by the public exchequer. I find it curious that we feel indignant about this arrangement before independence taking it as a clear sign of the racial face of imperialism, while in the post-independence period we tend to defend it as the symbol of our own struggle for socialist institutions. It was not only in banking but in many other spheres of economic life that the government sponsored institutions and often ran them for private beneficiaries (admittedly European) during the British period. So much so, that by the time the British left the subcontinent, a culture of government sponsorship of economic institutions, acts and policy for private beneficiaries had already taken firm root. Could one suggest that by the end of the Second World War the British, by the example of what they did for European interests here, had clearly established a model in the mind of the Indian business of what a national government could do for them in future? If so, the usual thesis that the pervasive presence of the government in our economic life is a halfhearted outcome of learning from the Soviet revolution, thwarted halfway by private capitalist interests, but then not all the way because of the alertness of a politically conscious Indian people and the progressive subset of their leadership seems less than convincing as a complete explanation. Finally, Oxford University Press deserves our thanks for very competent handling of this publication. The book contains a large number of photoplates of material of related interest-bank notes and cheques of various banks at different dates, photographs of some