Currency Amendment Act, 1866

Act No. I (Act No. 1) of 1866 (Repealed)

Repealed by Act No. III (Act No. 3) of 1871

Passed by the Governor-General of India in Council.

(Received the assent of the Governor-General on the 5th January 1866).

An Act to amend Act No. XIX (Act No, 19) of 1861 (to provide for a Government Paper Currency).

Preamble

WHEREAS it is expedient to amend Act No. XIX of 1861 (to provide for a Government Paper Currency); It is enacted as Preamble follows:

Addition to Section 9 of Act XIX of 1861

Section 1. The ninth Section of the said Act shall he read as if after the words Addition to Section Provided that the said Head Commissioner, Commissioners, Deputy Commissioners and Agents shall, in all cases, he entitled to require such silver bullion and foreign coin to be melted and assayed at the expense of the person tendering the same, the following words were inserted (that is to say),

Every person so tendering bullion or foreign coin and depositing the same in any such Office or Agency shall he entitled to receive there for a certificate signed by the person or persons authorized to issue the Notes aforesaid, which certificate shall acknowledge the receipt of such bullion or foreign coin, and shall state the value thereof after deducting the expense of melting and assaying the same, and shall also state the interval (which the Governor-General in Council shall from time to time fix by notification in the Gazette of India) on the expiration of which, if such certificate be presented to such Office or Agency, the holder shall be entitled to receive Promissory Notes in exchange for the said bullion or foreign coin at the rate and subject to the deduction aforesaid: and no person so tendering as aforesaid and receiving such certificate shall be entitled to receive such Notes previous to the expiration of the interval so stated in the said certificate. But nothing herein contained shall preclude the person or persons so authorized from issuing, if he or they shall think fit, Notes in exchange for bullion or foreign coin at the rate and subject as aforesaid.

Short Title

Section 2. This Act shall he called The Currency Act Amendment Act, 1866.

Explanatory Note

Overview

The Currency Amendment Act, 1866 (Act No. 1 of 1866), was enacted by the Governor-General of India in Council and received assent on January 5, 1866. It served as a short amendment to Act No. XIX of 1861, which had established a Government Paper Currency in British India. Although later repealed by Act 3 of 1871, this Act made specific procedural clarifications regarding the issuance of promissory notes in exchange for bullion or foreign coin.

Purpose of the Act

The main purpose of the Act was to amend Section 9 of the Indian Paper Currency Act, 1861, to ensure greater clarity and structure in the handling of silver bullion and foreign coin tendered for Government Paper Currency. It provided transparency in the process and protected both the tendering public and the currency-issuing authorities.

Key Provisions

Amendment to Section 9: The Act inserted a detailed clause into Section 9 of the 1861 Act. It mandated that persons tendering bullion or foreign coin would receive a certificate of deposit indicating the value after deducting melting and assaying expenses.

Issuance Delay: The certificate specified a waiting period—to be fixed by the Governor-General in Council via notification in the Gazette of India—after which the holder could exchange the certificate for Government promissory notes.

Optional Early Issuance: Although early issuance of notes was restricted, the Act allowed authorized officers discretion to issue notes before the waiting period if deemed appropriate.

Significance

This amendment refined the operational procedures under the Paper Currency Act, 1861. By formalizing the use of certificates and imposing a controlled interval for note issuance, it aimed to manage liquidity, ensure accountability, and maintain public confidence in the newly introduced paper currency system. It also balanced efficiency with safeguards to prevent misuse or premature redemption.

Conclusion

Although ultimately repealed in 1871, the Currency Amendment Act of 1866 played a transitional role in strengthening the legal and procedural framework for India’s early Government paper currency. It demonstrated a developing awareness of the need for structured financial operations during a formative period in the colonial monetary system.