XXIV INDIA AND GOLD* IT is not inopportune, now that a Committee is sitting to deal with Indian Currency, to refresh the memory by consideration of a few of the main features of that system as it now exists. Three systems are in vogue throughout the world. to-day-the scientific single gold standard, the limping standard, and the gold exchange standard. Under the scientific single gold standard system, the chief metallic currency is--under normal peace conditions, of course- a gold coinage. Silver coinage merely expresses fractional values of gold coins, and is not legal tender beyond a small amount. Gold in bullion form may be taken by any individual to be coined into the standard currency, and in this country for an ounce of standard gold may receive £3 17s. 101⁄2d. at the Mint. As a result of Government control being at a minimum on this system, public demand and not Government manipulation has the chief influence in determining the supply of coinage and the international flow of bullion. Commerce is thus * This article was written apropos of the Babington Smith Currency Commission, then recently appointed. freed from unnecessary shackles and prosperity follows. The gold standard is the system of the most advanced countries of the world. The second system, known as the "limping" standard, is an approximation to the single gold standard. It prevails in France, Italy, Belgium and Switzerland. The principle of bimetallism prevails to a certain extent, and silver coinage is less of a token than it is under the gold standard, and has not been reduced into as thoroughly subordinate a position, although efforts are being systematically made to reduce silver and depress the ratio of silver to gold coinage. The system of India is, however, the artificial one known as the gold exchange standard, with a fixed ratio betweon gold and silver. As far as India is concerned it originated in the demonetisation of gold in 1853 by Lord Dalhousie, following upon the making of the silver rupee the sole legal tender of India in 1835. India suffers under the crushing difficulty of a gold standard without an effective gold currency. There is a strong feeling in some financial circles that a gold Indian currency would endanger the finance of the rest of the world. An ancient bogey about India being the grave of the precious metals because of the hoarding habits of her peoples is exhibited as regularly as Guy Fawkes' masks on the Fifth of November. As far as the hoarding habits are true in a country of such poverty, the uncertain and fluctuating rupee is an obvious factor in the situation. Any English man or who has quietly hoarded an odd halfsovereign or so as a source of mental satisfaction to handle instead of the ever-depreciating poundnote ought to understand at once the very natural tendency to accumulate a little of anything which is of standard value and relatively unfluctuating. Nor would the consumption of gold in the arts and its import for the purpose of stiffening the bank reserves be any worse crime in the case of India than of any other country. The proposal that a stiff import duty should be placed upon gold imported into India was a monstrous one, even though it originated in the firm of Samuel Montagu. India's ancient currency was gold, and it is a poor argument for the British connexion to insist opon changed standards of life as reasons for a relatively unsatisfactory and "managed" currency. The Fowler Committee in 1898 unanimously recommended a gold standard. The Chamberain Committee of 1913, which reported in 1914, reversed The this recommendation, stating that the history of the preceding fifteen years had shown that the gold standard had been firmly secured without an effective gold currency, and that the people of India neither desired nor needed any considerable amount of gold for circulation as currency. Chamberlain Committee also stated with no uncertain voice the opinion that the proper place for the location of the whole of India's gold standard reserve was London. There was no foundation, said the Commission's Majority Report, for the opinion that the reserve was regarded in London as being available to supplement the Bank of England's reserve. One presumes that the Commissioners were, like Mr. Pecksniff, particularly careful that night in praying for the souls of those wicked enough to think the exact contrary. Sir James Begbie's Minority Report on this Commission is still of great value, in spite of the changed situation caused by the intrinsic appreciation of the rupee. The conclusions of the Chamberlain Commission were decidedly unsatisfactory from the Indian point of view, and any similar outcome from the deliberations of the Committee at present sitting would merely add emphasis to the demand of the Indian National Congress for the |