GOLD KEEPS INDIA POOR

Evening Star, Issue 19763, 13 January 1928, Page 10

GOLD KEEPS INDIA POOR

PRECIOUS METALS WORTH MILLIONS

SECRETLY HOARDED / . USED FOR WOMEN’S ORNAMENTS. A thousand million pounds’ worth of gold and silver treasure is sequestered in India in temple decorations, jewelled ornaments, anti bars of bullion, together with the bangles, anklets, necklaces, and American ‘‘eagles” with which millions of women array themselves, {recording to a new study of the legendary “ wealth of the Indies ” submitted to the United States Department of Commerce. “Frozen wealth,” the Government economists call this treasure, for it/is distributed and used in such forms that it yields not a penny of return to its owners nor a dollar of credit to carrv on the world’s commerce. With a lofty indifference to international money markets and the needs of trade, India sprinkles gold dust over the food served at extravagant banquets. Immense quantities of gold and silver are used to array ’ brides for their marriage ceremonies, and is a multitude of other forms of decoration. Gold is believed, moreover, to have an occult power of healing the sick. “ It is a popular remedy in the native pharmacopoeia,” <ays the Government study, “and medicines containing gold are favored for many diseases.” THE WORLD’S GOLD SUPPLY. All this has more than a picturesque interest. It involves the problem of altering the distribution of the world’s gold supply—a problem that took on new importance when executives of the British, French, and German central banks and the American Federal Reserves system recently foregathered in New York and Washington, and with the adjustment of Federal reserve rediscount rates below the European level. As the world recovered from the financial chaos of tho war most nations have struggled back to, or toward, a gold standard fbr their currencies. To establish and maintain such standards they must have gold reserves. Tho currents of international trade and other influences have brought to America’s coffers about half of the world’s monetary stock of gold. But in the last quarter of a century India has been quietly absorbing immense quantities of the yellow metal. With a store now estimated at about £500,000,000, she draws to herself a large part of the new gold produced from year to year. Meanwhile, tho world’s gold production has declined sharply from the maximum for this century, reached between 1910 and 1915. Although there has been a recovery in part since 1922, this increase has been vitiated, so far as monetary gold for the world is concerned, by the increase of Indian absorption. PROPOSED REMEDIES. In an attempt to bait or at least retard this accumulation, lar-reaching changes arc projected in the Indian financial system. Adoption of a gold bullion basis for India’s currency, replacement or silver rupees in circulation by gold notes; establishment of a strong central bank; and extension of savings bank facilities are now proposed. All arc designed largely to wean the Indian population away from the habit of hoarding of gold and silver pieces and bullion bars. If that is ever accomplished India’s five billions and more of gold and silver in time will cease to be merely so much “ frozen wealth.” What disturbs bankers and economists is not the size of India’s store of gold, great as it is, so much as the way it is treated. The United States has more gold. But this is working in an effective way. It serves a.s the foundation for the vest superstructure of credit employed at home and lately extended, with unprecedented swiftness, to the rest of the world. GREAT WEALTH UNUSED. India’s gold is idle. There is lacking even a pretence of making it add anything to the productive forces or the comfort of India’s 300,000,000 people or their fellow-beings in other lands. The wealth is scattered among millions of unorganised holders, and even the silver coins which constitute the metallic currency are snatched into private hoards by the ryots of peasant farmers. This problem of hoarding, Bliss’s report shows, is at the root of tho pathetic plight of millions of these farmers. Hereditary custom, social organisation, seasonal harvests, and the still ’primitive financial system all influence them to assemble any wealth they have in a: readily portable form, and often to hide it. In old days of tyranny and oppression manifest prosperity was an invitation to he stripped of one’s possessions. Hostile invasions also forced great southward migrations of people who, to save their wealth, had to collect it in highly concentrated form. These conditions have left their influence to this very day. OTHER CAUSES OF SAVING. Tho Hindu family, moreover, ordinarily holds all ready property and household goods in common. The individual wishing to save for his own use can segregate his savings only in the form of gold and silver. Millions of tho native population, too, have no access to hanks, in time of stress they must draw on accumulated reserves or resort to tho moneylender at 75 per cent, interest.