Hawkes Bay Herald MONDAY, JANUARY 23, 1899. LORD NORTHBROOK ON INDIAN CURRENCY.

Hawke's Bay Herald, Volume XXXIV, Issue 11129, 23 January 1899, Page 2

Hawkes Bay Herald MONDAY, JANUARY 23, 1899. LORD NORTHBROOK ON INDIAN CURRENCY.

full operation of the gold standard," 1 I£ the one is dangerous the other is I dangerous also. If the one is impracticable, so also is the other. I The Manchester Guardian, wbich is I exceptionally well informed on this I momentous topic, pertinently asks :— I " Can we imagine any such half-and-half system at work ? Lord Northbrook apparently believes that goldholders in and " out of India would tender gold to the Government in I exchange for rupees, and that the Custom duties and opium revenue I might be made payable in gold. But is it conceivable that banks or other firms or individuals would allow themselves to be loaded up with rupees, not only not convertible, but the legal tender of which might be eventually limited, or that they would give gold for rupees without any guarantee that the gold would be returned for the rupees when, required ? The proposed discrimination against the rupees in the payment of certain of the Indian revenues would alone be sufficient to send the gold coins to a premium in rupees." Another blunder of Lord Nortabrook's is his assumption that silver would have fallen to its present low price even if the Indian mints had not been closed, whereaß the fall is mainly due to that closing. The Government first depressed the price of the metal, and then deemed themselves bound, because of the fall which they had caused, to take precautions against returning to the silver standard. If the Indian mints were re-opened the probability is that the bullion value of the rupee would very shortly rise to its present " managed " or arbitrary value of sixteenpence. Lord' Northbrook also believes that the increase in the-world'a gold production, which is plainly insufficient to adequately supply existing wants (witness the bank rates) will be sufficient to supply comfortably the 800 million inhabitants of. India in addition. His article leads to the impression that he, like others, is still dwelling in a "fools' paradise" on a most important question. We can only hope that the awakening will come before irreparable damage has been effected.

Loud Nobthbeook, the retiring Governor-General of India, has pub- 1 lished in the National Review his views on the Indian currency question. He deserves the best thanks of those who oppose the latest freak of the G-overnment, for although he is a strong advocate of the new departure, the reasons which he urges in its favor are ao transcendently weak and inconclusive, that on the principle litera scripta manet, he has done the greatest service possible to the other side. Lord Northbrook's apology shows not only the rashness of the official, ready to make all other considerations tend to departmental convenience, but positive ignorance of many of the leading principles governing the position. If the civilised world is to be condemned to a further instalment of currency contraction on the strength of Lord Northbrook's arguments, then political economists, bankers, and financiers, may well regard themselves as for ever relegated to a back seat. They will have been permanently superseded by the genius of misrule. ...The ex- Viceroy says that he only came to the conclusion that a change to the gold standard was necessary when he became convinced that an international arrangement for the opening of the mints of the United States and Prance at a reasonable ratio was impracticable. It is a matter of notoriety that.no honest effort was made to arrive either at a reasonable ratio or a practicable arrangement. The Indian Government cavalierly rejected the overtures made to them jn order that they might be free to carry out their own fad, the proposal to purchase and melt down the rupees, which the Currency Commission now sitting will certainly condemn. Lord Northbrook is candid enough to admit that this scheme is virtually dead, and says that he sees no alternative but to bring the gold standard into full operation. There is an alternative, and that is to restore to full operation the ancient silver standard of the country, and this alternative is strongly favored by economists like Sir Eobert Giffen, and bankers like Mr David Tale. But it would involve the admission of error, and that is gall and wormwood to the official mind. Par better go on in the wrong track than return to the right one ! But now let us see what is Lord Northbrook's idea of bringing the gold standard " into full operation." He thinks that the gold value of the rupee 'may be fixed, and gold be gradually substituted for silver in circulation and in the reserves, and that a system of currency would be thus attained which would work automatically. That this gold would have to be withdrawn from the currencjes of gold standard currencies, and that ,th,e withdrawal would increase the pension which already exists at Berljn and Parjs, London and New York, does not of course give him any undue trouble. His brief is for India alone, and, as regards India, for the fancied interests of the Indian Treasury, not for the real interests of the people. For the general monetary welfare even ot his late subjects, much less for that of thp world at large, he evidently possesses little pr no concern. Proceeding, he admits that the Indian mints, if a gold standard is established, must be opened for the frfieAOJnage of gold, and he proposes that the soyerejgn shall be made legal tender, and that the rate at which sovereigns shall be '" interchangeable" with rupees shall be fixed at 15 to the sovereign, or Bixteenpence per rupee. The rupees "at first " must be unlimited legal tender. This means that, as their bullion value is only 10d or lid, there will be an unlimited demand to exchange them for sovereigns at a rate which will make them worth nearly double as much. A statesman who .cannot see that this is a fataj pbjeetion ought to leave currency mattepg fo' eotne one bet.ter informed. For how can any ope bring the gold standard " into full operation " if 15 rupees are not to be regarded as worth a sovereign, whilst a sovereign is to be reckoned worth 15 rupees ? The case of the token silver currency of Great Britain and Australia is nothing to the point. That has always been regarded as a token currency. It has never been hoarded because it has never been regarded as standard money. But the rupee has been the standard money of India from time immemorial. It has possessed full legal tender power, and by virtue of that power it has been hoarded in millions of millions, and is still being hoarded. Let it once bo deprived of its legal tender, or even / let thorp bo a prospect of such de- : privation, and tfaoro wiJJ be such a I rush to exchange it for the renlj legal tender coin, the sovereign, as . will open the eyes of the most • fanatical of the advocatoa of this • revolutionary change' Lord Northbrook o limits that to • follow the example of Japan and 1 undertake full couvertibility would be dangerous. But " full convertibility" is synonymous with /'the