THE INDIAN CURRENCY REPORT.

Otago Daily Times, Issue 11523, 8 September 1899, Page 3

THE INDIAN CURRENCY REPORT.

■ , (Manchester Guardian, July-11.) There is nothing in the final report of the committee appointed little more than a\year ago to consider the'proposals of the Government of India " for the establishment of a gold standard' ih India" which will be regarded as unexpected by, anyone who is familiar with. the question and the history and work of the committee. The terms of the reference, the constitution of the committee itself, the statements of the Secretary of State for India in Parliament in the presence of the chairman of the committee^ —Sir Henry Fowler,—who. raised no objection to them, the reports of the evidence submitted to the committee, with the very significant analysis by ' the . secretary with which they were introduced, and, finally, we are bound to admit,-the general trend of opinion ~in India so,.far-as it has been expressed during the course of the inquiry have all very plainly indicated - what the result would be. In" one- respect,' indeed, .we might have expected that the committee would have been.bolder than it has been. The witnesses by -whose evidence and opinions it has clearly been most influenced, and whose argumen'tsyit has practically adopted, agreed that the best solution of the problem in the interest of India would be attained by means' of an international agreement■•'; and regret was-ex-pressed that the special efforts. of the United States and Prance in 1897 to arrive at an agreement which would remove from the Indian currency system ah element of artificiality had been too summarily dismissed by Lord Salisbury and his colleagues. In view, of this testimony, and. the letter from the American Secretary of State.submitted by Lord Aldenham,- we have previously ex-ja-essed the opinion that"' the committee ought, in the first place,;'to recommend the British Government to take steps for reopening negotiations with the United States with reference to the possibility df an agreement on. tiie. basis of. a- reduced ratio. The fact that the committee has not done so lays it open to the charge of ■ having too readily fallen in with that disposition to suppress any serious "attempt at agree; ment Which has been observable from the'first. The bimetallistsfmay, however, console themselves with the reflection that the report-is not a" declaration'against bimetallism'; or, in other words, against an international agreement,for the free .coinage of both the precious -.metals iii a common-and Sxed l-atio. On the contrary, the particular plan proposed is recommended on the ground that "it would not preclude'lndia hereafter from considering responsible proposals for an international agreement if circumstances should arise to render such negotiations practicable." . Briefly stated, the plan proposed is that of Lord Northbrook, who, ;as we have before pointed out, is avowedly an advocate of a gold standard for India only so long ,as an international agreement " at a reasonable ratio" is impracticable. Lord Northbrook urged in his evidence that'if sovereigns are made legal tender in India at the ratio of 15 rupees to the sovereign, and the mints in India are open to the free coinage of sovereigns at that ratio, a gold currency will be gradually established in India—at least for payments -in large amounts,—and that eventually gold will accumulate in the Indian Treasury to an extent sufficient to enable the Government to redeem currency notes in certain specified minimum amounts either in gold sovereigns or in silver rupees. It is assumed that there would be practically no demand for. such redemption except for comparatively large 'payments, chiefty of- an international character. These, recommendations 'have been adopted by the committee, and, except for the proposal to open the mints .to the coinage of sovereigns from gold tendered for that purpose, and the enactment "that a sovereign in India shall be a legal tender there for the discharge of a debt of 15 rupees, it amounts simply to the maintenance of the status ,in quo: It must, however, be understood that- it is not proposed that the Indian Government shall give sovereigns freely in exchange for rupees, though it will be called upon to give rupees in exchange for sovereigns. The rupees will continue, at least for che present, to be unlimited legal tender. How far "this one-sided agreement, will prove successful in India can only be determined by experiment. In favour of its success is the recent and continued great increase in the output of- gold, the admittedly greater suitability of the rupee for the ordinary currency of India, and the fact- that a similar system is maintained in France and the United States. Of course, under the scheme itself the Government will in certain cases be called upon practically to give sovereigns for rupees,, inasmuch as large, currency notes may- be obtained against rupee deposits, and such large notes may be eventually cashed at the Treasuries in sovereigns. Herein lies the danger. France •is ' protected against this risk by a practically inexhaustible stock of gold"; and the United States is protected at present by a large accumulation of gold, consequent on extraordinary favourable balances of trade. But only three years ago even the United States was compelled to incur a huge additional gold debt in ordei to replenish its gold stock and maintain the parity. For this reason, then, there is undoubtedly some significance in the separate

declaration by Mr W. H. Holland, Mr Robert Campell,. and Sir John Muir against any. further borrowing of gold by the Government of India, either for the establishment or maintenance of the gold standard. We do not, however, quite see the logic of Mr Holland's objection to the ratio--of Is 4d. If we are to assume the possibility of a fall below that ratio, and leave the ratio unfixed on that account, we 'may as well follow Sir R. Giffen's advice—tb adopt the silver standard in India and reopen the 'mints .to,the free coinage of that metal. -But this is precisely what the committee, ill- Holland included, has declared--to be unadvisable. On the other hand, the other alternative, a rise in the value of silver above the' rate of ls 4d per rupee, asa consequence of silver legislation in the United States—a- possibility which Mr." Holland also contemplates,— would strengthen the gold standard in India, as it would drain silver thence in exchange for gold. That, we admit, would be inconvenient for India, as it .vould cause a scarcity of the most suitable currency ; but, the "Indian Government- would then probably make use of the door which the committee declares that it has left open, and enter into an international agreement. For the rest the plan of the committee is rather a defeat- for the advocates of single standards, whether of gold or silver, than for the bimetal lists. For the present French system, which is to be imposed on India, is' merely a _half-way stage between the single and the double standard, as it retains both metals as unlimited legal tender, though one of them is limited as to coinage until a demand arises.