Vol. 6 · pages 481–485

466 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES differently on this aspect of the question were not then prepared to go to the length of joining a bimetallic union, although they did not see any objection to doing so “if a sufficiently large number of other Governments were prepared to join” in it. With the growth of their financial difficulties, however, this slender faith in bimetallism considerably deepened, so much so that in 1886 the Government addressed to the Secretary of State a despatch* urging him to take the initiative in calling an International Monetary Conference to establish a stable ratio between gold and silver. So intense was its interest in the consummation of bimetallism that it did not hesitate to administer a sharp rebuke to the Treasury when they negatived its suggestion referred to them for consideration by the Secretary of State.† With such feelings of faith and hope the Government of India entered these international Conferences and watched their fortunes. But no Government could have been treated with such suspicion and injustice as was the Government of India. Its admission to the bimetallic union was desired by none of the Powers, not even by England.‡ It was treated as a villain whose advances were nothing but manoeuvres to pounce upon the already dwindling stock of gold. Not only was it planned to keep India out of the bimetallic union, but she was to be required to pledge herself not to take a mean advantage of the union after its efforts had succeeded in establishing a stable ratio by making gold legal tender.§ All these guarantees the Government of India had offered in a pathetic faithfulness to the cause of bimetallism, on the success of which it had depended so much. Consequently, when the attempt failed, the disappointment caused to the Government of India almost broke its heart. It is not too severe to say that the part played by the British authorities in causing this disappointment was highly irresponsible— one might almost say wicked. They forced India against her declared wishes to keep to the silver standard, partly to trail her off from making any demand for gold, and partly to silence the criticisms of other nations that Britain was not taking * Dated February 2, 1886, see C. 4868 of 1886, p. 5 et. seq. † Cf. the despatch of September 4, 1886, App. II to the First Report of the Royal Commission on Gold and Silver, 1886. ‡ Cf. the evidence before the Gold and Silver Commission of 1886 of Mr. S. Smith, Q. 4,825-30 ; also of Mr. Watney, Q. 9,427. § Cf. The Report of the Indian Delegates, p. 12.

467 TOWARDS A GOLD STANDARD her share in the matter of rehabilitating silver.* This was not the only advantage exacted from a country bound to obey. On the one hand it restrained the Government of India from taking any independent line of action in the matter of currency reform, and on the other such means as were calculated to make good the losses which arose from a depreciating currency were subjected to Parliamentary censure. The House of Commons was twice moved, once in 1877 and again in 1879, to resolve that the Government of India should lower its tariff, ostensibly in the interest of free trade, but really in the interests of relief to the depressed condition of Lancashire. The consequence was that the Government could not tap one important source of its revenue in times of its greatest adversity. The only adequate recompense, the British authorities could have made to a Government so completely paralysed by their dictations, and of whose interests they so loudly claimed to be the lawful trustees, was to have consented to join the bimetallic union, the consummation of which only waited upon their grace. But, as is well known, they did nothing of the kind, so that, after a period of enforced waiting and by no means unavoidable suffering, the Government of India, at the end of 1893, found itself just where it was at the beginning of 1878. Like all common-sense people who pray and yet do not fail to keep their powder dry, this interval was utilized by the silver-ridden countries, with the exception of the United States, in strengthening their gold basis no less than in attending the deliberation of the Monetary Conferences on the amusing plans for extending the use of silver.† Mr. Goschen, at the Conference of 1878, had quite philosophically remarked that States feared to employ silver because of its depreciation and the depreciation continued because the States feared to employ it. Now, if the first part of the diagnosis was correct, we should have found the States seriously engaged in the task of rehabilitating silver when its price was propped up by the silver legislation of the United States. On the other hand, just so far as the monthly purchases of silver, under the Bland Allison Act of 1878, or the Sherman Act of 1890, held up the price of silver, not only did they not feel anxious to take steps to restore it to its former * Cf. the speech of Mr. Goschen at the International Monetary Conference of 1878, Third Session. Report of the American Delegates, Senate Executive Document, No. 58, Forty-fifth Congress, Third Session, Washington, 1879, pp. 50-52. † Cf. for the variety of plans suggested at the Conferences The Report of the American Delegates to the International Monetary Conference of 1892, Washington, 1893.

468 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES position, but they actually took advantage of the rise to discard it.* And it is not possible to blame them either, for with the prospect of a bimetallic union vanishing into thin air the accumulation of this dead weight would have only ended in a gratutious embarrassment. India alone refused to profit by the squeeze, which the United States took vicariously for other nations, and allowed precious time to slip by, with the result that it was thrown back upon the same remedy, the adoption of which was negatived in 1878. If it was to be a gold standard it would have been better if it had been done in 1878. The plan then outlined by the Government of India was no doubt too complicated and too flimsy to be practicable. But its rejection should not have altogether suspended the introduction of a gold standard. If it was to be one of an orthodox kind on the English pattern, it would have no doubt involved some cost to the Government in being obliged to sell at a reduced price a part of the silver stock of the country in order to give the rupee a subsidiary position and to fill the void by a gold currency. The cost of this conversion in 1878 would have been inconsiderable, for the fall of silver from its normal gold price was only 12½ per cent. On the other hand, if it was to be on such an unorthodox plan as that of Colonel Smith, it would have involved no cost at all to the Government† beyond that involved in the installation of new machinery for the coinage of gold at the Mint. But in 1893 both * Cf. Russell, op. cit., p. 410 ; also Prof. F. A. Walker, “The Free Coinage of Silver,” in The Journal of Political Economy (Chicago), Vol. I, p. 174. † So evident was this the case that the London Times, although it did not agree that any change was then urgently called for, yet observed in the leading article in its issue of October 25, 1876, p. 9, cl. 2 : “The Governor-General in Council dismisses the suggestion of a gold standard on the ground that the present condition of affairs, bad as it is, does not call for so costly a remedy ; but this involves a misconception of the proposal. The substitution of a gold for a silver currency in India would be a most extensive and costly operation, but to refuse to coin silver and to offer to coin gold for all comers would involve no cost beyond that of new machinery. If it was announced that after a certain day the coinage of silver was suspended, and that gold could be coined instead, for whoever might bring it, in coins that would be exchangeable for rupees at a fixed rate, there would be introduced into India the bimetallic system prevailing in France, and a change in the currency would be gradually introduced. At first no gold would be brought to be coined, but as the suspense of the coinage of silver operated to raise the value of the rupees in existence to the par value defined by the fixed rate of exchange of rupees and gold, gold would be more and more brought to the Mint, and would find its way into circulation. The process would be automatic and not costly, but it would be extremely slow, etc.”

469 TOWARDS A GOLD STANDARD these processes of bringing about a gold standard seemed quite hopeless. The impossibility of the plan of conversion was quite out of the question. The fall in the value of silver in 1893 was nearly 35 per cent. Even the prospect of the Smith plan did not appear very bright owing to the enormous addition of rupees to the circulation of the country. If it had been adopted in 1878, all the subsequent additions to the currency would have been in gold, with the result that by 1893 the proportion of gold to silver would have been large enough to have endowed the whole currency system with the desired stability in relation to countries on a purely gold basis. In 1893 the mass of silver currency had grown to enormous proportions, so that it looked certain that it would take decades before the stoppage of silver coinage could make the rupee a stable and secure form of currency. The plans showing a way out of an impasse such as this were legion. One was the issue of heavier rupees.* The second was to make silver limited legal tender and to authorize the Secretary of State to sell in London gold or silver Indian stock to the extent of his gold payments, to be liquidated by the Government of India by the issue of unlimited legal-tender notes called “bons.”† The third was that England and India should, as between them, adopt a bimetallic standard on a new basis,‡ or to admit the rupee as full legal tender in the United Kingdom.§ The fourth was to regulate the opening and closing of Mints to coinage on the basis of deviations of actual exchange rates from the rate of exchange fixed at the opening of each year for the Council drafts of the Secretary of State. Under this scheme, so long as the actual rate did not exceed the fixed rate by less than 5 per cent., the free coinage of silver was to be suspended.¶ The fifth was to provide that on the one hand the Secretary of State should fix a minimum rate for his drafts, and that the Government of India on the other should levy a duty on all imports of silver equal to the difference between the daily official quotations of bar silver in London and the price of silver corresponding to the rate fixed for the Council drafts.‡‡ The sixth was to introduce a bimetallic coin, to be called the Imperial * By Aston and also by R. West, I.C.C, 1893. App. III, pp. 281 and 325. † By Atkins, ibid., p. 282. ‡ By Chapman, ibid., p. 282. § By Woodhouse, ibid., p. 33. ¶ By Graham, ibid., p. 305. ‡‡ By M. Schilizz, ibid., p. 319.

470 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES florin or rupee, made of the value of 2s. and containing 4 per cent, weight in gold and the balance in silver.* The seventh was to establish independent gold and silver standards without any fixed ratio of exchange between them.† or with some slight inducement for the use of gold in transactions of larger denominations.‡‡ Although the Government of India was not in agreement with these clever if not crazy plans of currency reforms, it agreed in the aim they had in view, namely, to place India on a gold basis without involving the actual use of gold in place of the existing rupees in circulation. With this aim in view it revived for adoption the more simple and more scientific plan of Colonel Smith. As a preliminary, the Government reverted to the policy of the resolution of the Bengal Chamber of Commerce, to the adoption of which it saw such “fatal objections” in 1876. In the despatch dated June 21, 1892, which contained the proposals, the Government of India asked for nothing more. In the words of their author§ they proposed “ ……That the Indian Mints should be closed to the unlimited coinage of silver, and no further steps taken until the effect of closing the Mints had been ascertained. “The ratio at which the change from silver to the gold standard should be made was subsequently to be settled and it was said that a ratio based on the average price of silver during a limited period before the Mints had been closed would probably be the safest and most equitable. When this ratio had been settled, the Mints were to be opened to the coinage of gold at that ratio, and gold coins were to be made legal tender to any amount.” These proposals were submitted for examination to a Departmental Committee, commonly known as the Herschell Committee. They were said to be defective in one important particular, and that was the absence of due recognition of the necessity of a gold reserve for the maintenance of the value of the rupee. Many people felt doubtful of the success of the proposals unless * By Stalkart, ibid, p. 322 ; also a very similar one by Merington, ibid, p. 316. † By Perry, ibid, p. 323. ‡‡ By Claremonth Daniell, ibid., p. 292. § Sir David Barbour, The Standard of Value, 1912, pp. 202-3. Italics not in the original.