Vol. 6 · pages 666–670

651 MINUTES OF EVIDENCE gold standard. I am not in love with it at all. 6114. Nor does the gold standard ameliorate the consequences of a trade cycle ?—No. 6115. Then there is only one point. In paragraph 5 you observe “I am necessarily in favour of the abolition of the gold standard reserve as being of no practical use for maintaining the stability of the currency.” By analogy why not abolish the paper currency reserve also because the value of the paper depends upon its limitations ?—Quite. 6116. Would you abolish that ?—No, for this reason. Because we are not placing a fixed limit on the issue of paper. Under the scheme where I say we should abolish gold standard I am placing a definite limit on the issue of the rupees. In the case of paper currency, we have allowed the Government the discretion. 6117. Do you think that possible ? I will tell you why. Because with limited incomes and things like that, there is more scope as population increases for the use of rupee. Could you say for ever and for ever, we shall be coining gold and no rupees until possibility the quantity of gold in circulation will be ten times that of the rupee ? Would that be convenient to the country ?— I should think it would be. I would rather say that instead of using gold we use notes backed by gold. I do not mean that we should use gold from hand to hand. 6118. (Sir Norcot Warren.) Am I to understand from the latter part of paragraph 8 of your memorandum that you are inclined to the rate of 1s. 6d. rather than 1s. 4d. ?—I confess prediliction in favour of 1s. 6d. 6119. (Sir Alexander Murray.) There is one point, Dr. Ambedkar, which you referred to in answer to some questions put to you by the Chairman; you seem to suggest that the Government of India were somehow or other prepared to go on coining rupees simply in order that they may make profit between the bullion value and token value of the rupee. I want to know what you are referring to actually ?—I am referring to this : It is a historical bit of thing. When the Government of India, for instance, introduced reforms suggested by the Fowler

652 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Committee, they felt that for a large circulation of the rupee they had not any reserve and the Fowler Committee in paragraph 60 of their Report suggested that if the Government coined rupees and keep profit to itself, that profit should be utilised as a reserve. Sir Edward Law who came on the scene in 1901, the period from which the coinage of rupees commenced, also felt that the volume of rupees was so large that some amount of reserve was necessary ; and I think he went on coining rupees sheerly because he felt that the reserve was wanted and the reserve could not be had in any other way except by coining rupees. 6120. You only think that ?—No, my point is this : I have read the despatch very closely and I feel that if Sir Edward Law had disclosed there that the rupee was coined to a premium because people did not want gold or any other thing to use in currency, then I could have understood that the rupee was coined in answer to the demand of the people. But there is not a single thing to that effect to be found in the despatch. He simply says that when we introduced reforms we did not take into account paragraph 60 of the Fowler Committee’s Report. 6121. But he also, I think, in that despatch to which you refer laid down that there ought to be a gold reserve which estimated at 7 millions or something like that. Against this you say that he was issuing rupees ?—Quite so. Gold standard reserve is kept in gold. I say no reserve was wanted. 6122. You make a general statement here, Dr. Ambedkar, “Unfortunately there is abundant proof of such perversion in the history of the currency system in India. Already we have had foolish administrators who had been obsessed with the idea that a reserve was a very essential thing and who had therefore gone on issuing currency without any other consideration but that of augmenting the reserve” and you are now repeating it to the Chairman ?—I have used a much milder expression than that used by Professor Cannan himself in his book. 6123. But is it not the case that in 1895 that was actually suggested by a well-known Bombay financier and turned down by the Finance Member at the time ?—I find that in the despatch.

653 MINUTES OF EVIDENCE 6124. One moment. In your book you actually give the name of the Bombay financier who suggested it and you give the name of the Finance Minister of the Government of India who turned it down ?—Yes. 6125. Then in your book you also give the name of a wellknown politician who as recently as 1907-08 suggested the same thing and again it was turned down by the Government of India and as recently as 1919, you give a reference to another well-known economist. Then why do you repeat the statement to the Chairman that the administrators of the Government of India have not thrown overboard or turned down the suggestion when as a matter of fact you know that the administrators of the Government of India have turned it down repeatedly when it has been put forward by wellknown Indian financiers ?—My reply to that is this : that somehow if you read the speeches in the budget delivered by every Finance Minister, for instance, I forget the names now, gentlemen who preceded Sir Edward Law; I think I can cite instances. 6126. Sir James Westland and Sir Clinton Dawkins ?—But they never agreed with that. 6127. No; it was suggested by an Indian to Westland who turned it down and again to Dawkins who turned it down ?— With due respect to your interpretation, Sir Edward Law did say that there should be gold standard sufficient to back all the rupees and the notes. I do not deny that. But I simply say this ; that other financiers stated that no reserve was wanted and the rupee would maintain itself and Sir Edward Law stated that the reserve was wanted and he coined rupees because he wanted the reserve. In fact, I have paid sufficient compliments to the training and the notions of Westland and Dawkins for turning down the proposals. I say they were right and Sir Edward Law was certainly wrong. 6128. Sir Edward Law did not say that he coined rupees in order to provide the reserve. He said that he should hold it as a backing against the issue. It is you that put in the interpretation that he did coin rupees for the other purpose ?— He says that in the despatch. Before the Fowler Committee there

654 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES were sufficient proposals of having a gold reserve and the Committee found that they were very costly, but slightly hinted that if a reserve was wanted, it might be had by coining rupees. The two gentlemen who preceded Sir Edward Law did not think it was necessary. But Sir Edward Law said it was necessary and coined rupees. I am not making a general charge. I have given praise where it is due. I can give you also the reference. 6129. I can verify all your references. What do you want to find there ?—That although the recommendation of the Fowler Committee was there that the Government of India could provide itself with gold reserve by coining rupees, Westland and Dawkins refused to pay any heed to that proposition, because they firmly believed that gold reserve was not necessary and that the rupee being limited in quantity it could maintain itself. But Sir Edward Law when he became Finance Minister felt that a reserve was necessary. 6130. Westland was the Finance Member before ever the Fowler Committee reported. I think he was away when the recommendations were brought into operation and Dawkins was the member in office when the Fowler Committee reported. But both of them turned down the suggestion which came from Indian politicians ?—There is no difference of opinion on that point. 6131. The only difference is that you are imputing to Sir Edward Law that he coined rupees in order to create a reserve. I say that he did not; that in the actual despatch he said that there was a gold reserve, I think, of 7 millions ?—If so, there is a difference between us. 6132. (Chairman.) I cannot see what conceivable advantage it can be to anybody to increase a reserve for the fun of the thing ?—Exactly, and people are under very big notions that a reserve is wanted and without a reserve a currency cannot work. I think it a very common superstition. It is there. 6133. (Sir Alexnder Murray.) I will give you the reference, pages 276 to 278 of your book, “The Problem of the Rupee” ?— Yes, Westland was there when the reforms were brought into being, page 276.

655 MINUTES OF EVIDENCE 6135. What date was that ?—It is the Budget speech of 1898-99 after the reforms were introduced. 6136. It was in 1894-95.—No ; Dawkins comes on the next page. My reference is to the Financial Statement for 1898-99 at page 276. Then the passage from Sir Edward Law occurs on page 278. 6137. Will you excuse me for correcting you. You said your reference was to the Budget speech of 1898-99. As a matter of fact the reference you have made is from the speech of 189495 ?— He was also Finance Minister in 1899. 6138. He turned it down in 1894-95 ?—I mean there was no material difference between the Herschell Committee and the Fowler Committee and I am sorry if you think I have made any vile allegation against the gentleman. 6139. (Sir Alexander Murray.) —All I am doing is quoting what you say in paragraph 5 of your statement. All I say is there is danger of anybody falling into that trap. 6140. (Chairman.) And you maintain that in your book you have vindicated these eminent statesmen ?—Yes. 6141. (Sir Purshotamdas Thakurdas.) In paragraph 8 you refer to various countries of the world as “hankering for a return to the pre-war parity” and you say it seems to be universal. Then you go on “There is but this difference between India and the other countries. The other countries have yet to reach the pre-war parity. India on the other hand has in fact overreached the pre-war parity.” Those other countries to which you refer have had their currency very severely depreciated during the war ?—Absolutely. 6142. Not the solvent countries ?—I think these countries also which are very near their old parity find it difficult to go back. 6143. For instance, which countries have you in your mind ?—Well, I am talking of the proceedings of the Genoa Conference, which I do not carry in my mind, but I think for instance a country like Italy. France was at one time within measurable distance of pre-war parity. 6144. France now is perhaps worst off of all; therefore you are there remarking a difference between India and other countries whose currency was severely dislocated during the war period