Vol. 6 · pages 676–680

661 MINUTES OF EVIDENCE and therefore to give justice to all I think that is the best way it could be done. 6190. What about contracts in the shape of debts incurred before 1914 ?—I do not suppose there are many existing now. 6191. You think that all these debts payable by agriculturists to sowers are paid within a certain period ?—My personal opinion is that no commercial contract extends for more than five years, and the proportion of those is very very small. There is no statistical information on this. Professor Fisher has made in his book certain calculations to that effect. He writes there that the rate of interest varies sympathetically with the prices ; so that the rate of interest bears a certain relation to the rise or fall of prices. He then comes to the conclusion that most contracts are very very recent commercially. 6192. You mean about India ?—I mean generally ; I do not know about India in particular; there may be something peculiar in India, but I do not know why it should be so. 6193. Do you think things in India may be different ?—I should not think so unless there was some evidence forthcoming that that was so. 6194. You think that the problems in India are the same as in the West ?—I do not see why they are not. 6195. It would surprise you if they happened to have been admitted to be otherwise ?—It would surprise me. 6196. Regarding the adjustment of price levels, do you think that the adjustment is anything near complete now, owing to the disturbance in the exchange rate from 1s. 4d. to 1s. 6d.?—There would be some disturbance; that would be detrimental to the wage-earners if we went back from 1s. 6d. to 1s. 4d. 6197. The disturbance from the lower to the higher rate from 1s. 4d. to 1s. 6d.......?—Has been favourable to the labouring classes. 6198. Is that adjustment complete, or is there still any mal— adjustment of that ?—I could not say ; that is a matter of statistical investigation which I have not entered into ; but I suppose exchange has been stable at 1s. 6d. for a long time. 6199. How long do you think it has been stable ?—I cannot exactly say ; but certainly it shows signs of stability.

662 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES 6200. How long ; have you any idea ? Some witnesses have said six months, some eight months.......?—I think somewhere there. 6201. Do you think that six or eight months is a sufficient period for judging this stability ?—I say due weight should be given to it, and therefore you should strike an average. 6202. But I think you have said in the course of your oral examination that you would be prepared to agree to 1s. 6d. ?— Yes, because it is nationally better; it would not inflate. That is what I say. If, even after 1s. 6d., the process of adjustment was not complete so as to enable us to say 1s. 6d. was really the level needed, I say we should establish it at that. 6203. Regarding the adjustment in the industries here, have you any idea at all ? Can you give us any opinion ?— None whatever. 6204. (Mr. Preston) : In case there should be any misunderstanding with regard to some of the answers which you gave to Sir Alexander Murray, in connection with that unfortunate reserve, the gold standard reserve, it may be well if we put on record some actual facts: the gold standard reserve came into being in the year 1901 and it resulted from profits earned from the previous April in 1900. The balance in the reserve to-day is 40 millions sterling, is it not ?—Yes ; I think it is about that. 6204A. The Finance Minister when he made his report on currency last year made the following statement: “As will be seen from the statement, the bonds and stock purchased are due for repayment within the next few years. Of the amount now standing at the credit of the reserve, £ 27,449,950 represents profits on coinage and the remainder represents accumulated interest on securities held in the reserve.” You say that this reserve cannot increase unless there is more rupee coinage. How has that increase of one-third in the last three years come about ?—By interest on investments. 6205. Then if the interest on that reserve is kept being added to it, you are increasing that reserve for a useful purpose without having to adopt those methods which you so very strongly deprecate ?—Yes, undoubtedly.

663 MINUTES OF EVIDENCE 6206. Just one more point as to the usefulness of that reserve. It will be within your knowledge that in the period of the world’s depression in 1908 that had it not been for that very reserve we could never have maintained our external parity; you admit that ?—Yes. 6207. Thank you ?—Although, of course, something has gone in to which I ought to take exception—by saying that I am in favour of increasing the gold standard reserve by investments. If a reserve is invested there is no reserve at all. 6208. (Sir Reginald Mant.) I understand your chief desideratum is stability of internal prices ?—Quite. 6209. And you hold that that stability will then be linked to gold prices, will they not ? They will vary with the gold prices ?—Yes. 6210. Internal prices will then be linked to gold prices, will they not ? They will vary with the gold prices ?—Yes. 6211. Now a gold exchange standard without a gold currency has been recommended by several people with the same object in view ; but I understand you to hold that it will not achieve that object ?—I think it has not, so far as India is concerned. 6212. I was not speaking of what has been done in the past; it has been represented to us that if a gold exchange standard were made automatic it could secure those objects ?—I do not know ; there may be some people who hold that view, but I cannot see how it could be held. 6213. I want you to explain why a gold currency would achieve it and the gold exchange standard would not ?—My first ground is this : that the exchange standard depreciates gold and makes it therefore useless as a standard of value. A gold exchange standard causes a redundancy of gold by its economy. 6214. Ought you not to put it the other way, and say that if we introduce a gold currency here we shall appreciate gold ; would not that be a more correct way of putting it ?— You might put it that way, yes. Therefore under the present circumstances gold would behave as a better standard of value. My next submission is this, are we really effecting economy by the exchange standard ? 6215. I was not raising the question of economy. I was trying to get at the reason for your holding that nothing but a gold

664 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES currency would effect your object of keeping internal prices linked with gold ?—Stabler than they would be otherwise is what I said. If we adopted a gold standard our prices would be more stable than they would be under an exchange standard. I did not say that under a gold standard they would be perfectly stable because gold itself is not a perfectly stable standard of value ; but certainly it would be more stable than under an exchange standard. 6216. Because simply we should be using more gold ?—Yes. 6217. That is your only reason for differentiation ?—Yes. 6218. (Sir Maneckji Dadabhoy.) Let me proceed a step further with regard to the answers you gave to Sir Purshotamdas Thakurdas : in paragraph 8 you say “Existing contracts are no doubt of various ages ; but the great bulk of them are of very recent date and probably not more than one year old ; so that it may be said that the centre of gravity of the total contractual obligations is always near the present.” When you are referring to this matter, I understand you are speaking without any definite statistics ?—Yes ; I simply say there has been a calculation made by Professor Fisher. 6219. You state this as a sort of generalisation ?—Yes. I said I had no definite information. 6220. When you speak of a centre of gravity of the total contractual obligations being near the present, it is not a very definite term. Would not that centre of gravity come within the circumference of twelve months ?—Yes, somewhere about that; because I have said one year old. 6221. So that, if a certain ratio prevailed twelve months ago, we would be, according to your reasoning, as much justified in taking that as 1s. 6d. ?—Quite ; yes. 6222. So you would be as much justified in taking that ?— Yes. 6223. Then when discussing this matter and when you expressed your election in favour of the 1s. 6d. ratio. I understand you founded your opinion on the dictum of Professor Fisher ?— Yes. 6224. Now we have got this dictum of Professor Fisher before us ; the words used are :— “The problem of a just standard of money looks forward rather than backward ; it must take its

665 MINUTES OF EVIDENCE starting point from the business now current, and not from imaginary pars before the war.” ?—Exactly. 6226. Don’t you think that Professor Fisher when he laid down that dictum had European conditions before him only ?—Yes, but that would apply almost to any country. It is a general proposition. 6226. My question is did he not have European conditions in view only when he said that ?—I cannot say. 6227. (Chairman.) The witness replied that he thought it would apply to any conditions ?—Yes, it is a genera! proposition. 6228. (Sir Maneckji Dadabhoy.) Is that conclusion justified by these expressed words ?—I should think it is. 6228A. Y OU think it is ?—He says further, he does not only refer to the war,—he says : “One might as well talk of restoring the original silver pound or returning the monetary standards of Greece and Rome.” 6229. Now, you know very well that this ratio of 1s. 6d. has continued in India for the last 16 months only. Now, if we take this period 16 months in Indian conditions, what would you say when you think of any imaginary pars before the war ? Do you think in India a period of 16 months would make any substantial difference in coming to a conclusion ? He is referring to the imaginary pars before the war; he takes a longer period ?—No, no. He is simply referring back to 1914, to the parity which existed in 1914. I say, if according to information 1s. 6d., has been in existence for 16 months, then I say it ought to be confirmed. 6230. Yes. But if previous to that, with a brief interval of some years, it has ranged equally for 20 years at 1s. 4d. you would brush aside all those considerations ?—Yes, because there are no contracts now existing that were made 20 years ago. And therefore we need not be concerned about it. 6231. This is your argument ? And you would also brush aside its economic effect both on agriculture and on the industries of the country ?—I say they will be very good. By bringing the ratio to 1s. 6d. I say there might be some depression of profits, but there won’t be depression of industry. 6232. Yes. So you don’t attach great value to those factors. You think on the whole it will be for the good of the country ?—Yes.