MR. BANERJEA'S book " is intended to be an introductory manual for those who wish to make a serious study of Indian economics." He confronts us at the outset with the'problem, how far are the principles of general economics applicable to Indian conditions, and reminds us of Bagehot's assertion that the doctrines of English political economy have little validity outside of England. " With us," says Mr. Renade (Essays in Indian Economics), quoted by our author, "an average individual man is to a large extent the very antipodes of the economical man. The family and the caste are more powerful than the individual in determining his position in life." This was true when it was written twenty years ago, not absolutely, but" to a large extent"; and now we learn from this volume, incidentally also from that of Mr. Howard and others such as The Economic Transition in India, by Sir Theodore Morison, recently noticed in these columns, that even in India the economic man, or rather the economic motives, is a reality deeply influencing the development of the nation. We take this to mean that the Western device of exchange is more and more justifying itself as an equitable and convenient method for organizing the industry of the country. Exchange is the subject matter with which economics is concerned, and we presume that economics is only relevant when exchange is sufficiently a normal habit with the population to warrant a scientific study of its phenomena. The economic motive, which is only one of the many motives which influence human action, involves a desire to substitute exchange for theft, taxation, and violence as a means of organizing our social and industrial relations, and economics is the history and theory of the process.
Since the days of Bagehot it seems to have been the boast of English economists that their generalizations are not applicable to any existing state of affairs either in England or in India. So numerous are the exceptions to every rule that generalization is impossible, and the so-called science is regarded with some disfavour by practical men as being indeed not distinguishable from chaos. This is a reaction, we are told, from the too confident assumptions of the orthodox economists of an earlier date. The French school of liberal economists, though its teaching is entirely neglected by the legislature, though it claims no categoric imperative for the promptings of the economic motive, has constituted itself the apologist and the panegyrist of exchange and of the corollaries which are necessarily imposed on a community which allows its activity to be organized by exchange. The corollaries are personal liberty and a clear definition of and respect for the institution of property. Be this as it may, it seems certain
* (1) A Study of Indian Economics. By PramathonAth Banerjea, M.A., late Professor of Economics, City College, Calcutta, &c. London: Macmillan and Co. [3s. 6d. net.]-(2) India and the Gold Standard. By H. F. Howard, et. the Indian Uvil Service, &c. London: W. Thacker and Co. [6s. net.-1
that India has already embarked and is now rapidly advancing on the path of industrial development and change. The prevalence of the economic motive seems indeed to be inevit- able, and the liberal economist accepts the fact as an element in the harmony of economic revolution. Mr. Banerjea's comment on these opposing views is as follows :—" One class of persons look confidently to the change for an economic millennium which will bring wealth and prosperity into the country; another class are appalled at the prospect of the immense misery that is likely to come in the train of the revolution" (p. 99).
This is the principal theme round which Mr. Banerjea's very interesting and very clearly written study is arranged. It requires him to describe the Indian village, the caste system, and the inroads which the new ideas are making on the ancient polity of the country. He discusses questions of currency and land tenure and gives interesting particulars as to the progress of co-operative banking in mitigating the evils of usury—a deeply interesting study in which the author suggests many contrasts between what we are presumptuous enough to regard as the primitive economy of the East and the encroaching currents of Western innovation.
Mr. Howard's book may be described as a history and vindi- cation of the Government's policy with regard to currency since the closing of the Indian mints to the free coinage of silver in 1893. " Exceptional interest attaches to the monetary system now in force in India, as representing a great practical experiment in the direction of the establishment of a gold- exchange standard, or, in other words, an arbitrary fixing of the parity of the standard silver coin with gold." We all of us can remember the heated controversies which raged over bimetallism when proposed as a solution of some of the difficulties of Indian finance. Public interest, however, seems to have died away when a compromise was made, and no account of the present currency system of India, says Mr. Howard, has been published. This clear and well- informed study will therefore be welcome to all who take a practical as well as an academic interest in this very important question.
The inconvenience which India suffered in its transactions with the gold-standard countries of the world is well known. India is a poor country, or rather many of its inhabitants are poor, and the adoption of a gold standard pure and simple was for this and other reasons thought impossible. For the every-day transactions of life a silver coinage of low denomi- nation was a vital necessity. "The adoption of the gold- exchange standard has made it possible for India to retain the silver in daily use, while at the same time eliminating the fluctuations of exchange between her and gold-using countries to which she was formerly liable. The rupee has under these arrangements been converted to a token coin," or, as it is put elsewhere, it is a note printed on silver. " The advantage of a token currency is that the Government takes upon itself the responsibility for maintaining the par value of the coins by means of a gold reserve, and takes the necessary steps to maintain this reserve. . . . The proposition is not to secure fixity of value between gold and silver bullion, but between gold and silver coins. Therein lies a marked distinc- tion " (p. v).
Gold is now the standard of value, and the value of the rupee is fixed at fifteen to the English sovereign. The Govern- ment is under obligation to provide an adequate supply of the token medium of exchange and a reserve of gold with which, in case of need, to purchase silver, and also for remittance to gold-using countries when the balance of indebtedness requires this. To render the gold exchange standard effective two propositions, says Mr. Howard, are essential " The first is to ensure that importers of gold should obtain rupees for their gold, and the second that conversely when gold is required for the purpose of remittance it should be possible to meet this demand from the gold reserves of Government." This position, Mr. Howard is of opinion, the Government has been able to maintain. He reminds us, however, that the exchange standard by its authors has always been regarded as a halfway house to the adoption of a gold standard and an opening of the Indian mints to gold. Our space hardly warrants us in entering farther on the technicalities of the subject. Mr. Howard's admirable and concise narrative does not lend itself to condensation, and we recommend those of our readers who are interested to study it at first hand. Exigency of space has led us to bracket this with another work on Indian economics, and in justification of the fact we venture to point out that incidentally Mr. Howard's book affords evidence of the transitional state of Indian industrial life. The ever-expanding need of currency is explained partly by the fact of increased population, but also to a certain extent by the growth of industries where payment of wages must be made in coin and no longer in kind, as was and is the custom in the primitive Indian village. With reference also to the supply of capital for industrial enterprise, he mentions the proverbial shyness of the native investor, who still loves the ancient device of hoarding ; but as proof that a wiser opinion is getting itself expressed he quotes an eminent Indian business man, Mr. R. N. Mukerjee, as reminding his countrymen that "there is wealth in India, and the possessors of it could with but a fractional part of their amassed wealth not only develop many of the industries which are to-day dormant, but make India industrially equal to any other country in the world. . . . Our countrymen had little interest in or knowledge of such enterprises, but that attitude is rapidly changing, and it should be our aim and endeavour to emulate the example set by our English fellow-subjects and to join with them in the industrial development of India."