INDIAN FINANCE.
[To THE EDITOR Or THE "SPECTATOZ."1 &s,—You have given us a very interesting summary of the difficulties of India in the Spectator of April 2nd. Allow me to mention another very serious " difficulty " which does not appear to have struck you. Those who desire a gold standard for India assume, though apparently without what can be called proof, that if this standard were adopted gold would ,come out of the existing hoards to be coined and afterwards used as currency. Many, however, think that even if gold now hoarded were brought out to be coined it would return as coin to its old receptacles, being good for hoarding and useless as currency for the " people " of India. In this uncertainty it seems clear that the Government must have an ample reserve in hand if they are to buy rupees at full 50 per cent. above the present gold value of the silver in the rupee, because no one can Bay how many holders of rupees might convert them into gold on terms so favourable. How much reserve would be necessary is hard to say. One authority says 2100,000,000, another 277,000,000, another 250,000,000, another 215,000,000, and this figure has, or had, the sanction of Sir D. Barbour. What I want to suggest is that not even £15,000,000 could be sent to India at present without causing most serious troubles at home. All the great import of gold in 1897 left our shores almost as soon as it arrived, and we have now some 26,000,000 less at the Bank than we had a year ago. The prospects point to a continued demand for America, and no supplies
an be procured from the Continent. The fact is that we cannot provide a gold reserve for India safely. Therefore, we must seek some other remedy for the present trouble. Apparently the action of 1893 has assisted the Budgets by raising the value of the rupee in exchange, but it has drained India of capital, and has caused a scarcity of loanable money which has produced a semi-panic. If gold is impossible as the money of India, what can we do but retrace our steps, and allow India to have once more a real money, the supplies of which are automatic ? At present India has no proper money, and the situation is said to be "intolerable." The Secretary of State objects that exchange must fall, if silver be once more freely coined, and thus Budgets must again become difficult. From his point of view, this objection may
appear insuperable. But at the risk of having to assist India, we ought to remember that the people have to be considered as well as the Government; and though we may be stria monometallists, we must not forget that silver has long been the money of India in which contracts are made and payments discharged. Why should we attempt to force on her a standard and currency which cannot apparently suit such people, if it be true that a silver standard and currency con- tinue to meet their needs as a community P—I am, Sir, &c.,
43 Grosvenor Square, W., April 4th. WILLIAM FOWLER.
[We publish our correspondent's interesting letter, but cannot open our columns to any general discussion of the currency question in India or elsewhere.—ED. Spectator.]
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