GOLD STANDARD FOR INDIA
Already, before the calling of the Brussels Conference, it had been recognised that, in case of failure to arrive at a bimetallic agreement, it would be essential thus far to close the Indian Mint, and to attempt the establishment of a gold standard in India. This impression, together with a draft scheme for a gold currency, was conveyed in a minute of Sir David Barbour's, addressed to the Secretary of State, 21st June 1892. As the result of correspondence between the Secretary of State for India in Council and the Government of India the British Government, on the 21st October 1892, i.e. a month before the meeting of the Brussels Conference, nominated a committee to consider the proposals submitted by the Indian Government for stopping the free coinage of
silver in India, with a view to the introduction of a gold standard.
The committee consisted of—The Lord High Chancellor; The Right Hon. Leonard H. Courtney, M.P.; Sir Thomas Henry Farrer, Bart.; Sir Reginald Earle Welby, G.C.B.; Arthur Godley, Esq., C.B.; Lieutenant-General Richard Strachey, C.S.I.; Bertram Wodehouse Currie, Esq.
A hope was at first expressed that the committee would be able to make its report before the meeting of the conference at Brussels. But it was not actually made until the 31st May 1893.
India.
The part which India has played in the currency history of the world has been characteristic and uniform from the first. India is, and has been, from the birth of international commerce, the receptacle or sink for the precious metals of the civilised Western world. The fact that in so being she has constituted herself the safety-valve of the world's currencies is not confined to the present day merely. It is peculiarly applicable to the present day, with our organisation of banking and credit, which has concentrated the metallic reserves in certain burning central spots, and built thereon a superstructure of credit transactions so vast and in so delicately poised a manner that any undue addition to the metallic reserve sends a shudder of excitement and speculation through the whole, inducing over-trading and over-funding, and in the
end a crisis. Such is the structure of the world's commerce that India provides an outlet or drain for any sudden crisis-bringing inflow of precious metal, and preserves the equilibrium of our system. The fact is patent to-day, because the nature of our credit and banking system is understood. But in reality this function India has performed through ages.
The influence she now exerts through impact with a highly delicate credit system, she formerly exerted on a less uniform and delicate system by the rougher influence of prices generally. The gain attending the Eastern trade in the sixteenth and seventeenth centuries was not measured by modern conceptions of dividends or trading margins. To the European trader the intercourse was attended with a double gain, commercial and financial—the latter really bimetallic in nature from the higher ratio then prevailing between silver and gold in India.
To India it meant a perpetual balance of trade in her favour, if such a phrase can be used of such a situation,—a continual inflow of precious metal. Her capacity of absorption of metal seems as large and unsatisfied as ever, and, on the assumption of an unaltered situation in Europe and America, her function in the world's currency system still remains—feasible and beneficent. It is the most difficult question attending the modern currency crisis, whether such assumption of an unaltered situation is permissible.