HC Deb 26 November 1912 vol 44 cc987-8
12. Mr. TOUCHE

asked whether, as the Secretary of State for India does not intend to restrict his drawings by weekly sales of Council Bills to the amount of home payments on account of the Government of India, but proposes to sell additional bills, so far as the resources permit, provided there is a sufficient demand for them, it is to be understood that he is not prepared to place a limit on the accumulation of balances in London?

Mr. BAKER

The accumulation of balances in London is limited in three ways: First, by the capacity of the Government of India to meet Council Bills from their balances; secondly, by the practice of regulating the sales so as not to interfere with the flow of gold to India except to prevent the necessity of its being subsequently re-exported by the Government; thirdly, by the practice of using part of the balances for the discharge of floating debt and for capital outlay.

17. Mr. TOUCHE

asked why trade requirements, for which the Secretary of State for India has sold Council Bills and telegraphic transfers in excess of payments which he has to make on account of the Indian Government, have not been met under the operation of the Gold Note Act, which was intended to provide for the free and automatic flow of funds to India and for the maintenance of exchange should the flow turn in an opposite direction, thus safeguarding India's financial position; is the proper course to buy silver in London against the sales at 13.4 5–32d., shipping it to India and minting it into rupees, the profit going to build up the gold standard reserve; and why has this practice been neglected at the risk of getting the financial position into a tangle?

Mr. BAKER

The Gold Note Act (i.e., Act II. of 1898, as amended by Act VIII. of 1898) expired on 21st July, 1900. Silver has been bought and coined as required and the profit has been added to the gold standard reserve, with the exception of about £1,100,000 used for capital expenditure on railways in accordance with the recommendations of the Committee of 1907–8 on railway administration and finance.