HC Deb 26 May 1924 vol 174 cc4-6
7. Mr. SCURR

asked the Under-Secretary of State for India what steps the Government propose to take to meet the demand of the people of India to transfer the funds standing to the credit of the gold standard reserve in London to India?


The reserve is at present held in the form of sterling investments which could not suitably be held elsewhere than in the United Kingdom.

9. Mr. SCURR

asked the Under-Secretary of State for India whether, seeing that the Indian merchants have demanded that the Indian Currency Act should he amended by substituting the rate of exchange to be 1s. 6d. instead of 2s., what steps is it proposed to take in the matter?


I assume my hon. Friend is referring to the views of the Indian Merchants' Chamber, Bombay, advocating the restoration of the pre-War rating of the rupee at 1s. 4d. gold. The Government of India have explained at length in a letter dated the 25th January to the chamber their reasons for holding that in the existing uncertainty of world economic conditions it would be inexpedient to make any immediate attempt to fix the future gold value of the rupee. My Noble Friend concurs in this view.


Is the hon. Gentleman aware that the Indian Government failed to maintain the rupee at 2s., and, that being so, would he ask the hon. Gentleman who put the question, how he would propose to maintain the rupee at 1s, 6d., seeing that the natural balance of trade even now only maintains the rupee at 1s. 4½d.?


It is not for the Minister to question an hon. Member.

12. Lieut.-Colonel MEYLER

asked the Under-Secretary of State for India whether he is aware that opinion in India favours the establishment of a gold standard and the opening of the Mint for providing gold coinage; and whether he will state the intentions of the Government in regard to these matters?


While the effective restoration of the gold standard is the objective of Government policy, economic conditions throughout the world have not yet reached a degree of 'normality which would justify at present an attempt to stabilise the gold value of the rupee. In present circumstances, owing to the existing premium on gold in India, the question of the internal circulation of gold currency does not arise.


Is it not a fact that gold has been pouring into India for tens of centuries, and that it is always made into ornaments, and disappears from circulation? Is he aware that a drain of gold to India would injure our own gold reserves, sinking into the quick-sands of India without going into circulation as currency? What then would be the use of coining gold?

14. Lieut.-Colonel MEYLER

asked the Under-Secretary of State for India whether he is aware that the Indian Merchants' Chamber and Bureau of Bombay suggested to the Government that at least 17 crores of rupees worth of currency notes should be issued as emergency currency to meet the seasonal demands at 5 per cent., 5½ per cent., and 6 per cent. instead of 12 crores of rupees only at 6 per cent., 7 per cent., and 8 per cent.; why that suggestion was not adopted; and what are the intentions of the Government for the future?


asked the Under-Secretary of State for India whether it is proposed to take any steps, and, if so, what steps will be taken, to prevent a recurrence of a great stringency in the money market in India leading to a rise in the bank rate of interest from 4 per cent. to 9 per cent., and to a consequent demoralisation in the trade and industries of that country?


I am aware that in April, 1923, when the note circulation was about 170 crores of rupees, the Indian Merchants' Chamber, Bombay, suggested that additional currency should be issuable up to 10 per cent. of the note issue at rates varying from 6 to 7 per cent. The actual decisions embodied in the Paper Currency Amendment Act and rules thereunder were taken after careful consideration of the views of various representative bodies in India. In addition to expanding the currency up to 12 crores of rupees against commercial bills, a further expansion of 12 crores was effected this busy season against sterling securities in London, making a total expansion of 24 crores this winter. The important problem referred to in these questions is being carefully watched by the Government of India.


With regard to Question 41, am I to understand that the Secretary of State for India acquiesces in the statement in the hon. Member's question that there is disaster in the trade and industries of India? Is he not aware that the total of the trade in and out of India is now higher than ever it was, except in the boom years of 1919, 1920 and 1921? Is there any ground for the implication contained in the question, No. 41?


There is no demoralisation.