The Sun.
London, England, 1860-05-14 00:00:00

PAPER:CURREA CY IN INDIA.

(From the Derbyshire Courier.)
A subject of grave importance must soon occupy
the attention of Parliament. We mean the project
of Mr. Wilson for a paper currency for British
India. Never in the world's history has a pro-
posal affecting so directly the social condition of
such a large portion of the human family been
laid before a legislative body. A heavy responsi-
bility rests on this country to give good laws to
our immense possessions in the East. We have al-
ready suffered severely for our selfish neglect in not
attempting, to the best of our ability, to educate
and christianise the natives. Having escaped for
the time the Government appears inclined to re-
lapse into indifference to its duties in this respect.
But if we do little for the Hindoos, we wish them
to do much for us. A new system of taxation is
now propounded, and in connection with this a
new monetary system also. Now the laws relative
to taxation, the holsling of land, and indigo plant-
ing, are important, but there can be no question
that all these together are of small account com-
pared with the proposal which is made for a new
monetary system. No financial transaction between
the Government and the people, no interchange
of commodities between the traders, no interest
of the richest native prince and the poorest na-
tive pariah, will remain unaffected by this mea-
sure. The importance of the proposed step is in-
deed fully admitted by the Government authorities,
both at home and in India. From the Minute of
Correspondence on the Paper Currency recently
printed by order of the House of Commons, it ap-
pears that Mr. Wilson has duly elaborated his plan,
' and that Sir C. Wood has duly considered, and re-
vised, and corrected it. All parties seem to know
that they are gliding over a surface marked out as
" Dangerous." We do not complain of the caution
exhibited by them as they proceed. But none of
them are, we think, aware of the extent of the
danger.
We will endeavour to explain, in a few plain
words, the present state of the monetary system in
India, and the proposed plan for a Paper Currency.
India has what is called a Silver Standard. With
the exception of a few millions of notes issued by
joint-stock banks, the whole circulating medium
of India is composed of silver rupees, or two-shil-
ling pieces. Indic is blessed with a " purely me-
tallic currency? It possesses the kind of money,
therefore, to which it has been the grand
object of Peel and Overstone to assimilate the
circulating medium of England. For the pro-
fessed design of Peel's bills of 1819 and 1844
was to make our mixed currency of paper and metal
fluctuate " exactly as a
.purely metallic currency
would do." The bullionists have, h6wever, dis-
covered that their theoretically perfect currency is
a very bad one in practice. It is found that the
resources of the country cannot be developed, nor
commerce successfully carried on, nor, above all,
an adequate amount of taxation raised in India,
with this " purely metallic currency." It is, there-
fore, proposed to give India a paper currency,
which Mr. Wilson thinks can be best effected by a
plan of Mr. Tooke, and Sir C. Wood thinks should
be done •by the plan laid down by Peel's Bills.
Both agree in the necessity of making this paper
currency fluctuate as " a purely metallic currency
would do."
Now we in England have had a good deal of
practical experience on this point. Since 1819
bullionism has been the Pandora's box of the
country, out of which has issued innumerable evils.
The only hope remaining at the bottom is, that the
principle upon which Peel's Bills were founded may
before long be shivered to atoms. In the insane
attempt to make our mixed paper and metallic cur-
rency fluctuate as a metallic currency would do,
we had, at the termination of the French war, dis-
tress (according to Mr. Tierney's statement)
"greater than had been known in this country
since the Norman conquest." The bill of 1819 drove
the much-enduring working classes to what was
little short of open rebellion. Then came 1825 with
ruin and misery to millions; when Mr. Huskisson
suggested that a paper should be placed on the
Bank of Englana aoofs stating " Mar tney naa nut;
gold to pay with, but might expect to recommence
payment in a short period." The virtual abroga-
tion of Peel's " convertibility" took place at this
time, by the issue of an old boxful of £1 notes,
which, the Governor of the Bank said, " saved the
credit of the country." Passing over various
periods of serious financial disarrangement, we
had the panic of 1847, proving that the bill
of 1844 was as contemptible a failure as that of
1819. Convertibility was again demonstrated
to be a sham and a delusion. Then came
1457 with a panic which even the tons of gold
from Australia and California could not starve off.
For the third time convertibility was thrown to the
winds, and the Peel bills shown to be miserable
and disgraceful failures, both in principle and prac-
tice. To all these evils the people of England have
submitted, because they will not think for them-
selves on the currency question, and the conse-
quence is that the bullionists are emboldened, in the
face of the signal failures of their system, to pro-
pose to engraft their pernicious and mischievous
monetary crotchets on British India.
And yet the bullionists themselves are forced to
admit the advantages of paper credit and paper cur-
rency. In his despatch of 25th December, 1859,
Mr. Wilson writes, " Inasmuch as the coin required
for circulation is a real abstraction from the avail-
able active capital of the country, it follows that
any method that can be adopted by which the quan-
tity of coin required for the transactions of the
country may be reduced, with perfect security to
the maintenance of the standard, to that extent so
much capital will be released from an unprofitable
employment, and returned into the channel of re-
productive uses? And he then goes on to com-
mend (as if he Lad made a discovery) the use of
c
drafts, bills of exchange, or
h"
o ohe qu
nd
jeess o
~, fororders," remittances,
" but the great means
of economising coins," he says, "is by the issue of
bank notes payable to bearer for small sums, uni-
form in amount, and suited to the daily wants of a
population in relation to the character of their
dealings, and bearing so high a credit that they are
received from hand to hand without hesitation as
money." And he goes on to observe, with perfect
truth, that "what cheques and drafts for large
amounts are to the trading and rich classes, in large
transactions; bank notes are to the community at
large in the transactions of every day life."
But Mr. Wilson has other arguments in favour
of a paper currency. It not only, he says, " eco-
nonuses capital," but (1) it reduces the expense
of the mint, (2) it saves the wear and tear of coin,
(3) it affords greater facilities for the public, es-
pecially in its transmission from place to place,
and (4) " these advantages are experienced to the
greatest extent when coin, as in India, is nearly
exclusively of silver, and therefore of great bulk in
proportino to its value." The practical conclusion
to which Mr. Wilson arrives is to recommend the
issue of bank notes for ten shillings, one pound,
two pounds, five pounds, ten pounds, and fifty
pounds. Sir C. Wood approves of this suggestion,
Obsesve how completely the bullionist party in
this recommendation falsity their own principles.
Pitt sanctioned the issue of small notes, for £1 and.
£2, in Great Britain. Peel and Overstone con-
spired to deprive England of these small notes, and
tried, unsuccessfully, to deprive Scotland also of
them. But Mr. Wilson and Sir C. Wood, as they
want to develope the resources of India, and to
raise taxes, recommend small notes of ten shillings
and upwards.
They are quite right in advocating a paper cur-
rency for India. Quite right in advocating a small
note circulation. They ought, indeed, if they wish
to " economise coin," and give the other advantages
on which Mif. i'brilson dilates, to recommend notes
of one rupest which would be pre-eminently'
" suited to t daily wants" of the Indian popula-
tion, among many of whom a rupee is a week's
wages.

. But
.they are quite wrong, and we trust the
country and Parliament will let them know that
they are quite wrong, iu proposing to introduce
panics, as well as paper currency, into India.
Paper currency in Pitt's time wrought wonders
in 'England. Never since the gold discoveries in
Elizabeth's time did this country make such gigan-
tic strides in civilisation, commerce, and wealth;
and that in time of a most expensive and disastrous
war. Peel was unable to destroy Pitt's -system of
paper currency, any more than he was able to de-
prive the people of Scotland of their £1 notes, but
he did all he could by ignorant and,unjust legis-
lation, to make paper currency a curse, instead of
a blessing, to England.
This is exactly what Mr. Wilson and Sir C.
Wood are going-to do in India. They wish to in-
troduce paper currency, which ought to be a