The Sun and the New York herald., 1920-08-31
Asia Takes to Paper Money.

Long and stubborn opposition
to the issuance Of paper money In
India and contiguous countries has
finally begun to crumble under the
economic pressure Of the law of sup
ply and demand. The inevitable mo-
ment has come when the Indian mer-
chant, rather than shut himself Off
from the trade advantages gained
during the war, has decided to sup
press his scorn for anything except
hard money made of gold or silver
and to accept the paper substitute
offered by the Western, Sahib.
This radical departure from Gus
tom was taken in India proper some
months ago as result Of recon-
mendations from n British currency
commission. 1t Is now extended to
the outlying territory of Afghanistan
through an official order by the Amir
issued at the city of Kabul.
Cloaked in pompous language cal
culated to reassure sceptical public,
the official notification orders the In
PRODUCTION of currency notes in the
denominations of l, 5, %, so and 100
rupees. The public is informed that
these notes "have been printed under
supervision of RAzA BEG Khan, the
mathematician, and after the neces-
sary tests have been stamped with
specially made seals Of MIRA NAH
MUD Khan, the Finance Minister, and
GHULAM HAIDER Khan, General Of
Treasures" All of this, Of course, is
intended to confer upon the paper
notes something Of the respectability
attaching to the names mentioned.
In India attempts have been made
on previous occasions to introduce
paper money, but always with failure
as the result. The banks and leading
merchants would accept the paper,
but the laborer would not. The war
brought unprecedented demand for
Indian products, such as rubber,
spices and tin, and all the power Of
the British Government did not suf-
fee to make the Indian toiler accept
anything but gold or silver In ex-
change for the goods he sold to the
Allies.
The steady flow of precious metals
to India from all parts Of the world
is an old story. 1t took the Ameri-
can silver dollar out Of circulation
and put It in the crucibie to satisfy
the endless demand for exchange on
India. But while this Is no news,
yet the inevitable reaction now oc-
CURING In India, the emancipation Of
Europe from the grip of the Indian
merchant, Is an event which bears a
great deal of significance for the
future.
II an India gorged with gold and
silver can be persuaded to accept
paper substitute, the metal now in
circulation can be gradually with
drawn and put in the Government
vault. 1t is but one more step to
substitute British Treasury bills for
the gold as reserve behind the cur
rency, and then the metal would be
well on Its way to the strong box in
the Bank of England.
To make the Indian populace see
the wisdom of accepting paper money
India has been threatened with trade
stagnation. The Indian worker faces
one Of two alternatives, either to ac-
cept paper money and prosper or to
refuse 1t and ruin his own prospects
The world Is willing to buy from him,
but win not pay in gold or silver. To
be sure, the British bankers who have
put this proposition have not been
grufr about 1t. They have combined
the Presidency banks Of India and
given them note issuing powers,
backed by the guarantee Of the Gov
ernment. Every precaution has been
taken to assure the public that the
despIsed paper money is safe and will
pass fori@ face value.
IndiG and Afghanistan need an up
to date currency system. This is their
chance to get 1t. But in making the
change a good share Of their gold re-
serve is certain to find its way to Lon
don, thus adding to the financial
strength of the mother country.