INDIAN CURRENCY AND FINANCE [Illustration] MACMILLAN AND CO., LIMITED LONDON · BOMBAY · CALCUTTA MELBOURNE THE MACMILLAN COMPANY NEW YORK · BOSTON · CHICAGO DALLAS · SAN FRANCISCO THE MACMILLAN CO. OF CANADA, LTD. TORONTO INDIAN CURRENCY AND FINANCE BY JOHN MAYNARD KEYNES FELLOW OF KING’S COLLEGE, CAMBRIDGE MACMILLAN AND CO., LIMITED ST. MARTIN’S STREET, LONDON 1913 COPYRIGHT PREFACE When all but the last of the following chapters were already in type, I was offered a seat on the Royal Commission (1913) on Indian Finance and Currency. If my book had been less far advanced, I should, of course, have delayed publication until the Commission had reported, and my opinions had been more fully formed by the discussions of the Commission and by the evidence placed before it. In the circumstances, however, I have decided to publish immediately what I had already written, without the addition of certain other chapters which had been projected. The book, as it now stands, is wholly prior in date to the labours of the Commission. J. M. KEYNES. KING’S COLLEGE, CAMBRIDGE, _12th May 1913_. CONTENTS CHAPTER I PAGE THE PRESENT POSITION OF THE RUPEE 1 CHAPTER II THE GOLD–EXCHANGE STANDARD 15 CHAPTER III PAPER CURRENCY 37 CHAPTER IV THE PRESENT POSITION OF GOLD IN INDIA AND PROPOSALS FOR A GOLD CURRENCY 63 CHAPTER V COUNCIL BILLS AND REMITTANCE 102 CHAPTER VI THE SECRETARY OF STATE’S RESERVES AND THE CASH BALANCES 124 CHAPTER VII INDIAN BANKING 195 CHAPTER VIII THE INDIAN RATE OF DISCOUNT 240 INDEX 261 CHART SHOWING THE RATE OF DISCOUNT AT THE PRESIDENCY BANK OF BENGAL _Face page_ 240 CHAPTER I THE PRESENT POSITION OF THE RUPEE