²⁸⁴ _See_ P.P. 400 of 1912. ²⁸⁵ From this point of view the proposition of Prof. Keynes, that the gold value of the rupee may be fixed irrespective of the cost price of silver, must, having regard to the existing system of currency, be looked upon as a somewhat unsafe position. Cf. his evidence before the Indian Currency Committee of 1919, Q. 2,688. If it is argued, as it well may be, that the will of the Government of India as a monopolist, i.e. its desire to see that its currency is not depreciated, may bring about a limitation on the issue of rupees which could not have been possible had the Mints remained open to the public in general, the reply is that this will to limit could be effective only if the Government had the power to refuse to issue. Central banks limit their currencies so far as will is concerned, because they are not obligated to issue to anyone and every one. But the position of the Government of India is lamentably weak in this respect. It is bound to issue currency when asked for. It is true that every issue does not involve a net addition to the existing volume of currency; for a portion of the new issue is a re-issue of what is returned from circulation. None the less, it cannot be said that the Government by reason of its monopoly has put an effective limit on the volume of rupee currency. On the other hand, having no escape from the liability to issue currency, the exercise of this cherished privilege has recoiled on the [pg 171] Government, so much so that this monopoly of issue, instead of strengthening the position of the Government, has weakened it considerably.²⁸⁶ The view of the Chamberlain Commission²⁸⁷ ²⁸⁶ The danger involved in this indefinite liability to issue rupee currency was recognized by the Smith Currency Committee of 1919, which recommended that this obligation should be withdrawn. _See_ Report, par. 68. Of course its motive was different. ²⁸⁷ Report, par. 182. “that while the Government are very large dealers in the exchange market, they are not monopolists (!) and it seems doubtful if they could successfully stand out for any such [fixed minimum rate] at all times of the year,” is therefore interesting as a confession that the closing of the Mints has not had the virtue of so limiting the coinage of rupees as to enable the Government to dictate at all times the price of the rupee, which none but it alone can manufacture. Thus the present standard is different from the standard proposed in 1878 only in name. If this one is characterized by the adoption of the rate of exchange as an index for regulating the volume of currency, the same must be said of the former. But, as Mr. Hawtrey remarks,²⁸⁸ whatever means are adopted for the manipulation of the currency, “the value of the rupee will be determined by the quantity in circulation.” ²⁸⁸ _Currency and Credit_, 1919, p. 341.