Had gold formed a part of the Indian currency it would have not only met the needs for expansion but would have permitted contraction of currency in a degree unknown to the rupee. Gold would be superior to the rupee as a standard of value for the reason that the former is expansible as well as contractible, while the latter is only expansible but not contractible. This is merely to state in different language what has already been said previously, that the Indian monetary standard, instead of being a gold or a gold-exchange standard, is in all essentials an inconvertible rupee standard like the paper pound of the Bank Suspension period, and the extra local rise of prices which, in itself an incontrovertible proof of the identity of the two systems, is characteristic of both, is, to use the language of the Bullion Report,³⁹⁷ ³⁹⁷ Prof. Cannan’s Reprint, p. 17. “the effect of an excessive quantity of a circulating medium in a country which has adopted a currency not exportable to other countries, or not convertible at will into a coin which is exportable.” Therefore, if some mitigation of the rise in the Indian price-level is desirable, then the most essential thing to do is to permit some form of “exportable” currency such as gold to be a counterpart of the Indian monetary system. The Chamberlain Commission expended much ingenuity in making out a case against a gold currency in India.³⁹⁸ The arguments it urged were: (1) Indian people will hoard gold and will not make it available in a crisis; (2) that India is too poor a country to maintain such an expensive money material as gold; (3) that the transactions of the Indian people are too small to permit of a gold circulation; and (4) [pg 260] paper convertible into rupees is the best form of currency for the people of India as being the most economical, and that the introduction of a gold currency will militate against the popularity of notes as well as of rupees. The bogy of hoarding is an old one, and would really be an argument of some force if hoarding was something which knew no law. But the case is quite otherwise. Money, being the most saleable commodity and the least likely, in a well-ordered monetary system, to deteriorate in value during short periods, is hoarded continually by all people, i.e. treated as a store of value. But in treating it as a store of value the possessor of money is comparing the utilities he can get for the money, by disposing of it now, with those he believes he can get for it in the future, and if the highest present utility is not so great as the highest future utility, discounted for risk and time, he will hoard the money. On the other hand, he will not hoard the money if the present use was greater than the future use. That being so, it is difficult to understand why hoarding should be an objection to a gold currency for the Indian people. If they hoard gold that means they do