not care to spend it on current purchases or that they have another form of currency which is inferior to gold and which they naturally like to part with first. On the other hand, if they do wish to make current purchases and have no other form of currency they cannot hoard gold. There are instances when precious metals have been exported from India, when occasion had called for it,³⁹⁹ showing that the hoarding habit of the Indian peoples is not such an unknown quantity as is often supposed, and if on some occasions⁴⁰⁰ they hoarded an exportable currency when they should have released it, it is not the fault of the people but of the currency system in which the component parts of the total stock of money are not equally good as a store of value. The argument from [pg 261] hoarding, if it is an argument, can be used against any people, and not particularly against the Indian people. ³⁹⁸ Report, pp. 15–19. The same arguments will be found in Chap. IV of Mr. Keynes’s treatise. ³⁹⁹ _See_ the Memorandum by Mr. Dalal to the Chamberlain Commission Appendices, Vol. III, No. XXXIII, pp. 673–76, for this and other cognate topics. ⁴⁰⁰ In the crisis of 1907–8 the Indian people were accused of this. Yet it must be noted that in that crisis some gold was exported on private account. The second argument against a gold currency in India has no greater force than the first. If gold were to disappear from circulation then the cause can be nothing else but the over-issue of another kind of money. In the nineties, when the question of establishing a gold standard in India was being considered, some people used to point to the vain efforts made by Italy and the Austrian Empire to promote the circulation of gold. That their gold used to disappear is a fact, but it was not due to their poverty. It was due to their paper issues. Any country can maintain a gold currency provided it docs not issue a cheaper substitute. Again, if gold will not circulate because transactions are too small the proper conclusion is not that there should be no gold circulation but that the unit of currency should be small enough to meet the situation. The difficulties of circulation raises a problem of coinage. But the considerations in respect of coinage cannot be allowed to rule the question as to what should be the standard of value. If the sovereign does not circulate it cannot follow that India should not have a gold currency. It merely means that the sovereign is too large for circulation. The case, if at all there is one, is against the sovereign as a unit and not against the principle of a gold currency. If the sovereign is not small enough the conclusion is we must find some other coin to make the circulation of gold effective.