“16. If it be accepted that £7,000,000 is the maximum sum which, under existing conditions, can be held in gold in the currency reserve, in addition to the 10 crores already invested, it is evident that such assistance as can be obtained from manipulating the reserve will fail to provide the sum in gold which it is considered advisable to hold in connection with the maintenance of a steady exchange. So far no authority has ventured to name a definite sum which should suffice for this purpose, but there is a general consensus of opinion, in which I fully concur, that a very considerable sum is required. The most ready way of obtaining such a large sum is by gold borrowings, but the opinion of the Currency Commission was strongly hostile to such a course, and the question therefore remains unanswered: How is the necessary stock of gold to be obtained? “17. I do not presume to offer any cut-and-dried solution of this difficult problem, but I venture to offer certain suggestions which, if adopted, would, I believe, go a considerable way towards meeting the difficulty. I propose to create a special ‘Gold Exchange Fund,’ independent of, but in case of _extraordinary_ requirements for exchange purposes to be used in conjunction with, the gold resources of the currency reserve. The foundation of this fund would be the profit to be realized by converting into rupees the excess above £7,000,000 now held in gold in the currency reserve.” Can there be any doubt now as to the true cause for coining rupees? Writers who have broadcasted that rupees were coined because people did not want gold cannot [pg 283] be said to have read correctly the history of the genesis of the exchange standard in India. But was Sir Edward Law the evil genius who turned a sound system of currency into an unsound one by his disastrous policy of coining rupees? Opponents of the Government as well as its supporters are all agreed⁴²⁹ that this was a departure from the ideal of the Fowler Committee. In what precise respect the Government has departed from the recommendations of the Fowler Committee has, however, never been made clear anywhere in the official or non-official literature on the subject of Indian currency. What were the recommendations of the Fowler Committee? It is usually pointed out, to the shame of the Government of India, that the Fowler Committee had said (it is as well to repeat it):— “We are in favour of making the British sovereign a legal tender and a current coin in India. We also consider that, at the same time, the Indian Mints should be thrown open to the unrestricted coinage of gold. … Looking forward as we do to the effective establishment of a gold standard and currency based on the principles of the free inflow and outflow of gold, we recommend these measures for adoption.”