⁴⁰⁹ _See_ Commons Paper 495, of 1913, p. 57.
⁴¹² The Commission recommended that if a gold Mint was not established in India Government should renew the notification withdrawn in 1906 to receive refined gold on suitable terms.—Report, sec. 72.
“The principal advantage which you would expect to derive from a gold Mint is that you would increase the amount of gold coin in circulation?—That would be one of the tendencies.
“Is there any other advantage?—The advantage is that the country would be fitted with what I regard as an essential part of its monetary mechanism. I regard it as an essential part of its currency mechanism that it should have a Mint at which money could be coined at the requisition of the public.
“I want to get exactly at your reason why that is essential. Am I right in thinking that you consider it essential to a proper currency system that there should be a gold currency?—Yes.
“And essential to a gold currency that there should be a gold Mint?—Yes, on the spot in India itself. … It would do away, in a measure, with the management by the Secretary of State of the Foreign Exchanges, in that there would be always the Mint at which the public could convert their gold into legal-tender coins in the event of the Secretary of State taking any action of which the public did not approve. It is a safeguard, so to speak, an additional safeguard, that the people of India can on the spot obtain their own money on presentation of the metal.”
Here, again, the assumption that a gold Mint is a guarantee that there will be a gold currency seems to be one as gratuitous as the former assumption that if gold were allowed to be freely imported it would on that account become part of the currency. On the other hand, there are cases where Mints were open, yet there was neither gold coinage nor gold currency. Instances may be cited from the history [pg 272] of the coinage at the Royal Mint in London. The magnitude of gold coinage during the bank suspension period, 1797–1821, or the late war, 1914–18, is instructive from this point of view. The Mint was open in both cases, but what was the total coinage of gold? Throughout the suspension period the gold coined was negligible, and during the years 1807, 1812, and 1814–16 no gold was coined at all at the Royal Mint.⁴¹⁴ Again, during the late war the coinage of gold fell off from 1915, and from 1917 it ceased altogether.⁴¹⁵ There instances conclusively show that although a Mint is a useful institution, yet there is no magic in a Mint to attract gold to it. The historical instances adduced above leave no doubt that the circulation of gold is governed by factors quite independent of the existence or non-existence of a Mint open to the free coinage thereof. Now, it is an established proposition of political economy that when two kinds of media are employed for currency purposes the bad one drives out the good one from circulation. Applying this principle to the situation in India, it should be evident that so long as there is an unlimited issue of rupees gold cannot circulate in India. This important principle has been so completely overlooked by those who have insisted on the introduction of a gold currency that they have not raised a finger against the unlimited issue of rupees. Mr. Webb, the fiercest opponent of the India Office malpractices, and the staunchest supporter of the view that if only the Secretary of State could be made to contract his drawings gold would flow and be a part of the currency in India, recommended to the Chamberlain Commission that—
