Sir Stanley Reed Contrasting the conditions in 1897 with those to-day, he said that India used to be poor and congested, and suffered from unemployment and famine. Now there was a shortage of labour in every industry, including even agriculture. There had been a phenomenal rise in the financial capacity of India, very large sums being raised without disturbing financial stability. There had been an enormous awakening of public spirit, demanding a higher standard of living and better social surroundings. Political activity had developed in an extraordinary degree, and the people were demanding to take their share in the government of their country. Replying to Sir J. D. Rees, he said that although India was making such progress, he thought the Bill was sufficient as a first step.From evidence before the Joint Committee. Sir Valentine Chirol I am quite alive to the practical difficulties which dyarchy or dualism presents, and to the objections entertained to it by many able and experienced administrators. But whereas its advocates, who also include administrators not less able and experienced make out a strong case in its support, its critics are unable to produce any alternative means of giving effect to the essential purpose of a scheme avowedly directed, it must be remembered, to the carrying out of the Declaration of August 20, 1917. That purpose is "the gradual development of selfgoverning institutions with a view to the progressive realization of responsible government in India". Is it possible to achieve that purpose otherwise than by giving Indians a measure of administrative power and responsibility which can be clearly enough defined for them to be held by the Indians themselves to strict accountability for the use they make of them? * How * * are we, how is Parliament, which is to be the judge of the time and manner of each further advance, to test the capacity of Indians for power and responsibility unless the field in which they are to display it is distinctly marked off? How are Indian representative assemblies to test the capacity of those of their fellow-countrymen who are to be made responsible to them unless that field is so adjusted as to include chiefly those subjects with which somewhat primitive electorates are likely to be most familiar, or in regard at least to which they will feel most quickly where the shoe pinches ?—From a letter to The Times. Mr. A. J. Pugh His Indian experience extended over 30 years. He said there was no serious objection to allow Indians to take an active, responsible part in education, sanitation, and local Self Government, provided non-official Europeans were adequately represented on the Council. The Government proposal was favourably received in Calcutta, though the proposal from the commercial conference referred to in the Joint Address was preferred. Non official Europeans were kept out of politics under the present system, but undoubtedly a considerable number would take part in politics if they had the opportunity. Indians were qualified for the responsible duties, but because they had not had practice, they might not at first be efficient. If Responsible Government were not given, there would be discontent, strikes and interference with commerce and industry. If the Government would lead the way and satisfy Indian public opinion, the general body of European opinion would go with them. On the Corporation there were Indians of ability and experience, with whom the European representatives got on extremely well.-(From evidence before the Joint Committee) Hon. Mr. Yakub Hasan The mercantile community particularly desire an element of responsibility to be introduced in the Central Government for the following rea sons: 1. The Industrial Commission has recommended that the Government of India should in future pay more attention to the industrial development of the country, that a department of industries should be opened in the Government of India. 2. In the list of the All-India subjects are included (18) Commerce, including banking and insurance; (19) Trading Companies and other Associations. 3. The Government of India will have the power to supervise the administration of transferred subjects in the provinces, including the subject of industries. 4. The ruthless destruction that Indian industries have suffered at the hands of the East India Company and the British Parliament and their agents in India, does not entitle the Parliament to control this subject any longer. As a transferred subject in the Provinces, the Minister in charge of it will be responsible to the electorate. It is not reasonable that the member of the Viceroy's Executive Council in charge of the same subject should be responsible to the Parliament. 5. Fiscal matters, for autonomy in which there is persistent and unanimous demand, should also be in charge of a Minister responsible to the peoples of India. There can be no autonomy if he is responsible to the Parliament through the Secretary of State. As future Legislative Councils will have more merchants, industrialists and agriculturists than lawyers and journalists, ministers could be recruited from all classes of people and we hope to see commercial and industrial portfolios in the hands of merchants.-Statement made to the Joint Committee on behalf of Indian Merchants. H. H. The Maharaja of Bikanir subjects carrying on business in British India, there are much more than formerly frequent and intimate interchange of ideas and opinions and greater contact between our own subjects and those of British India. It was for such reasons that I strongly felt it to be my duty, not only to India, but also to the Emperor and the Empire to bring to notice these facts and obvious dangers.(Speech at the Legislative Council, Bikanir. Hon. Dr. Tej Bahadur Sapru Interviewed by a representative of the Associa ted Press, Dr. Sapru said that on the question of reforms, while it was not possible to say what shape or form the Reform Bill will take when emerging from the hands of the Joint Committee, he felt confident that any modifications the Bill might undergo would be to the advantage of India. He thought it highly probable, provided no impasse was created in England by domestic struggles like the last railway strike, the Reform Bill would be finally passed in the Parliament by the middle of December. Dr. Sapru thought that after the Bill emerged from the Joint Committee there was not much prospect of independent amendments, to improve or whittle the scheme, being accepted. Speaking of the interest evinced by the British public on Indian questions, Dr. Sapru said that he wished to emphatically say to his countrymen that it was an illusion to the people in India that Indian affairs created any interest in England. The average Britisher whether a conservative, liberal, or labourite, did not feel any interest whatsoever in Indian questions or for the matter of that on many other questions beyond the circle of immediate domestic problems before who was him. Mrs. Besant is the only person to arouse interest and large audiences listened to her many meetings on Indian affairs. Other Indian publicists of whatever deputation could hardly attract any appreciable audiences. The chief work of the Indian deputations in England lay in interviewing and placing the facts before the leaders of different parties and others associa ted in the task of shaping the Reform Bill and influencing the British Press. The British Press supplied very scanty news on Indian affairs so much so that the affairs treated in India as highly momentous received no notice at all in the British Press, the explanation given being that the average Britisher did not feel interested on Indian questions, It is plain to any broad-minded person that should the counsels of the opponents of genuine reform prevail, the feeling and political effect which would thereby be created in India would be deplorable. Surely, the duty of Princes as friends and allies and in view of the indentity of interests, to advise the British Government on matters which in certain eventualities are likely to create a disturbing situation in British India, cannot be questioned, and the past precedent is forthcoming, as in 1908, when Lord Minto asked for the cooperation of the Princes and their advice in dealing with the unrest in parts of Bengal and elsewhere. While the Princes of India can always be counted upon to throw the whole weight of their infiuence and resources on the side of law and order and constituted authority, as they have invariably and unflinchingly done in the past, they are, apart from all these weighty considerations which appealed to them most prompted not unnaturally by reasons of self-interest also, to see such a course followed as will ensure tranquility on the other side of their borders and thus avert serious trouble from crossing into their territories, for the conditions existing in British India and the attitude of the people there find their inevitable reflex in our own States. It is quite clear that any grievance and discontent in British India, still more anarchy and sedition, are bound, sooner or later, to spread to our States and to affect Indian rulers and their Governments. Many of us are surrounded by British territory. With increased railway, telegraph and postal facilities and spread of education and western thoughts and ideals and with a large number of our State able BY MR. G. SATYANARAYANAMURTI, M.A. Professor of History and Economics, Findlay College, Mannargudi. HE politico-economic question of a State Bank for India has been, for the last half a century, engaging the attention of the people and the Government. My only plea for writing this article is the importance which the problem has, of late, assumed on account of some misgivings in several quarters when the Honourable Mr. B. N. Sarma's proposal for a commission of inquiry regarding a Central State Bank was negatived in the September Session of the Imperial Legislative Council. Before committing myself to any comment on the official and the non-official views expressed in the recent Council discussion of this economic measure, I beg to simply mention the well-known necessity of a sound system of banking facilities for floating new ventures in the industrial field and financing India's internal and external commerce, and proceed to give a brief history and discussion of some schemes and arguments for the establishment at an early date of a Central State Bank for India. A BRIEF HISTORY OF THE PROBLEM. The idea of a Central Bank in place of the three presidency banks can be traced to the early seventies and eighties of the last century; but the Government did not then arrive at any decision on the subject. It was again discussed in 1899-1900 and in 1900-1902, a proposal was placed before the Government for the amalgamation of the three presidency banks and the enlargement of their capital by a substantial amount on the condition that the Government would hand over to the amalgamated bank the management of the Paper Currency and a large portion of the public balances. The Secretary of State and the Indian Government though they had sympathised with the idea shelved the question on the grounds of the expensive nature of the scheme which offered little or no profitable chance of employment of the proposed bank's capital, and the provincial and personal jealousies that would have wrecked the whole enterprise. Some 12 years later, the problem of a State Bank had again engaged the attention of the Royal Commission on Indian Finance and Currency (1913-1914) which, though expressing no final opinion, had recommended that the question should be taken up at an early date. They said thus in para 222 of their Report: The question......deserves the careful and early consideration of the Secretary of State and the Government of India. We think therefore that they would do well to hold an enquiry into it without delay and to appoint for this purpose a small expert body representative of both official and non-official experience with directions to study the whole question in India in consultation with the persons and bodies primarily interested such as the presidency banks, and either to pronounce definitely against the desirability of the establishment of a State or Central Bank in India at the present time or to submit to the authorities a concrete scheme for the establishment of such a bank fully worked out in all its details and capable of immediate application. The Chamberlain Commission had also examined a memorandum prepared by Mr. Lionel Abrahams, Permanent Assistant Under Secretary of State for India on the subject of State Bank with the help of Prof. John Maynard Keynes who after a careful sifting of the evidence and facts on the subject prepared an outline constitution and a memorandum on the topic of a State Bank for India. Neither the Indian Government nor the Indian public seem to have taken sufficiently serious notice of either the recommendation of the Royal Commission or the scheme of Prof. Keynes because of the recent and allabsorbing European War and because of the still more absorbing political agitation in the country. I do not, of course, ignore the consideration bestowed from time to time on this problem by text-book authors in their books or publicists and economists both in the press and on the platform. Expert opinion on the question of a State Bank is still divided. Some are of opinion that a Central State Bank should be an immediate reality while others contend that "One Bank, however large it may be, will not be able to satisfy the needs of such a continent as India, and they would like the three presidency banks to continue......what is wanted is only a suitable adjustment of the existing machinery to the growing requirements of the country" (V. G. Kale's "Indian Economics, p. 324.) M. de P. Webb' of the Karachi Chamber of Commerce observes in his "Advance India" that what is wanted is not a concentration of banking but more Indian banks conducted by Indians. Again no mention even has been made of the necessity of a Central State Bank in the MontaguChelmsford Report on Indian Constitutional Reforms though Paras 331 to 343 in Chapter XI are specially devoted to matters of economic interest; nor does the recently issued Industrial Commission Report (1916-1918) lay any emphasis on the necessity of a State Bank (though a few witnesses before the said Commission urged its importance) except in the minute of dissent by the Honourable Pandit Madan Mohan Malaviya (page 339.) where he says, "The consideration of it (the necessity of a State Bank) was postponed because of the War. I can only express the earnest hope that it will be taken up as early as may be practicable. Nor is the recently set up Babington (Indian Currency and Exchange) Commission of 1919 going to take up any serious notice of the questions of location of reserves and a State Bank for India. The only latest development in the history of the movement for a Central State Bank is the recent proposal of the Hon'ble Mr. Sarma in the Imperial Council for an expert committee to consider the question of establishing a State Bank on lines advocated by Prof. Keynes and its failing to gain the acceptance of the Government. THE SCHEMES OF MESSRS. L. ABRAHAMS AND The cardinal assumptions of Mr. L. Abrahams' scheme are: (i) That a State Bank can be established only by the amalgamation of the three presidency banks for effecting which the Secretary of State for India, the Indian Government and the presidency banks must agree with ther; one ano (ii) That a State Bank would not lead to any very great economies being effected by the reduction of the Government establishments; (iii) That a State Bank would not cause any large increase in the popularity or efficiency of management of the Paper Currency. Mr. L. Arahams' plan also enlightens us as to what ought to be and what ought not to be the functions of the Indian State Bank, He would entrust only three functions: Government balances in India, (ii) the managethe holding of ment of Paper Currency, and (iii) the participation in the sale of drafts on India for meeting the Secretary of State's requirements. With regard to the functions that ought not to be entrusted to it, he holds (i) that the Bank except issuing sovereigns when it has them should not undertake to provide sovereigns for -the public in exchange for any unlimited number of rupees; (ii) That it should not accept an unlimited obligation to sell bills on London except so far as it might be authorised by the Government; (iii) That the management and responsibility of the Gold Standard Reserve should solely rest in the Government though for convenience parti cular transactions pertaining to it might be from time to time relegated to the State Bank. (iv) That the Bank should not be allowed to receive deposits in London lest inopportune withdrawals by the London depositors should inconvenience Bank Reserves and trade interests. As for the method of business of the Bank, he would not countenance any detailed control of the Government on the work of the Bank though he favoured a code of rules sanctioned by the Government for the conduct of the Bank. Nor would his plan question the free issue as heretofore of loans by the Secretary of State, and borrowing by the Bank in London to place money at the Secretary of State's disposal. Concerning the relation of the Government to the Bank, he held that there should be an agree ment charter with provisions similar to those in the constitutions of the Bank of France, the Bank of Japan and the Reichsbank of Germany for enabling the relations to be revised or termi nated at stated times or on the occurrence of specified events. The Government should, according to Mr. Abrahams, share in the profits of the Bank though it should in his opinion be simply increasing its control and not the stock-holder's capital. My exposition of Mr. Abrahams' scheme, sketchy as it is, contains clearly the points that do not satisfy some of even the most staunch advocates of a State Bank for India to-day. Apart from the technical objections of the experts on the Royal Commission (for which see the annexures to the Royal Commission Report), let me merely mention a few salient draw-backs in the scheme which has fortunately been rejected. In the first place, his assumptions cannot be accepted by most advocates of State Bank at present since they count upon the presidency banks as often irresponsive to the interests of Indian trade and look upon the reduction of Government establishment and án enhanced popularity of the Paper Currency as advantages necessarily accompanying their ideal of a State Bank. In the second place, Mr. Lionel's picture of a State Bank is practically that of a semipublic, if not a private bank (what else can it be if there is to be little or nothing of detailed control except that due to the charter ?) to which no Government can safely entrust its reserves. Further the proper and primary function of State Bank, if at all one can be established in India in the near or remote future, should be to finance, in the busy season, the Indian agriculturist, trader and entrepreneur and this function is not conspicuous. Thirdly, the irresponsibility as to the "convertibility of the rupee," the sole vesting of the management of the Gold Standard Reserve in the Secretary of state for India with freedom to loan out to the London market at an insignificant rate of interest and borrow often at larger rates of interest for accomodating exchange, and not allowing deposits in London chiefly on account of the mischievous fear that there would be " a great drain of gold to India" -these are just the important dangers which several Indian publicists and economists wish to guard against by their staunch advocacy of Fiscal Autonomy but these are just the evils which Mr. Lionel's scheme would have perpetuated. I shall now epitomise a few aspects of that much-talked of scheme of Prof. Keynes and briefly offer some comments thereon.* Prof. Keynes' scheme may be broadly considered under the following heads: The Central Board of supreme direction and its duties; Presidency Boards and their powers; Head-offices; relations between the Government and the State Bank; the chief duties of the Imperial Bank : (i) Supreme direction shall vest in a Central Board of three members (the Governor and a Deputy Governor of the Bank and a Government representative together with three or more Assessors) appointed for periods of 5 years by the King on the Secretary of State's recommendation but with no direct dealings with the public; "The Governor and Deputy Governor of the Bank should invariably be persons of commercial or banking, not of administrative or official, experience and should be appointed......from the staff of the Presidency Offices......It might perhaps increase public confidence in the non-official character of the Bank's management and in the Government's intentions, if it were definitely laid down that members of the English or the Indian Civil Service were ineligible for appointment as officers of the Bank." [Annexure to the Royal Commission's Report, page 63.] The Assessors shall be the managers of the three Presidency Head Offices and shall not vote but simply assist the Board whenever summoned. The Government's representation shall have discretionary power to suspend any measure, the ultimate right of veto vesting in the Viceroy. The Board shall be located in Delhi or Calcutta *[See "Indian Currency, Banking and Finance" by J. M. Keynes; and Alak Dhari's "Currency Organisation in India."] L but should be in touch with the commercial centres by touring. The duties of this Central Board will be to formulate general policy and deal with the questions of the Bank rate and the remittance of funds from one presidency to another and between India and London. (ii) The Presidency Board shall consist of the Manager, the Deputy Manager, a representative of the Local Government and 3 or 4 un-official members elected by the share-holders. It shall conform in general to the special prior directions of the Central Board but shall have, within its discretion, all questions of individual credit and possess the same independence as each Presidency bank has now. Each Head office shall be under the direction of a Presidency Board which, subject to the restrictions of the Central Board, shall transact business of the following descriptions: to open, staff and control branch banks, accept valuable goods for safe keeping, accept interest and non-interest bearing deposits, make interest bearing loans for periods not exceeding 6 months against the kind of security permitted by the Bank Act, discount Indian trade bills, rediscount sterling trade bills bearing the endorsement of another Bank, provide trade remittance for customers to all parts of India and private remittance to London, and buy and sell in India gold bullion, bonds and securities as authorised by the Bank Act. (iii) The Head-offices, subject to the direction of the Presidency Boards, shall transact business between the Bank and the public in India. The Presidency Head offices shall be established at Calcutta, Bombay and Madras and their spheres of influence shall be the same as those of the present Presidency Banks. (iv) The Government of India shall have sufficient control both over the Central and the Presidency boards through its representatives with the ultimate right of veto resting in the Viceroy. The Bank Act shall have conditions providing for revision of relations between the share-holders and the Government. The Act itself shall be liable to revision at intervals of 10 years or even shorter intervals; at each revision, the Government should be free to take over the whole good will and assets of the Bank. (v) The chief functions of the State Bank will be to hold portions of the Government balances as the Government banker without payment of interest, to manage its note-issue and have the custody of the Paper Currency Reserve, to purchase gold bullion for the Government at a notified rate, to manage the Government debt in |