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India, to accept payments and make disbursements on behalf of the Government (Imperial and Local) at all places where the Bank has set up a branch and do all remittance business for the Government. But the State or the Central Bank should not be interested with either the management of the mint or the custody of the Gold Standard Reserve which should always rest in the Secretary of State for India. It must also have a London office for doing Government business without coming in conflict with the banking interests of London. "And it should be a declared policy of the Bank to open branches.

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most places where there is now a District Treasury."

A CRITICAL SURVEY.

The broad lines of Prof. Keynes' scheme outlined above present undoubtedly some improvements over the earlier conceptions of the proposal for a State Bank and there are now some very strong upholders of Prof. Keynes' views of a State Bank. But still I note below a few defects in Prof. Keynes' Scheme with regard to its practicability, efficiency and the advantages which are alleged to follow from its actualisation.

The scheme "relegates the existing Presidency Banks to a position of insignificance and dependence which their share-holders could scarcely accept with any regard to their self-respect." The Governor and the Deputy-Governor of the Central Board being practically Government officials according to the scheme would not be dependent on the good-will of the share-holders of the Presidency banks and might after all injure the interests of the share-holders whose functions are merely consultative. Again, the share-holders will have no direct representation on the Central Board though they may lay their views before it through their Presidency Managers. custody and management of note-issue will of course be their great privilege but is it "sufficient compensation to the share-holders for the relegation of their present controlling position to one of imbecile lookers on "? question of the division of profits between the Again, the share-holders and the Government bristles with difficulties though the Government would in all fairness claim a tolerable share of profits on account of the fat revenues of the Bank in virtue of the management of note-issue and Government cash balances.

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The management of the note-issue which according to Prof. Keynes' scheme would raise a host of difficulties in spite of the fact that the dea of Bank management of notes is grand and

appealing to some people. Experts are not agreed as to the fiduciary proportion of the Currency Reserves. The rules proposed for governing the Note issue provide "that the proportion of cash should never fall below 40 per cent of the gross circulation of notes" and may, under certain conditions rise up to even 60 per cent.

Mr. Alak Dhari remarks "In a country like India where the use of currency notes is still in its infancy the above percentages for fiduciary holdings (ie., investment of the Currency reserve in gilt-edged securities) is far too high."

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He thinks that the fiduciary portion of the Currency Reserve ought not to rise above 33 per cent. of the circulation. Whether this figure might or might not satisfy the purpose, it must be remembered that in a country like India any little suspicion of the solvency of the issue department would put a premium on metallic money with all its attendant evils. The suggestion of depending on the funds of the Gold Standard Reserve as a temporary bulwark” in any emergency for encashment of notes is not quite sound when there is the option of keeping the portion of coin so ample as to meet an acute crisis. Another difficulty is that the note-issue of the Central Bank, though it might be a semipublic institution will be thought less secure and hence less readily accepted by the people than the notes issued by a Government department as at present.

Mr. Wilson remarked as long ago as 1860 that "we cannot avail ourselves of the agency of banks for a Again, as general Indian Paper Currency." Mr. Thomas Smith, Agent of the Allahabad Bank aptly remarked in his evidence before the Royal Commission, Bank notes "would not for many years carry the confidence which the existing Sircar's notes do and the recent marked development in note-circulation might be seriously checked."

The Gold Standard Reserve wholly being vested in the management of the India office in London except transfer of a few transactions every now and then to the State Bank would raise a lot of familiar objections which I already mentioned in my comment on Mr. Lionel's

scheme.

The contention that a Central State Bank will develop Indian Banking in general and co-operative banking in particular just like the central banks in England and Germany should be viewed with caution; for though it is a pious wish to imitate an England or a Germany in banking, should not forget to note that conditions differ very greatly. The difficulties of location of the proposed central bank and of the complaint of

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the exchange banks, minor as they are, should not be overlooked.

"Calcutta wants it to be in Calcutta and Bombay wants it to be established in Bombay; and if established in Delhi, it will be out of touch with business conditions." Again "most business men in India seem to hold the opinion that the exchange banks have financed the foreign trade of the country cheaply and efficiently. Why then introduce a novelty. "[Manimohan Sen: Outlines of Economics,

Part II p. 87.]

Further we should not lose sight of a right observation of the Industrial Commission in para 282 of their report: "There is in India at present a lack of trained bank employees owing to the absence in the past of facilities for commercial education and of any regular system of training Indians in bank work."

Though as the Honourable Mr. Malaviya said in his minute of dissent to tha said report

'not the least important advantage of the establish ment of a State Bank will be that adequate facilities will be provided for training Indians in banking work,"

it must be remembered that the attainment of necessary training in bank work has other potent avenues and need not be sought in the establishment of a State Bank in India on lines regarding which there is much diversity of opinion.

When I review some of the chief objections against the scheme of the State Bank, I should not be understood to be oblivious of the advantages accruing from its establishment if only it can be established on lines free from economic and administrative difficulties. What I strongly insist upon is that the zeal of the advocates of State Bank should not outrun considerations of practicability. Let me critically survey some chief arguments adduced in favour of the establishment of a State Bank,

Advocates of the State Bank contend that both the Government and the business world derive a number of advantages from its establishment.

"The Government," "it is said," wants a Central Bank to act as its fiscal agent før keeping itsbalances, for managing its note issue and the public debt and for controlling the regulation of foreign exchange which is done at present by the Indian Government these functions will be much better performed if they are combined with the function of banking by a Central Bank." (Manimohan Sen P. 84.)

A Central State Bank is advocated partly because the presidency banks have not been sufficiently responsive to Indian trade interests and partly because the Government cannot trust larger cash balances to these banks since they might not be able to return promptly the Government monies when urgently required. This is indeed a desirable advantage but then an advantage desired by the State Bank advocates and not

by the State itself. The Government has been ever since 1900 (and even earlier) either harping on the string of the amalgamation of the Presidency banks (the same note was struck by the Hon'ble Mr. Howard, the Officiating Finance Minister when the Hon'ble Mr. B. N. Sarma introduced his proposal in Sept. '19 in the Imperial Council) or it has been for reasons noticed already, shelving the question. Had the case been otherwise, there would have been already a State Bank probably. If the object of the upholders of the State Bank is to see that considerable portions of the reserves mostly controlled by the India office at present are diverted to India for financing India's indigenous industries and not as at present utilised for loans to the London market, I am afraid their case is bound to be considerably weakened however full of pious intentions it might be; for, it is a question connected with the attainment of full fiscal autonomy by India, which is only a dim and distant vision of the future. Representations/ have been made before the Royal Commission about the grievances of "placing portions of the India office balance out on short loan with approved borrowers in the City of London" and "the favouritism of the Secretary of State" and the result is the incorporation of the Paras 196– 202 in the Report of 1913-14, the sum and substance of which being that the system of loans "is on the whole well-managed" and that "there is no ground for any kind of favouritism and that it is "founded on prejudice and ignorance of the facts." (The reader may profitably read Webb's "Advance India" on this topic). Nor is the insinuation against the presidency Banks of any practical avail though a few instances of their irresponsiveness to Indian trade demands might be cited. A strong case may, if the charge is well founded be made for a thorough overhauling, if necessary, of their constitution, personnel and policy instead of the circumlocutory medium of agitating for a State Bank on lines beset with technical and practical difficulties.

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Another advantage urged is that "the Government will have a staff of expert financial advisers in the high officials of the State Bank." The justification generally given for mentioning this advantage is that "at present the Government has to depend for financial advice largely upon intelligent amateurs of the Indian Civil Service." The need for this contention would vanish if the Government can soon see its way to actualise some of the proposals of the recent

Industrial Commission and create more and more facilities for commercial education in the broader sense of the term; for several non-I.C.S. Indians are naturally bound to prove better and even more capable financial experts than some I.C.S. officers.

Again, Prof. J. M. Keynes observed before the Royal Commission that by the institution of a State Bank "a buffer is placed between the Secretary of State and vexatious criticism on small details of financial business" and this has been magnified into a great advantage of the proposed State Bank by some text-book writers and publicists.

A critic of the State Bank writes "The people themselves are not convinced of its advantages. Where, then, is the necessity to start a huge Bank, if not to shelter the bureaucratic activities from criticism and to avoid the searching light of open examination on the free investment of India's funds in England?" An Under Secretary of State for India in answer to a question put by Mr. Austen Chamberlain (1913) said "We, in the India Office, as I daresay you realise, are not in any cowardly sense afraid of criticism."

The value and force of Prof. Keynes' observation as to the advantage of the State Bank can be estimated in the light of the above quotations.

The advantages that the business world is said to derive from the establishment of a State Bank are entrancingly attractive and really important but they may be secured by a reform of the existing machinery, of banking in which there might be soon established a judicious system of state control. That a State Bank would place Indian banking on a sounder basis by extending facilities to many parts of the country, that it will bring about a normal bank rate beneficial to business that it fosters the progress of cooperative movement in India and that it will remove the inelasticity of the present banking system and the divorce existing now between the responsibility for note-issue and that for banking

men,

-these are some of the advantages said to accrue to the business world on the institution of a State Bank. It cannot be denied that there is much force in these contentions but one cannot help observing that to develop banking in a country like India a diffusion of sound commercial education and adequate and satisfactory laws for the regulation of banking, are more urgently needed than a State Bank; again the incentive to co-operation in banking and other commercial pursuits comes more as a result of the development of business instincts and a realisation of the principles of commercial morality than by

an artificial institution of a Central State Bank on lines calculated to breed banking jealousies and "full of incongruities and anomalies."

The charge that elasticity as a guiding principle of banking is wanting in the Indian system has really much force. In our country,

"the Government (and not banks) issues notes and it keeps its reserve for securing the note-issue which is thus quite separate from the banking reserve kept by the banks; and when the banking reserve proves to be insufficient there is no provision for strengthening it from the reserve for securing the notes."

This objection will vanish only if the banking laws are relaxed and liberal loans are made from out the reserves to the existing banks (they might be reformed if necessary) or to a State Bank free from technical and administrative difficulties pointed in Prof. Keynes' scheme. One special difficulty (which should neither be evaded nor under estimated) in the case of India is that the India office has, in spite of frequent criticisms, not been able, in its administration of the reserves, to treat the Paper Currency Reserve as ear-marked for the redemption of notes and the Gold Standard Reserve as ear-marked for the support of exchange. Very often the former is resorted to " as a second line of defence" for the support of exchange. The questions of location, composition and disposal of the Gold Standard, Paper Currency and Cash Balances Reserves must once again be urged before the Government in India as well as England and, if possible, favourably settled before there can be a strong and successful case for the State Bank on lines more sound and liberal than those suggested by Prof. Keynes.

I have in the fore-going paras attempted to point out certain defects and practical difficulties in the proposed scheme of a State Bank for India which cannot be considered as final and ideal. The problem though undoubtedly important is full of puzzling and controversial topics that have as yet to be threshed out in all their bearings before the Government can be requested to appoint a Committee or Commission for considering the institution of a State Bank for India. The country need not feel sorry that the Hon'ble Mr. B. N. Sarma's proposal for a Committee of inquiry has been negatived by the Government. Publicists, economists and bankers, I think, have to devote some of their best attention to this question and attain some unanimity before the Government might again be approached on this point,

IDEAS & FACTORS MAKING FOR PROGRESS

BY

MR. S. JACKSON COLEMAN.

HE atrocities revealed during the recent War, and the inevitable degradation of mankind that accompanied them, made many wonder if civilisation were really advancing. For, if uncivilised man was like the brute, events seemed to suggest how very thin was the veneer of so-called civilisation and how strong was the primitive instinct. The many advantages that collective effort had brought to science, education and commerce did not seem to be making the young more honourable or moral than their forefathers and in many instances it appeared to be making for more callousness. Spiritual faith, in fact, seemed only too surely to be giving way to brute force.

With the new order which is being inaugurated as a sequel to the War, newer conceptions of life's aims and responsibilities, however, present themselves. There arise newer conditions which demand fresh methods of treating the great problems which have for generations been presing for solution. Undoubtedly the world realises that another great War on a modern scale would wipe us all out and that the only hope of salvation from such a catastrophe lies in the first instance with the firm establishment of a League of Nations.

The dawn of newer international relationship in the League of Peoples, therefore, foreshadows a true world-partnership based upon mutual interests and common comradeships, and once our interdependence is fully realised, it will be impossible to dispute the marvellous advances and improvements which will come into being on every hand.

То peer into the future, of course, is the work of the seer and the prophet, but there are certain tendencies of modern progress and discovery which will undoubtedly become translated into actual facts within a very few years.

With

out indulging, therefore, in any mere imaginative speculations, let us restrict ourselves purely to the safe task of recording various wonders that have already been accomplished in the laboratory, and only await further development and testing to be welcomed by our war-weary world.

The day is perhaps coming, so Edison tells us, when the changing of one metal into another will

even be as familiar as the manufacture of jam is to-day; and when a bar of iron will be converted within a few hours into an ingot of pure gold. In those days gold may be so common and so cheap that a man will not require a long purse to ride in a golden motor-car! This great inventor, who has wrestled so many secrets from Nature indeed tells us that all the wonderful discoveries of to day are but blind gropings in the dark compared with the light in which our great, great grand-children will live. He foretells the discovery of a new force so amazing that it will reduce the greatest of our scientific marvels to the rank of clumsy nursery toys. But these observations are largerly speculative.

Time and distance, it would appear, however, will practically cease to exist in the days to come. It will be an everyday incident for a man, without leaving his arm chair, to hold converse with a friend at the other end of the world; and, not only to talk with him as he would across his hearth, but also to see him face to face in his own surroundings in the antipodes. For the power of the press will be diminished in so far as it will be possible shortly to watch a scene at a distance of some hundreds of miles. It will be possible for busy men, who cannot attend the races, to simply call at the nearest threatre at the proper time and witness by electroscope the actual race being run. Contrivances of this character are already adapted to private use, and the invalid confined to his room is able not only to enjoy the scenery of the mountains and sea, but also to witness a military review.

Man, as we all are aware, is now confining his travels no longer to land and sea. It would be difficult, indeed, to forecast the possibilities of aerial travel. Experiments have shown that a man-power aeroplane is already capable of covering a distance of some twenty miles, and it is therefore quite possible that aeroplanes may eventually complete effectively against the common bicycle! Electricity, however, will undoubtedly prove the great future power. It is from this source that the greatest discoveries may be expected. Even the discovery of wireless telegraphy, is eclipsed by the invention of a system of pocket telegraphy, whereby a man may carry his

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own aparatus in his pocket and receive messages even from people who do not know where he is. This can be done already in open country over a space of ten miles or so, but in a town, with so much metal and waste electricity about, the range as yet is much more limited.

The scientific mind is prepared to accept the view that before long it will be possible for us to communicate with each other without audible speech but through some process of thoughttransference, or, as it is now called, thoughttelepathy. Language is without doubt an imperfect and clumsy instrument for transferring our ideas, and a "mind-to-mind wireless" would be far more preferable. But we do not know as yet all the conditions upon which telepathy depends, and therefore we cannot use it at pleasure, although some of us undoubtedly have had remarkable experiences. It is possible, however, that the future investigation by psychologists of this important problem may enable us to use telepathy at will and much more effectively than hitherto.

Experiments, strangely enough, are proceeding with the object of devising an entirely new system of electric lighting, which will entirely dispense with wires and connections. A series of vacuum tubes arranged on the ceiling or walls under this new system give out a diffused, lambent light as long as a small coil, which may be in another part of the house, is in action.

By reason of the telautograph it is possible that journalism will make some extraordinary strides. This instrument will render possible the transmission of autegraph hand writting or drawings. Is it not possible to suggest, from a commercial point of view, that a future business transaction will be done by this means, without the loss of time involved in sending a letter through the post? At any rate, an artist will be able to transmit his sketch of any event to a newspaper as quickly as the reporter his "copy." It is imagined that the type may be set later on in the form of opaque impressions on a sheet of glass. Tuis in turn will be placed upon a pile of suitably prepared sheets of paper, and by sending the X rays through them, by means of powerful Crookes tubes, the whole of the sheets will be simultaneously printed. This is no mere visionary dream. It is an accomplished fact, and has been successfully used already in respect to printing cards and other small matters.

Before long many believe that Esperanto will "be adopted as the world's common language and

taught in every school throughout the globe. For, ever since the Tower of Babel set men quarrelling because they could not understand one another, that difficulty has been prolific of strifes. It would be a mighty help in the building of a New Era if such a tongue were adopted and fostered by the newly constituted League of Nations. What a new zest it would give to life and travel if, in five or ten years from now, one could travel through Europe and through Siberia, and Japan and China, and all the countries of South America and find everywhere a language one could speak and understand!

Education must benefit by all these new ideas which are severally making for progress, but it is indisputable that there is great difficulty in getting the proper authorities alert to the necessity for new methods. Take, for instance, the cinema. Many education experts are in favour of a cinema for every school. It is, undoubtedly, a thing that is coming. Meanwhile, a satisfactory alternative suggests itself. Why, instead of the cinema going to the school, should not the school go to the cinema? This view is supported by the fact that mind-experts have discovered a mysterimind-department, the sub-consciousness. Consisting of highly sensitised brain-tablets, every smallest happening of a lifetime-scenes, experiences, mental impressions-are photographed on these and stored for ever after as inefface'able records.

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It would undoubtedly be an excellent idea if cinema theatres arranged school afternoons where travel pictures—a much easier way of learning geography than the present primers-natural history pictures, and films illustrative of the processes in vogue for the production of common objects, might be shown for the children's especial benefit. The young mind is like an unfurnished house. The rooms are empty. There are no pictures on the walls. But its unblotted, exquisitely sensitised spaces are ceaselessly filming these indelible records of everything seen and felt and apprehended. One impression may cor rect or may distort others, and, though perhaps wholly forgotten, these sub-conscious records nevertheless colour and influence for ever after every thought and impulse and action. Sometimes they flash up as memories, and scientific research has shown them capable of being recalled by hypnotism. Indiscriminate and not educational picture-entertainments are therefore much to blame for the increasing criminality and demoralisation of our young people.

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