A RETURN TO THE GOLD STANDARD 585
These instances conclusively show that although a Mint is 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—
“The sales of Council Drafts should be strictly limited to the sum required to meet the Home Charges, and no allotments should in any circumstances be made below, say,
1s. 4 [1] / 8 d. to 1s. 4 [3] / 32 d.—i.e. about the present equivalent of specie point for gold imports into India. The sum required in London for Home Charges having been realized, no further sales of Council Drafts should be made except for the express purpose — duly notified to the public — of purchasing metal for the manufacture of further token coinage. Such special sales of Council Drafts should not be made at anything below specie point for gold imports.”†
Again, Sir V. Thackersay, in the course of his speech on March 22, 1912, moving a resolution in the Legislative Council, asking the Government to open the Mint for the coinage of gold in India, observed :—
“Let me make myself clear on one point. I do not suggest that Government should give up the right to coin rupees or refuse to give rupees when people demand the same. I do
- See Report of thc Deputy Master of the Royal Mint, 1921.
† Italics not in the original.