686 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
and others who blame the Gold Standard for the rise of prices after 1911. But Prof. Fisher forgets to take note of the fact that gold became a bad standard of value because of continuance elsewhere of the Gold Exchange Standard. For if after 1911 the Gold Exchange Standard has been abandoned and countries had used gold instead of economising it, there would have been no redundancy of gold and the rise of prices consequent on it would have been arrested. The Gold Exchange Standard from this point of view has outlived its purpose and is now doing positive harm. In the light of these considerations it is not possible to have any sympathy with projects that economise the use of gold and yet maintain it as a standard of value.
These points must have entirely escaped the author when he conceived his project of a Rupee convertible into gold bullion. But convertibility into gold bars does not embody the whole plan of the author. Along with convertibility he says a limit must be placed on the issue of rupees and small notes, even when they are legally convertible into gold bullion. The currency in India should be allowed to expand annually by only a certain small percentage representing its normal rate of progress in business. Beyond that percentage Government should have no power to increase the currency…… In giving reasons for this fluctuating limit on the issue of rupees and small notes, the author says, “A ‘convertible rupee’ being small in its denomination, is not adequate safeguard against inflation ; for, as the older economists clearly showed, the de facto suspended convertibility of the small notes makes it practically inconvertible, and its over-issue, is just as likely as that of inconvertible paper.” All this is fantastic if not strange. It is strange because the author in one place says “convertibility is the best safety-valve for redundancy of currency: it provides the easiest automatic danger signal to Government which is inflating the currency.” Now, if this is so, why is a convertible Rupee not sufficient for the purpose the author has in view ? The author is quite wrong when he says that the older economists believed that convertibility of small notes was not a sufficient safeguard