CHAPTER V 'THE EXTRAORDINARY AMOUNT OF PRECIOUS METALS THAT IS ABSORBED BY THE PEOPLE' The Pons Asinorum concerning the Absorption of Gold and Imports of Treasure Not Evidence of Accumulating Wealth to 1900. Coinage of Rupees at British Indian and Feudatory State Average 'Absorption' 34d. per head per annum! Mr. Dadabhai Naoroji's Illustration for Puzzled 'Economists.' 'The Total Absence of Anything Like Accumulated Wealth in Indian Wealth compared with British Wealth. Stop the Drain and There May Be a Chance of Wealth THE HE title of this chapter is the climax in a series of sentences which, like a stately march, records our progress in India. A prudent Government,' said Lord Curzon to his Legislative Council in Calcutta, on March 28, 1901, endeavours to increase its non-agricultural sources of income. It is for this reason that I welcome, as I have said to-day, the investment of capital and the employment of labour upon railways, canals, in factories, workshops, mills, coal mines, metalliferous mines, and on tea, sugar, and indigo, plantations. All these are fresh outlets for industry. They diminish pro tanto the strain upon the agricultural population and they are bringing money into the country and circulating it to and fro. This is evident from the immense increase in railway traffic, both goods and passenger, in postal, telegraph, and money order, business, in imports from abroad, and in the extraordinary amount of precious metals that is absorbed by the people. These are not symptoms of decaying or impoverished populations.' In other chapters of this work it is made abundantly clear that, apart from a small section of the population of India, and that, mainly, the foreign section, there has been no increase of prosperity among the native people of the country. Only two passages out of the Viceroy's 'baker's dozen' of disputable assertions, need be singled out for comment here. One is the remark: . . . they are bringing money into the country and circulating it.' If it be a good thing to bring money into a country it must be a bad thing, on the balance of commercial transactions, to send money out of a country. Therefore, when Lord Curzon's eyes are opened to the drain' which Lord Salisbury saw (and deplored) in 1875, he cannot, consistently with his own dithyrambic speculations, fail to consider and support such means as will stop the 'drain.' The second passage is that which records the impression that has been made upon the viceregal mind by the extraordinary amount of precious metals that is absorbed by the people.' This absorption of the precious metals in India is a pons asinorum which many people, besides a too-busy Viceroy, unable to think out the proposition he wishes to demonstrate, have failed to cross. In 1891, in reply to some strictures of my own, similar to those to which Lord Curzon was replying when he made the remark I have quoted, one of the leading journals in England used language similar to that which the Viceroy has just used. And, at the very time when Lord Curzon was being hypnotised by contemplation of 'the extraordinary amount of the precious metals that is absorbed by the people' of India, one of the chief officials of an important Chamber of Commerce in England wrote to NOT EVIDENCE OF INCREASING WEALTH 179 me to ask how I could assert that India was growing poorer when it could absorb such an extraordinary amount of the precious metals' as the Indian people absorbed. Apparently, the issue involved in this 'absorption of precious metals' is imperfectly apprehended even by those whose business it is to know, and, in some degree, to control, the currents which, in their ebb and flow, render international traffic possible and profitable. I, therefore, ask that what follows may receive careful consideration seeing I assert that the phenomenon so vigorously described by the Viceroy of India, and so insistently brought to my attention in England by journalist and commercial expert, may exist in 'decaying or impoverished populations,' and, even, actually, become one of the signs of decay and of impoverishment. The form in which the difficulty is generally stated is this (I quote remarks really made):— These imports of treasure are surely evidence of accumulating wealth. Will Mr. Digby say why this accumulation of gold and silver is going on, as it has done for centuries past, in spite of all difficulties, and why it is not good evidence of increasing wealth?' 1. I demur to the statement that India has, unremittingly, been importing treasure for centuries past. Prior to British rule, when India on her own account was carrying on a great trade with neighbouring nations in Asia, she required and received a certain quantity of gold and silver, not then producing either, needing both for commercial purposes and for ornamental and luxurious uses, and being then wealthy enough to indulge in luxuries. But, in the early years of British rule, India was depleted of its precious metals to such an extent as to greatly diminish in quantity . . . the current specie of the country.' (Minute of 1787, by Sir John Shore, afterwards Lord Teignmouth, Governor-General of India.) It will be admitted that some gold and silver was required to restore the equilibrium which our exploitations of those days disturbed. 2. There has been some accumulation of the precious metals in India, but, with the condition of things which exists in that country, such accumulation is not 'evidence of increasing wealth.' At the same time the amount of the treasure in question is infinitesimally small when regarded in the light of the enormous population that receives it. 3. Mr. Dadabhai Naoroji, in his 'Poverty of India' (pp. 230-272, collected works, Swan Sonnenschein and Co., Ltd.), has considered and commented upon the question very thoroughly up to 1869. In his Contemporary Review articles, 1887, he carried the particulars to 1884. I will now take them to a later date. Mr. Naoroji has pointed out that India does not receive its imports of the precious metals as so much profit on its exports, or to make up a deficiency of imports against exports. As Lord Salisbury so excellently put it, in the same Minute as that in which he cynically declared India must be bled,' 'much of the revenue of India is exported without a direct equivalent.' Even after the gold and silver has been received in India there is still a huge annual balance against that country on every year's trade; in 1889-90 the amount was Rx.23,492,000 (£15,661,334). Again, it must not be forgotten that the British introduced into India the system of the payment of revenue in cash. Our predecessors were content to take their toll in kind. It will at once be seen that this innovation alone would call for a large supply of silver with which to meet the newlycreated demand. Before specifically answering the question as to why the import of gold and silver into India is not evidence of increasing wealth, let us see what this import actually amounts to. The India Office obligingly furnishes me with statistical information, from which I find that from 1835-36 to 1899-00, both years inclusive, the imports of gold and silver have been respectively as follow: Imports of Precious Metals into India, 1835-36 to 1899-1900: In sixty-five years the combined totals amount to— 181 Average per annum, £5,766,967. The total amount imported was £374,853,857. During the period under consideration the Indian mints have coined The details are interesting. The silver received into the mints for coinage during this period was from two 1 In 1892-93 £2,812,683, and in 1894-95 £4,974,094, the exports exceeded the imports by these amounts. |