Book contents
- Frontmatter
- Contents
- List of Figures and Tables
- Preface
- Abbreviations
- Introduction
- 1 The Issue of Government Loans: Purpose, Location of Issue and Purchasers
- 2 The Issue of Government Loans: Demand
- 3 The Issue of Government Loans: Yields, Assets and Repatriation
- 4 Other London Debt
- 5 The Purchase of Silver and Other Currency Activities
- 6 The Finance of Indian Trade
- 7 Council Bills: Purpose and Nature
- 8 Council Bills: Price
- 9 Indian Government Difficulties in Cashing Bills and Other Methods of Remittance
- 10 Gold Standard and Paper Currency Reserves
- 11 Home Balances
- Conclusion
- Appendices
- Bibliography
- Index
10 - Gold Standard and Paper Currency Reserves
Published online by Cambridge University Press: 05 April 2013
- Frontmatter
- Contents
- List of Figures and Tables
- Preface
- Abbreviations
- Introduction
- 1 The Issue of Government Loans: Purpose, Location of Issue and Purchasers
- 2 The Issue of Government Loans: Demand
- 3 The Issue of Government Loans: Yields, Assets and Repatriation
- 4 Other London Debt
- 5 The Purchase of Silver and Other Currency Activities
- 6 The Finance of Indian Trade
- 7 Council Bills: Purpose and Nature
- 8 Council Bills: Price
- 9 Indian Government Difficulties in Cashing Bills and Other Methods of Remittance
- 10 Gold Standard and Paper Currency Reserves
- 11 Home Balances
- Conclusion
- Appendices
- Bibliography
- Index
Summary
Created in 1899 on the recommendation of the Fowler Committee, the Gold Standard Reserve (GSR) was initially intended to support the establishment of a gold currency. With the abandonment of an Indian gold standard, its purpose then became to underpin the exchange and to provide a pool of money that could be used to cash the reverse council bills sold in India and cashed in London when the exchange rate fell below the gold export point and as an alternate source of funds when council bills/sterling could not be sold/bought at sufficiently high prices. It also provided temporary loans to the Indian government when it lacked the funds to meet council bills; helped to minimise Indian inflation; by ensuring the stability of the exchange, improved Indian credit in the London capital market; and, controversially, in 1907 financed the repayment of £1.1m of railway debentures, which the IO was unable to renew owing to a dearth of money in the City. Indian critics denounced the raid. The repayment of the debentures should have been financed via the issue of sterling bills, a solution rejected because officials wished to avoid acting against their City friends, and the use of the Reserve for ‘purposes…wholly foreign to its object’ would ‘shake public confidence’ in India's determination to maintain the exchange, threatening its stability.
- Type
- Chapter
- Information
- Financing the RajThe City of London and Colonial India, 1858–1940, pp. 166 - 187Publisher: Boydell & BrewerPrint publication year: 2013