Cambridge must win-a confidence which was falsified after a fine race. Shortly before the coronation of King George V a great deal of insurance was effected by persons occupying houses on the route which the procession was to take. If it passed their doors, they stood to receive big sums for seats. The insurances were either to provide against the postponement of the event or any change of route. Ten per cent. was at one time paid. As every General Election draws near there are all sorts of insurances taken out. For some persons an election means good trade, for others bad business. Some of these political insurances are of a somewhat speculative nature. Thus on the first day of the last election the rate covering the risk of a Unionist majority fell from 20 to 5 per cent. premium of 30 per cent. was paid if the Coalition had a majority of 130. In the autumn of 1912 five per cent. was paid to insure the payment of a total loss should Mr Lloyd George be made Prime Minister before the end of the year. But one of the strangest enquiries that ever reached the market was from an undertaker in the East End of London. He desired to cover the risk of shock caused to persons by his coffins being delivered at the wrong houses at night. Underwriters expressed themselves willing to quote a rate if particulars were given of the turnover, the number of shocks caused, and their effects. In this article there has been no attempt to enter into the technicalities of marine insurance business, to deal with its law, or to touch upon many subjects bearing on it, such as the frauds which various persons have endeavoured to perpetrate upon the underwriting community. Rather the idea has been to give, within the space available, a general impression of the services rendered to commerce by the underwriting community and of the life led by underwriters and brokers. For those who are attracted by maritime matters, or who take a keen interest in almost any form of enterprise, the life undoubtedly has its charms. CUTHBERT MAUGHAN. Art. 9.-INDIAN FINANCE AND CURRENCY. 1. The Royal Commission on Indian Finance and Currency. Seven vols. London: Wyman, 1913-14. 2. An Act to provide for the Establishment of Federal Reserve Banks to furnish an Elastic Currency, etc. [United States]: Public, No. 43–63d, Congress. 3. On Chinese Currency. By Dr G. Vissering. Two vols. Amsterdam: J. H. De Bussy, 1912-14. 4. Annual Report of the President of the Java Bank, 1912. SINCE the mints of India were closed to the free coinage of silver in 1893 on the advice of Sir David Barbour, the currency policy to be pursued has thrice passed under review. But the composition of the reviewing bodies which succeeded the Herschell Committee has not been entirely satisfactory. The reference to the Fowler Committee was intended as an appeal from the theoretical to the practical-from experts to men of the business world or, to borrow a legal phrase, from a special to a common jury. And the result has been somewhat to darken wisdom, for both elements should be present in the tribunal. The appointment of Mr Chamberlain's commission has been due to quite other causes. Recent purchases of silver through Messrs Montagu instead of through the customary agency of the Bank of England had excited considerable feeling, while party attacks had been made in Parliament regarding the enormous Indian balances lent out at interest in the London money market, and there had been general criticism both in India and England of the currency policy pursued. In these circumstances the Government, instead of appointing a select committee of economists and bankers, has, not unnaturally, had recourse to the customary expedient of a whitewashing Royal Commission. The only economist on this body was a young gentleman formerly in the India Office, who had already committed himself deeply to very definite views upon the matters coming up for adjudication, and had recently written a book whose every page bears evidence of a still intimate connexion with the office to which he lately belonged. On the other hand, the choice of a chairman was exceedingly happy-we might even say astute. The temper and tact with which the discussion has been guided, and the breadth and sense of balance animating the report are alike admirable, while every breath of political feeling has been rigorously excluded. The Commission sum up the result of their deliberations in no less than forty-one conclusions, all of which it is neither possible nor profitable to examine within these pages. I propose to confine my observations to the more important of these conclusions, and to discuss them under three main heads-(1) the currency policy to be pursued, (2) the management of Government balances, and (3) the desirability or otherwise of a Central Bank. Judgment is pronounced against a gold currency. In paragraphs 56 et seq. the arguments advanced in its favour are summarised and dismissed, and the conclusion reached is that the people of India neither desire nor need gold for circulation, and it is not to India's advantage to encourage its use. Yet it is stated that a gold unit is unobjectionable if genuinely demanded by Indian sentiment, and that the Government should contrive to give the people whatever they demand, rupees, notes or gold. Directly this last admission is made, there is really little left to quarrel about. Many of us believe, contrary to the opinion above expressed, that India desires a gold currency, and will continue to show this desire by importing and using gold as currency in large and increasing quantities. Solvitur ambulando. We are therefore content, so long as no obstacle is placed in the way of India getting the currency she desires. No one wishes to force gold on India or believes that the attempt would do anything but defeat itself, and every one would be glad to see her use more paper. It is, however, impossible to pass over without criticism the very perfunctory examination of the arguments on either side made in the paragraphs cited above. The argument, that India should be encouraged to use gold to protect the world (and itself) from a further rise in prices due to cheapening gold, is (not altogether without reason) classed with the opposite argument that India by using gold adds to the inconvenient drain of gold to the East, and dismissed with the remark that neither consideration should be permitted to affect India's policy. This treatment is hardly fair to those who have advanced the former argument. No one could say whether the old spectre of the gold drain would not affect the Commission's nerves. It was resuscitated by at least one witness (Mr Barrow), though it should have been laid finally to rest by Lord Rothschild, who pointed out (to the Fowler Committee, I think) that what England did not absorb others took. In other words, London was the neck of a bottle through which the world's supplies were poured, and what it could not retain went to others; why not, then, to India amongst them? The Commission urge that India's interests should alone be considered. But it is perfectly legitimate to add, as I did, that if you bring in the question of England's advantage, it not only would not lose by India's adoption of a gold currency, but would gain, with India and the rest of the world. I now propose to examine seriatim the remaining criticisms offered by the Commission on the policy of a gold currency in the order in which they are marshalled. No one denies that India, being a poor country where the unit of transactions is low, will, for an indefinite period, require large quantities of silver for its everyday payments; but there are also large payments to be made, e.g. rent, purchase of cattle, interest on moneylenders' advances, marriage and funeral expenses, and legal charges (a lawsuit is one of the first luxuries and amusements that a prosperous peasant indulges in). In such transactions it is not only more economical to use gold, but gold is, as a matter of fact, replacing silver. Savings are best preserved in small bulk; travelling monies are safest when carried unobtrusively; while part of the purchase money for produce sold wholesale is conveniently receivable in some units of high value, as they will be useful for the foregoing purposes. By all means let the people use notes if they will, and give all facilities that are not costly to encourage their use. Yet it still remains true that gold is more convenient and portable than rupees. The cause of progress is not advanced by refusing to look facts in the face. No one holds that the use of gold is a necessary step towards an ideal currency, viz. paper backed by Vol. 220.-No. 439. 2 I gold. What has been said is that, as the unit of transactions rises, there is a natural tendency to employ a currency unit of higher value. This is what is happening in India and has happened in Europe. Down to 1870 everything was obscured in Europe by the action of the bimetallic tie. Thereafter the natural movement towards the higher unit of value became very marked in Germany, Russia, Austria and France, and has resulted in a very large coinage of gold. The argument quoted in sub-section iii is a mere travesty of the point urged, namely, that when Europe is adhering with great tenacity to the preservation of gold currencies, or, in the alternative, to paper currencies so strongly secured by gold as to resemble gold certificates, it is undesirable to press the advantage of a silver token currency upon the incredulous East. Much has been heard of late of the advantages obtainable from the Insurance Act of ninepence given for fourpence. The pressing upon reluctant India of a rupee which costs tenpence to produce, but is offered at sixteenpence, is a proceeding which is even more likely to excite suspicion. The fourth argument, that gold in circulation is a support to exchange, requires, as the Commission declares, careful examination. Yet there is perhaps no passage in the whole report so open to adverse comment as their observations on this subject. Reference is made to the policy of the Bank of England and the Reichsbank; and it is averred (but no evidence is adduced of the fact) that Germany is doing what Goschen desired to do, that is to say, is replacing its gold in circulation by notes and keeping the gold so obtained in reserve. Granting all this, the real point is missed. The currency policy of England and Germany (and France) is primarily directed to securing its gold basis, a vast superstructure of credit depending on a slender foundation which it is desired to strengthen. Goschen, when advocating the substitution of small notes for gold, proposed to hold 80 per cent. of the circulation in gold; and his idea was that, this gold being in excess of what was really required behind the notes, a portion of it could be utilised in times of crisis. That is to say, when there is grave monetary |