Obstinacy Is Not Firmness

It amazes one to read reported statements of the Finance Minister seeking to minimize the public protests against his Gold Control Rules as emanating only from a few people, and referring to the distress and chaos caused by his policies and directions in this regard as something of trifling import. Ruthlessness will not be forgiven in democracies. He has not realized that he has laid violent hands on hard-earned savings. He has broken the oldest, the best and most widely distributed rural bank in the country. His motive that the smuggling of gold should be stopped has the appearance of virtue, but only the appearance.

     All import restrictions are but attempts to block the freedom of world trade and to oppose the forces of natural economy. This can go on only for some time. Nature is ultimately inevitable. The rupee buys goods according to its true value and not according to the “it shall be so” of any Finance Minister. Governments can stop and prevent imports. They cannot alter values in a rapidly shrinking world.

     By seeking compulsorily to reduce the supply of good gold, Sri Morarji Desai is not going to succeed in lowering the price of gold or increasing the value of our rupee. He is more likely to see the opposite of it. He has convinced himself that our womenfolk are wicked in preferring gold to currency notes or Government bonds and that they should be brought round to correct views through causing distress and robbing the millions of their savings.

     “It is not wise to ignore popular unacceptability of 14-carat gold and implement the impractical law at heavy cost, creating vast unemployment much against the aim of the development Plans of the country,” say the Madras Jewellers in their memorandum to members of Parliament. But what does the Finance Minister care? “Steel and iron are of infinitely greater account in this commonwealth than flesh and blood,” wrote Dickens in quite a different context but it applies well here also with little emendation.

     “The contraction in the value of gold arbitrarily forced on vast numbers has already resulted in economic hardship in every section due to drying up of sources of credit,” say these jewellers. But Sri Morarji Desai does not care.

     “There is at the moment a deep distrust of 14-carat gold and there is very little demand for ornaments made thereof, despite favourable press publicity. The general feeling is that Government will never succeed in creating a taste for this jewellery.” But Sri Morarji Desai is confident that he will be able to change the taste of the people.

     The jewellers say “closure of jewellery trade will result in a loss of at least Rs. 10 crores in taxes and other revenue to Government. High price of gold in India only reflects the declining value of the rupee”. The Finance Minister does not care. He should be firm!

     The Finance Minister knows what happened in America when the Government tried to mop up all the yellow metal— how instead of admitting failure, estimates of stock held by the people were revised and altered to suit the shortage of performance. Gold in India has been functioning in other and more important ways than in America. It is the small and illiterate man’s best rural bank in India, and his most convenient negotiable instrument for conversion into value when such conversion is required. All this is easy to see but not when pride or obstinacy, going by the name of firmness, shuts off the channels of communication.

     Attempts were made a little over sixty years ago to use gold as currency in India. But the experiment failed. India was for ages used to silver coinage; and the gold sovereign, by reason of its high value, was unsuitable for a poor country. People looked upon and valued gold in India as a convenient long term savings medium.

     People in India found gold to be “something which stood between the citizen and the frequently predatory State”. The attitude thus formed towards the yellow metal over the ages still continues and with good reason. It has served for long, and faithfully, not only to beautify the person and give status and credit, but also as “the individual’s private insurance against armed conflict or economic depression”—words taken from an important British bank’s journal. There is therefore a high degree of resistance to the proposal that all private gold should be handed over to Government in return for paper bonds, which is Sri Morarji Desai’s aim.

     The time is not very far off when the common sense of mankind will recover ground, and commodities, natural and manufactured, will move freely all over the world, not blocked by stupid and short-sighted policies. The currencies of nations will one day be freely exchanged at their true, though shifting, values in accordance with the movement of goods from different countries, instead of foreign currencies being put up on the notice boards of governments at less than their real price but refused to be actually delivered at that price, except to favoured individuals. Transfers at real values, when they take place, are being stigmatized as crime. Some day, not very far off, we shall have the commerce of mankind recognized as one and undivided —to be disturbed only if and when some nations go mad and fight with one another and shut off communications. Let us feel sure that these things must happen and let us work for freedom of trade and quicken the pace of unifying the world.