The long answers to RBI Quiz 2022 are given below: Continue reading “Answers to RBI Quiz 2022”
Posts relating to the history of central banking in India.
The Kerala Model: The Stories Within
The Kerala State’s Economic Review 2020 blandly claims that the State’s development outcomes are comparable with the most developed countries. Is this true? Has Kerala’s progress in economic indicators since independence been superior to that of other States? To what extent are the State’s historical, geographical, social, and cultural factors responsible for its superior outcomes? Didn’t countries and regions with similar characteristics have similar and perhaps better outcomes? We examine these questions and are led to conclude that the ‘Kerala Model’ is less a model and more an experience. Continue reading “The Kerala Model: The Stories Within”
RBI Quiz 2021 – The Answers
Last week I had posted questions for the RBI Quiz 2021. The answers are provided below. I should add that most of these questions are curtain raisers to future and more elaborate posts on the subject. Stay tuned! Continue reading “RBI Quiz 2021 – The Answers”
Reserve Bank of India Quiz 2021
Wish all the readers of ‘Tiger and Palm Tree’ season’s greetings and best wishes for a happy new year. Please see below the questions in Reserve Bank of India Quiz 2021. I will post the answers next week.
Indian Cooperation: Finding Raiffeisens
That wretched woman with the infant in her arms, round whose meagre form the remnant of her own scanty shawl is carefully wrapped, has been attempting to sing some popular ballad, in the hope of wringing a few pence from the compassionate passer-by.Charles Dickens, Sketches by Boz
“Cooperation has failed, but cooperation must succeed,” is an oft-quoted extract from the 1954 report of the All India Rural Credit Survey Committee (AIRCSC). Sir Benegal Rama Rau, the fourth Governor, Reserve Bank of India, appointed the Committee. No other financial sector was the subject of scrutiny by as many committees as Indian cooperation. The quote is believed to be the contribution of Burra Venkatappaiah, of the Indian Civil Service. Venkatappaiah was then the Reserve Bank of India’s first Executive Director, and a member of the AIRCSC. He later became Deputy Governor, and the fourth Chairman of the State Bank of India. Thereafter he chaired the All India Rural Credit Review Committee which reported in 1969. I have a separate post on Venkatappaiah coming up, but my focus here is on Indian cooperation. Continue reading “Indian Cooperation: Finding Raiffeisens”
Sir Everard Hambro’s central bank proposal
In the history of Indian currency and central banking, the Fowler Committee occupies an important position. But, its relevance went beyond the currency question. One suggestion that emanated from its report was Sir Everard Hambro’s central bank proposal. Hambro suggested establishing a state bank along the lines of the Bank of England and the Bank of France. Hambro’s central bank proposal is contained in a brief note attached to the Fowler Report. It provided the rationale for the proposal. The suggestion went back and forth between Calcutta and London before it was dropped after objections from different quarters. Continue reading “Sir Everard Hambro’s central bank proposal”
History of Indian Currency: The Fowler Committee
Five years after it implemented the Herschell Committee recommendations in 1893, the Government of India made fresh proposals. The British Government, in turn, appointed the Fowler Committee in 1898 to examine these proposals.
In 1893, as endorsed by the Herschell Committee, and approved by the British Government, the Indian Government discontinued silver coinage. The intention was to eventually introduce a gold standard, the most important step in ensuring an exchange rate of 1s. 4d. This was not achieved for nearly five years. Therefore, the Government of India submitted fresh proposals to the Secretary of State for India to hasten the process. Some of these were drastic. These included the sale of bullion worth £ 6 million. There was also to be a sterling loan issued to make good the loss. Continue reading “History of Indian Currency: The Fowler Committee”
History of Indian Currency: The Herschell Committee
The Herschell Committee on Indian Currency, appointed in 1892, was the first of five Committees which examined India’s currency question. The other four were the Fowler, and Babington-Smith Committees, and the Chamberlain, and Hilton Young Commissions. Prior to this, the Mansfield Commission had in October 1866 submitted a brief report on implementation of the Paper Currency Act 1861. There have also been various minutes on the subject. These includes minutes of James Wilson, the first Finance Member, Sir William Mansfield (later Lord Sandhurst), George Dickson, Secretary to the Bank of Bengal, and others. We will cover there in different parts. In the first part of this series, we discuss the Herschell Committee, which submitted its report in 1893. Continue reading “History of Indian Currency: The Herschell Committee”
Purshotamdas Thakurdas, Part 3
Sir Purshotamdas Thakurdas next made a major contribution to the work of the Indian Retrenchment Committee. The implementation of the Acworth Committee recommendations, including greater investment for railway expansion and a separate railway budget, increased government expenses substantially. The government feared that it might not be able to meet these rising expenses. Following this, the government responded by cutting expenses even by laying off people wherever possible. To find the means of doing this, it appointed the Indian Retrenchment Committee, which functioned during 1922-23. Continue reading “Purshotamdas Thakurdas, Part 3”
Purshotamdas Thakurdas as the young crusader
Purshotamdas Thakurdas, the young crusader, Sir PT or PT to friends, and as “King of Cotton” among other epithets, had a formidable reputation for his honesty, integrity, and fierce independence. He retained these characteristics while serving on up to seventy bodies. These included the Round Table Conferences, legislative councils and assemblies, committees and commissions, and trusts and boards. He served in these as trustee, director, commissioner or chairman. Moreover, PT was an untiring crusader for various public causes from a young age, including famine relief. He was also the fourth longest-serving director on the Central Board of the Reserve Bank of India. The next month, July 2021, denotes the 60th year of the passing away of Sir PT. This is the first in a series of posts covering the life and work of Sir PT.
The young Purshotamdas Thakurdas
In the 1880s, whenever his family could not find the young Purshotamdas Thakurdas in the house, they knew where to look. Invariably, he sat perched precariously on top of the tiled triangular roof of their house on Cawasji Patel Tank Road in Girgaum, Bombay. The family had moved here from Surat, where Purshotamdas was born on 30 May 1879. Undoubtedly, from the height of the roof, far removed from the hustle and bustle of the crowd below, Purshotamdas had a quiet and balanced view of goings on, his world neatly divided into two, giving him the confidence of heights and a right sense of proportion.
On one occasion, as a young apprentice, Purshotamdas Thakurdas called on Mr Glazebrook of the Cotton Association to settle an account. Pleased with the young boy, Glazebrook handed him another cheque for Rs. 5,000 along with the payment, calling it “pocket money”. Purshotamdas took the cheques. The next day, Glazebrook received a letter from Narandas Rajaram & Co, acknowledging the rebate. A surprised Glazebrook asked Purshotamdas why he passed on the money which was meant for him. He further asked, “Is that your Bible?” To this, Purshotamdas’s characteristic reply was “There is nothing biblical about it. It is commonsense.”
Early days and education
Orphaned at a young age, it was Vijbhucandas, his uncle, who brought up Purshotamdas like his own son. Unlike Purshotamdas’s lawyer father, Vijbhucandas was a cotton trader. With greater interest in extracurricular activities such as cricket, tennis and gymnastics, PT failed his intermediate examination. A preceding illness partly accounted for the failure.
Notwithstanding the early setback, PT passed his BA in 1900. After this, he wanted to pursue law in his late father’s firm. Rebuffed by its current partners, Vijbhucandas took his nephew as an apprentice in his own firm, Narandas Rajaram & Co.
Purshotamdas, the young crusader, earned the reputation for his scrupulous honesty from an early age. He invariably advised his traders in writing not to mix inferior quality cotton with high-quality ones. As it turned out in PT’s case, honesty paid dividends. PT cleared his stock in three months. Soon, he became a byword for quality, and his reputation reached the ears of the senior Sassoon of E.D. Sassoon & Co. Contrary to experience elsewhere, Sassoon asked PT to call on him. (Frank Moraes, PT’s biographer, refers to him as ED Sassoon, who passed away in 1880. This was probably Sir Edward Albert Sassoon, died in 1912, Sir Jacob Elias Sassoon, died in 1916, or Sir Sassoon Jacob Hai David, died in 1926).
The Sassoons were an Iraqi-Jewish family from Baghdad which extended its business to India under David Sassoon. The family became famous in Mumbai for the Sassoon Docks, the Sassoon group of mills, and the David Sassoon Library and Reading Room which is still functioning. They had business interests extending from Manchester, UK, in the West, to Hong Kong in the East. The family was then known as the Rothschilds of the East. This was not fully justified as they were merchants, not into banking.
A bulk order
During the meeting, Sassoon placed an order for 500 bales of cotton. After receiving the consignment, the blind Sassoon felt the cotton. He was assured of its superior quality, which he confirmed with his workers who were ecstatic about it. Sassoon had the entire stock in his godowns verified for quality. He changed his purchasing staff and insisted that his suppliers replace the entire stock of inferior cotton. This led to the liquidation of Vassanji Trikamji & Co. and an Italian firm, the principal supplier to Sassoon. This episode also established the reputation of Purshotamdas, the young crusader.
Purshotamdas Thakurdas and ethical standards
Not resting on his laurels, PT introduced ethical standards to curb malpractices in the trade. This included watering cotton and mixing sand to increase their weight. Such mixing and false packing were unscrupulously practised by firms which had mixing clerks on their rolls. Foreign firms had separate training for such clerks for more effective “false packing”.
European firms dominated the Bombay Cotton Trade Association (BCTA) then. Apart from Britishers, this included German, Italian, Swiss, and even Russian firms. Only two out of fifty shareholders were Indian firms. The other Indian firms were associate members which did not entitle them to do arbitration or surveys. In the event of a dispute between a European firm and an Indian one, the decision invariably went in favour of the former. Smarting under this, PT made his objections vocal.
After a few incidents established PT’s reputation for fair dealing, BCTA offered a few shares to PT and a Japanese firm. PT refused to bite the bait. He insisted that they make Indians eligible for full membership. After accepting this, BCTA allotted PT a share and made Narandas Rajaram & Co. a full member. PT thereafter received several requests for surveys and arbitration from the Indian section. Till 1920, when he discontinued the activity, PT dominated the field. His reputation for rectitude was such that even European firms approached PT to appoint him as their arbitrator.
The Famine Relief Fund
After coming to know of the young man’s organizing capacity and his charity in times of famine, Sir Pherozeshah Mehta, the freedom fighter, entrusted PT with the responsibility of the Famine Relief Fund.
Purshotamdas Thakurdas was drawn between the choice of collecting thousands of rupees or nipping the problem at its source. Finally, he took the advice of an elderly man he met while walking on Chowpatty Beach. This was to supply cheap fodder where it was required. He prevailed upon Sir George Clarke (later Lord Sydenham), then Governor of Bombay, to make at least ten railway wagons available every day for the purpose.
For his efforts, the government honoured Purshotamdas, the young crusader, with the Kaiser-e-Hind silver medal. This was not enough, felt Phirozeshah Mehta. He thought that PT deserved the CIE, and advised him to refuse the award. PT replied that if he were to refuse this, and later accept a higher award, it would mean that he was involved in relief work only for the sake of honour, which he was not. The Uncrowned King of Bombay, as Sir PM was known, had no reply.
The above incident showed PT’s confidence and independent thinking even when dealing with someone more than a generation his senior. Such instances further strengthened the reputation of Purshotamdas, the young crusader, for his courage, vision, and independence in dealing with any problem.
Bombay Legislative Council
Soon, higher responsibilities came the way of Purshotamdas Thakurdas. In 1916, PT entered the Bombay Legislative Council, formed as part of the Morley-Minto reforms. With powers still concentrated in the government, the best that a member of the legislative council could do at the time while criticizing the government, was to arouse public opinion and prod the government into action.
PT decided to add to his criticism, wherever possible, constructive suggestions. As a result, even government officials became keen listeners of his speeches. His suggestion for irrigation and public works to have more fodder and reduce starvation was welcomed but not implemented on the plea of inadequate funds.
Once, PT’s resolution for improving irrigation using modern mechanical methods and by importing skilled labour from other states and provinces, based on the recommendation of the Indian Irrigation Commission, was not favoured for want of funds. This time he pressed for a vote. His resolution was carried 22 to 17.
Opposition from nominated members like PT irked the then Governor, Sir George Lloyd. In PT’s case, he was not only opposing but was openly leading the opposition. One such instance was Lloyd’s proposal for a caravanserai, using Bombay Port Trust funds. The luxury hotel was for travellers passing through the Gateway of India. Lloyd himself had identified with the project.
Lloyd asked Chunilal V. Mehta, PT’s cousin, to convey to PT his displeasure at his opposition. PT told his cousin, “Will you tell the Governor that I never accepted membership of the Council on any condition? Nobody in fact has ever mentioned any condition. If His Excellency so desires I shall resign provided he puts down on paper the message you have conveyed to me.”
Purshotamdas Thakurdas in the Assembly
During the last years of that decade, an occasional visitor to his house in Malabar Hill was the South Africa-returned Mohandas Gandhi, not yet the undisputed leader of the Congress. In 1920, when the Bombay Legislative Assembly replaced the Legislative Council, the government nominated Purshotamdas Thakurdas to that also. In the same year, PT became Sheriff of Bombay.
What distinguished Purshotamdas, the young crusader, in his performance was the thoroughness with which he studied various issues and the courage and sense of fair play with which he approached them and articulated his point of view. This courage and valuable contributions earned him his reputation which led to the government nominating him to various Committees.
We will cover these aspects of the life of Purshotamdas, the young crusader, in the next parts.
© G. Sreekumar 2021.
For periodical updates on all my blog posts, subscribe for free at the link below: