In search of Sir James Taylor

The youngest and the only Governor of the Reserve Bank of India to die in office, James Taylor spent almost his entire career in the cause of central banking in India for around two decades. In that sense, he was India’s first real central banker.

Like a flower, he comes forth and withers.
He also flees like a shadow and does not remain.

Job 14:2


A bitter cold February

The 1940s

If one decade in the last century best characterised the Dickensian contrast of light and darkness, wisdom and foolishness, hope and despair, it must have been the 1940s. The contrast was sharper in 1943 than any other. Robert Oppenheimer, newly appointed director of the Manhattan Project’s Los Alamos Laboratory, was charged with developing an atomic bomb that would threaten mankind forever. Alexander Fleming published his clinical trial results for penicillin in The Lancet, paving the way for the British War Cabinet to approve its mass production, giving hope to millions.

February 1943

February was particularly gloomy. Early that month, around 90,000 troops of the German army, the Wehrmacht, surrendered in the Battle of Stalingrad. But, it was too early to predict how the War would end. Greek Jews and Roma Gypsies were transported to concentration camps. Subhas Chandra Bose boarded a German submarine and formed the Indian National Army in Singapore, which was captured by the Japanese a year earlier.

In India, on the 10th, Mahatma Gandhi, under house arrest at the Aga Khan Palace, Poona, started one of his most famous fasts unto death. The Churchill government, undeterred, prepared for Gandhi’s cremation, surreptitiously moving in sandalwood and other materials in case the need arose. Famine raged in Bengal.

Reflecting the sombre mood, the weather in New Delhi recorded extreme historical values. The high was 45.2 on 22 May. The record low of 4.5 was on 6 February. CD Deshmukh, later Reserve Bank of India’s third Governor, remembered the night as bitterly cold. He struggled to keep warm, even with a fire. As Deputy Governor, he was in New Delhi along with Sir James Taylor, the Bank’s second Governor. They were staying with Sir Jeremy Raisman, the Finance Member. Raisman was three years Taylor’s junior and two years Deshmukh’s senior in the Indian Civil Service. The General Budget due later that month and the nationwide shortage of coins, debated in the Council of States, must have figured in their discussions. And so also the Bengal famine.

Taylor falls ill

Taylor returned to Bombay only two days after Deshmukh did. The next morning, he walked into Deshmukh’s room. He said he was tired and would rest at home. That evening, Deshmukh called on Taylor at the Governor’s residence on Carmichael Road. Taylor was in bed with a ‘feverish cold’. Nevertheless, he expected to return to the office soon. But, the condition worsened the next day. Deshmukh’s friend, one Dr Vad, diagnosed the ailment as influenza. A couple of British doctors called in by Taylor’s friend who was staying with him decided that it was coronary thrombosis. Despite the best of care, Taylor’s condition deteriorated further. On 17 February, he breathed his last.

Taylor was hardly eight months into his second term of five years. He remains the Bank’s youngest Governor at the age of 46 years and the only one to die in office. If he had completed his term, he would still be the longest-serving RBI Governor by a wide margin.

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Early days of James Taylor

James Braid Taylor (Braid is often misspelt as Baird in certain records) was born on 21 April 1891 in Edinburgh, Scotland, as the eldest of three sons of James Taylor, MA FRSE, and Amelia Sutherland. James Sr. was a distinguished teacher of Mathematics at the Edinburgh Academy for forty years from 1886 to 1926. The second son, Dr John Sutherland Taylor MB FRCSE, became a surgeon and died in 1967. Stanley Gordon Taylor, the youngest, proficient in mathematics and shooting, was killed on active service during the First World War. All brothers excelled academically, with John and Stanley winning school prizes in Mathematics.

Taylor Sr. wrote a mathematics book titled Arithmetic, Algebra, and Graphs (1905). His students remembered him “…as a singularly sympathetic teacher, with an unusual gift of understanding their difficulties and reducing their mountains to molehills; sympathy gives insight, and it was the combination of the two that made him so helpful to many young mathematicians…”

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Edinburgh Academy

The young James attended the Edinburgh Academy from 1898 to 1909. He had notable achievements in Classics, winning several prizes in Classics and Greek, including the Weir Class Club Prize, 1st Academical Club Prize (Classics), and Clyde and Millar Greek Prize. He also did an academic exhibition with another student. Taylor was the Dux (topper) of the School in 1909.

University of Edinburgh

The University of Edinburgh, established in 1583, boasts many illustrious names among its alumni. Charles Darwin and Robert Louis Stevenson need no introduction. Samuel Smiles, who wrote Self-Help, lending the name to that genre, is less known today. Of immediate relevance to India (and Egypt) was Sir CK Scott-Moncrief, whose report as Chairman of the Indian Irrigation Commission (1900-1903) remains an all-time classic.

James Jr. proceeded to further his studies at the University of Edinburgh. Taylor attended the University for four years. The Edinburgh Academy proudly recorded its former student’s achievements at the University for the benefit of its students:

“A brief statement of his success at the University may prove stimulating to present boys and interesting to old ones. It is believed that by graduating M.A. with double First Class Honours within four years, his success constitutes a record in the University.

1909. Took fourth place in the general bursary list; first in John Welsh Classical list; gained a Sibbald Bursary, £30 a year for four years.

1910. Joined the Honours Classes in Latin and Greek (equal with Kyd for the Academical Club Exhibition).

Proxime accessit in the C. B. Black Scholarship, £70 a year for two years, for New Testament Greek and Exegesis.

1911. Gained the Vans Dunlop Scholarship in Classics, £100 a year for three years.

1912. First Medal in Greek Honours Class; won the Scott and Dunbar Greek Prize, £15; First Medal in Latin Honours Class; M.A. with First Class Honours in Classics. Offered, for the Autumn Term, the post of Assistant to the Professor of Greek.

Proxime accessit in the Ferguson Scholarship Examination, £80 a year for two years (Classics).

1913. First Medals in Honours History and Political Science; M.A. with First Class Honours in History; won the Kirkpatrick History Scholarship, £60.

Proxime accessit for the Mackenzie Scholarship (Classics and English), £118 a year for four years.

In the four years, he attended seventeen classes, and in each one, he gained a First Class Certificate (thirteen being Honours Courses), earned five Medals (all in Honours Classes), ten Class Prizes, was 1st in seven classes, 2nd in one, 3rd in two, 4th, 5th, and 8th in one each.”

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The Indian Civil Service

The Academy added that their former Dux went straight up to the Indian Civil Services examination without going to any crammer. In the ICS Examination 1913, Taylor stood second behind Percy James Grigg, who we will encounter later. Grigg opted for the Treasury. According to the Academy, though Taylor was “eligible for a Treasury appointment, he decided to go to India, and, after a year’s probation … at Trinity College, Dublin, he will go to the Upper Provinces.”

CD Deshmukh must have mistaken Trinity College for the college by the same name at Cambridge and concluded that Taylor studied there (Deshmukh, The Course of My Life, 1974).

After probation, Taylor arrived in India in November 1914. The Government posted him not to the Upper Provinces but to the Central Provinces and Berar. His first posting was as Assistant Commissioner, probably at Saugor (Sagar), now in Madhya Pradesh. That lasted only a few months.

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Military Service

Lord Kitchener’s famous campaign

Four months into his new posting, in March 1915, Taylor was enlisted for military service in the Great War, as were his brothers John and Stanley, the former in the Royal Army Medical Corps. They joined around 8,000 former students of the University of Edinburgh in the war effort. Lord Kitchener’s famous campaign calling for enlistment, “Your Country Needs You”, must have inspired the brothers.

We don’t have details of Taylor’s military service. But we know that the family lost Stanley in the War, after which Taylor returned to the Central Provinces in April 1919.

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Controller of Currency

On rejoining the civil service, Taylor once again became Asst. Commissioner at Saugor (Sagar). In December 1920, he was transferred as Under Secretary to the Government of India’s Commerce Department. In January 1924, Taylor joined the Finance Department. April found him taking over as Deputy Controller of Currency in Calcutta. Taylor also officiated as Deputy Controller of Currency in Bombay from November 1925 till April 1927, when he started officiating as Controller of Currency, Calcutta. Taylor was confirmed as Controller of Currency in October 1929.

As the Controller of Currency, Taylor served off and on as a Governor on the Board of the Imperial Bank of India for over six years. Sir Osborne Smith, the first Governor of the Reserve Bank of India, was then the second Managing Governor of the Imperial Bank of India. Smith became the first Managing Governor only about 11 months before he moved to the Reserve Bank of India in January 1935. The origins of the personal animosities between Governor Smith, on the one hand, and Deputy Governor Taylor and Finance Member Grigg, on the other hand, which plagued the early years of the Reserve Bank, perhaps lie somewhere here. In that story, which we will discuss another day, Montagu Norman, the longest-serving and whimsical Governor of the Bank of England, played a significant role.

As the Controller, Taylor signed currency notes issued by the Government of India. Thus, he remains the only Governor to have signed a currency note before and after becoming Governor of the Reserve Bank of India if one were to ignore the one rupee notes signed by Finance Secretaries before they became Governor.

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Lincoln’s Inn

Taylor’s academic pursuits that went alongside his official work require a passing mention. It was perhaps common for civil servants working in India to take time off and register for law in England. Abdullah Yusuf Ali, ICS of the 1894 batch, on whom I wrote earlier, did this (see here). So did others. The relatively generous leave allowance for British officials, called furlough, extending to two or three years, enabled such pursuits.

In 1923, at 31, Taylor enrolled at the Lincoln’s Inn. He was called to the bar in 1927.

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Ministry of finance

In June 1932, Taylor moved to the Finance Department of the Government of India, initially as Additional Secretary and officiating as Secretary on a few occasions.

This section has many sub-sections. Please use the contents below to navigate.

Ministry of Finance contents

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First Budget

Hossain Imam, representing Gaya, who later migrated to Pakistan in 1951, appreciated Taylor on the first Budget:

“….I find that in the general congratulations that have been showered on the Honourable the Finance Member, the services of our colleague have not been sufficiently appreciated. I have been in this House for two years and one month and in this short period it has been my experience to hear four budgets presented, and as the vagaries of the time would have it they were presented by four different Secretaries, and Mr. Taylor has come in at the tail end. We have had his exposition, in a very lucid and clear manner; and I may say that we were agreeably surprised to find not only that we have been able to balance our Budget but to have something as a surplus in the next year. The Finance Department has also presented us with an additional book of details of those demands which are not voted upon by the Legislature. This is a new improvement, and I welcome it and thank the Finance Department for this.”

Taylor replied:

“Sir, as the Honourable Mr. Hossain Imam truly observed, I have come in at the tail end, and in that unfortunate position, it is somewhat disconcerting to find the tail of this House wagging so vigorously.”

Edward Benthall, representing the Bengal Chamber of Commerce and Taylor’s contemporary on the Board of the Imperial Bank, congratulated him “for the very lucid and precise way in which he placed the Budget before (the) House.”

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New Year Honours

Taylor’s name appeared in the New Year Honours list of 1933. Felicitating him, Sir Maneckji Dadabhoy, the President of the Council of States, had this to say about the Finance Secretary:

“As regards the distinction conferred on the Honourable Mr. Taylor, it is a particular gratification to me as he comes from my Province. When he first joined the Indian Civil Service, it was discovered that he was a promising young man and he has fully justified the prophecy then formed by many of his friends in the Central Provinces. He has distinguished himself as Controller of the Currency in Calcutta, and I know the valuable services he has rendered in the matter of finance to the Government of India…”

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Reserve Bank Bill of 1933

As George Schuster, the Finance Member, was piloting another bill in the Central Legislative Assembly, Taylor introduced the Reserve Bank Bill in the Council of States on 16 September 1933. He provided a financial justification and a political rationale for the early passing of the Reserve Bank Bill.


“the credit of India has improved in a manner which would have been considered quite impossible 24 months ago, and we can now fairly say that we have sufficient gold and sterling within our grasp to bring within easy reach the reserve of 50 per cent. in external assets which the proposals of 1927 indicated as sufficient to enable a Reserve Bank to begin to function.”

“A much stronger argument for early action is however the constitutional developments indicated in the White Paper. There it has been laid down that a Reserve Bank must not only have been created but must be functioning successfully before the new constitution comes into being at the Centre. It would obviously be unfair to the new Directorate to launch the Bank simultaneously with the reformed constitution; they must be given reasonable time to find their feet before they can assume the position reserved for them in the constitutional proposals. For these reasons the earlier action is taken the better, and we consider that our proposals afford opportunity for the maximum amount of consultation combined with speedy execution.”

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On central bank independence

Intervening in response to a comment that the interests of the Government and the interests of the country were divergent, Taylor stated as follows:

“Finally, Sir, the Honourable Mr. Hossain Imam at the conclusion of his speech said that even though other Central Banks were subject to a certain amount of government control, the position was different in this country because the interests of Government and the interests of the country were divergent. Here I confess to an attitude almost of despair. If that is to be the attitude in which the new constitutional proposals are to be approached, I can see no way out. On the other hand, Sir, I would ask this House to let the past bury its past and to look at the proposal as they stand as a fair proposition by His Majesty’s Government to make the transfer of financial responsibility a practical proposition subject to the inevitable qualifications which the circumstances of the present day demand.”

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Reserve Bank as shareholders’ bank

Regarding ownership of the proposed central bank, Taylor’s view was that of Sir Purshottamdas Thakurdas in his dissent to the Report of the Hilton Young Commission, favouring a shareholder’s bank. This approach followed from the hope that the Imperial Bank would eventually become the central bank. In the Council of States, as he piloted the Reserve Bank Bill, he justified the compromise model incorporated in the Bill in the following words:

“It is impossible to have a Bank which is entirely a State Bank. There are obvious objections to that. It is equally impossible to hand over the enormous interests of Government, particularly of the Government in India, to a body entirely and finally responsible to shareholders. There must be some compromise. The compromise in this Bill weights the scales very definitely in favour of the shareholder. The shareholders are to appoint eight Directors, Government are to nominate four, and there will be a Managing Governor appointed by the Governor General after consideration of the recommendations of the Board. This makes five against eight. That is a very definite weighting of the scales in favour of the shareholders.”

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Defending the Imperial Bank of India

As Finance Secretary, Taylor made several interventions, even in matters other than the Reserve Bank Bill, during the proceedings at the Council of States. One such case was the Imperial Bank Bill consequent to establishing the Reserve Bank of India. The third volume of the History of the State Bank of India discusses most of these. In response to one criticism against the Imperial Bank of India, Taylor defended the Imperial Bank thus:

“I would like to put in a small word of protest on behalf of the Imperial Bank. I, Sir, have been a Governor of the Imperial Bank off and on for more than six years and from that inside knowledge I can testify how unfounded many of the charges made against it are. ….the Imperial Bank in some respects has had to assume the unfortunate position of a whipping boy. In olden days when a king was crowned at a very early age, the authorities who realised that he had to have a certain amount of discipline appointed a small boy in poor circumstances to be brought up with him. It was high treason to whip the king if he did anything wrong, so they whipped the small boy instead in the hope that the King’s tender heart would be affected by the cries of the small boy. Sir, the Imperial Bank of India is to a certain extent in the position of that small boy.”

“The credit policy of the last ten years may not have seemed justified. Personally, I think that it was justified and that the present strong position of India is due to our policy of the last ten years but undoubtedly it was our policy; the credit policy was laid down by the Government of India and the Imperial Bank had to follow it. I know myself, Sir, and – if it is not abusing the privilege of the House – I would say that you know, too, that there have been occasions when not only the elected Governors of the Imperial Bank but the nominated Governors also when they felt that Government’s action was too stringent and have protested to Government. Therefore, Sir, I think it quite unfair to blame the Imperial Bank in this matter and not to lay the blame. If it is blame (which I deny) on the proper shoulders, that is, on those of the Government.”

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Joint Select Committee

Taylor moved the motion on who could be on the Joint Select Committee (JSC) for considering the Reserve Bank Bill and Imperial Bank Amendment Bill. Around the time, MP Mehrotra, speaking on the Medical Council Bill, referred to the compromise that sorted out specific ‘obnoxious clauses’ in the Bill. He added:

“The Honourable the Leader has just said that the climate of Simla had done a lot in arriving at this compromise. But I would submit, Sir, that it was not the climate of Simla but it was the spirit of give and take on account of which the compromise was arrived at and the report of the Select Committee was unanimous. I hope my Honourable friend, Mr. Taylor, will also show the same spirit in the case of the Reserve Bank Bill which we are going to discuss shortly. (Laughter).”

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Schuster and Taylor dissent

Out of the 15 dissent notes to the JSC report, one was by George Schuster, the Finance Member, and Taylor. They objected to the proposal, modelled on the South African Reserve Bank, that the Governor should have ‘tested banking experience’ of at least five years. They argued that the experience required of a Governor differed from the demands of commercial banking. If commercial banking experience were the only requisite, five years was inadequate. On the other hand, many successful central bank governors of the day did not have commercial bank experience.

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Reserve Bank Bill of 1934

Taylor introduced the revised Reserve Bank Bill on 13 February 1934 after incorporating the changes suggested by the Joint Select Committee. He referred to two significant features that remained unchanged: its being a shareholder bank and maintaining the currency policy and the external value of the rupee as prevailing at the time of the introduction of the Bill.

After laying out the other significant changes, Taylor said as follows:

“…what I feel is the most important feature of these prolonged and laborious discussions has been the growing atmosphere of cordiality, the increasing realisation that this Bill is primarily designed in India’s interests. It is an enormously difficult measure to frame because we are building something entirely new for India and we are building it at a time when we have nothing to build on. All the credit systems of the world, all the monetary theories are now being put to a much searching and critical examination than they ever had in the past, and in framing a measure of this nature we have to combine to an almost impossible degree rigidity with elasticity. Rigidity because the essence of this Bill is a transfer of financial responsibility from one authority to another, and that authority in transferring the power must see that safeguards and limitations are imposed. Elasticity because, as I have said, the currency systems of the world are in a state of flux, if not of chaos, and it would be unfair to tie down the Bank too far in any particular direction. At the same time, Sir, I think that these two principles have been reconciled in this Bill.”

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Pleased with outcome

As a former Controller of Currency, Taylor was pleased with the outcome:

“To my mind, the most important feature of the Bill is that it will create in India an independent and I hope authoritative organisation which will be able to consider those matters, not as at present from the outside, but from the inside, which will realise, by being confronted in practice with the day to day work of such an institution, the practical difficulties which we in the past have been confronted with as Currency Authority.”

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Concluding the introduction…

Taylor concluded the introduction of the Bill with the following words:

“…I think that as the Bill progressed it was realised how wide the transfer of power was going to be, wide not only as regards the actual operations but wide also as regards the extent and the untried nature of the authority in whom it is proposed to repose that power. It is a great trust which is being imposed upon the new Bank—upon its Directorate and upon its shareholders, and I trust that in the interests of India it will use that power wisely and well.”

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Compulsory deposits

Later, replying to members’ observations, Taylor countered one argument against compulsory deposits from banks, a practice not followed by the Bank of England. The member was referring to the cash reserve ratio. Taylor observed as follows:

“I agree with him that the Bank of England does not require to exact compulsory deposits from British banks but the Bank of England is the oldest bank in England, it is by far the most important bank, and it has, as a result of its prestige, numerous unofficial ways of putting pressure on any recalcitrant bank in England. We are creating a new institution which will be confronted with other institutions, long established and with a very high prestige, and for that purpose we must give it some means of exercising at any rate a limited control over such institutions.”

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Political influence

Replying to apprehensions of political influence, Taylor said:

“We must not visualise that for ever what is called political influence in India will be synonymous with a certain type of national aspiration. In future we hope that politics will develop in India on the same lines as in other countries and when that development occurs we do definitely wish that there shall be in existence a banking institution which will be outside politics. I might give as an instance something that has happened during the last few weeks.”

“The Bank of France is outside politics. We have seen one Government succeed another day after day in France and yet the Bank of France has managed to stand up against one of the strongest attacks made on its currency and has emerged undefeated. What would its position have been, if it had been politically bound up with the changing Governments of the day? Sir, the experience of other countries, of the Bank of England and of the Bank of France is, to my mind, conclusive that we should look at this question not from the temporary aspect of nationalism or anti-nationalism but from the point of view of the stability of the country, and you will be building well if you create now a Reserve Bank that is and will remain outside politics.”

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Unwarranted criticism

Taylor also took on unwarranted and destructive criticism with lethal effect, though in a refined and restrained manner:

“I now turn, Sir, to what I might call the destructive criticism of the measure and I find considerable difficulty in arriving at an appreciation of what is the attitude of mind that underlies those criticisms. In the first place, I do not think they are putting their case quite fairly even from their own point of view. What Lala Ram Saran Das and Mr. Banerjee were saying in effect is that they will be put on the horns of a dilemma, that India was being compelled to swallow what it did not want as an essential pre-requisite to constitutional reforms. Sir, I think that is an entirely wrong way of looking at the matter.”

“Constitutional reform does not come suddenly. If it is to be wholesome it must broaden steadily from one development to another and this measure, quite apart from any question of a further instalment of constitutional reforms, is in itself a most material advance in India’s constitutional development. In fact, Sir, I do not think that I would be exaggerating if I said that both as regards immediate effective powers and as regards ultimate potentiality it is one of the greatest, if not the greatest, transfer that has ever been made since the British Government assumed the control of this country.”

“Then, Sir, they went on to talk about pre-requisites. The Honourable Rai Bahadur Lala Ram Saran Das said that until certain pre-requisites were fulfilled it was rash to create a Reserve Bank. There, Sir, I was frankly amazed. I could imagine him talking like that if he was a Die-hard speaking in the House of Commons arguing that the times were not propitious for such a great transfer of control. But why he should stand up in this House and say that these are arguments why the Indian Legislature should not accept it when offered I frankly confess that I do not understand.”

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Why Reserve Bank

Explaining further the rationale for a Reserve Bank and its role in times of a crisis, Taylor elaborated thus:

“Then, Sir, the Honourable Mr. Hossain Imam said, if I understood him right, that there was no object in creating a Reserve Bank because the Reserve Bank could not stand up to emergencies, and that if there was a war or other crisis, that Government must take charge. I did not follow what the conclusion of this argument was. I presume that it was that there was no use in creating a Reserve Bank at all. Surely, the commonsense view of the matter is that if there is a crisis, Government must co-operate, but that if such a crisis occurs it will be of very great value to Government to have an independent and authoritative body which can tender advice at that time. If there is no Reserve Rank and a crisis occurs, Government has to take what action it can, but if there is a Reserve Bank in existence, they will be ready with their advice. They will also be able to warn the Government of impending dangers, so that— even though when the crisis occurs Government may have to take charge, it will be all the better for it to have a Reserve Bank in existence as an established authority.”

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Choosing the Governor

Negativing a private amendment suggesting that the Governor General choose the Governor from a panel of six, Taylor commented as follows:

“To ask the Board to put up a panel would be not only useless but it would be very invidious. Central Bankers are not so thick on the grounds that it would be possible to collect a panel of six possible men willing to be considered and the remaining five would undoubtedly feel hurt at the publicity of having been on the panel and then finally rejected. For these reasons, Sir, I oppose the amendment.”

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At least one Indian

On an amendment seeking a proviso that at least one of the three top executives (Governor and two Deputy Governors) be an Indian, Taylor quoted the Joint Select Committee report where the Government had assured this. He went on to add:

“I trust that the House will also be satisfied. I disregard the charitable assumption that official undertakings made to the Legislature are purely personal to the individual incumbents of the offices, and ask the House not to bring in a provision of this sort in an actual statutory measure. It is obviously undesirable that words of this nature should appear when in effect what is required can be obtained without them. I therefore ask that the amendment may be opposed.”

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History of Reserve Bank legislation

Frustrated at one member elaborating the history of the Reserve Bank Bill, which was first introduced in 1927, Taylor reacted thus:

“I had some difficulty in keeping my seat and I was not altogether successful in doing so particularly when the Honourable Rai Bahadur Mathura Prasad Mehrotra was giving his description of the history of Reserve Bank legislation in this country. Sir, the comic travesty of history has acquired a certain vogue in recent years. There is a book called “1066 And All That”. I think that the Honourable Rai Bahadur might, if he feels in that vein, write “1927 And All That”. For instance, Sir, he referred to a Bill which, according to him, passed both Houses, to be finally rejected by Government, but he was really quoting extracts from a Bill put up by the Joint Committee to which all the Government members objected and which never came to fruition in the Legislative Assembly at all.”

(My comment: 1066 refers to the year of the Norman Conquest in one day’s bloody battle, the last successful one over England.)

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An issue of loyalty

Protesting against an allegation that he had the interests of the British Government in mind, Taylor prefixed his remarks as follows:

“I hope that I shall be able to rebut what I must call the unfounded allegation that we on these Benches prefer the interest of His Majesty’s Government to those of the people of India and that before I sit down I shall have convinced the House that our policy in this respect is dictated by what we consider to be in the permanent true interests of India as a whole.”

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Agricultural credit

Responding to Sardar Buta Singh’s resolution on agricultural credit:

“Sir, I do not think that it is necessary for anybody rising in these Benches in this House to say how fully Government realise the importance of preserving agriculture in India in a sound and healthy condition. We realise that agriculture is the hub of the whole Indian financial structure and that if the agriculturist is not prospering the rest of India also cannot prosper.”

Speaking further on the same subject, Taylor said:

“At present the Imperial Bank happens to be our Government bank, but we all recognise that as at present constituted it cannot fulfil all the functions of a Government bank and that is why a Reserve Bank was held to be necessary to co-ordinate the credit structure of the country. When that stage arrives, I am sure that everybody will recognise the fundamental importance of giving agriculture its proper place. I submit, Sir, that this is not the proper way, nor the proper time, in which this matter should be approached, but at the same time I would make it clear that Government view the object underlying the Resolution very sympathetically and that when the time comes, that is to say, when the Reserve Bank comes under discussion, it will be considered and Government will insist on the paramount importance of giving proper facilities on a proper financial basis for the development of agriculture in this country.”

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Loss in sale of silver

Responding to criticism of loss in the sale of silver, Taylor said:

“A most misleading comparison has been attempted with the price in India. As everybody knows, there is a very heavy duty in India, and if anybody in this House imagines that the Government of India could have sold 20 million ounces in India at a price even remotely approximating to the market price of silver in Bombay at the time, I am afraid that he will have to choose some other profession than silver broking. (Laughter.)”

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A forged letter

During discussions on the Reserve Bank Bill, Sir George Schuster, the Finance Member, revealed a plot on 19 December. This is best described in Schuster’s own words:

“Sir, I do not believe that there are many Members in this House who know what dirty methods these speculators adopt or how they are certain to take advantage of any rumour or any suggestion of a change and exploit it for their own profit. Now, Sir, I want to tell the House a little story. (Cheers from a Non-Official Member). My Honourable friend’s applause is premature; it is not a funny story.”

“On the 2nd of December, when I was busily engaged in this debate, a certain incident happened. The Additional Secretary in the Finance Department was sitting in the official box in this Chamber when a representative of the Associated Press called to see him and said: “Oh, with reference to this letter of yours, which I have just received I have already put it on the wires to go off to Calcutta and Bombay, but I want to ask you whether you have got any further information to give me”. And he put forward a letter with the heading “Finance Department: signed apparently – a well forged signature – by Mr. J.B. Taylor. This is supposed to be a letter from Mr. Taylor to Mr. Sen of the Associated Press. The letter runs as follows:

“Dear Sir,

We understand President Roosevelt has been persuaded by his Advisors to follow the slippery path of unchecked inflation which will mean an entire collapse of other currencies to start with. Currency authorities are adopting measures in all countries to prevent American action from reacting too violently on them, but it is certain that in the early stages there will be almost complete dislocation. It seems important to warn the Indian market at once of the violent fluctuations that are sure to occur in the next few days although in India nothing more than a fall of a penny in the rupee exchange may result. Will you issue the necessary statement, beginning “reliable private advices show, etc., etc.”

Yours sincerely,


As soon as Mr. Taylor saw this letter, he said: “This is a wicked forgery which will lead to the most disastrous consequences, you must stop this at once”. The Associated Press representative said: “I will do my best, but I have already sent telegrams down to the Post Office”. As a matter of fact, however, he was able to save these telegrams going off by thirty seconds thanks to his promptness, a serious disaster was averted. If the telegrams had gone off, there would at once have been panic in Calcutta and Bombay.

Now, Sir, that happened just after I had made a very definitive statement in this House as regards our exchange policy, and the Secretary of State had made a similar statement in London. Those people who had been gambling on creating uncertainty during the discussions on the Reserve Bank Bill had realised that we had spoiled their game and they then had resort to this kind of move in order to enable them to cover up their purchases in one day’s panic. That, Sir, is the class of persons with whom one has to deal, these are the sort of vultures which are hanging over the position. And if we allow any uncertainty to be created by anything that is done in this House, it is absolutely certain that there are people waiting about with positions already created to take advantage of that, while the poor agriculturist, whom some Honourable Members have in mind, will sit in his village and suffer far worse in the long run than if we kept the position stable so that he knew where he was.”

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Appreciation for the Bill

Appreciating both Sir Schuster and Sir Taylor for the work done on the Reserve Bank Bill, Sir Homi Maneck Mehta, an industrialist based in Mumbai and about two decades Taylor’s senior, spoke at the Council of States:

“Honourable Mr. Taylor had to do most arduous work and so had the Honourable Sir George Schuster in conducting the Bill as he did so exceedingly well in the Lower House. One must admit that they have secured the freedom for India, as far as the currency and finances are concerned. Hereafter the currency of this country will not be conducted by one man, the Finance Member, but will be dictated by a Governor and a Central Board nominated as well as elected. This is real Swaraj in the currency as people must admit, and the names of these two gentlemen will go down to posterity to show that they were the first liberators of this country as far as currency is concerned.”

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Sir James Taylor

Taylor’s work on the Reserve Bank bill must have been the main factor in his being knighted in June 1935. Sir Maneckji Dadabhoy, President of the Council of States, felicitated Taylor thus:

“The name of Sir James Braid Taylor is one of considerable importance. (Applause.) He was in our Council off and on for various periods between 1932 and 1934. He is a comparatively young man but a very talented man and is now recognised as an expert in financial matters. As Finance Secretary to the Government of India he was for some time in this House and we were struck with the high quality of his debates and the conspicuous part which he always took in discussion of financial matters. He has now been translated to a more eminent post and that is the Deputy Governor of the Reserve Bank of India, a post which I have no doubt – and the Council will also agree – the duties of which he will discharge with great credit to himself and also credit to the Government of India.”

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Deputy Governor

Taylor resigned from the ICS before assuming office as Deputy Governor in February 1935. Taylor perhaps hoped to become the first Governor. Maybe James Grigg, the Finance Minister, might also have wished that. But, several factors would have worked against this. First, Osborne Smith was brought from London to the Imperial Bank of India to gain experience in Indian conditions and eventually take over as Governor of the proposed Indian central bank. Second, Taylor would have been just 44 and perhaps found to be too young for the job.

Third, and most importantly, Smith had the backing of Montagu Norman, the redoubtable Governor of the Bank of England, powerful enough to dictate or advise who should be the Chancellor of the Exchequer. I reserve the spat between Governor Smith and Taylor for another post, hoping to throw some fresh light. Governor Norman, the man and his work, especially in establishing central banks in India and other colonies, is also reserved for another post.

The Reserve Bank of India Act does not refer to inter se seniority among Deputy Governors. There were only two Deputy Governors as per the Act. But, Taylor considered himself the Senior Deputy Governor, allowing such references in the Bank’s publications. As discussed elsewhere in the literature, the times when Governor Smith and Taylor were in office simultaneously were rare. Smith had gone to London on extended leave protesting various things, including his Deputy communicating directly with the Finance Member. When Smith returned, it was Taylor’s turn to take an extended break. While in London, both would call on Governor Norman to pour out their grievances.

James Taylor
The First Central Board of the Reserve Bank of India.
James Taylor is sitting third from left (Source:

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Seal of the Bank

As Deputy Governor, Taylor played a crucial role in deciding on the Bank’s seal. Taylor proposed choosing the famous double mohur coin of the East India Company with its motif of a lion and palm tree. He suggested replacing the lion with the tiger as the latter was considered more representative of India. It was in the Central Provinces where Taylor served, and as we will see below, one tiger did play a role in his wife’s life.

As the official history records, the first sketch, prepared by a Madras firm, was considered by the Board on 23 February 1935. Taylor suggested fresh sketches from the security printing press at Nasik, whose establishment in 1925 he must have played some role. For a better design, he arranged for a photograph of the tiger at the entrance of Belvedere, the former residence of the Viceroy and later of the Governor of Bengal Presidency. He would have passed that way numerous times on the way from home to the nearby office of the Controller of Currency. He didn’t seem happy even with the fresh images, and the history quotes him as having remarked:

“. . . . .’s tree is all right, but his tiger looks too like some species of dog, and I am afraid that a design of a dog and a tree would arouse derision among the irreverent . . . . .’s tiger is distinctly good but the tree has spoiled it. The stem is too long and the branches too spidery, but I should have thought that by putting a firm line under the feet of his tiger and making his tree stronger and lower, we could get quite a good result from his design.” (a few punctuation marks added).

The tiger and palm tree continue to embellish the Bank’s currency notes, cheques, publications, gifts, and stationery, including letter covers and letterheads.

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Governor James Taylor

After Smith resigned in 1936, with effect from the end of June 1937, the Board unanimously recommended Taylor for the top job effective 1 July 1937. Notwithstanding doubts about whether a Governor closely associated with the Government would be conducive to the Bank’s independence, Taylor became the Governor on 1 July 1937.

Among Taylor’s significant changes were the Bank’s Central Office shifting from Calcutta to Bombay and the financial year from December to June. The latter decision came about ostensibly to allow for the holidays in December. But could there be other reasons? We will examine this in a future post.

Taylor also started the practice of weekly demi official letters to the Finance Secretary. Smith never wrote such letters as a routine. As a former Finance Department official, Taylor may have felt the need for such an interaction. The practice was perhaps in continuation of similar correspondence between Taylor as the Controller of Currency and Finance Secretaries over the years. Whether this was a healthy precedent is beyond my judgment but would have depended on the individual equations that prevailed over time and the need for greater coordination in those early years.

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The rest of this section is divided into several sub-sections. Use the following list of contents to navigate:

Contents of Governor Taylor

Debt floatation

Floatation of debt used to involve consultation with the Imperial Bank of India, the Finance Department of the Government of India, the Controller of Currency, and the Secretary of State in London, the last invariably consulting the Bank of England. Taylor curtailed these as he found them prolonged, and the “discussions were always rather platitudinous and their most usual and undesirable result was premature leakage.” For making suitable changes to loan floatation, including for the provincial governments, he studied procedures in London and other countries with a federal structure.

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Taylor played a significant role in the Indianisation of the Bank. One of the steps involved roping in CD Deshmukh, as discussed in detail below.

As discussed earlier, Taylor shot down a private amendment to the Reserve Bank Bill suggesting that one of the Deputy Governors be an Indian. He referred to the assurance in the Joint Committee Report. That was how Sir Sikander Hyat-Khan became the second of the first two Deputy Governors.

One of the candidates considered was Sir RK Shunmukham Chetty, Vice President of the Central Legislative Assembly, when it discussed the Reserve Bank Bill. The Government found him too political for the post. As irony would have it, Sikander Hyat-Khan resigned by the end of 1935 to join politics, becoming the Prime Minister of Punjab, and died in office.

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For those interested in trivia, Sikander Hyat-Khan’s grandson, Tariq Ali, wrote a brilliant book on the Nehrus and Gandhis and a film script on BCCI, the bank (Banker for all Seasons: Bank of Crooks and Cheats Inc.). On the other hand, his grandfather served as the second President of the other BCCI, the cricket body. Furthermore, as I had written earlier, Shunmukham Chetty became independent India’s first Finance Minister more than a decade after being overlooked for the Deputy Governorship (he might not have sought it himself).

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Deshmukh and Taylor

As part of his efforts at Indianisation of the Reserve Bank, Taylor narrowed down on CD Deshmukh from his home cadre of the Central Provinces and Berar. Deshmukh would later describe his transition from civil servant to central banker as “a metamorphosis rich and strange for an administrative officer in any country except pre-independence India”.

In his Kale Memorial Lecture (published as Central Banking in India – A Retrospect, 1948), Deshmukh recalled how Taylor started preparations for Indianisation. As early as 1936, Taylor sounded his former senior colleague, Eyre Gordon ICS, then Member of the Central Provinces Governor’s Executive Council (wrongly mentioned as Chief Secretary), who was in charge of revenue and finance, regarding Deshmukh. As Deshmukh narrates:

“Taylor wrote to Gordon … to say that they were looking round for an Indian who might in due course be found suitable for promotion to one of the two Deputy Governorships – a man of good general financial knowledge and experience – and from this point of view Government Finance was nearly as useful as banking or commercial experience – but primarily of energy and administrative capacity and presence. He requested Gordon to let him know if he thought that Deshmukh would be likely to suit them and whether, if approached, the Province would be likely to spare him. Since I did not then know Taylor, I can only presume that someone had suggested my name to Taylor. Gordon replied that he considered Deshmukh suitable for the purpose in every way, but he did not think that there was the slightest chance of the Provincial Government allowing him to go “at present”, because the Government had just had him trained for dealing with the ways and means and other finance problems that would arise under the new Constitution and needed Deshmukh themselves.”

Notwithstanding the above, Deshmukh mentions elsewhere that he first met Taylor when the latter was working on the Reserve Bank Bill. Moreover, they were from the same cadre, where the ICS community was small, and Deshmukh also had a British wife. All this makes Deshmukh’s version less credible. Maybe this was an error in transcribing his talk where he might have said he didn’t know Taylor well enough, and the last two words got dropped.

On renewing the enquiry in mid-1938, they informed Taylor that Deshmukh was unavailable. In the meantime, Manilal Nanavati filled the vacancy of an Indian Deputy Governor caused by the resignation of Sikander Hyat Khan in December 1936.

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Filling Taylor’s vacancy

After Taylor became Governor in 1937, the government tried to bring in another British officer or expatriate to fill Taylor’s vacancy. Plans to bring in a British banker came to nought as Taylor was not keen on a British import. In any case, Taylor found the one suggested by the Bank of England (read Montagu Norman) too young. The India Office in London raised the matter again in 1938 to have a standby arrangement in case Taylor fell ill or proceeded on leave. They suggested a person from England with sufficient banking experience. The first banking crisis, involving the liquidation of the Travancore National Quilon Bank and its aftermath, might have also added to the urgency. India expressed difficulty in getting the correct type of European.

Suggesting Deshmukh

The Bank and the Government worked out an interim solution of bringing in a liaison officer who would be on the Bank’s Board and also attend Committee meetings. In early 1939, Taylor suggested Deshmukh for the post. James Grigg, then Finance Member, did not favour the idea as he felt that a Mahratta like Deshmukh might not be recommended eventually for the position of Deputy Governor by a Board mainly consisting of people in business. Secondly, if they did and he later became Governor, there would be no European Deputy Governor. Grigg did not seem ready for the complete Indianisation that this entailed.

Sir Jeremy Raisman, who succeeded Grigg, had different views. Considering repeated demands from the Bank of England for a more robust line-up at the top, Taylor’s continuing efforts to rope in Deshmukh, and Nanavati’s indifferent health, Raisman agreed to the idea. Even then, Taylor was open to the idea of a British import succeeding him:

“Taylor at the time thought that to succeed himself, a Governor would have to be imported from England … Taylor’s view at the time was that the Indian to be chosen as a Deputy Governor must have sufficient ability and experience to be likely to develop into an efficient Governor at least for acting vacancies, and that simultaneously efforts should be made to get a London banker as his colleague; but that Government should bear in mind the probability that when the actual appointment of Governor came to be made, it would probably be necessary to bring somebody out fresh unless conditions were such that it was thought that the Indian could safely be entrusted with the post.” (Deshmukh, op. cit.)

Thus, Deshmukh went to the Ministry of Finance as an officer on special duty liaising between the Bank and the Government. From there, he became a Government Director on the Central Board of the Reserve Bank. By the end of the year, he took over from PC Beale as Secretary to the Board. Deshmukh joined when there were sharp differences between Taylor and the elected members on the Board of the Bank regarding the rupee-sterling ratio.

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Deshmukh’s training

According to the RBI’s official history, Taylor and Deshmukh made an excellent pair. Quoting Deshmukh, it said that Taylor…

“…deliberately worked towards making me fit to carry the responsibility in succession to himself. He taught me all he knew of Central Banking and the country’s currency and exchange and bullion problems, withheld no confidences and pressed on purposefully with my training.”

Apart from training Deshmukh himself, Taylor arranged for his secondment to the Bank of England for about a month in late 1940 to get oriented to central banking. Deshmukh had a penchant for not only digging out his old Civil Services marks and comparing them with those of his seniors like Grigg, Taylor, and Raisman (he seemed pleased that his marks were higher), but as Finance Minister, he also dug out what his boss wrote about him. He reproduced some of these in his autobiography.

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Reports on Deshmukh

In a November 27, 1940 report, Taylor wrote:

“I am pushing on training by handing over as much as I can to him (Deshmukh) and interfering with his instructions, specially in exchange control matters and high finance, as little as I can. He is shaping very well. Though he has not the brilliance of the Madrasi, there is a lot more to him, and I am confident that he will develop well.”

Another report from Taylor, dated March 23, 1941, said:

“Practically all the work is entirely novel to him and since so much of it depends on knowledge of the personalities with whom we have to deal, he still wants experience. He is, however, quick to assimilate and has made a good start. In particular, his qualities of caution and commonsense will stand him in good stead.”

On 26 June 1941, a few months before Deshmukh’s elevation as Deputy Governor, Taylor recorded in a long telegram to Raisman, disjointed at places, as follows:

“He has certainly shaped very well and in my opinion is quite fit to be tried as Deputy Governor. On the other hand, the duties and responsibilities which he will have to undertake are very different from purely administrative functions which he has to perform now — need not elaborate as you (Raisman) will fully appreciate … to show ability to deal with elected members of the Board, bankers and the public. Bound to be satisfied that he will fairly and firmly represent interests of the Bank vis-a-vis Government and Home: authorities will require assurance on that head. Think shaping well undertaking functions, otherwise I would not recommend him. But real test when act as Governor and preside over Board meetings in some leave or other vacancy. On the other hand I can say with confidence that he is one of the soundest members of the Service with whom I have come contact and that if he reverted to the Secretariat have little doubt would in due course find himself in one of the highest position open to members of that. Whether willing to take risk primarily matter for him to decide. Suggest discuss — theoretical risk and political change. But possibility cuts both ways and fairly be asked disregard. He is popular with members and outside public limited circle. Prospects unlikely terminate political changes. He is not of a grasping nature.”

India Office responded by cable (September 1941): “We are glad to know he has fulfilled expectations and agree to his appointment.”

Deshmukh succeeded Nanavati as Deputy Governor in December 1941. He later acknowledged that the training received from Taylor over four years gave the Board the confidence to recommend him as the next Governor.

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Silver vs Nickel

Soon after the Second World War broke out, Taylor wrote to the Government to consider the following:

‘…whether we cannot take the opportunity of the war to liberate the Indian currency system as far as possible from the incubus of silver, a metal which does not seem to have any future before it’!

The Government seriously considered the proposal, and silver was eventually replaced by nickel.

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Banking regulation

Early in Nanavati’s tenure of five years (1937-1942), the Reserve Bank’s first banking crisis of Travancore National Quilon Bank happened in July 1938. The liquidation of the bank and the role of Taylor and Nanavati, including the lack of it, requires a separate discussion. But, this episode led to a banking bill drafted entirely by Taylor. It would, however, take another decade and a few ordinances before the bill eventually became law. Taylor thus initiated work towards banking regulation, including inspection of banks.

Thus, it was not just in the Reserve Bank of India Act of 1934, but James Taylor was involved with at least two other important legislations or rules, namely, the Banking Companies Act of 1949 and the Defence of India Rules of 1939, some of whose exchange control regulations were the precursor to the Foreign Exchange Regulation Act of 1947.

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Taylor’s term was extended by five years in 1942 following a unanimous recommendation by the Board. The announcement made on 16 February 1942 put paid to wild speculation that Sir Jeremy Raisman, the Finance Member, would succeed Taylor after his first term of five years.

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Keynes’s Bancor scheme

Early in 1943, Taylor had sent Deshmukh a copy of Keynes’s bancor scheme. Deshmukh wrote to Taylor that it might be inflationary. Taylor replied:

“I agree with you about Keynes—a monetary quack preferring a monetary panacea of the worst inflationary type for … an international political problem. I will try to take the paper with me to Juhu over the weekend and think out a more or less polite reply.”

As we know, Keynes’s bancor scheme remained on paper.

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Sterling balances

One of the significant issues that engaged Taylor’s attention before he passed away was the protection of India’s interests vis-à-vis the sterling balances that were accumulating during the War. According to Deshmukh, Taylor was confident that this would eventually be liquidated by repayment to India in goods. Both he and Raisman resisted attempts by London to abandon its agreement with India. The Board, ever watchful of the inflationary impact of the accumulating reserves, recommended that the Government plan to ensure continued availability of India’s sterling balances and other foreign assets, without depletion in their value, for use in post-war reconstruction and development. Taylor did not live to see further work in this regard.

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Tributes and homages

Council of States

On hearing of the demise of Sir Taylor, Sir Maneckji Dadabhoy, President of the Council of States, made the following statement in the House:

“Honourable Members, there is another matter to which I refer with deep sorrow. You must have heard of the sudden and untimely death of a distinguished member of this Council many years ago, Sir James Taylor, the Governor of the Reserve Bank of India. Sir James was here only ten days ago and on his way back to Bombay contracted chill and pneumonia. His death is a great loss to the country. Sir James was a member of this Council for some time and during that time we all not only admired him but loved him on account of his sobriety of views, his unique courtesy and the manner in which he used to behave towards the members of this House. He rendered very valuable services to Government. In the first instance, he served for most of his lifetime in the Currency Department of the Government of India before the Reserve Bank was established and in that capacity he rendered very valuable services and his speeches sometimes even in this Council were illuminated by his vast and considerable experience of the financial matters of the Government of India.”

“I am very sorry that I have to bring this matter to the notice of the House. Many of you members perhaps do not remember him – very few old members here will remember him – as a member of this Council but I assure you that he was a distinguished and a very useful member of this Council and rendered valuable services both to Government and to the Council. He was the man who was able, as all the financial magnates of Bombay and Calcutta will admit, to keep down the bank rate of the Reserve Bank for about three years during the period of the War at a low level and if you remember what was the bank rate during the last War you will realise the exceedingly valuable service rendered by him to this country. Honourable Members, I believe it is your wish that I should communicate our great sorrow to his wife and son, both of whom are in England now.”

The Leader of the House, Sir Mahomed Usman, echoing the sentiments, said:

“Sir, the country has suffered a very great loss by the sudden and untimely death of Sir James Taylor. I associate myself with you that our expression of great sorrow be conveyed to the members of his family.” 

A few others followed in their appreciation and remembrance of Sir Taylor.

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Central Board

The Committee of the Board of the RBI met on 18 February 1943 to condole Taylor’s death. Deshmukh chaired the meeting, also attended by Sir Purshotamdas Thakurdas, Sir Homi Mehta, Sir Sultan Chinoy, and Sir Arthur Bruce. The minutes recorded the cause of death as coronary thrombosis, pneumonia, and cardiac failure.

The Central Board of the Reserve Bank of India expressed its grief at its meeting on 5 April 1943 with the following resolution:

“That the Board record with the profoundest sorrow the premature death of Sir James B. Taylor, the Governor of the Bank, and desire to express their deepest sympathies to Lady Taylor.

The Board also wish to pay a tribute of admiration and gratitude to Sir James B. Taylor for the invaluable assistance which he rendered in organising the affairs of the Bank as Deputy Governor and for his masterly handling of them as Governor. They cannot speak too highly of his single-minded devotion to the Bank’s interests and the fairness and understanding which invariably characterised his relations with the Board. They mourn the loss of an admirable colleague and consider that by his death the Bank has lost an administrator of the highest calibre and India a very good friend.”

RBI Annual Report, 1942-43

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Sir James Grigg
Sir Percy James Grigg by
Walter Stoneman, 1934.
Courtesy: National Portrait Gallery, London.

Sir James Grigg, the Finance Member when the Reserve Bank was established and who later became Secretary of State for War in Churchill’s War Cabinet from 1942 to 1945, wrote his memoirs, Prejudice and Judgment, first published in 1948.

Grigg was eager to get into the ICS and even had a few dreams about it, in one of which he found that he was the topper. He described in his autobiography his delight at topping the ICS examination in the following words:

 “When the list came from the Civil Service Commissioners, I found I was first. I had scored 3367 marks, and 100 marks covered the first four candidates. Clow was fourth and number two was J. B. (afterwards Sir James) Taylor of Edinburgh, of whom I was to see a great deal later when I went to India as Finance Member. Naturally I leapt at the offer to join the Treasury…”

Even though Taylor and other speakers at the Council of States or Central Legislative Assembly, including Sir George Schuster, were effusive on the momentous occasion of passing on financial freedom to a separate institution, the Reserve Bank of India, James Grigg, who followed Schuster, was restrained, to the point of even dismissive, while writing of his role in setting up the Reserve Bank of India:

“…I had inherited from my predecessor an obligation to set up an Indian Reserve Bank to take over the management of the currency and debt independently of the Government. This I did, but the results were quite other than its promoters intended, for the Central Board was, under the bank’s charter, to be mainly elected by the shareholders, and within four years it came to be dominated by those Hindu big business men who were more than sensitive to suggestions from the Congress caucus, and some of whom had contributed largely to its funds. This might have had serious consequences. That it did not was due very largely to the skill and tact of Sir James Taylor, who was Governor for most of the time I was in India.

“In addition to his admirably efficient management of the internal affairs of the bank, he showed the utmost loyalty to me, both officially and personally, and we became the firmest of friends. His death during the War was a great grief to me and a severe loss to the bank, though he had trained a gifted Indian deputy who was able to succeed him.”

Grigg did not refer to his bête noire, Sir Osborne Smith, Taylor’s predecessor and the first Governor.

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CD Deshmukh

Five years later, Deshmukh reminisced at length about Taylor at the Kale Memorial Lecture (published as Central Banking in India: A Retrospect, 1948). A few relevant excerpts are as follows:

“Sir James Taylor was among the most remarkable men that it has been my good fortune to know. His intelligence was like a lambent flame which illumined everything that it touched and purged it of dross, and he had a catholicity of interest, a breadth of outlook and a warm humanity which I have seldom seen equalled. His political views were most liberal and fair-minded.

“As long ago as 1929 he realised that whether within or outside the British Commonwealth of Nations, the independence of India was inevitable and he held that it would be the greatest work of the English to transform peacefully and purposefully their last and greatest Empire into a Commonwealth of Free Peoples. In his view, all that British vested interests could claim was a reasonable opportunity for liquidation and to secure itself against loss, but not to claim to fetter indefinitely constitutional action in its own interests…

“It was his firm conviction that the indispensable condition for achieving and maintaining self-government for India was a strong, efficient and honest administration through Indian personnel.”

Advocate of Indian interests

“Despite the evidence of instances of corruption and nepotism, the causes of which he traced with sympathetic insight, he held that Indians who belong to services with an honourable tradition live up to that tradition in a way which does all honour to them in spite of the mud that is occasionally thrown at them by ignorant outsiders. He also realised with characteristic clarity that one of the strongest and noblest characteristics of the Indian is his “Izzat”, which is more than honour and prestige.

“He was, therefore, an ardent champion of a rapidly progressive Indianisation of the administration with the final goal of complete Indianisation being kept steadily in view. Communalism he regarded as a canker in the body politic, and it was his opinion that communal electorates must go if there was to be any practical political advance at all in India. For the nourishing of communalism in India he largely held the indifference of the Government of the day’ to be responsible. As a preparation for carrying the burden of self-government, he strongly urged the spread of free and compulsory education and the remodelling of the educational system of the country, so as to put India first and to prevent the teaching of dogmas which inculcated the hatred of fellow-Indians because of their creed….

“In financial matters, he was, even in his Controller of the Currency days, a vigilant watch-dog of India’s interests. . . .”

Taylor and the Reserve Bank Board

“His relations with the Board of Directors were generally cordial, and he commanded their respect and willing co-operation, except where, in their opinion, the interests of the country called for disagreement. “I must carry my Board with me”, he often used to say . . . .

It was well understood by the Directors that the Governor was very often consulted by Government in his personal capacity in matters which were outside the sphere of the Reserve Bank, but which, nevertheless, impinged very closely on it. They relied on him to take them into confidence at the proper time, whenever necessary, and, generally speaking, I know of hardly any instance where this mutual confidence was abused on either side.”

(Excerpted from Deshmukh, Kale Memorial Lecture, 1948).

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First central banker


Taylor is, to date, the youngest Governor of the Bank and the only one to die in office. Taylor is also the only Governor to have signed a currency note (other than one rupee) before and after becoming Governor. The debates in the Central Legislative Assembly and the Council of States, Taylor piloting the Reserve Bank Bill in the latter, and the subsequent history of the Reserve Bank of India show that Taylor had the best interests of an imminent independent India in mind. Deshmukh called him “a vigilant watchdog of India’s interests”.

Taylor and Smith

Taylor was invested in central banking far more than Sir Osborne Smith, a commercial banker by training and experience. He had to balance pressures from the private interests represented on the Central Board, an intrusive Government, and a Bank of England eager to have advance information on debt floatation and other matters while keeping the best interests of India in mind.

Much more than Smith, it was Taylor, as a former Controller of Currency, whose tenure as both Deputy Governor and Governor provided continuity in the carrying out of central banking functions. Considering the efforts he put into Indianising the bank by training CD Deshmukh to take on the responsibility first as Deputy Governor and later as Governor, Taylor ensured that the Reserve Bank of India had the strength to help facilitate the transition of India from a colonial to an independent nation.

First central banker

Adding Taylor’s decade-plus experience as Deputy Controller and Controller of Currency to his years as Addl. Secretary/Secretary, Finance, working on the Reserve Bank Bill, and as Deputy Governor and Governor, Taylor’s experience in central banking is around two decades. Thus, Taylor’s entire working career was devoted to central banking in India except for military service and two other short postings. This includes the early tumultuous years of the Bank, where Taylor’s vision and hard work played a crucial role in seeing it through initial rough weather and nurturing and placing a nascent institution on an even keel. This length of service at that level, for the cause of central banking, has not been matched thereafter. But for his untimely death, Taylor’s stint of ten years as Governor would have been the longest. Therefore, Taylor was India’s first real central banker, perhaps even the father of Indian central banking.

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Personal life

Betty Coles

We do not know, with any degree of precision, when Taylor got married. But, we know he was married to Jessica May Beatrice Coles, better known among friends and relatives as Betty. Though of Scottish descent like Taylor, Betty was a lady from India, born in Nagpur in 1899. Her father, HE Coles, rose from being a constable to become a Deputy Supdt. of Police also in Central Provinces. He died of wounds inflicted by a tiger which mauled him. He was only 46, and Betty was nine.

After her husband’s unfortunate death, Betty’s mother remarried Mr (later Sir) John Hullah of the Indian Civil Service, son of the famous English composer by the same name. Hullah was then an Assistant Commissioner also posted to the Central Provinces. We will never know whether Betty grew up in the Hullah household or that of her uncle, the other Coles. FE Coles was also in the police service and had his share of tragedy; his wife died a day after giving birth to a son, and the baby followed its mother four months later.


Hullah might have been Taylor’s boss at some stage, or the young Taylor and Betty might have met at a social gathering, like an evening or weekend party or ballroom dance, in Saugor or elsewhere in the Central Provinces. It could even have been a picnic in the suburbs or the forests where caves abound. Remember the Marabar caves in EM Forster’s A Passage to India. The British ICS fraternity in the Central Provinces was not too large to avoid running into each other. They married, probably sometime after Taylor returned from the War in April 1919 and before he left the Central Provinces in December 1920. While unwell and in bed that fateful February of 1943, Taylor would have sorely missed Betty and their only and late child, Robin, born in 1930.

Though Betty was away when Taylor passed away, she did spend some time at the Reserve Bank House, the Governor’s residence. Prof Alaknanda Patel, a later resident from 1977 to 1982, recalls her neighbours remembering the young Betty who loved ballroom dancing in the living room with wooden flooring and the parties the Taylors hosted in the late 1930s. That must have been soon after 1937 when the Bank purchased the bungalow and shifted its Central Office from Calcutta to Bombay long before the War started. Stories of Lady Taylor handed down by servants and neighbours say that she used to sit in the front and was a very able administrator of the bungalow. In that regard, friends teased Prof Patel that she could never become a Lady Taylor.

Betty and Robin

It was probably in the interest of better education that Lady Taylor and Robin were away during the War. That was why when Taylor passed away, only a friend working with Burmah Shell was staying with him. Or perhaps the family was stranded in England due to the War, deciding to keep away, fearing the ubiquitous German U-boats which treacherously lurked in the high seas of the deep blue Mediterranean. That is another story of a civil servant’s family separated by choice, chance, or the compulsions of War or education.

Lady Taylor and Robin passed away in the same year, 1984, leaving no known descendants behind. If the Robin Taylor I encountered in the public domain is the same person, he did not have a bright career. He could even have occasionally been on the wrong side of the law. Given the identical year of death, we hope theirs was not unnatural.

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Here lies James Taylor

Sewri Christian Cemetery

My research into the life of Sir James Taylor finally led me to where it logically should – his grave. In colonial India, the bodies of British officials who served and died in India were almost always buried in India. To my knowledge, one rare exception was Lord Mayo, the only Viceroy assassinated while in office. The family took his body back to England. Therefore, in my search for what happened to Sir James Taylor after his death, it was easy to narrow down to the Sewri Christian Cemetery, the only cemetery in Bombay where they buried such British officials.

Arthur Crawford, Mumbai Municipal Corporation’s first Commissioner who also lent his name to the South Mumbai market by the same name, established this 35-acre cemetery in 1857. The bodies of prominent city citizens are interred here, from Frederick William Stevens, who designed the incomparable Victoria Terminus and the majestic Bombay Municipal Corporation building, to Francis Souza, the artist, and Dom Moraes, the poet.

I visited the Sewri Christian Cemetery on Monday, 4 September 2023, my first visit to the city in nearly five years. A search for Taylor’s grave topped the agenda.

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Taylor’s grave

It did not take me long to discover Taylor’s grave. One gravestone, a decrepit old flat slab of ordinary dark granite, broken and displaced, is visible from Taylor’s grave. It was overgrown with shrubs and runners. The grave marker was barely legible even after the groundskeeper helped clear the overgrown shrubs from the top of the broken slab. He attempted to scrape a red brick over the markings to clarify the letters. I forbade him from doing it further as I preferred to let things as they were in keeping with cemetery etiquette.

Grave marking

After clearing part of the shrubs and highlighting the words by rubbing them with a brick, the engraved words on the slab read as follows, in bold:






There is no cross. The grave does not have a headstone, tombstone or a grave ledger. Unlike other graves of the period, the name is neither prefixed nor suffixed with a Sir, KCIE, or other decorations. There are also no references to Taylor’s designations or the institutions he was associated with. Nor is there any mention of close relatives. It is just a bland statement that does not qualify for an epitaph.

James Taylor is a common name. Without pertinent details, this Taylor could be another ordinary army private, a trooper, gunner or sapper, or a stray seaman stranded in Bombay who happened to be buried in Sewri. This omission might be because Taylor’s wife and son were away in England at the time of Taylor’s death.  

Present condition

A good grave lasts over 500 years, but this one seems to have fallen apart soon. The slab or the cover of the grave, which also serves as the grave marker, is displaced and broken into at least three pieces, cutting through the name ‘Taylor’ and the word ‘February’, separated from the year ‘1943’. Did mourners at the adjacent grave crowd over Taylor’s grave during their rites? Or did a hearse bringing another body run over Taylor’s grave while backing up? Rainwater, fallen leaves and dirt would have been falling through the wide gaps left by the broken and displaced slab for at least a few decades. In the meantime, newer graves have come up in the vicinity, making planning something new and more prominent difficult.

A Rewind

Bakhtiar Dadabhoy, in Barons of Banking, wrote that “Deshmukh and other fellow officers of the RBI were the pallbearers at the funeral, which was attended by prominent bankers and businessmen.” But, he provides no reference. I can only consider this an exercise in “creative nonfiction” without any supporting evidence.

My hunch is that those in charge of Taylor’s burial had no clue who he was and his accomplishments, barring the name and date of death. Or they were asked to keep things simple. Or, people in the know did not play much role in the post-burial formalities. They probably wrote to Lady Taylor expecting the family to take a call on an appropriate tombstone or memorial. Taylor seems to have faded from memory for family, friends and even the Bank’s fraternity. Otherwise, nothing explains the present state of gross neglect and disrepair.

Those associated with Taylor on the Board, like Sir Purshotamdas Thakurdas or Sir Lala Shri Ram, continued their association with the Bank for almost two decades. Sir PT, a long-time colleague of Taylor, for six years on the Board of the Imperial Bank of India and another eight years on the Central Board of the Reserve Bank of India, had godowns in Sewri, where the cemetery is located. He might have dropped by at some point. Maybe he never did. But, maybe for reasons unknown or the social customs of the period, he might have chosen to leave it to Taylor’s friends from his service or community. But, in the process, they forgot that barring his four years in military service, Taylor spent practically his entire working life in the cause of central banking.

From all I could survey, Taylor’s is probably the most shabbily maintained grave in that 35-acre expanse. I guess nobody visited Taylor’s grave after his funeral service.

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The other James Taylor

The groundskeeper told me that the modest design of Taylor’s grave was as per the style of his time. I was not convinced. Perhaps different church denominations have distinct styles. Was Taylor a believer? Which church did he belong to? We might never get answers to these questions.

To draw a comparison, see the image of the grand tomb and memorial of another James Taylor in the same cemetery.

Memorial to James Taylor, former Registrar, University of Bombay. The image does not capture the third dimension, which extends beyond the facade.

Who is the other James Taylor? Prof Alaknanda Patel mentioned a book in her possession. The inscription in the book showed that it was part of the James Taylor Prize presented to her husband, Dr. IG Patel, the fourteenth Governor of the Reserve Bank, while he was in College. When Dr. Patel became Governor, she wondered whether IG, as she referred to him, would be taking over the same position that James Taylor did. She was amused at the thought but never found an answer.

On making enquiries, I found that the other James Taylor was a former Registrar of the University of Bombay from September 1868 to May 1874. The James Taylor Prize, instituted in 1875, went to the student who passed BA with First Class, securing the highest marks in a combination of subjects, the priority being six papers in Economics and two in Modern India. Around the time Dr. Patel won the prize in the mid-1940s, perhaps not long after Governor Taylor’s death, the prize amount was Rs 85, given away as books.

This memorial of the other Taylor was commissioned by the Bombay Chamber of Commerce and other institutions he was associated with.

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The other Deputy Governor

Earlier, I mentioned in passing Sir Sikandar Hyat-Khan, who was the second Deputy Governor, the second President of BCCI, the cricket body, and later Premier of Punjab. Unfortunately, the grave of Hyat-Khan in the Badshahi Mosque, Lahore, where Allama Mohamed Iqbal is also interred, is under extreme neglect, according to reports (see here).

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As there are no known descendants of Taylor and as he devoted almost his entire working career to the cause of central banking in India, I feel that it is only appropriate for the Reserve Bank of India to rectify the wrong done to Taylor’s memory. It could commission a suitable grave and memorial in the existing space. Or else, as more recent graves now occupy the surrounding area, Taylor’s remains could be exhumed and shifted to a more ideal place with a suitable memorial built over it.

The Bank could also consider instituting a suitable endowment, scholarship, chair, or lecture series at the University of Edinburgh in memory of Sir Taylor.

My email to the Governor of the Reserve Bank of India, making this appeal, is reproduced in the Annexe below. If the Bank, for some reason, feels constrained to act on my appeal, I am sure that the Reserve Bank fraternity in Mumbai will rise to the occasion and do the needful.

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As I located Taylor’s grave and discovered its derelict and dilapidated state, Macbeth’s famous soliloquy came to mind:

Tomorrow, and tomorrow, and tomorrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life's but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing. (Macbeth, Act V, Scene 5)

But Shakespeare is too well known to have qualified for an epitaph unique to a person of great and unparalleled accomplishments.

If Deshmukh were one of the pallbearers, as Dadabhoy claims, the devoted and admiring protégé that he was, and with his penchant for poetry, whether Sanskrit or English, perhaps even Greek or Latin, that ICS officials of the period often dabbled in, he could have penned a suitable epitaph. And it is not that Deshmukh was unaware of such post-funeral formalities. He would build a marble memorial for his British wife, Rosina, a few years later and deposit an amount with the local Rector to look after the grave in perpetuity. This is an omission that I hope somebody will soon rectify.

Apart from the epigraph, I considered the following for an epitaph:

My days are swifter than a weaver’s shuttle, And come to an end without hope.

Job 7:6

My days are like a lengthened shadow,
And I wither away like grass.

Psalm 102:11

Finding them unsuitable, I put my amateur poetic side to work to pen a few lines:

Many notes I signed,
 backed by gold, 
 pure and standard;
 in strong holds, 
 safely secured.
All were left behind;
no doubt, long withered,
like the leaves around.

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I am posting this in Varanasi. As I will write in detail later, the objective of my visit was to roam around and drink in the city’s ambience and history. But, somebody told me that it was pitru paksha, ideal for shraddha, the traditional ceremonial offering for one’s ancestors. I thought, why not? Maybe it was providential. This morning, just before completing this post, I went ahead. The first six of the seven pinda danams covered close relatives. The seventh, the dharma pind, pays respect and homage to all who preceded you and contributed to whoever you are: teachers, friends, colleagues, distant relatives, helpers, cooks and whoever served or influenced you. I added the Scottish gentleman, who died aged 51, working in the cause of central banking in India.

Note: I deeply thank the ready, comprehensive, and unhesitating assistance from Andrew McMillan, Hon. Archivist, The Edinburgh Academy.

© G Sreekumar. Sreekumar is a former central banker. This long essay on Sir James Taylor is a work in progress. Several important parts of his tenure were omitted for want of complete information. I hope to cover them on a future date. The urgent need to restore Sir Taylor’s grave, as detailed in the Annexe below, is one reason I am advancing the publication of an incomplete work. Suggestions are welcome in the comments section.


Email to Governor, Reserve Bank of India

Respected Governor

As a former central banker with an abiding interest in the history of central banking, central banks and central bankers, I make this appeal regarding Sir James Taylor, the Bank’s second Governor.

Besides being the youngest Governor of the Reserve Bank of India and the only one to die in office, Taylor was “a vigilant watchdog of India’s interests”, as CD Deshmukh described him. The lengthy debates in the Central Legislative Assembly and the Council of States, Sir Taylor piloting the Reserve Bank Bill in the latter, substantiate this.

First central banker

Taylor spent over two decades in the cause of Indian central banking. This accounts for most of his working career, except for military service during the First World War, a few years in his initial District posting, and the Commerce Department. This includes Taylor’s decade-plus experience as Deputy Controller and Controller of Currency and his years as Addl. Secretary/Secretary, Finance, working on the Reserve Bank Bill. It also includes the eight years he worked as Deputy Governor and Governor in the Bank’s formative years, where his vision and hard work played a crucial role in seeing the Bank through the initial rough weather and nurturing and placing a nascent institution on an even keel. Taylor thus ensured a seamless transition for the central banking functions from its pre-Reserve Bank days to the ones after the Bank was established. Taylor could, therefore, be described as India’s first true central banker.

Taylor’s grave

Sir Taylor was interred in the Sewri Christian Cemetery in Bombay on 17 February 1943. In my detailed blog post on Sir Taylor, I have added photographs of the grave ( It may be seen that the grave is in gross disrepair and neglect and does not give credit to the rank and position held by Sir James Taylor and his many achievements.

An appeal

As Taylor has no known descendants and no other institution with which he had a long and meaningful association, may I request the Reserve Bank of India, as a special case, to kindly take the initiative in restoring Sir Taylor’s grave to its rightful dignity? More recent graves in the vicinity make building a memorial in the existing place infeasible. I suggest arranging for exhuming Sir Taylor’s remains and shifting them to a more ideal place which could be purchased to prevent further encroachment. A one-time endowment at the cemetery should ensure the continued upkeep of the memorial.

Sir Taylor studied at the Edinburgh Academy and Edinburgh University, passing out with great distinction and record success, justifying lengthy commendation in the Academy’s journal. The Bank could also consider a suitable endowment, scholarship, chair, or lecture series at Edinburgh University in memory of Sir Taylor.

With respectful regards

Sreekumar Gopalakrishnan

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2 thoughts on “In search of Sir James Taylor”

  1. Very well researched article, throwing much light on the second Governor of RBI, who also did much to “Indianise”the Bank. Its intriguing that his legacy hasn’t received the deserved attention; it’s equally unfortunate that his last resting place remains in a state of utter disrepair in the city of Bombay where RBI is located. I do hope the Governor takes some action on your appeal , both on Taylor’s grave and in the matter of the Endowment. Compliments on this long read: well worth the effort, both for the author and the reader!

    1. Compliments more to the reader for having plodded through. The author, anyway, is ungainfully, but usefully underemployed, as you can see.

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