¹ In this paper, the term ‘monetary policies’ is used to represent exchange-rate policies as well.

² Cain, P. J., and Hopkins, A. G., ‘Gentlemanly Capitalism and British Expansion Overseas: The New Imperialism, 1850–1950’, Economic History Review, 1 (1987);Google ScholarKrozewski, G., ‘Sterling, the “Minor” Territories and the End of Formal Empire, 1939–1958’, Economic History Review, 2 (1993).Google Scholar

³ De Cecco, M., Money and Empire: The International Gold Standard (Oxford, pp. 120–2;Google ScholarAmbirajan, S., Political Economy and Monetary Management: India, 1860–1914 (New Delhi, 1984), p. 169;Google ScholarPresnell, L. S., ‘Sterling System and Financial Crises before 1914’, in Kindleberger, C. P. and Lafargue, J. P. (eds), Financial Crises. Theory, History and Policy (Cambridge, 1981), p. 162;Google ScholarCommittee on Indian Exchange and Currency, 1920 (Babbington-Smith Committee), Memoranda and Evidence, app. IIB to app. A,Google Scholar ‘A History of the Indian Currency System and its Present Position and Problems’ by Abrahams, Lionel; The Collected Writings of John Maynard Keynes (JMK), vol. 1 (London, 1971), pp. 75, 80–3.Google Scholar

⁴ Balachandran, G., ‘Britain's Liquidity Crisis and India: 1919–1920’, Economic History Review, 3 (1993);Google Scholar‘India in Britain's Liquidity Crisis: The Stabilization of 1920’, Papers in Third World Economic History (School of Oriental and African Studies, London, 1990), pp. 3–10.Google Scholar

⁵ In general, India's gold imports depended on her income, which could be expected to rise as the world economy expanded. During the 1920s, Britain sought an expansionary global economic environment to ease her own postwar adjustment problems. Since Indian gold imports were thought to exert a counter-cyclical influence upon the world economy, Britain's policy-makers felt the need to insulate the Indian economy from global upswings. The exchange rate was the main instrument for this purpose, and the 1920 episode represented an early use of the emerging policy approach. For a more detailed argument, see Balachandran, ‘Britain's Liquidity Crisis’.

⁶ National Archives of India (NAI), GOIFD, A & F proceedings, no. June 1919–2073-C, ‘Regulation of Exchange between England and India’, Abrahams' memorandum, 26 Jan. 1919; Abrahams to Lucas, 27 Jan. 1919; Meston's note, 17 April 1919; Howard's note, 12 May 1919.Google Scholar

⁷ JMK, vol. 15, pp. 38–9, 214–15, 234–6;Google ScholarChandavarkar, A. G., Keynes and India: A Study in Economics and Biography (London, 1990), pp. 107–8;Google Scholar contrast this with the India Office's nonchalant response to the effects of the 1920 stabilization package in India Office Library and Records (IOR), L/F/7/612, Kisch's ‘Note on Exchange and Currency Position’, 5 November 1920, and Howard's ‘Note on the Currency Situation’, 17 November 1920; for Abrahams' influence on Keynes, see Chandavarkar, , Keynes and India, pp. 25–6, 107–8, 191;Google Scholar also see JMK, vol. 15, pp. 38–9, 95–6.Google Scholar

⁸ School of Oriental and African Studies (SOAS), Addis Papers, PP. Ms. 14/37, Addis's diary entry, 20 Oct. 1919; for an example of the new, post-Abrahams attitude, see the India Office memoranda referred to in the previous note.Google Scholar

⁹ Even as an Indian government official, Brunyate's attitude in financial matters was rather more London-centred than that of any of his colleagues; see NAI, GOIFD, A & F proceedings, no. Feb. 1916–112–A, Brunyate's ‘Statement of the Case’, 4 January 1916.Google Scholar

¹⁰ See, for example, Royal Commission on Indian Currency and Finance, 1926 (Hilton-Young Commission), Minutes of Evidence, Q. 11303 and QQ. 11267–80; SOAS, Addis Papers, PP. Ms. 14/557, Brunyate to Addis, 10 November. 1926; also Brunyate, J. B., ‘Report of the Royal Commission of Indian Currency and Finance—1926’Google Scholar, Journal of the Royal Society of Arts (1926), p. 76.Google Scholar

¹¹ Bank of England (BOE), ADM 20/13, Norman's diary entry of 6 May 1924.Google Scholar

¹² IOR, L/F/5/29, p. 517, Abrahams to Meston, 26 Oct. 1906; para. 3 of Financial Despatch no. 3 of the Government of India, 26 April 1907.Google Scholar

¹³ Two shillings sterling would equal 2S. gold when sterling returned to its prewar parity with the metal.Google Scholar

¹⁴ Balachandran, ‘Britain's Liquidity Crisis’.Google Scholar

¹⁵ IOR, Mss Eur D523/4, Chelmsford to Montagu, 17 Mar. 1920; Montagu to Chelmsford, 8 April 1920, 15 April 1920, and enclosed memorandum entitled ‘Reverse Councils’, 13 May 1920.Google Scholar

¹⁶ NAI, GOIFD, A & F proceedings, no. May 1923–64-A, note by Dutt and Hailey, September. 1922; no. May 1923–72-A, Cook to McWatters, 9 Oct. 1922.Google Scholar

¹⁷ IOR, Mss Eur D703/24, Viceroy to Secretary of State, 8 Nov. 1926.Google Scholar

¹⁸ IOR, Mss Eur E397/20, Baldwin to Blackett, 24 June 1923; L/F/7/468, f. 16, Secretary of State to Viceroy, 1 May 1923; Hilton-Young Commission, Memoranda, app. 3 to vol. 2, McWatters’ memorandum, app. II, p. 25.Google Scholar

¹⁹ Churchill College Archives (CCA), Cambridge, Hawtrey Papers, Htry 1/3/1, text of Blackett's speech to the Associated Chambers of Commerce, Dec. 1923.Google Scholar For a more detailed discussion of the episode, see Balachandran, G., ‘The Sterling Crisis and the Managed Float Regime in India, 1921–1924’, Indian Economic and Social History Review (IESHR) 1 (1990), pp. 19–27.Google Scholar

²⁰ CCA, Htry 1/3/1, Blackett to Hawtrey, 1 May 1923.Google Scholar

²¹ IOR, L/F/7/468, f. 16, Viceroy to Secretary of State, 23 April 1923. This summary is based on L/F/6/1047, f. 2410, Viceroy to Secretary of State, 5 Feb. 1923, Secretary of State to Viceroy, 6 Feb. 1923, Viceroy to Secretary of State, 31 August 1923, and Secretary of State to Viceroy, 5 Sept. 1923. For a more detailed discussion, see Balachandran, ‘Sterling Crisis’.Google Scholar

²² Federal Reserve Bank of New York (FRBNY), Strong Papers, 1111.1, Blackett to Strong, 13 Feb. 1923.Google Scholar

²³ BOE, OV 9/17, Schuster to Niemeyer, 10 Jan. 1929; according to Edward Benthall, politically the most active and well-connected British businessman in India, Cecil Kisch, Secretary of the India Office's Finance Department and the subject of Schuster's remarks, felt no European except himself could effectively control Indian finances; he also appears to have had the ear of the Secretary of State; see University of Cambridge, Centre of South Asian Studies (CSAS), Benthall Papers, box 2, f. 3, Benthall's remarks on p. 97.Google Scholar

²⁴ FRBNY, Strong Papers, 1111.1, Blackett to Strong, 13 Feb. 1923.Google Scholar

²⁵ IOR, Mss Eur E387/22, Cook to Blackett, 26 April, and 3 May 1923.Google Scholar

²⁶ BOE, ADM 25/14, Siepmann to Norman, 31 Jan. 1924.Google Scholar

²⁷ BOE, OV 56/85, Blackett to Norman, 5 Nov., and 10 Dec. 1925.Google Scholar

²⁸ For a more detailed study of the gold standard controversy of 1925–26, see Balachandran, G., ‘Britain, USA and the Indian Gold Standard’, Economic and Political Weekly, 2–909. (1989).Google Scholar

²⁹ Royal Commission on Indian Finance and Currency, 1914 (Chamberlain Commission), Appendices to the Interim Report of the Commissioners, vol. 2, app. XIV, ‘Memorandum on Proposals for the Establishment of a State Bank for India’ by Lionel Abrahams.Google Scholar

³⁰ JMK, vol. 15, pp. 151–203 contains the text of Keynes' State Bank plan; Chamberlain Commission, Final Report of the Commissioners, sec. 5, discusses central banking;Google Scholar for a summary of the Keynes plan, see JMK, vol. 15, pp. 128–32;Google Scholar also see pp. 133–50, 212–19; also see Chandavarkar, Keynes and India, and Bagchi, A. K., ‘Keynes, India and the Gold Standard’, in Banerjee, D. (ed.), Essays in Economic Analysis and Policy: A Tribute to Bhabhatosh Datta (Delhi, 1991), pp. 229–34.Google Scholar

³¹ The latter emphasis—of depoliticizing decision-making in monetary affairs— was not altogether absent in Keynes' plan. But it was somewhat incidental, and arose in the background of the silver purchase controversy which culminated in the setting up of the Chamberlain Commission; see JMK, vol. 15, p. 143.Google Scholar

³² Sayers, R. S., The Bank of England, 1891–1944 (Cambridge, 1976), vol. 1, pp. 156–60; vol. 3, apps. 9 and 10.Google Scholar

³³ BOE, ADM 16/2, Norman's memorandum of 15 Feb. 1921 and enclosure;Google ScholarBoyle, A., Montagu Norman (London, 1967), p. 206;Google ScholarSayers, , Bank of England, vol. 1, pp. 156–60; by 1927,Google Scholar however, Norman was disappointed enough about the outcome of his efforts to characterize central bank cooperation as ‘melancholic’ and ‘rather a pretence! than deep reality’; see Sayers, , Bank of England, vol. 3, app. 17, p. 100.Google Scholar

³⁴ Meyer, R. H., Bankers' Diplomacy: Monetary Stabilization in the 1920S (New York, 1976);Google ScholarCostigliola, F. C., ‘Anglo–American Financial Rivalry in the 1920s’, Journal of Economic History (1977).CrossRefGoogle Scholar

³⁵ BOE, G30/9, Norman to Peel, Viscount, 26 Oct. 1922; also see his letters to Siepmann cited below.Google Scholar

³⁶ CCA, Hawtrey Papers, Htry 1/3/1, Hawtrey to Blackett, 7 June 1923; BOE, G3/179, Norman to Blackett, 31 March 1924.Google Scholar

³⁷ BOE, ADM 25/14, Norman to Siepmann, 12 Sept. 1923; Siepmann to Norman, 31 Jan. 1924.Google Scholar

³⁸ BOE, ADM 25/14, Norman to Siepmann, 12 Sept. 1923.Google Scholar

³⁹ BOE, ADM 25/14, Norman to Siepmann, 14 Nov. 1923; Siepmann to Norman, 31 Jan. 1924.Google Scholar

⁴⁰ BOE, ADM 25/14, Norman to Siepmann, 12 Sept. 1923.Google Scholar

⁴¹ IOR, Mss Eur E397/22, Cook to Blackett, June and 13 June 1923.Google Scholar

⁴² BOE, G3/180, Norman to Blackett, 21 May 1924; IOR, Mss Eur E397/22, Cook to Blackett, 24 May, and ‘ June 1923.Google Scholar

⁴³ BOE, G14/96, ‘Final Edition’ of ‘Confidential Suggestions’, 19 March 1923; also see the letters cited in the previous note.Google Scholar

⁴⁴ NAI GOIFD, A & F proceedings, no. 11. 1923–565–71-B, ‘India Office Report of Meeting at Bank of England on 19th March 1923 between Representatives of the Bank of England. the London Office of the Imperial Bank of India and the India Office’, enclosure no. 1 to the Secretary of State's Financial Despatch no. 13 of 3 May 1923; for Indian suspicions of the India Office's attitude towards the Imperial Bank, see proceedings, no. May 1923 60–126-A, Cook's note, 7 Dec. 1922; also see f. no. 2(VI)-F-1928, Kisch to Burdon, 28 June 1928, for more evidence of the India Office's continued efforts to reduce the role of the Imperial Bank of India.

⁴⁵ BOE, ADM 25/14, Norman to Siepmann. 26 May 1924; also see the papers in NAI, GOIFD, A & F proceedings, no. Dec. 1923–599–605-B.Google Scholar

⁴⁶ BOE, G3/182, Norman to Blackett, 8 Dec. 1925.Google Scholar

⁴⁷ BOE, OV 56/52, note by Norman, undated, but attached to the minutes of the committee's meeting of 16 March 1925. The subject was raised in nearly every meeting of the committee until February 1926 when India's gold demand began to level out; also see OV 56/49 and OV 56/54. Noman's letters on gold to Blackett, Niemeyer and Warren (of the Imperial Bank) were all retained by his ‘confidential typists’, and have not come down to us.Google Scholar

⁴⁸ BOE, GI/317, ‘Note of a conversation between Mr E. C. Benthall and the Governor and Sir Ernest Harvey’, 8 Oct. 1928; rough notes in the same file of a further meeting on 30 November. 1928; Norman to Osborne Smith, 31 Dec. 1928; CSAS, Benthall Papers, box 7, f. 1, p. 9, diary entry of 13 February. 1929 which speaks of a meeting at which Norman, Hatvey, Blackett, Benthall, and Walter Layton (editor of the Economist) discussed the threat of an Indian takeover of the bank.Google Scholar

⁴⁹ Hilton-Young Commission, Minutes of Evidence, Q. 11000, QQ. 11141–7, QQ. 11623–5.Google Scholar

⁵⁰ Hilton-Young Commission, Minutes of Evidence, Q. 11140.Google Scholar

⁵¹ Hilton-Young Commission, Minutes of Evidence, QQ. 11179, 11627, 11181–3, and 11439–49.Google Scholar

⁵² Kisch, C. H., Central Banking (London, 1928).Google Scholar

⁵³ CCA, Hawtrey Papers, Htry 1/3/2, Strakosch to Blackett, 17 October. 1925; Public Records Office (PRO), T176/25B, Strakosch's note ‘Imperial Bank of India’, 28 February. 1926;Google Scholar in Sayer's view (Bank of England, vol. 1, pp. 202–3) Strakosch was, along with Norman, one of the pioneers of central banking.Google Scholar

⁵⁴ Chandavarkar, , Keynes and India, pp. 82, 106–7.Google Scholar

⁵⁵ PRO, T176/25B, Hilton-Young to Niemeyer, 19 Oct., and reply, 20 Oct. 1926; IOR, L/PO/2/3(i), Chancellor to Secretary of State, 21 Oct., and reply, Oct. 1926.Google Scholar

⁵⁶ IOR, L/PO/2/3(i), note, 22 Oct. 1926; Kisch to Carter, 20 Oct. 1926.Google Scholar

⁵⁷ IOR, L/PO/2/7(i), ‘Memorandum on points of controversy between the Government of India and the Secretary of State arising out of the Reserve Bank Bill’, undated; L/F/7/2292, colln. 375, f. 19, pt. 3, Secretary of State to Viceroy, 7 Sept. 1927; Viceroy to Secretary of State, 10 Sept. 1927; Mss Eur D/703/27, Secretary of State to Viceroy, 3 Sept. 1927; also see R. Mathur, ‘The Delay in the Formation of the Reserve Bank of India: The India Ollice Perspective’,Google ScholarIESHR (1988).Google Scholar

⁵⁸ BOE, OV 56/1, Norman to Strakosch, 26 Sept. 1927.Google Scholar

⁵⁹ IOR, Mss Eur D703/27, telegram, 14 Sept. 1927; L/PO/2/7(ii), Birkenhead to Irwin, 22 September. 1927; these statements may have been intended to threaten Blackett that a future career in the City ‘depended on his being amenable…‘; according to one of Blackett's successors, such threats were London's stock-in-trade in dealings with Indian civilians; see CCA, Grigg Papers, 2/22, Grigg to H.J. (Rowlands), n.d., but Sept. 1938.Google Scholar

⁶⁰ IOR, Mss Eur D 703/27, Birkenhead to Reading, 19 Sept. 1927; also Reading to Birkenhead, 15 Sept. 1927.Google Scholar

⁶¹ BOE, G1/312, Kisch to Norman, 13 Feb. 1928; IOR, L/PO/2/3(i) Kisch to Kershaw, 2 Feb. 1928.Google Scholar

⁶² IOR, L/PO/2/7(i), Kershaw's note, 25 Oct. 1927, and Secretary of State to Viceroy, 27 Oct. 1927; BOE, ADM 20/16, Norman's diary entry of Nov. 1927, describing a meeting with A. Hirtzel of the India Office.Google Scholar

⁶³ BOE, G1/312, Norman to Birkenhead, Feb. 1927; Norman to Smith, 9 Mar. 1927; Smith's reply, 22 April 1927.Google Scholar

⁶⁴ IOR, Mss Eur E397/31, Siepmann to Blackett, 4 Feb. 1927.Google Scholar

⁶⁵ IOR, L/PO/217(ii), note by Hirtzel, 16 Sept. 1927; also see Mss Eur D703/27 Viceroy to Secretary of State 9 Sept., and 14 Sept. 1927.Google Scholar

⁶⁶ For Norman's resolve to prevent the South African Reserve Bank coming under the influence of that country's politicians, see Ally, R., Gold and Empire: The Bank of England and South Africa's Gold Producers, 1886–1926, forthcoming book, ch. 4, pp. 103–8;Google Scholar the page references are to the manuscript. I am grateful to Dr Ally for permission to cite his material.

⁶⁷ The main financial safeguards papers are in IOR, L/F/6/1179 f. 4495, and L/F/5/191; PRO, T160 519/F12471/05/2, T172/16, and T175/45; BOE, GI/310, and 311.Google Scholar

⁶⁸ BOE, G1/411, Norman to Schuster, 3 Sept. 1930; PRO, T160/F. 12471/05/2, ‘Indian Constitutional Programme: Some Financial Aspects’, Grieve's memorandum, 12 Sept. 1930.Google Scholar

⁶⁹ CSAS, Benthall Papers, f. 2, diary entry of 20 Nov. 1934, quoting Indian government officials.Google Scholar

⁷⁰ PRO, T177/16, Waley's minute, 3 April 1933; T175/45, Hopkins's ‘Note on the View of the Financial Advisers’, 29 Oct. 1932.Google Scholar

⁷¹ BOE, G1/310, notes of the meeting between Indian representatives from the Round Table Conference and a delegation of London bankers led by Norman, undated but July 1931; see also Norman to Strakosch, 7 July 1931.Google Scholar

⁷² BOE, G1/314, ‘General Principles upon which Relations between the Bank of England and the Reserve Bank of India will be based’, 3 Oct. 1934.Google Scholar

⁷³ BOE, G1/314, Norman to Kisch, 20 Feb. 1934; OV 56/47, Norman's note on memorandum by Poppiatt, 30 Nov. 1935; Norman had also opposed the South African Reserve Bank's move to open a London branch for similar reasons; see CCA, Hawtrey Papers, Htry 1/23, Norman to Hawtrey, 14 Jan. 1921.Google Scholar

⁷⁴ BOE, G1/316, Grigg to Norman, 17 Jan. 1934; G1/313, Harvey's ‘very secret’ note, 6 March, 1934.Google Scholar

⁷⁵ NAI, GOIFD, f. no. 7 (52)-F-1933, report of the India Office ‘Committee on Indian Reserve Bank legislation’, 14 March 1933; Schuster to Kisch, 10 April 1933. Kisch to Schuster, 28 April 1933; Taylor's note, 10 May 1933; Kelly's note, 25 May 1933; Finance Department memorandum, 29 May 1933.Google Scholar

⁷⁶ BOE, G1/314, Norman to Kisch, 20 Feb. 1934; Kisch to Norman, 26 Feb. 1934; C40/177, Poppiatt's note, ‘Reserve Bank of India’, 16 Sept. 1935.Google Scholar

⁷⁷ CCA, Grigg Papers, 2/3 Stewart to Grigg, 25 Jan. 1936.Google Scholar

⁷⁸ IOR, L/F/7/2292, colln. 375, f. 19, Pt. 3, Kisch's ‘Memorandum on Points of Controversy between the Government of India and the Secretary of State arising out of the Reserve Bank Bill’, Nov. 1927.Google Scholar

⁷⁹ IOR, Mss Eur E397/29, Niemeyer to Blackett, 6 July 1927; L/PO/1/52(ii), Kershaw's note, 3 May 1933; BOE. G14/96, Minutes of the Committee of the Treasury, 26 Nov. 1930;Google ScholarSchuster, G., Private Work and Public Causes: A Personal Record (Cardiff, 1979), P. 122.Google Scholar

⁸⁰ BOE, G2/10, Hoare to Niemeyer, 21 Nov. 1933.Google Scholar

⁸¹ BOE, G1/411, ‘Finance Member’, 23 Oct. 1933; the statement is derived from Norman's short-list of candidates with his remarks against their names.Google Scholar

⁸² CCA, Grigg Papers, 2/7, letter to Floud, 22 Feb. 1936; 2/9, letter to his father, 6 July 1937.Google Scholar

⁸³ PRO, T160, 426/f. 11548, Grigg to Snowden, 11 Oct. 1929;Google ScholarGrigg, , Prejudice and Judgement (London, 1948), p. 257, pp. 324–5, p. 330;Google ScholarCCA, Grigg Papers, 2/2, Grigg to Chamberlain, 17 Aug. 1934; see also his correspondence with Chetwode in 2/3.Google Scholar

⁸⁴ CCA, Grigg Papers 2/2, Grigg to Chamberlain, 30 March 1936; also see 2/20, Grigg to Stewart, 23 July 1934.Google Scholar

⁸⁵ Grigg, , Prejudice, p. 290.Google Scholar

⁸⁶ Boyle, , Norman, p. 206.Google Scholar

⁸⁷ CCA, Grigg Papers 3/4, Smith to Grigg, 13 May 1937; reply, 20 May 1936; note of 16 May 1936; also see Prejudice, p. 209; FICCI stands for the Federation of Indian Chambers of Commerce and Industry.Google Scholar

⁸⁸ CCA, 3/2, Grigg Papers Grigg to Smith, 8 March 1935; 14 Nov. 1935; Smith to Grigg, 18 November. 1935 Nehru Memorial Museum and Archives (NMMA), PT Papers, 105, Smith to Thakurdas, 27 June, 21 July, 10 August., and 10 Sept. 1936.Google Scholar

⁸⁹ IOR, Mss Eur D714/31, Grigg to Stewart, 14 May 1934; BOE, Gl/316, Kershaw to Norman, 6 Feb. 1934.Google Scholar

⁹⁰ CCA, Grigg Papers 3/10 has copies of the intercepted mail; Grigg's charges against Smith and his lady friend are also in this file.Google Scholar

⁹¹ CCA, Grigg Papers, 3/2, 3/3, 3/4, and 3/10; IOR, L/PO/3/2(i); the Bank of England papers on this episode were not yet open to researchers when this student wished to consult them; the episode is also discussed in Mathur, , ‘Delay’, and Rothermund, D., India in the Great Depression, 1929–1939 (Delhi, 1992).Google Scholar

⁹² CCA, Grigg Papers 3/5, Secretary of State to Viceroy, 20 Aug. 1936.Google Scholar

⁹³ BOE, G1/318, Taylor to Norman, 15 Nov. 1938; Norman to Baxter, 25 Nov. 1938; Norman to Taylor, 22 Nov. 1938; also OV 56/3, ‘India Confidential’ by Kershaw, 31 May 1938.Google Scholar

⁹⁴ Gallagher, J. and Seal, A., ‘Britain and India between the Wars’, Modem Asian Studies, 15, 3 (1981), p. 409;CrossRefGoogle ScholarTomlinson, B. R., ‘India and the British Empire, 1880–1935’, IESHR, 4 (1975), pp. 374–7.Google Scholar

⁹⁵ Also see in this connection, James, H., ‘Introduction’, in James, H., Lindgren, H., and Teichova, A. (eds), The Role of Banks in the Interwar Economy (Cambridge, 1991), p. 5, which discusses, in a different context, the possibility of institutions using (or promoting) financial crises to secure their own position.Google Scholar

⁹⁶ In Contrast, the South African Reserve Bank, which was also set up with a view to integrating it ‘into the working of the Bank of England’, quite soon became an ‘essential element in helping South Africa to secure its currency autonomy from Great Britain’; see Ally, Gold and Empire, ch. 5; the quotc is from ch. 4, pp. 110–1.Google Scholar