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MacLeod and Keynes on India

A few posts ago I briefly mentioned the history of free banking in India and how it ended. Here is an old online book that discusses banking in the free banking period, though it focuses on the three largest banks, known as the presidency banks, and has little to say about the rest.  The account of the note issue is on pages 55-60. The presidency banks are the ancestors of today's government-owned State Bank of India. For a more recent treatment, see this book on the history of the State Bank, not online.

The Scottish-born lawyer and economist Henry Dunning MacLeod proposed a return to free banking in 1900 in an article (see page 53)  written for The Imperial and Asiatic Quarterly Review, and Oriental and Colonial Record.  ("What a wonderful name," remarked Mark Brady, who found the article–referring I suspect to its Victorian prolixity and self-assurance.) MacLeod also wrote another article (starting on page 263 of the link I already gave), and a third one. Earlier he had written a short book on Indian Currency. MacLeod's was the only voice I am aware of calling for a return to free banking in India; the horse was long out of the barn by then. MacLeod, by the way, is in the line of Henry Thornton and others whom Joseph Schumpeter described as adhering to a credit view of money rather than a monetary view of credit (see this post).

Besides work by MacLeod, I also recently found online the testimony of John Maynard Keynes to the 1926 Royal Commission on Indian Currency and Finance (Hilton Young Commission). The testimony, which is rather long (starting on page 145 of this volume) is revealing of Keynes's style as a talker. His views were not new–he had already expressed them in his first book, Indian Currency and Finance (100 years old this year) and in the Tract on Monetary Reform, a decade later–but it is still fascinating, to me at least, to read how he reacted to others rather than just how he presented his ideas as a monologist.

The volume with Keynes's testimony is in the Reserve Bank of India's digital library. Any reader interested in Indian monetary history will find other important government documents on the subject there.

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