We have an unusual situation of an OFFICIAL DOCUMENT from Indias Central Bank The Reserve Bank of India saying that Alfred Rothshcild and Evard Hambro were SCHEMEING to create an unpopular Central Bank in India
The following post is based on OFFICIAL RBI Archival document titled Genesis of Central Banking in India
“The question of the amalgamation of the Presidency Banks was not taken up again till 1898, when several witnesses before the Indian Currency Committee (Fowler Committee) drew attention to the inadequate banking facilities in India and the sharp fluctuations in the rate of discount. A few favoured the amalgamation of the Presidency Banks into a”State Bank”
One witness, Mr. A. de Rothschild, outlined a strong scheme for the creation, in India, of a bank with privileges similar to those of the Bank of England, by absorbing the Presidency Banks. It was to have a capital, the same as that of the Bank of England, viz., £14 million, to be held partly in gold and partly in sterling securities. The bank was to have the right to issue notes.Government were to use the bank and its branches as their Treasury. The proposed bank was not to conduct any foreign exchange transactions.
The bank was to make advances to the Indian Government, when necessary, against ‘deficiency’ bills.The management of the bank was to be vested in a Board comprising representatives of merchants and bankers (agents of a certain A Rothschild maybe??) and also those of Government. Government representation was regarded as necessary to ensure that the policy of the bank and that of Government were in ‘absolute harmony’. It is not known whether any consideration was given to this proposal.
One of the members of the Fowler Committee, Mr. Everard Hambro,(“Crypto Norwegian Jew” and Rothschild agent ) urged the establishment of a strong bank in India,despite the fact that the question of banking facilities in India had not been referred to the Fowler Committee. Mr. Hambro stated that such a bank would be able to carry out the currency regulations more effectively and more in harmony with the trade needs of the country than any Government Department could possibly do, and, that, moreover, such a bank alone with ample facilities at its disposal, would be in a position to expand the supply of capital in times of pressure and contract it in times of slackness. (In short Rothshcild and his agents wanted to control the money supply in India )
In a despatch dated July 25, 1899, the Secretary of State invited the attention of the Government of India particularly to ‘the important recommendation with regard to the improvement and concentration of banking facilities contained in the separate report of Mr. Hambro’ .The Government of India, who, till 1871, had doubted the possibility of inducing really capable persons to come to India to manage such an institution,gave their whole-hearted support to Mr. Hambro’s suggestion .Such a bank, they stated, would be a powerful support to the State for effective maintenance of the gold standard and it could be entrusted with the management of Government paper currency.
The Government of India, however, felt that as the Presidency Banks had given good service to the country, Government owed them full consideration and therefore an attempt should be made in the first instance ‘to absorb the three existing banks in one strong establishment, constituted on a sterling* basis’. Thus, at this stage, the object was not mere amalgamation, but the entrusting of central banking functions to the new institution. It was thought necessary to elicit the views of the Presidency Banks and the business community on the subject.
Amalgamation was, however, opposed, among others, by the Bombay Chamber of Commerce and the Lieutenant-Governor of Bengal.The Chamber considered India and Burma too vast to be effectively served by one central bank. Also, the Presidency town where such a bank would have its seat of management would have an advantage over the other two. The Lieutenant–Governor’s thinking was on the same lines. He added that a huge monopoly was not in the public interest, and that credit was ‘a matter of local knowledge and experience’.
About a year later, in the winter of 1900-01, the matter was again discussed by Sir Edward Law, the Finance Member, with the Presidency Banks, exchange banks and leading merchants. He expressed views akin to those of Sir Roger de Coverley: the conclusions which have forced themselves on my mind are that there is under present conditions no real necessity for the foundation of such a bank in the interests of trade, and that although, in my opinion, the existence of a strong bank with abundant resources would be useful
The Government of India, in their despatch dated June 13, 1901 to the Secretary of State, stated that they accepted Sir Edward Law’s ‘ final deduction that sufficiently strong reasons have not been shown for carrying out the amalgamation scheme at the present time’. The despatch further said: We are therefore regretfully compelled to advise that the scheme should be held in abeyance, although we desire at the same time to record our deliberate opinion that it would be distinctly advisable, if practicable, to establish a Central Bank in India . . . .
The Secretary of State while accepting this view reluctantly, added in the despatch of July 26, 1901, ‘I request that this object may be kept in view and that
the scheme may be revived, whenever there is a probability of its being successfully carried out’.