Home > Current Issue (Fall 2001) > 'Sikka' and the Crown
  Introduction & Part I | Part II | Table of Mints & Part III | Parts IV & V | Appendix | References  

Part IV

Lord Northbrook, who succeeded Lord Mayo on 3 May 1872, was very keen to adopt a general policy regarding the handling of Native coinage with a view to introduce an uniform coinage throughout India. At his instance, the question of change in the existing law to facilitate the currency of the Native coinage in the British India was revived in the Financial Department in July 1872. R.R. Chapman, Secretary to the Government of India in the Financial Department was doubtful about the working of such a system. He observed in his Office Note that, ".... if at all it worked....I do not expect it would do in this generation." 56 Lord Northbrook, on the other hand, did not see any objection and regarded the plan to admit the coins of the Native States as a legal tender in the British Indian territories as " a beginning in the direction of an uniform coinage." 57

Thus, in September 1872, a Resolution prescribing the condition on which coins of a Native State may be admitted as a legal tender in British India was introduce in the Financial Department. 58 [f1] The provision of the Resolutions were to apply on a reciprocal basis to the silver and copper coins "struck by, or on behalf of" any Native State "which has a mint in active operation, or which may hereafter be held entitled to re-open such a mint." 59 As a necessary condition of this arrangement, the Native States were to agree to abstain from coining in the same metal in their mint. As an alternative, the Government of India agreed to manufacture the Native coins in a British mintunder the same regulation as well as purity standards as applicable to its own coins. As a distinctive feature, however, such coinage was to bear the obverse and reverse device approved by the Governor-General-in-Council as well as value in the money of the Government of India in English language. Besides, the Government of India kept to itself the power to regulate the quantum of coinage for any Native State.

The Government was keen to adopt a legislation for this purpose, "as soon as information is received that any Native State is ready to enter into the reciprocal arrangement described in the Resolution." 60As the consent of the Secretary of State was required to adopt a law to authorize the Government of India to declare coins of Native States to be a legal tender in British India, a copy of the above Resolution was sent to him on 13 October 1872. 61 The Secretary of State, in his reply dated 12 February 1873 sanctioned generally the arrangements proposed by the Government of India, but with regard to the condition which required the Native States to undertake to abstain from minting coins in the same metal at their own mints, he wanted to have some safeguards against the possibility of British Indian territories being flooded with the inferior coins manufactured in Native Mints. He, therefore, suggested that a provision should be made that, "....in the events of subsequent manufacture of the coin by any Native Chief, the coin of the same metal .... should cease to be legal tender in British Indian territories." 62 The Secretary of State also stressed upon the importance of "... proceeding with great caution in regard to the introduction of the measures contemplated, and especially as to the exercise of any pressure upon the Chiefs with the view to obtain their cooperation." 63 He held the opinion that the "... object aimed at can only be obtained gradually, and with the goodwill and free consent ofNative Rulers." 64 The Secretary of State directed the Government of India to forward the draft of the proposed legislation and warned that it may not be passed into law without his prior approval.

It was not long thereafter, when the Government of India was provided with an opportunity to move ahead in the direction of the proposed legislation. On 19 March 1873, Capt. T. Cadell, Political Agent at Alwar, informed Col. J.C. Brooke, the Officiating Agent of the Governor-General in Rajputana, about the willingness of that State to agree to the terms proposed in the Resolution. 65 "The coinage arrangements are beginning to bear fruits," recorded a jubilant Aitchison in his Office Note dated 24 April 1873. 66 The Financial Department asked the Legislative Department to prepare a Bill, "for the purpose of admitting the coins of Native States to be a legal tender on payment or in account in British India," and also directed that "the provisions of the Bill should be general and not special to any State." 67 The draft of the Bill was accordingly prepared in the Legislative Department under the supervision of Sir Richard Temple, Member of the Supreme Council of the Government of India Incharge of the Financial Department. 68The draft of the Bill entitled,"A Bill to Enable the Government of India to declare certain coins of the Native States to be a legal tender in British India" was sent to the Secretary of State on 15 September 1873 for his approval. 69

Meanwhile, Reports from the Political Officers at various Native Courts were received by the Government of India. 70 It was noticed that with the exception of Alwar, the States in Rajputana and Central India were not in favour of the Government ’s scheme. Similarly, neither Cochin nor Travancore were willing to enter into the proposed arrangement. 71 All these States were averse to give up their minting rights because they regarded coining as one of the insignia of independence and were opposed to lose an important source of revenue. Besides, the cost of carriage of bullion to the Mint and the coin therefrom was also seen as a crunch on their incomes.

Presumptions and apprehensions differed on the feasibility of the legislation. "I did not expect any other result," commented R.B. Chapman on the response of the Native Chiefs. 72 He suggested dropping of the entire matter, at least for the time being. Sir Richard Temple did not see that the Bill can do any harm. 73 Aitchison was even more hopeful than Temple. He noted, "As Ulwar has agreed, I think it would be as well to go on with it (The Bill); although the agreement of any one State is no very great matter, others may follow in time." 74

The Secretary of State, who was appraised about the response of other Native States, 75 was himself skeptical about the success of the proposed legislation. In his reply dated 7 January 1874, he declined to make any further observations on the subject for the time being. 76

The Government of India, on the other hand, was not ready to let this opportunity escape. In a letter dated 13 March 1874, it again pleaded with the Secretary of State that :

"....although no native state except Ulwar, is at present willing to enter into the arrangements which we have prescribed for that purpose, yet it is possible that they may in time be inclined to accept our terms as the Ulwar State has done." 77

The Government of India was anxious to be in a position to accept at once any proposal to that end which any Native State might make and for this purpose legal powers were required. Looking at the desperation of the Government of India to adopt a legislation to regulate the Native Coinage, the Secretary of State reluctantly yielded to its request. His sanction was conveyed by a letter dated 14 May 1874 in the following words:

"As you consider it desirable to obtain legal power with reference to the possibility of other native states agreeing to the contemplated arrangements hereafter, I will not withhold my consent to the course which you propose to adopt." 78

Immediately the Legislative Department was requested to proceed with the draft Bill. 79 As preparations were made to introduce the Bill in the Legislative Council, a new development took place.

In January 1875, a spontaneous offer was made on behalf of the Maharaja Holkar of Indore, by his Minister Sir T. Madhava Rao. He submitted the draft agreement to General H.D. Daly, Agent to the Governor-General in Central India, which contained terms and conditions on which Maharaja Holkar was willing to ‘close his mints and forego his privilege of coinage’ by transferring his right to the Government of India for a period of ninety-nine years. 80 However Holkar wanted to keep to himself the right to terminate the agreement at any time by giving three years’ previous notice. 81

This offer from one of the large Native States was welcomed by Daly, who observed, "I think Sindia may be moved after Holkar’s arrangements is completed." 82 However, on certain technical points, expert opinions from Col. H. Hyde, Mint Master, Calcutta, and E.F. Harrison, Comptroller General of India were sought. One of the points for consideration was that whether the Government should agree to the provision of terminating the agreement by a three-year notice. While Chapman, a hard liner, as well as Sir William Muir, who had succeeded Sir Richard Temple as the Member of the Supreme Council of the Government of India Incharge of the Financial Department, and Col. Hyde were unanimous in their opinion that the right of coining must be given up by the Native States forever, Northbrook, the Governor-General followed a softer line. He held that, "....it would be sufficient that there should be a long notice and that the Native States should engage not to use the same device." 83 The question was "not so much what is best as what can be effected," recorded the impatient Governor-General in Office Note dated 17 June 1875. 84

It was now stipulated that instead of forever, a period of thirty years may be provided for which the Native States should abstain from coining. As this new provision was a departure from the contents of the draft Bill approved by the Secretary of State, the Government of India, on 9 August 1975 once again addressed itself to the Home Government seeking sanction of the amendment thus proposed. The dispatch recorded :

"Upon reconsidering this condition (of abstaining from coining forever) in the light of the present negotiation with the Maharaja Holkar, we think its so improbable that any Native State would assent, that we are unwilling to risk the failure of the present negotiation by insisting upon it." 85

Since now one of the large Native States had expressed its desire to enter into an agreement with the Government of India, it was perhaps not difficult for the Secretary of State to sanction the modification of the Bill. His sanction was conveyed in a dispatch dated 30 November 1875 86 and was placed before the Governor-General’s Council which met on 25 January 1876. The modification approved by the Secretary of State was thereafter sent to the Legislative Department for amending the draft Bill. 87

Part V

The stage was now all set to have the much-awaited legislation and looking at the pace at which the subsequent events moved, it was clear that the Government of India was in a no mood to wait.

On 8 February 1876, the amended Bill was introduced in Governor-General’s Legislative Council. While introducing the Bill, Sir William Muir detailed the objects as well as provisions enunciated therein and which would eventually "smooth the way to the adoption of a common currency throughout all districts, both Native and British." 88 The long cherished desire of the British Government to suppress the Native Mints was also to be accomplished under the proposed legislation as, ".... every Native State which gives in its adhesion to the project will close one of the springs from which the varied currency flow, and in so far diminish the mischief." 89

In the subsequent meeting of the Legislative Council on 15 February, a discussion was held in which Maharaja Iswari Prasad Narayan Singh of Benaras and the Maharaja of Vizianagaram, both Members of the Governor-General’s Legislative Council, participated. Northbrook, acting as the President clarified that, "...the Government of India, in introducing this Bill, desires in no way to exercise pressure, either directly or indirectly upon Native States." 90 It was thereafter decided to refer the Bill to a Select Committee with instruction to report in a month, and publish the Bill in the Gazette of India as well as in respective Gazettes of the local Governments. 91 On the same day Sir William Muir, Sir Arthur Hobhouse (Member of the Supreme Council of the Government of India Incharge of the Legislative Department), Sir Edward Clive Bayley, J.R. Bullen Smith, Maharaja of Benaras and the Maharaja of Vizianagaram were appointed as the members of the Select Committee. 92 The Committee submitted its Report on 9 March 1876. 93 On 14 March the Report was presented in the Legislative Council 94 and on the same day the second draft of the Bill was published. The revised Bill was presented and was passed in the Legislative Council on 28 March 1876. 95 On the same day the Bill received the assent of the Governor-General and was adopted as Act IX of 1876 - An Act to Enable the Government of India to declare certain points of Native States to be legal tender in British India.

The Act provided that on a Native State agreeing to abstain from coining for at least thirty years, and not to allow coins resembling those of British India to be struck under its authority, the Government of India would strike for the State coins identical in weight and fineness with those of the British India, but with a device differing from that used before by the State. Such coins were to be declared legal tender in British India. (For full text of the Act please see the Appendix).

This attempt to unify the currency of all India was not very successful. Uptill 1893 only four minor States namely Alwar, Bikaner, Dewas (senior and junior branches), and Dhar had availed themselves of the provisions of the Act. In 1893 Government Mints were closed to public coinage and thereafter only one State, namely Sailana was allowed to get its coins struck under the provisions of this Act. With all the major Native States abstaining to be a agreeing party, the Native Coinage Act became, in effect, ‘a dead letter.’ 96

  Introduction & Part I | Part II | Table of Mints & Part III | Parts IV & V | Appendix | References  
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