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Bengal Famine Cash Coupons

Started by EWC, March 24, 2015, 09:13:27 AM

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EWC

I wonder if anyone has any thoughts/clarifications to make on the situation with regard to the Bengal Famine Cash coupons.

I raised this matter in a talk I gave various places about 25 years back.  There was no internet then, I had to get on a train to reach audiences in London, Oxford and Tubingen,  I never got any feedback on this aspect of the talk.

My information came entirely from a short paper by P L Gupta – and the primary source in that paper was a very brief and potentially ambiguous comment in the minutes of a meeting of the Chamber of Princes, 8th Nov. 1943, concerning a shortage of petty coin, and stating

"This shortage is mainly responsible for the hoarding of food grains."

I attach a scan of the slide I used at the time

PS - thanks to Krause for use of the pic from 'The Standard Guide to South Asian Coins and Paper Money since 1556 AD' p. 471

Figleaf

So you are basically arguing that the evidence is thin. One source, one picture, but a claim of some states issue cash coupons. Can you post Gupta's original remark, please? What is the text on the left design (I think I read TREASURY and BIKANER)

I know of two older, metallic famine tokens. If I remember correctly, the sequence was something like:

  • Big famine, many deaths, British do little to nothing and are massively blamed at home.
  • Famine. British do tokens that arrive too late but nevertheless have an effect.
  • Famine projected. British do tokens, but famine does not materialise.
Add wartime hoarding of silver and you get a credible scenario for doing nothing when there is a local need for small change and the coin shortage hitting the rumour mill may indeed have caused hoarding of rice. Giving Gupta some credit, the question becomes "is the design you show a cash coupon?" For the moment, it looks more like a tax stamp.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

malj1

Have you looked at the The Standard Guide to South Asian Coins and Paper Money since 1556 AD where a lot of these issues are to be found.

I have the first edition of 1981 where these issues start at page 470 - I haven't seen the new edition.
Malcolm
Have a look at  my tokens and my banknotes.

EWC

Thanks Malcolm - yes - 'The Standard Guide to South Asian Coins and Paper Money since 1556 AD' is  where my picture came from - there seem to be about 20 different issuing states listed there - but there are sure to be more.

I will try dig out the Gupta article - but may take a while.  There is an enormous amount of dispute about the Bengal famine – the Wiki article itself remains disputed:

http://en.wikipedia.org/wiki/Bengal_famine_of_1943

What we can say pretty much for sure is that Chamber of Princes, 8th Nov. 1943 thought that a lack of small change was contributing to the famine, and they took steps in many states to issue emergency paper coins to plug the gap

What is not clear is

1)  if there really was a shortage of petty coin,

2) if so - why?

3) if there really was a shortage of petty coin, how could that shortage impact the production or distribution of food

4) If it did in fact so impact the production or distribution of food

The most obvious possibility is that coin as well as food was being hoarded by speculators – but that conclusion is highly controversial and hard (impossible?) to prove (see the Wiki article for problems about judging whether food was hoarded!)





Pabitra

Quote from: Figleaf on March 24, 2015, 12:19:28 PM
I know of two older, metallic famine tokens.

I think reference is to these tokens.
Maj. Fred Pridmore wrote about the pieces, briefly, in The Coins of the British Commonwealth of Nations, Part 4, India (published in 1980).

The famine, also known as the Bihar famine of 1873 to 1874, was caused by drought. In response, rice was imported from Burma for distribution. The tokens were presumably used to monitor equitable distribution of rice to the needy.

This pair of the tokens is offered in A.H. Baldwin & Sons Ltd.'s April 2 Hong Kong auction.


FosseWay

On the image in the OP it says "Issue of new petty coin ceases in 1942". No denomination apart from the 1/12 anna was out of production in 1942 or any other year between then and 1947 AFAIK. What Figleaf says about the hoarding of silver may be true, so newly produced coins - of which there were hundreds of millions - disappeared quickly from use, but that would only affect quarter-rupees and upwards. It depends on what constitutes "petty", and either way there should have been plenty of half-pice to 2-anna coins around - if people had the wherewithal to be paid them.

I suspect the latter was more of a problem: leaving aside theft and charity, the only way to get coins is to sell something or work for a wage. If you have nothing to sell and no chance of getting a job you will have difficulty paying for food or anything else. If that situation affects a whole region it obviously has horrendous consequences. I don't see how issuing replacement money for coins that supposedly have disappeared will help, if the tokens/coupons are being acquired by end users in the same way as real coins - through sales or wages.

If they are being distributed as humanitarian aid so that the poor are able to exchange them for food, then the shortage or otherwise of real coinage is irrelevant. If they are used in this way, it is presumably to ensure that they are spent on the product intended and not hoarded, spent on e.g. alcohol/tobacco or embezzled by corrupt officials.

EWC

There seems to have been general agreement by all parties at the time that a specific shortage of small change was driving the famine. 

Food aid and job creation both have a long history in famine relief measures - but that is not what is being discussed in this case.

Here are three key passages from the Gupta paper clarifying this:

WORLD WAR ll CASH COUPONS   (from Numismatic Digest - but I do not have the date......)

Parmeshwari Lai Gupta

During  World War II – about 1942-43 – people in India faced  great shortage of lower denomination coins. At this time, the Japanese  army overran Burma and crossed the Indian. The British Government in India tried to explain this shortage against the background of this invasion and said that this scarcity was due to hoarding of such small coins for trafficking in them. But it never explained how the .Japanese invasion and the hoarding, of small coins could he interrelated.

The People did not believe: this official version of the British Government. They took the scarcity to be due to the non-availability of various kinds of metal for coinage. which they thought were being diverted to ammunition factories.

***********************

It is only recently, during my research  for my contemplated book, Paper Money of India, that I discovered some  archives that throw light on these issues.  One of them is an order of Sir Ram Singh, ruler of Sitamau state.  This Order bears the identifying number 15/1999/1942-43. The date of its  issue could not be determined; but it may reasonably be said that it was  issued some time in 1942. 1t is written in Hindi and bears the Royal seal  and the signature of the Ruler. The English rendering of this order is as  follows:

"Due to the scarcity of rupee and fractional coins in the State, the common people are having great difficulty. Therefore for their convenience the following order is being issued:

(a) Cash Coupons of the value of I-anna. 2-annas and 4-annas be prepared. They will bear on one side the seal of the State and the other side will have a number, date. value and the signature of the Finance Member.

(b) On Payment of the cost. any body may have these coupons and make transactions with them in the market.

(c) On return of such coupons to the Treasury, any one may have their full value back.

(d) No one will refuse to accept these coupons. If anyone does so, he will be guilty of disobedience. Legal action will be taken against him."

******************************

Some more light is thrown on these Cash Coupons from an item on the agenda of the Chamber of Princes dated November 8. 1943. The Chamber of Princes was an organisation of all the feudatory rulers, which met occasionally to discuss problems of common interest and to pursue matter with the Government of India. Here this agenda said. "Various States invited the attention of His Highness the Chancellor (i.e.. the President of the Chamber) to the difficulties experienced by them because of the shortage of small coins. This shortage was mainly responsible for the hoarding of the food grains.

EWC

Got little response on this topic here - so raised the matter on a different group.  On that group got links to an interesting set of exchanges in NYRB - below is one - from it you can track back to others.  But none of these people mention any small coin shortage

http://www.nybooks.com/articles/archives/2011/mar/24/truth-about-bengal-famine/

Now - thinking further about the secret melting of 100 tons of silver rupees from WWII  - just revealed in a seperate thread.  This still seems odd to me.  What does anyone think about the economics of melting these rather then putting them out onto the market as they were?  I would have thought you could definately get a few percent over bullion from the collector/speculator market, and a few percent of fifty million dollars is not to be sniffed at.

Crosses my mind that auctioning the coins publically would have caused a lot more publicity and thus a lot more airing of history that some in UK government might prefer to forget?

Figleaf

I can only comment on the metallic tokens. If memory serves, they were distributed among the poor and could be used to buy food aid. Something like the US food coupons. In other words, they were not a sign of scarcity of coins.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

THCoins

#9
I have no knowledge on the issue of WWII cash coupons, but quite a lot of examples from different Indian states can be seen here.
And some background info i found: here

EWC

Thanks Ton! - If I have it right - that ups the issue count from 16 issuers in Gupta -  to 20 in SAC -  to 77 in your source!

That seems to be 77 authorities who thought the lack of small change was a crucial problem linked to the famine.

No economist has yet turned up anyone in that discipline who has taken note of this fact, and I am not clear if Peter wants to  oppose the suggestion,  since pertinent arguments would be required to do that.

Working from early 19th century Maharashtra sources, Frank Perlin noted that coin famines and food famines both seemed common, and associates the one with the other (Unbroken Landscape, p 78)

Figleaf

The closest I got to a famine was questioning my parents and grandparents on the 1944/5 famine in the Netherlands. They said money had become useless in the cities. In the country, food was available for gold coins, that had not circulated for decades. The zinc and paper in circulation were a second choice at best, often not accepted at all. The situation was probably influenced by the knowledge that the nazis were losing fast - therefore it was seen as quite temporary.

Samuelson uses a hypothetical famine to defend a market solution. In his model, money velocity is going up steeply, as people un-hoard money to pay for food and food prices rise. In his analysis, there would be more money available during a famine. However, he has a society in mind with a favourable Gini coefficient.

I would argue that you could have a scarcity of money with a large wealth inequality. That would not be scarcity in the sense of "there isn't enough", but scarcity in the sense of "it's in the wrong place". The rich, using their reserves as in Samuelson's model, would have enough to eat during a famine. The poor would not have reserves. Samuelson would argue that creating money at such a time would increase inflation, thereby exacerbating the problem and his market solution would kill the poor. I would prioritise life over inflation. Samuelson would argue that money would ration food correctly, the government would mis-judge the end of the food supply and everyone would die. I would counter that food aid and imports would end the famine way before the next harvest.

You may be able to see how the above debate could paralyse a central government, where the right would be arguing the point of view of the rich and the left would support the view of the poor, to the point where local governments take things in there own hands and create money without the permission of the central authorities (happened in Argentina not so long ago). Keeping in mind that the above is a mix of theory and speculation, it seems most likely to me that the cash coupons were in fact food coupons for distribution to the poor, not replacement coins. Keep in mind also that for the poor, money and food is largely equivalent. Anecdote: in my student days, a five guilder note was referred to as a two beer coupon.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

EWC

Quote from: Figleaf on April 18, 2015, 11:42:54 AM
Keeping in mind that the above is a mix of theory and speculation, it seems most likely to me that the cash coupons were in fact food coupons for distribution to the poor, not replacement coins.

The problem here is not what you are keeping in mind.  It is what you are ignoring. 

As I pointed out at the start of the thread - the people who issued these things clearly stated that they were replacement coins.  So why on earth would we consider any other possibility?

This is not just a personal criticism of you.  Not a single economist seems to have ever taken note of this matter.  My fear is that, in the hunt to win funding from commerce, and academic prestige from political patrons, economic ideology regularly trumps historical fact, and thus much of what we read, even from Nobel Laureates, is rather close to politically correct fabrication.



Figleaf

I see in your first post your own statement on a slide "a shortage of petty coin occurs" and your admission that your source is ambiguous. I am arguing that at least theoretically, it is also unlikely and giving a more logical explanation. ???

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

EWC

Quote from: Figleaf on April 19, 2015, 09:00:53 PM
your admission that your source is ambiguous.

Afraid that is incorrect.  There is no ambiguity in the source, and I gave no such admission.

There is uncertainty as to the objective facts - but that is a different matter.

The sources are very clear. In Sitamau state for instance, the coupons were to be sold for cash at par, and bought back for cash at par, and legal action was to be instituted against anyone refusing them. 

There were intended as small change - not food coupons