The Age Of Stars

money / currency · 30 June 1948

RBI ceases to act as Pakistan's central bank

State Bank of Pakistan from 1948-07-01

VerifiedOfficial record. Source: RBI chronology 1935–49

Banking · regulation · 1 January 1948

Act providing for the acquisition of RBI shares by the Central Government

VerifiedOfficial record. Source: RBIH1 ch. 17

Government of India · 1 February 1948

Government of India: The interim agreement extended to 30 June 1948; the remaining balance of the Post-War Dollar Fund was folded…

~$25m folded in

The interim agreement extended to 30 June 1948; the remaining balance of the Post-War Dollar Fund was folded into the limit fixed for India's drawings on the central reserves for that half year, so India had no further claim on the Fund after that date

VerifiedOfficial record. Source: RBIH1

Government of India · 15 July 1948

Government of India: Sterling Balances Agreement of July 1948 announced in the House of Commons by Sir Stafford Cripps: £100m for…

see magnitudes above

Sterling Balances Agreement of July 1948 announced in the House of Commons by Sir Stafford Cripps: £100m for defence stores and fixed assets; £55m due from the UK; £176¼m pension annuity; three-year term to 30 June 1951; no No. 2→No. 1 release in 1948-49; £40m/yr thereafter; £60m No. 1 Account floor; £15m hard-currency drawing limit

VerifiedOfficial record. Source: HAN4807; RCF4950

Reserve Bank of India · Invalid Date

Reserve Bank of India: Ad hoc treasury bills created in the Issue Department to replace sterling securities transferred to the UK…

Rs 267.51 crores outstanding at end-1951-52

Ad hoc treasury bills created in the Issue Department to replace sterling securities transferred to the UK Government, in terms of the July 1948 Sterling Balances Agreement, for the purchase of sterling pensions annuities and defence stores and installations taken over

VerifiedOfficial record. Source: RCF5657; RCF5051

Reserve Bank of India · regulation · 1 September 1948

Reserve Bank of India: Non-scheduled banks' demand liabilities and cash in hand compiled from returns in Form III under the Banking…

Non-scheduled banks' demand liabilities and cash in hand compiled from returns in Form III under the Banking Companies (Control) Ordinance

VerifiedOfficial record. Source: BMS1954

Reserve Bank of India · 1 January 1948

Reserve Bank of India: The Partition Council's sterling-asset arrangements take effect: each Dominion keeps its own foreign-exchange…

The Partition Council's sterling-asset arrangements take effect: each Dominion keeps its own foreign-exchange earnings from this date, and the separate Pakistan account is run through the Bank of England

VerifiedOfficial record. Source: PC218; UNTS134-1796; UNTS134-1797

Reserve Bank of India / HM Treasury · regulation · 15 February 1948

Reserve Bank of India / HM Treasury: UK–India exchange of letters extending the Financial Agreement, signed at New Delhi

The principal Agreement is extended, with effect from 1 January 1948, pending completion of a longer settlement. Raisman to Narahari Rao; the annexed paragraphs of the Partition Council minute are expressly incorporated

VerifiedOfficial record. Source: UNTS134-1796

Banking · regulation · 21 February 1948

UK–Pakistan exchange of letters (Raisman to Abdul Qadir, Karachi)

10

The principal Agreement, which "by virtue of Article X (a) … constitutes an Agreement between the Government of the United Kingdom and the Government of Pakistan", is extended to 30 June 1948 with effect from 1 January 1948, and applies only to the Dominion of Pakistan. A £10,000,000 working balance is transferred from the No. 2 Account to the Pakistan Account, plus a further £6,000,000

VerifiedOfficial record. Source: UNTS134-1797

Government of Pakistan / HM Treasury · 21 February 1948

Government of Pakistan / HM Treasury: A further UK–Pakistan exchange of letters of the same date extends, mutatis mutandis to Pakistan, the three…

A further UK–Pakistan exchange of letters of the same date extends, mutatis mutandis to Pakistan, the three side understandings of 14 August 1947 (Silver Redemption Reserve, rate of interest on sterling balances, Indian private sterling balances)

VerifiedOfficial record. Source: UNTS134-1797

Government of India · 1 June 1948

Government of India: An Indian ministerial delegation led by the Finance Minister, R. K. Shanmukham Chetty, and including the…

83

An Indian ministerial delegation led by the Finance Minister, R. K. Shanmukham Chetty, and including the Governor of the Reserve Bank, C. D. Deshmukh, visits Britain seeking a longer (three-year) agreement and to settle the valuation of military stores and the pension annuity. India had meanwhile accumulated current sterling of about £83 million

VerifiedOfficial record. Source: RBIH2-PLENTY

Banking · 1 July 1948

The State Bank of Pakistan takes over central banking and currency functions from the Reserve Bank of India

Pakistan assumes complete control over its currency and banking system

VerifiedOfficial record. Source: VAKIL1950; ANKIT2023

Government of India / HM Treasury · 9 July 1948

Government of India / HM Treasury: Three UK–India exchanges of letters

100

(1) Final settlement of £100 million payable by the Government of India "in respect of all Defence stores and fixed assets … taken over by the Government of undivided India on 1st April, 1947", in full and final settlement for both Dominions. (2) Purchase of a pension annuity for a capital sum of £147,605,125 to be paid by India out of the No. 2 Account, in return for tapering annuities from 1948-49 to 2007-08. (3) The remaining sum due to India and Pakistan under the Indian Defence Expenditure Plan is fixed at £55 million, of which £8,951,250 is payable to Pakistan. A fourth letter of the same date extends the silver-reserve and interest-rate understandings

VerifiedOfficial record. Source: UNTS134-1796

Reserve Bank of India · regulation · 9 July 1948

Reserve Bank of India: The letter extending the principal Agreement provides: (a) no transfer from No

40

2 to No. 1 Account in the year 1 July 1948 – 30 June 1949; (b) in 1949-50 and 1950-51, releases of such amounts, not exceeding a total of £40 million in each year, as are required to prevent the No. 1 Account balance falling below £60 million, in multiples of £5 million; (c) India agrees so to limit expenditure in hard-currency areas that drawings on the central reserves in the twelve months to 30 June 1949 do not exceed the equivalent of £15 million

VerifiedOfficial record. Source: UNTS134-1796; HAN4807

State Bank of Pakistan / HM Treasury · 14 July 1948

Three UK–Pakistan exchanges of letters

45

The principal Agreement is extended to 30 June 1949; £2 million is added to the Pakistan working balance, increasing it to £12 million; £45 million is transferred from No. 2 to No. 1 Account for 1948-49 plus up to a further £5 million for refugee resettlement and rehabilitation; Pakistan's net hard-currency drawings for 1948-49 are limited to £5 million; the UK undertakes a further £5 million in 1949-50 and £5 million in 1950-51. A separate letter records the £100 million defence-stores settlement for Pakistan, and a further letter records a Pakistan pension annuity for a capital sum of £8,166,848 (1948-49 to 1997-98)

VerifiedOfficial record. Source: UNTS134-1797

Government of the United Kingdom · 15 July 1948

Government of the United Kingdom: Cripps makes the Commons statement on the Indian settlement: £100m for defence stores and fixed assets "found…

100

Cripps makes the Commons statement on the Indian settlement: £100m for defence stores and fixed assets "found from the joint sterling balances of India and Pakistan"; £55m due to India and Pakistan under the Indian Defence Expenditure Plan, "made from Army Votes"; £176¼ million paid by the Indian and Pakistan Governments out of their sterling balances for a pension annuity yielding tapering annuities over 50–60 years, starting at roughly £5,500,000 in the first year; the three-year arrangement from 1 July 1948; the £15m hard-currency ceiling; and a maximum of £80 million of unrequited exports over the three years. Cripps promises a separate statement on Pakistan "next week"

VerifiedOfficial record. Source: HAN4807

Banking · regulation · 1 January 1948

Reserve Bank of India; Imperial Bank of India: IOR/L/E/8/8654 is the Economic Department file "F&E E(B) 13532/48, Proposed nationalisation of the Reserve…

IOR/L/E/8/8654 is the Economic Department file "F&E E(B) 13532/48, Proposed nationalisation of the Reserve Bank of India and of the Imperial Bank". This verifies the reference earlier passes carried forward unverified

VerifiedOfficial record. Source: IOR/L/E/8/8654 () (searcharchives.bl.uk)

Nath Bank · 1 September 1948

The RBI's Deputy Governor sanctioned limits to the Nath Bank aggregating Rs 72.50 lakh against its over-all…

Rs 72.50 lakh

The RBI's Deputy Governor sanctioned limits to the Nath Bank aggregating Rs 72.50 lakh against its over-all assets after panic appeals from Bengali banks and the West Bengal Government.

VerifiedOfficial record. Source: RBI, History of the Reserve Bank of India, Vol. I, pp. 732–733

Westminster Bank Ltd, London · 7 April 1948

Westminster Bank Ltd, London: A "Second Account" in the name of the Nizam's Government was opened and £1,000,000 transferred to it; on 24…

GBP 2000000

A "Second Account" in the name of the Nizam's Government was opened and £1,000,000 transferred to it; on 24 May 1948 the remaining £1,000,000 was transferred across, closing the Hyderabad State Bank Account

VerifiedOfficial record. Source: [2019] EWHC 2551 (Ch), paras 96–103

Banking · 24 June 1948

Reserve Bank of India / Imperial Bank of India: The RBI decided, with Government's concurrence, to abolish its currency chests at Hyderabad and Secunderabad…

The RBI decided, with Government's concurrence, to abolish its currency chests at Hyderabad and Secunderabad and to suspend remittance facilities between India and Hyderabad, holding that it was under no obligation under the RBI Act or its agreement with the Imperial Bank to maintain chests outside British India

VerifiedOfficial record. Source: RBIH1 pp. 582; MENON1956, Hyderabad ch.

Banking · 1 September 1948

Reserve Bank of India / Imperial Bank of India: Following the "successful conclusion" of the police action, the currency chests were re-established and…

Following the "successful conclusion" of the police action, the currency chests were re-established and remittance facilities between India and Hyderabad resumed; restrictions on the use of Indian currency in Hyderabad were removed

VerifiedOfficial record. Source: RBIH1 p. 582

Government of India · 1 July 1948

Government of India: India's balances placed in a "No

£65m

2 Account" with the Bank of England, with a "No. 1 Account" for current use; £65m transferred from No. 2 to No. 1 at once for India and Pakistan

ReportedPress. Source: MELL1951

Government of India · 2 January 1948

Government of India: Public escalation of the cash-balances dispute

75

Nehru tells a press conference on 2 January 1948: "… we cannot make these payments at present when the money we give might be utilized for warlike preparations against India." Liaquat Ali Khan replies the next day. Patel states on 12 January 1948: "It is the Pakistan representatives who were all the time trying to soft-pedal the Kashmir issue in order to secure concessions from us on the financial issues … We were, therefore, fully justified in providing against Pakistan's possible continuance of aggressive actions in regard to Kashmir by postponing the implementation of the agreement"

ReportedPeer-reviewed. Source: BRECHER1953

Various (Baroda) · scandal · 1 January 1948

Various (Baroda): A senior Indian Audit and Accounts Service officer was appointed by the Government of India to scrutinise the…

A senior Indian Audit and Accounts Service officer was appointed by the Government of India to scrutinise the Maharaja of Baroda's past financial transactions and to inventory the state jewels; his report, accepted on the ruler's behalf with one or two modifications, found "an alarming state of affairs" and that failure to produce accounts had been "a very great handicap"

ReportedOfficial record. Source: MENON1956, Baroda ch.

banking

Banking Companies (Control) Ordinance

Non-scheduled banks' returns in Form III from September 1948; the immediate post-war regulatory step before the comprehensive Banking Companies Act

VerifiedOfficial record. Source: BMS1954

external payments

Sterling Balances Agreement, July 1948

Three-year extension to 30 June 1951; £100m stores payment; £176¼m annuity; no No. 2→No. 1 release in 1948-49; £40m/yr thereafter against a £60m No. 1 Account floor; £15m hard-currency drawing ceiling

VerifiedOfficial record. Source: HAN4807

India–UK financial relations

Financial Agreement (July 1948)

Three-year settlement: stores £100m; pensions capitalised at £47.5m + £20.5m; £80m releases over 1949–51; £5m convertibility; £15m hard-currency ceiling; £55m Defence Expenditure Plan arrear

VerifiedOfficial record. Source: HC Deb 15 Jul 1948 vol 453 cc1404–10; eparlib.nic.in.57701 ch. II.2.23–2.25

RBI ownership

Reserve Bank (Transfer to Public Ownership) Act 1948

Compulsory acquisition of the RBI's private shares; state ownership from 1 January 1949

VerifiedOfficial record. Source: RBIH1 pp. 505, 528

India's sterling reserves

Sterling balances agreement (July 1948, extending Cmd. 7195)

No No.2 to No.1 release 1948-49, up to GBP 40m a year thereafter, hard-currency drawings capped at GBP 15m; balances debited GBP 100m for stores and GBP 176.25m for the pension annuity; final settlement expressly postponed

VerifiedOfficial record. Source: Hansard, HC Deb 15 Jul 1948 vol 453 cc1404-10

Hyderabad State

Government of India ordinance on Hyderabad securities and bullion

Government Securities held by or on behalf of the Nizam, the Government of Hyderabad and the Hyderabad State Bank were made non-transferable without the Central Government's approval; the Government of India's currency chests in Hyderabad were withdrawn; and the export to Hyderabad of gold, silver, jewellery and Indian currency was prohibited, because the Hyderabad Government was using all its available resources to buy arms and ammunition abroad

VerifiedOfficial record. Source: MENON1956, Hyderabad ch.

imports

Import Trade Control and Open General Licences (OGL I–XI)

Freely issued OGLs in 1946 and early 1947 admitted "a large number of luxury and semi-luxury goods, like fountain pens, wrist watches, cameras, playing cards"; the policy was reversed in 1947 and OGL XI was cancelled in May 1949, with India having to fund outstanding commitments

ReportedPress. Source: MELL1951; RCF4950

convertibility of sterling balances

Convertibility limits on India's sterling

After January 1948 the UK ceased to finance India's dollar deficit from the central reserves of the sterling area, and India's convertibility was limited to £10m ($40m) for the half year January–June 1948 and £15m ($60m) for the year July 1948–June 1949

ReportedPress. Source: MELL1951

prices

Decontrol and recontrol of essential commodities

Internal decontrol of foodgrains and sugar ordered in December 1947 and gradual relaxation of cloth price and distribution controls from mid-January 1948; after July 1948 cloth and foodgrains were recontrolled and import policy liberalised to break the price rise

ReportedPress. Source: MELL1951

Banking companies

Select Committee on the Banking Companies Bill, 1948

Listed in RBIH1's table of contents

UnconfirmedOfficial record. Source: RBIH1 (contents)

Industrial Policy Resolution, 1948-04-06

Mixed economy. Reserved sectors for the state (arms, atomic energy, railways)

New units in coal, steel, aircraft, shipbuilding and telecoms equipment reserved to the state, with existing private units left alone for ten years.

ReportedOfficial record. Source: Government of India resolution

Sterling balances agreement (1948-07-09): import liberalisation clause

In return for releases, India agreed to liberalise imports of consumer goods (from sterling sources) and to…

In return for releases, India agreed to liberalise imports of consumer goods (from sterling sources) and to cap dollar drawings at £15 mn. A London-shaped trade term.

ReportedPeer-reviewed. Source: Abreu TD 643; Hansard 1948-07-15

Havana Conference (1947-11-21 ~ 1948-03-24): ITO Charter

India was a leader of the "underdeveloped bloc

It rejected the Geneva draft's rule that quantitative restrictions for development needed prior ITO approval, and won language letting developing countries impose protective QRs largely on their own authority (Charter Art. 13–14). India signed the Final Act (1948-03-24). The ITO died when the US Congress failed to ratify it (withdrawn 1950-12).

ReportedPeer-reviewed. Source: WTO, Havana Final Act text; Toye, "Developing multilateralism: the Havana Charter…" (2003); FRUS 1948 vol I pt 2 doc 164

South Asia

Operation Polo, annexation of Hyderabad

Integration of the Nizam's state and its currency (Hyderabad rupee; the Osmania Sicca was phased out by 1959).

ReportedPeer-reviewed. Source: general histories

defence procurement (London)

Jeep scandal: V.K. Krishna Menon (High Commissioner, London) ordered 2,000 jeeps for the Kashmir…

Case closed by the government in Sept 1955. A London-sourced scandal. I took the amount from secondary accounts, and it was not verified against the PAC report.

UnconfirmedPress. Source: secondary histories (Wikipedia "Jeep scandal case"); PAC reports (primary, not seen)