Halifax stopped pacing and turned to face Bridges, his voice and manner suddenly changing. “I had not thought of that. In conscience, we cannot break the agreement we have with our servicemen with regard to their families. I will reconsider what to do about the pay for our troops abroad. No matter what decision we may come to on that issue, the allotments for their families here will continue to be paid. We will also honor their deferred pay and hold it in trust for them. Quite apart from anything else, this will give us a moral claim over UK forces overseas.”
“There is a problem here.” Bridges was relieved; Halifax was not as set on confrontation as his initial comments had made him seem. “We can continue allotments and deferred payment according to the records held here. However, we cannot hope to keep these allotments updated to reflect the men’s own wishes, unless there is regular administrative communication between the forces abroad and ourselves. In the event of hostilities continuing, as they seem set to do so in the Middle East at least, there will be casualties that we would be unable to track.”
Halifax waved his good hand dismissively. “Then we shall institute a standardized ‘Dependant’s Sustenance’ payment to be given out in lieu. This is nothing new; it can work just like any other government pension. We set a base rate with modifiers for number of children, residence status, rent, et cetera. Doing so will keep the people happy and reconcile them to the events of the last few weeks.”
His anger broken, Lord Halifax sighed and looked at Bridges again. “I understand your point about trade and the Commonwealth. I will think on this matter further. There is much to be considered before we make a final decision on these issues.”
“And now we have the problem of the princes. Or, more precisely, the wealth that they control. Putting that to productive use is likely to be a challenge.” Lord Linlithgow wrinkled his nose slightly. “And then we have the related problem of what to do with the Princes themselves.”
“The latter should more properly be considered a matter for consideration at a later date.” Sir Eric Haohoa was concerned by several aspects of the Princes Problem, but none of them compared with the economic problems that seemed about to engulf India. “The princely wealth, on the other hand, relates directly to financial difficulties that are reaching a crisis point. Fortunately, South Africa has come up with what may be at least a partial solution. The basic problem is that the rupturing of the Commonwealth has left us without an umbrella currency. Without it, we are unable to mobilize what economic strength we have. This leaves us with two choices. One is to go back with our tail between our legs and beg pardon while pleading to be allowed to return to the pound sterling basket, with all that implies.”
“Never!” Sir Martyn Sharpe, Lord Linlithgow and Pandit Nehru chorused the denial in perfect harmony. The three men looked at each other in amazement, then burst out laughing.
“You know, I think this political alliance is going to work.” Lord Linlithgow’s observation was dry, but still tinged with unexpected humor. “Sir Eric, perhaps you can cement our friendship still further by proposing the second option?”
“Well, Your Excellency, if we must have an umbrella currency and the pound sterling is unattainable, we are left with but one choice. To create our own. That is what the South Africans propose.”
“And how do they propose we do that? Have they any idea of the complexity of what they suggest? New currencies cannot be waved into existence on a whim.” Harold Hartley shook his head. “How do we back such a currency?”
“But what was the pound sterling? Since Britain moved off the gold standard, it was just another currency based on collective faith as much anything else.” Sir Eric started to count off points on his fingers. “Firstly, we need to replace the sterling as a common standard, Secondly, we need to stop the massive devaluation of our currencies on the international market and thirdly we must get some stability back into the utter chaos that is our international trading position. The current short term flux is undermining our international bargaining position across the board.
“So, the South Africans suggest that we invent a new currency specifically for international trade. Initially at least, it’s not going to have any confidence in the wider market. Unless we can back it properly, such a construct would lack the gravitas to be taken seriously. There is one thing we have in the Commonwealth that we have in bulk. Gold. We’ve got gold mines in South Africa, Australia and here in India. In fact, we control a good portion of the world’s gold supply.
“We’ve even been playing with names for the new currency. The South Africans suggested the Krugerrand of course, but the sovereign has much more support. We can mint sovereigns in South Africa, here and Australia but mostly we print them on paper using the gold still in the ground as collateral. And diamonds, rubies, emeralds, anything we can get that has value. Then, we peg all the Commonwealth currencies to the sovereign as they were to the sterling.”
“You’re putting us back on the gold standard?” HH was shocked.
“At a much reduced value to bullion, yes. We have no choice. Being a hard, gold-backed currency, the sovereign has immediate respect, while wartime restrictions on currency speculation around the world will stop us getting raped in the process. The sterling pool will be replaced by a free market that is not subject to the dreadful standing of our individual currencies. Best of all, it will hold off the Americans who are sitting in Washington, waiting for us to go bankrupt so they can essentially buy us up on the cheap. Pandit, what could mark India’s independence more clearly that abandoning the pound sterling?”
“My God. Creating a new currency, even a limited use one, is a massive undertaking even under benign conditions and these conditions are anything but benign. I simply don’t think it can be done.” HH shook his head in awed disbelief at the suggestion. “The whole problem here is the extent to which the collapse of the UK kicks the center out of the Commonwealth system. The problem with establishing any collective position is that a collective position needs to have a lead voice to present that position. Who is going to be that lead voice? This is a question we must think about with care, because whoever that lead voice is will become the de facto head of the nonBritish Commonwealth. I would suggest to you that such thoughts have already occurred to the Boers in Pretoria.”
“They almost certainly have.” Nehru spoke carefully, keeping his own deep feelings about the Boers well under control. “They would be foolish not to. But I do not see this as a great problem. India will leave the Commonwealth at some point, that much is certain. It is also certain that Britain will return to it once Halifax and his clique have been removed and they will resume their previous position as its head. Leadership of the Commonwealth will be a sought-after prize but I feel it will turn to dust in the hands of the winner.”
“Be that as it may; but something dramatic and solid is needed quickly if we are to survive. The sovereign is one of, if not the most, widely distributed bullion currencies in the world. We’ve already got the dies to make it and it’s something everyone understands. Politically, it’s also a sign of solidarity with the Crown. Which further puts the skids under Halifax.” Sir Martyn nodded as he spoke; the idea of a new currency was indeed seductive. “I will say this; going back to a gold standard, however diluted, is going to cause some severe problems all around.”
“It will. But it is severe problems in the future or an economic disaster now.” Sir Eric shook his head. “The Boers may have their own motivations, but that doesn’t stop them being right. A new currency basket based around our gold-backed sovereign is the only way to go.”