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THE BUILDING OF GOSABA: a legitimate use of money

September 23, 2018


Ken Palmerton is the co-founder of a small ecumenical group (Muslim, Jewish, Christian) called the Institute for Rational Economics, which has been active in several areas, including the promotion of local currency schemes and reform of banking systems. For years he has been trying to find out if there are any traces\memories\further records left of the scheme he describes below.

This project is an example of the legitimate use of money, which should not be treated as a commodity but as a medium enabling the exchange of goods and services in situations where direct barter would have posed difficulties. Used within a sound financial system, ‘honest’ money can serve the community by facilitating trade and above all can ensure the application of the talents and labour of each person to the meeting of his or her community’s needs.

Millions of people in the subcontinent of India, despite its great natural wealth in land and labour, live in poverty. A detailed examination, however, reveals local small-scale patterns of success that hold out hope in a world where hope is at a premium.

One historic example was a co-operative scheme undertaken in Gosaba, a previously uninhabited area of the Ganges delta in West Bengal.

In 1903 a Calcutta businessman, Sir Daniel Hamilton, (left) took out leases on tidal swamp land. During the next thirty years the flood-prone area was drained and turned into productive agricultural land, supporting about 12,000 people.

Schools, dispensaries, small industries, river transport and the means of processing the surplus crops for sale in the city were organised on co-operative lines – and the co-operative movement eventually spread throughout Bengal.

In its twenty-five villages, all disputes were settled locally and there was no alcohol in evidence.

A photograph of his bungalow taken in 2013 by Lokenrc, Creative Commons licence


A radical method of funding made this development possible.

From the first, Sir Daniel had issued notes called ‘hachitta’, in exchange for work done and redeemable at a co-operative store set up to supply the needs of the community.

The official backing for these notes was a deposit of 11,00 rupees, supposedly held at the estate office, but in fact they were simply a medium of exchange as the wording on one side of the notes explained:

Sir Daniel Mackinnon Hamilton promises to pay the bearer on demand, at the Co-operative Bhundar, in exchange for value received, one Rupees worth of rice, cloth, oil, or other goods.

Signed: D.M.Hamilton

On the other side was written: “The value received in exchange for this note may be given in the form of bunds constructed, or tanks excavated, or land reclaimed, or buildings erected, or in medical or educational services. The note may be exchanged for coin, if necessary, at the estate office. This note is made good not by the coin, which makes nothing, but by the assets created, and the services rendered. The note is based upon the living man, not on the dead coin. It costs practically nothing, and yields a dividend of one hundred per cent in land reclaimed, tanks excavated, and houses built, etc. And in a more healthy and abundant life”.



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