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 PART FOUR
WORLD FINANCIAL ENVIRONMENT

CHAPTER EIGHT
GLOBAL FOREIGN-EXCHANGE MARKETS

OBJECTIVES

• Learn the fundamentals of foreign exchange

• Identify the major characteristics of the foreign-exchange market and how
governments control the flow of currencies across national borders
• Describe how the foreign-exchange market works
• Examine the different institutions that deal in foreign exchange
• Understand why companies deal in foreign exchange

CHAPTER OVERVIEW

The foreign-exchange market consists of all those players who buy and sell foreign-
exchange instruments for business, speculative, or personal purposes. Primarily, foreign
exchange is used to settle international trade, licensing, and investment transactions.
Chapter Eight explains in detail basic concepts (such as rates, instruments, and
convertibility) and explores the major characteristics of the foreign-exchange markets.
The chapter includes a discussion of the foreign-exchange trading process that focuses on
both the over-the-counter and the exchange-traded markets, i.e., banks, securities
exchanges, electronic brokerages, and the respective roles they play.

CHAPTER OUTLINE

OPENING CASE: Going Down to the Wire in the Money-Transfer Market

This case describes Western Union’s international money transfer services and the
increasing competition the company is facing from banks. Western Union has been
particularly successful in attracting business from Mexican emigrants in the United States
who send part of their paycheck home to support their families. Western Union charges
relatively high fees and uses its own exchange rates that are usually significantly lower
than the market rate. Banks have been introducing their own money transfer services,
many with lower fees and better exchange rates than Western Union. Due to many
Mexicans’ distrust of banks, however, Western Union continues to enjoy large profit
margins and a large market share in the money transfer business.

Questions

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8-1 The United Arab Emirates, of which Dubai is a member, is one of the Gulf
Cooperation Council members. How does it compare with other GCC countries in
terms of total population and non-immigrant population as a percentage of total
population? How important do you think migration and therefore capital
remittances are for each of the countries in the GCC?

While 30 percent of the Saudi Arabian population is expatriate, in Bahrain it is 26

percent. Expatriates account for 80 percent of the population in the United Arab
Emirates, while they constitute 27 percent in Qatar, 63 percent in Kuwait, and 62
percent in Oman. The large-scale recruitment of an expatriate work force is justified
by the need for executing huge development projects in the fast-growing GCC
countries. Another factor was the willingness of expatriate workers to undertake
hazardous jobs with lower wages that Gulf citizens refuse to do. (LO: 2, Learning
Outcome: To identify the major characteristics of the foreign-exchange market and
how governments control the flow of currencies across national borders, AACSB:
Dynamics of the Global Economy)

8-2 Should the U.S. government regulate the exchange rate that financial
institutions charge Mexican migrant workers for sending money back to
Mexico? Why or why not?

Many people use the word “remittance” when they refer to sending money from the
United States to other countries. Federal law defines “remittance transfers” to
include most electronic money transfers from consumers in the United States through
“remittance transfer providers” to recipients abroad, including friends, family
members, or businesses. Remittance transfers are commonly known as “international
wires,” “international money transfers,” or “remittances.”

Certain federal protections apply if you send money abroad. Under federal law, many
money transmitters, banks, and credit unions and possibly other types of financial
services companies qualify as “remittance transfer providers.” They must generally
provide consumers certain information before they make remittance transfers. This
includes information about:
• The exchange rate

• Fees and taxes they collect from you

• Fees charged by the company’s agents abroad and certain other institutions
involved in the transfer process

• The amount of money expected to be delivered, not including foreign taxes or

certain fees charged to the recipient

• If appropriate, a statement that additional foreign taxes and fees may be deducted
from the remittance transfer

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 You also must receive information about when the money will be available,
instructions on your right to cancel transfers, what to do in case of an error, and how
to submit a complaint.

Regarding the right to cancel: After paying, you will typically have 30 minutes (and
sometimes more) to cancel the transaction at no charge, unless the transfer has
already been picked up or deposited into the recipient’s account.

With these current regulations in place, an argument could be made that no

additional regulations be required. (LO: 2, Learning Outcome: To identify the
major characteristics of the foreign-exchange market and how governments
control the flow of currencies across national borders, AACSB: Dynamics of the
Global Economy)

TEACHING TIPS: Carefully review the PowerPoint slides for Chapter Eight and
select those you find most useful for enhancing your lecture and class discussion. For
additional visual summaries of key chapter points, also review the figures, tables,
and maps in the text. Students can check currency prices by visiting the Web site
http://finance.yahoo.com.

I. INTRODUCTION
A. What is Foreign Exchange?
Foreign exchange is money denominated in the currency of another nation or
group of nations, i.e., it is a financial instrument issued by countries other than
one’s own. An exchange rate is the price of one currency expressed in terms of
another, i.e., the number of units of one currency needed to buy a unit of
another.
B. Players on the Foreign-Exchange Market
The foreign-exchange market is made up of several players. The Bank of
International Settlements (BIS), a Swiss-based central banking institution,
divides the market into three major players: reporting dealers, other financial
institutions, and non-financial institutions. Reporting dealers are also known as
money center banks and include large banks such as Deutsche Bank and HSBC.
Other financial institutions include commercial banks other than money center
banks (local and regional banks), hedge funds, pension funds, money market
funds, currency funds, mutual funds, and specialized foreign-exchange trading
companies. Non-financial customers include governments and companies.
C. Some Aspects of the Foreign-Exchange Market
The foreign-exchange market is comprised of two major segments. The over-
the-counter market (OTC) includes commercial banks, investment banks, and
other financial institutions—this is where most foreign-exchange activity occurs.
The exchange-traded market includes certain securities exchanges (e.g., the
Chicago Mercantile Exchange and NASDAQ OMX) where particular types of
foreign-exchange instruments (such as futures and options) are traded.
1. Some Traditional Foreign-Exchange Instruments. Several types of
foreign exchange instruments are available for trading. In addition, several

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 types of transactions may occur. Spot transactions involve the exchange of
currency “on the spot,” or technically, transactions that are settled within
two business days after the date of agreement to trade. The spot rate is the
exchange rate quoted for transactions that require the immediate delivery of
foreign currency, i.e., within two business days. Outright forward
transactions involve the exchange of currencies beyond two days following
the date of agreement at a set rate known as the forward rate. In an FX swap
(a simultaneous spot and forward transaction), one currency is swapped for
another on one date and then swapped back on a future date. In fact, the
same currency is bought and sold simultaneously, but delivery occurs at two
different times.
a. Currency swaps deal with interest-bearing financial instruments (such
as bonds) and involve the exchange of principal and interest payments.
An option is a foreign-exchange instrument that guarantees the
purchaser the right (but does not impose an obligation) to buy or sell a
certain amount of foreign currency at a set exchange rate within a
specified amount of time. A futures contract is a foreign-exchange
instrument that specifies an exchange rate, an amount, and a maturity
date in advance of the exchange of the currencies, i.e., it is an
agreement to buy or sell a particular currency at a particular price on a
particular future date.
2. Size, Composition, and Location of the Foreign-Exchange
Market. The Bank for International Settlements (BIS) estimated in 2010
that $4 trillion in foreign exchange was traded each day. This was a 20%
increase over the 2007 survey. One reason for the increase in trading
activity is likely due to the growing importance of foreign exchange as an
alternative asset and the larger emphasis on hedge funds (a fund, usually
used by wealthy individuals and institutions, which is allowed to use
aggressive trading strategies unavailable to mutual funds).
a. Using the U.S. Dollar on the Foreign-Exchange Market. The
U.S. dollar remains the most important currency in the foreign-
exchange market [See Table 8.1], comprising one side (buy or sell) of
84.9 percent of all foreign currency transactions worldwide in 2010.
This is because the dollar:
• is an investment currency in many capital markets
• is held as a reserve currency by many central banks
• is a transaction currency in many international commodity
markets
• serves as an invoice currency in many contracts
• is often used as an intervention currency when foreign
monetary authorities wish to influence their own exchange
rates
b. Frequently Traded Currency Pairs. Nonetheless, the largest
foreign-exchange market is in the United Kingdom, which is
strategically situated between Asia and the Americas, followed by the
United States, Japan, and Singapore. Four of the most commonly

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 traded currency pairs involve the U.S. dollar, with the top two pairs
being the euro/dollar (EUR/USD) and the dollar/yen (USD/JPY).

DOES GEOGRAPHY MATTER?

Foreign-Exchange Trades and Time Zones

Even though the U.S. dollar is the most widely traded currency in the world, some trading
centers outside the U.S. are very important in the global currency trade. London, for
example, is a major trading center because it is close to the major capital markets in
Europe and is in a time zone that straddles the other major markets in Asia and the U.S.
Despite the fact that the currency market is a 24-hour market, the heaviest volumes of
trade are concentrated in the hours when Asia and Europe are open or when Europe and
the U.S. are open. Also, prices tend to be better when markets are active and liquid. [See
Map 8.1 and Fig 8.3]

II. MAJOR FOREIGN-EXCHANGE MARKETS

A. The Spot Market
The spot market consists of players who conduct those foreign-exchange
transactions that occur “on the spot,” or technically, within two business days
following the date of agreement to trade. Foreign-exchange traders always quote
a bid (buy) and offer (sell) rate. The bid is the rate at which traders buy foreign
exchange; the offer is the rate at which traders sell foreign exchange. The
spread is the difference between the bid and offer rates, i.e., it is the profit
margin of the trade.
1. Direct and Indirect Quotes. Exchanges can be quoted in American
terms, i.e., a direct quote that gives the value in dollars of a unit of foreign
currency, or European terms, i.e., an indirect quote that gives the value in
foreign currency of one U.S. dollar. The base currency, or the denominator,
is the quoted, underlying, or fixed currency; the terms currency is the
numerator. Most large newspapers quote exchange rates daily, listing both
spot and forward rates. The spot rates listed are usually the selling rates for
interbank transactions (transactions between banks) of $1 million or more.
B. The Forward Market
The forward market consists of those players who conduct foreign-exchange
transactions that occur at a set rate beyond two business days following the date
of agreement to trade. The forward rate is the rate quoted today for the future
delivery of a foreign currency. A forward contract is entered into whereby the
customer agrees to buy (or sell) over the counter a specified amount of a specific
currency at a specified price on a specific date in the future.
1. Forward Discounts and Premiums. The difference between the spot
and forward rates is either the forward discount (the forward rate, i.e., the
future delivery price, is lower than the spot rate) or the forward premium
(the forward rate is higher than the spot rate). Spot and forward rates can be
seen in Table 8.2.
C. Options

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 An option is a foreign-exchange instrument that guarantees the right, but does
not impose an obligation, to buy or sell a foreign currency within a certain time
period or on a specific date at a specific exchange rate (called the strike price).
Options can be purchased over the counter from a commercial or investment
bank or on an exchange. The writer of the option will charge a fee, known as the
premium. An option is more flexible, but also more expensive, than a forward
contract.
D. Futures
A foreign currency future resembles a forward contract because it specifies an
exchange rate sometime in advance of the actual exchange of the currency.
However, a future is traded on an exchange, not OTC. While a forward contract
is tailored to the amount and time frame the customer needs, futures contracts
have preset amounts and maturity dates. The futures contract is less valuable to a
firm than a forward contract, but it may be useful for small transactions or
speculation.

III. THE FOREIGN-EXCHANGE TRADING PROCESS

When a firm needs foreign exchange, it typically goes to its commercial bank. If the
bank is large enough, it may have its own foreign-exchange traders. A smaller bank,
dealing either on its own account or for a client, can trade foreign exchange directly
with another bank or through a foreign exchange broker, who matches the best bid
and offer quotes of interbank traders. The foreign-exchange process can be seen in
Figure 8.6.
A. Banks and Exchanges
At one time, only big money center banks could deal directly in foreign
exchange. Now, with the advent of electronic trading, smaller regional banks
can hook up to Reuters or Bloomberg and deal directly in the interbank market.
In spite of these developments, the greatest volume of foreign-exchange activity
still takes place with the big money center banks.
1. Top Foreign-Exchange Dealers. Top banks in the interbank market are
so ranked because of their abilities to:
• trade in specific market locations
• engage in major currencies
• engage in cross-trades
• deal in specific currencies
• handle derivatives (forwards, options, futures, and swaps)
• conduct key market research
A large firm may use more than one bank to conduct its foreign-exchange
dealings, given their particular strategic capabilities. In addition to the OTC
market, there are a number of exchanges where particular types of foreign-
exchange instruments (such as futures and options) are traded.
a. CME Group. The Chicago Mercantile Exchange (CME) offers
futures and options contracts in numerous foreign currencies. CME
uses two electronic trading platforms to trade different commodities,
including currency: CME Globex and CME Clearport.

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 b. NASDAQ OMX. In 2008, The Philadelphia Stock Exchange
merged with NASDAQ OMX. They formed the third largest
options market in the U.S. and a new hybrid of trading both
traditional floor trading and online trading.
c. NYSE Liffe. The London International Futures and Options
Exchange (LIFFE) still trades the U.S. dollar/euro and euro/U.S.
dollar options contract, even though it was purchased by Euronext,
which merged with the NYSE.

IV. HOW COMPANIES USE FOREIGN EXCHANGE

Companies enter the foreign-exchange market to facilitate their regular business
transactions and/or to speculate.
A. Business Purposes (I): Cash Flow Aspects of Imports and Exports
When a company must move money to pay for purchases or receives money for
sales, it has an option on the documents it can use, the currency of
denomination, and the degree of protection it can ask for.
1. Commercial Bills of Exchange. In order for these transactions to take
place, a number of documents are needed, including a draft and a letter of
credit. A draft or commercial bill of exchange is an instrument in which
one party directs another to make a payment. If the exporter demands
payment to be made immediately, the draft is called a sight draft. If the
payment is to be made later, it is called a time draft.
2. Letters of Credit. With a bill of exchange, it is always possible the
importer will not be able to make the payment to the exporter. A letter of
credit (L/C) obligates the buyer’s bank to honor the draft. There are still
risks with an L/C. It must adhere to all the conditions in the document in
order to be valid. A letter of credit may also be confirmed by another bank
and is called a confirmed letter of credit.
B. Business Purposes (II): Other Financial Flows
Companies also deal in foreign exchange for other transactions, such as the
receipt or payment of dividends or the receipt or payment of loans and interest.
1. Speculation. Sometimes companies deal in foreign exchange for profit.
Speculation involves buying (or selling) a currency based on the
expectation it will gain (or lose) in strength against other currencies.
Although speculation offers the chance to profit, it also contains an element
of risk. Profit-seekers may engage in arbitrage, i.e., they may purchase
foreign currency on one market for immediate resale on another market (in
a different country) in order to profit from a price discrepancy. Interest
arbitrage involves investing in debt instruments (such as bonds) in
different countries in order to maximize profits by capturing interest-rate
and exchange-rate differentials.

POINT—COUNTERPOINT: Is it OK to Speculate on Currency?

POINT: Currency speculation is not illegal, nor is it necessarily bad. Speculators are
merely trying to make a profit by trading based on market trends. Currency speculation

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allows investors to diversify their portfolios from traditional stocks and bonds, which are
themselves forms of speculative investment.

COUNTERPOINT: There are plenty of opportunities for a trader, whether in foreign

exchange or securities, to make money illegally or contrary to company policy. Nicholas
Leeson, a 28-year-old trader for British bank Barings PLC was chief dealer for the bank
in Singapore. Leeson had no checks and balances on his trading and made big bets on
stock index futures assuming that the Tokyo stock market would rise. After the January
17, 1995 earthquake in Kobe, Japanese stocks plunged and Leeson had to come up with
cash to cover the margin call. With lax internal controls, Leeson was able to make
numerous questionable and illegal transactions to illicitly generate the cash needed to
cover his positions. These actions resulted in huge losses in excess of $1 billion for
Barings, putting the company into bankruptcy. Since the collapse of Barings, measures
have been put into place in banks to prohibit such consequences, yet the occurrence of
and potential for negative outcomes from rogue trading continue to exist. Another recent
example, Jerome Kerviel of the French bank Societe Generale shows the ongoing risk for
banks to lose significant amounts of money.

LOOKING TO THE FUTURE:

Where Are Foreign-Exchange Markets Headed?

The speed at which transactions are processed and information is transmitted globally
will continue to lead to greater efficiencies and more opportunities in foreign-exchange
markets. Companies’ costs of trading foreign exchange should come down and they
should gain faster access to more currencies. Government exchange restrictions should
diminish as currency markets are liberalized. As the euro continues to solidify its
position in Europe, it will reduce exchange-rate volatility and should lead to the euro
taking some of the pressure off the dollar so that it is no longer the only major vehicle
currency in the world. The growth of Internet trades in currency will take away some of
the market share of dealers and allow more entrants in the foreign-exchange market.
Internet trade will also increase currency price transparency and increase the ease of
trading.

CLOSING CASE: Do Yuan to Buy Some Renminbi?

The yuan is the official currency of China. It has been historically fixed and controlled
by the Chinese government, but that may be changing. As China becomes a greater
global exporter and economic powerhouse, critics are claiming that the currency is being
undervalued and manipulated in an attempt to protect domestic markets. There are
additional levels of complexity impacting China as the nation must deal not only with
economic competition, but also internal political and social pressures. As China
continues to loosen capital controls, there is great fear that the government may lose
control of inflation and interest rates, thereby causing a great deal of labor and social
unrest, while negatively impacting China’s competitive advantages. There are currently

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platforms in place to increase the circulation of the yuan, but those platforms are
currently limited and severely restricted.

Questions

8-3 Why is it important for the yuan to become a major world currency?

China is now a leader in international world trade, a major exporter, and currently
holds the largest foreign exchange reserve in the world. The nation has one of the
highest GDPs in the world, and is increasing its economic power. The sheer size,
volume, and magnitude of China’s economic activity may also be arguments for the
yuan to become a major world currency. (LO: 1, Learning Outcome: To learn the
fundamentals of foreign exchange, AASCB: Analytical Skills)

8-4 What needs to take place for the yuan to be listed right along with the U.S. dollar and
the euro as global currencies?

The Chinese government will need to further loosen controls and restrictions to
promote the free trade and exchange of the currency in international markets. There
will also be a need for further development of trading platforms and banking
initiatives to promote the circulation and exchange of the currency. (LO: 2, Learning
Outcome: To identify the major characteristics of the foreign-exchange market and
how governments control the flow of currencies across national borders, AACSB:
Dynamics of the Global Economy)

8-5 Why is the Chinese government so hesitant to open up the yuan to market forces to
determine its value inside and outside of China?

The major concerns of the Chinese government revolve around the impact of market
forces upon inflation and interest rates within the country. Consequences of
inflation and higher interest rates may create labor and social unrest, as well as
political complications and a loss of economic competitiveness. (LO: 2, Learning
Outcome: To identify the major characteristics of the foreign-exchange market and
how governments control the flow of currencies across national borders, AACSB:
Dynamics of the Global Economy)

8-6 What roles do foreign banks like HSBC and electronic platforms like Thomson
Reuters and ICAP play in helping the yuan move closer to becoming a global
currency?

These entities have the ability to create platforms and markets to stimulate and
expedite currency trading. Consequently, these entities can increase the circulation
of the yuan. Further, these actors will be instrumental in allowing the yuan to be
exchanged in a floating exchange system against the world’s other leading

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 currencies. (LO: 4, Learning Outcome: To examine the different institutions that
deal in foreign exchange, AACSB: Analytical Skills)

8-7 By the end of 2013, the Bank for International Settlements will have issued its next
triennial survey on foreign exchange. Look up the report on the bis.org Web site.
What are the major differences in that survey from what is reported in the 2010
survey in the chapter?

Trading in foreign-exchange markets averaged $5.3 trillion per day in April 2013.
This is up from $4.0 trillion in April 2010 and $3.3 trillion in April 2007. (LO: 3,
Learning Outcome: To describe how the foreign-exchange market works, AACSB:
Reflective Thinking)

ADDITIONAL EXERCISES: The Foreign-Exchange Market

Exercise 8.1. Many students will have had experience with foreign currency
conversion. Ask them to describe the differences they have encountered in rates
quoted at the airport, in hotels and banks, and on the street. Then ask students to
describe their experiences using credit cards and ATM cards in particular foreign
countries. How were the transactions reported on their statements? Were they
charged processing fees? (LO: 3, Learning Outcome: To describe how the foreign-
exchange market works, AACSB: Reflective Thinking)

Exercise 8.2. Take copies of the most recent editions of The Wall Street Journal
and the Financial Times to class. Explain to students where to find foreign-exchange
rates, forward rates, cross rates, commodity prices, etc. Select the home countries of
various students in your class. Use the forward rates to engage the students in a
discussion as to which currencies appear to be stronger. Explore the possible
underlying reasons for a given currency’s strength or weakness. (LO: 1, Learning
Outcome: To learn the fundamentals of foreign exchange, AACSB: Analytical
Skills)

Exercise 8.3. More than 150 currencies exist today. Some countries share a
common currency (e.g., those that participate in the euro), while certain countries
peg their currencies to others (e.g., Chile’s currency is pegged to the U.S. dollar).
Many nations, however, maintain their own independent currencies. Ask students to
debate the potential for additional regional currencies such as the euro. If they
support the concept, should those currencies necessarily be tied to regional economic
blocs? (LO: 2, Learning Outcome: To identify the major characteristics of the
foreign-exchange market and how governments control the flow of currencies across
national borders, AACSB: Communication Abilities)

Exercise 8.4. Have the students assume the role of CFO of a mid-sized U.S.
company that exports to Europe. The company has received a contract to supply
components to a European manufacturer with an agreed-upon sales price of €4

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million due in 90 days. Should the CFO do anything to hedge against possible
fluctuations in the dollar/euro exchange rate? If so, what? If not, why not? (LO: 5,
Learning Outcome: To understand why companies deal in foreign exchange,
AACSB: Analytical Skills)

Exercise 8.5. Go to a trading Web site like www.forex-markets.com or an

information site like finance.yahoo.com/currency and demonstrate the charting,
conversion calculators, and other research and information tools available for foreign
exchange. (LO: 1, Learning Outcome: To learn the fundamentals of foreign
exchange, AACSB: Use of Information Technology)

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Other documents randomly have
different content
Home Rule. In fact the Reform Act made Home Rule
inevitable within a comparatively short time, and
indicated the nature of the constitutional methods of
its early attainment. Mr. Gandhi was in India for
some years before that date. He scarcely lent any
assistance to the Reform party. Considering his
principles he could not. After having obtained the
Act, the Reform party proceeded to work it, to carry
out the administrative reforms needed, to educate
the masses to enable them to claim and exercise
larger political powers, in order to claim at as early a
date as possible that further instalment of Reform
provided for and contemplated in the act itself. Mr.
Gandhi is standing right athwart their path, thus
preventing or at least retarding and dangerously
imperilling the indispensable reforms, regardless of
the sufferings of the people entailed thereby, in order
to carry out his own wild principles which have not
the slightest chance of acceptance provided they are
understood by the people of the country for what
they are, emotional speculations without any
considered relation to existing conditions. Mr. Gandhi,
to take him at his best is indifferent to facts. Facts
must submit to the dictates of his theories. The only
difficulty in his way is that they don't. Will o'the wisp
politics are not of use to a people who have to live in
a world which, from long and bitter experience, has
at last come to realise that dreams of distorted
brains are not the stuff of which contented Nations
are made. Gandhi in fact is seeking not only to
destroy the fruits of the long endeavour of the
constitutional reformers, but blast for ever any hopes
of Indian regeneration.
To push forward the working of the Act has been
the work before the Reform party which he is thus so
perniciously thwarting. They had to take up in the
Legislative Councils the question of the redress of the
grievances under which the people suffered, not only
to agitate for their removal, but to show the people
that by constitutional agitation sooner or later they
can get what they want. The most important
question with which the constitutional Reformers had
to deal was one concerning the great poverty of the
country. For this it is necessary to consider the
question of the Land Tax—its nature, incidents,
relation to other taxes, its necessity, the distribution
of the land produce between the Government and
the classes that own the land. This is a question in
which the landholding classes are very much
interested. They would have understood the
arguments addressed to them and therefore it would
have served as a means of political and social
education. The Councils have already been dealing
with it, and, considering the conditions, satisfactorily.
The Government have been meeting them in a
sympathetic spirit and are trying to give effect to
their proposals as much as possible. What is Mr.
Gandhi's advice? He does not seek to co-operate to
make the tax less oppressive. He would have the
people pay no land tax to Government. Only the
dreadful consequences that would ensue prevent him
in this case, from giving full effect to his intentions.
In any case, it is not the oppressive nature of the tax
that he relies on, nor is it alleged that it is an
innovation of the British Government, which of
course it is not. He objects to the tax, not for itself,
but because it is another weapon with which to
destroy the Government.
A cognate question is that which arises between
the landlords and tenants. In this also all the
landholding classes are deeply interested, and a
discussion of the nature of the distribution of the
produce between the landlord, farmer and
agricultural labourer would have been of great
educative value. The Legislative Councils are dealing
with the question. Government in this matter also
are showing the greatest possible consideration for
the feelings of the people of the country. Yet Mr.
Gandhi and his friends would not only take no part in
the deliberations of the council but would prevent an
amicable settlement by steps which have produced
riots between the classes interested in the land, with
the object of discrediting the Reform Scheme and
paralysing the Government of the country.
Closely connected with this is the question of
Indian manufactures, industries and the development
of mineral resources, which, besides, conferring
other benefits, will relieve undue pressure on the
land. Our industries have been destroyed by English
competition and constitutional reformers are
determined to take all the steps necessary to enter
into healthy competition with English industries in
Indian interests and to develop their own mineral
and other resources. In so doing they have to take
care that the conditions which accompanied the rise
of industrial prosperity in the West are not
reproduced in India. They have to see that wage
earners received adequate protection. What are the
tactics of Mr. Gandhi and his friends? All these
industries are to him the devil's-own agency to
destroy the soul. He says they cannot add an inch to
India's moral stature. Starvation due to the absence
of industries may destroy the body and certainly
hinders the development of the soul. But to him this
does not matter. He and his followers would taboo
machinery, without which competition or
development is hopeless. Without attempting to
promote an amicable settlement between English
capitalists and Indian labourers they have on the
contrary been responsible for a deliberate widening
of the chasm between the races.
The administration of justice is another matter in
which all are interested; and already the Legislative
Councils are dealing with the question of the
separation of Judicial and Executive functions. The
Government again are not only not standing in their
way but are rendering every assistance towards the
solution of the problem. This is also the case with
reference to the removal of discriminations between
Europeans and Indians in the administration of
justice. The people of the country understand this
question well as they are deeply interested in it. Mr.
Gandhi is asking the people of the country to avoid
all courts and thus not to interest themselves in the
improvement of judicial administration.
I might take many other questions relating to
finances, army, etc., and show the baneful influence
of his propaganda. In all these Mr. Gandhi's
campaign against Government has hampered the
reformers who would otherwise have made the
redress of these grievances a more effective plank in
their platform; these questions would have been
more widely discussed throughout the country. But
such discussion is now almost impossible with the
result that these questions are not settled as
satisfactorily as they might otherwise be. But it is as
regards education that the reformers have most felt
the want of that popular support necessary to carry
out the reforms needed.
Mr. Gandhi will never be forgiven by all true lovers
of sound National Education for India for the
campaign he has carried on against real education.
The education that has been hitherto imparted had
been as everybody, including Mr. Gandhi also
recognised, lamentably defective. The reformers had
to insist on the imparting of suitable primary
education to the masses, to the workers, to the
labouring men and others, to enable them to
improve their condition, because no class can
generally rise except under the ultimate stress of its
own will and ability. They had to demand suitable
higher education, which was required not only in the
interests of the culture but also for the industrial
regeneration of the country and for the development
of India's natural resources. In the laboratories of
Europe, America and Japan students are devoting
themselves to discover means for the alleviation of
misery and pain. Nay, higher claims are advanced,
for it has been declared by scientists that we are on
the eve of discovery of means for a practically
indefinite prolongation of life under certain conditions
which make us intensely expectant to know whether
they are the same as described in our ancient books
as efficacious for that purpose, descriptions which
have hitherto been contemptuously discarded as
worthless. Archaeologists are almost every day
unveiling to us ancient remains and writings which
give us a different and a startling conception of
ancient History and Civilisation. Indian History is
being rewritten. When we hear of the Marconi
wireless, our young men turn to our own ancient
descriptions of the training of human body and mind
which make these fit to receive and convey
messages regardless of space and distance and they
show eagerness to take part in experiment and
research. When we find rays penetrating solid matter,
our young scientists wonder whether after all the
stories of great seers whose vision, not of the
material eye, is not bounded by time or space or
distance, may not be true and wonder whether we
should not now take up the training prescribed to
attain those results. Researches are made in the
laboratories to control the forces of nature, to
increase human comforts and happiness, to increase
productivity in all directions. Researches have already
attained brilliant results. The lessons of the survey of
the regions above by the telescope, of all below by
the microscope, and generally speaking all these
marvels of science which lend fresh light and new
significance to the lesson of ancients as to the all
pervading of the universe are all anathema to Mr.
Gandhi.
He wants to hold back our boys from the
Universities and post-graduate studies and research
that they may go back to their ploughs while the
Universities of the Western world are sending their
delegates all over the world to take stock of what
has been done and to devise means for the
intellectual and moral uplift of the Nations.
The constitutional reformers and the Councils have
the great task before them of reconciling the Hindus
and Mahomedans on a basis for their unity other
than the one which arose out of the Mahomedan fury
against the British Government for its failure to
support Mahomedan interests in the West. They have
also to promote goodwill between the Hindus and
the Mahomedans on the one side and the Europeans
on the other, both in India and in the colonies. They
have to face the rising antagonism between the dark,
the fair and the white—an antagonism which
threatens in course of time to engulf the whites with
all that modern civilisation, whatever be its faults, is
standing for. The Reform party want India to take her
rightful place in the Indo-British commonwealth, the
first place, in fact, to which her natural genius and
her resources entitle her, with all its responsibilities.
The conditions are all favourable to India.
Governorships of Provinces are thrown open to
Indians. There are Indians in the Viceroy's and other
Councils. But Mr. Gandhi and his friends will not only
do practically nothing in that direction but they have
created what threatens to be a permanent gulf
between the Mahomedans and non-Mahomedans,
and they are dangerously widening the gulf between
the Indians and Europeans. The reformers have to
improve the conditions of women both amongst the
Mahomedans and the Hindus, as without such
improvement India is not entitled to take her place
among civilised nations. They have practically to get
rid of the caste system as with such a cancer political
progress is impossible. Mr. Gandhi, on the other
hand, panders to Mahomedan vanity and justifies the
racial differences as between different classes of
Hindus. He insists upon the necessity of our going
back to our own caste system, which is responsible
for the condition of our women and of the lower
classes. He has given a handle to those who want to
maintain the repressive laws, and is really
responsible for the retention of them. He has not
only thrown doubts as to our fitness for Self-
Government but has rendered it possible for our
opponents to urge with plausibility that danger would
accrue to the Empire and to India itself by granting
Home Rule to India. He has thus to the best of his
sinister ability attempted to prevent all reforms and
has tried to paralyse all the efforts of the reformers
in every direction, fomenting racial and class
differences, as I have already explained.
Everywhere we see a class of narrow thought in
the white world raising the colour sentiment against
the Asiatics, and against Indians in particular,
proclaiming that there is no place for Indians in
British Empire on terms of equality. These are not
the intellectual leaders of the white races, nor are
they those who set the best standards of morality.
On the other hand, we see the noblest of them
proclaiming and striving with all their might, with
varying degrees of success, to enforce the opposite
ideal. We know also that in India the question is only
one of time and within a short period absolute
equality in every respect will be carried out. We see
further that our countrymen elsewhere are weak and
comparatively helpless, and till we in India attain our
manhood they must continue at the mercy of the
white races. What is it, then, that not only Religion,
Universal morality, or good, but also policy and
prudence, dictate? There can be only one answer.
We must strengthen the hands of those who are
fighting for race equality and give no opportunity to
those who maintain that the Indians are a peril to
the white race. What is Mr. Gandhi doing? He is
doing everything possible to increase racial and class
hatred.
We see the wonderful phenomenon of Australian
ladies begging pardon for the atrocious treatment of
their Indian sisters by a few Englishmen in Fiji and
elsewhere. We see the Universities and Professors,
ashamed of themselves for their aberration during
the great War, hastening to make amends by trying
to bring together all classes and races of men. We
see white women trying to band themselves and
other women of whatever colour and creed into one
sisterhood, without any difference, to throw
themselves into all social and political movements for
sex enfranchisement and uplift; to work for the good
not only of themselves but of children in particular,
and generally to devote themselves to all activities of
mercy. We find various Nations calling to one another
across seas, deserts and mountains to join in a
common fellowship, not to work in opposition to one
another. Every where, after the fearful cataclysm
through which we have passed, there is wistful
yearning for fellowship and brother-hood to carry out
in practice the teachings of the ancient prophets and
seers, Buddha, Confucius, Zoroaster, the seers of the
Upanishads, Christ, Mahomed, in opposition to the
Churches and the dogmatic religions identified with
their names. And is it not extraordinary, we see this
man, uninfluenced by this tremendous intellectual
and moral up-heaval, waging a bloody and racial
struggle for what? that if successful Indians may not
take part in any of these movements, shun them all,
since God has not created man with his limited
means of natural locomotion to labour for general
good, and may therefore, retire to their village to
lead a solitary life.
If he had followed this advice for himself, or had
retired to the Himalayas to live a mahatmaic life he
would have saved the lives literally of thousands,
prevented horrible outrages worse than death, saved
thousands from incalculable misery. Instead of
paying the penalty themselves, he and his
lieutenants stalk about the country dripping with the
blood of the victims of their policy.
Who is responsible for all this? The Government of
India cannot divest themselves of their responsibility
and India will hold the Indian members primarily
responsible for the present situation. For no Viceroy
will venture to disregard their advice in a matter of
this sort. They do not seem to have strengthened the
fibre of the Government. Nor have the Legislative
Councils who also must share the responsibility
advanced the claim for the transfer of the
administration of justice to popular control. The
Gandhi movement will no doubt collapse by internal
disruption as it is composed of various elements,
drawn from Tolstoy Lenin communism, socialism,
Rigid Brahmanism, militant Mahomedanism mutually
repellent and explosive when they come into contact
with one another and already producing the natural
terrible results. But before the final collapse comes it
will have produced appalling misery and bloodshed
unless it is dealt with firmly and with statesmanship.
The Government should give Mr. Gandhi and some of
his chief lieutenants who accept the whole
programme the rest, they sadly need. And the
Congress and the Khilafat associations must be
treated as they themselves wish to be treated as
disloyal illegal associations.
Since the above lines were written Mr. Gandhi has
been arrested, tried and convicted. He pleaded guilty
to the charges framed against him. His statements
are worthy of careful attention (App. XXI). He said "I
wish to endorse all the blame that the learned
Advocate-General has thrown on my shoulders in
connection with the Bombay occurrences, Madras
occurrences and the Chauri Chaura occurrences.
Thinking over these deeply and sleeping over them
night after night, it is impossible for me to dissociate
myself from the diabolical crimes of Chauri Chaura or
the mad outrages of Bombay." He is quite right when
he says, that "as a man of responsibility, a man
having received a fair share of education, having had
fair share of experience of this world, I should have
known the consequences of every one of my acts. I
knew that I was playing with fire. I ran the risk and if
I was set free I would still do the same. I have felt it
this morning that I would have failed in my duty, if I
did not say what I said here just now." A man who
says that if set free he would still pursue the same
course though aware of the consequences of his acts
is not a safe leader. There are signs however of a
general recognition throughout the country that Mr.
Gandhi's theories are no longer suitable as a guide
for political action. The Maharashtra party have
apparently resolved to seek admission into the
Legislative councils. The Central Provinces are also
apparently of the same opinion. A large section of
Bengal represented by the Chitagong conference
apparently hold the same view. In Madras a
considerable section is inclined to agree. But there is
little doubt that it would take a long time to eradicate
the feeling of hatred that has been roused by Mr.
Gandhi throughout the country.
As I left the Government of India long before the
campaign of non-co-operation was launched,
perhaps there is nothing inappropriate in the few
observations which I propose to make regarding the
delay in taking action against Mr. Gandhi and his
followers. In September 1920 the Congress adopted
the non-co-operation resolution. The Government
might then have taken action with the support of a
large majority of Indian politicians. After the final
adoption of a non-co-operation programme by the
Nagpur Congress it was felt that the Government
should have stopped the activities of the party which
from that moment had openly declared their
disloyalty. They maintained their silence however
even after Gandhi and the Congress party resolved
on the recruitment of volunteers and the
organisation of a parallel Government. On the arrest
and trial of the Ali Brothers Mr. Gandhi challenged
the Government to arrest him as he maintained that
the conduct of the Ali Brothers in tampering with the
loyalty of the Sepoys and uttering sedition was only
in pursuance of the policy adopted by himself and
the congress. His words are remarkable. "The
National Congress began to tamper with the loyalty
of the sepoys in September last year, i.e. 1920 the
Central Khilafat Committee began it earlier and I
began it earlier still, for I must be permitted to take
the credit or the odium of suggesting, that India had
a right openly to tell the sepoy and everyone who
served the Government in any capacity whatsoever
that he participated in the wrongs done by the
Government."—"Every non-co-operator is pledged to
preach disaffection towards the Government
established by law. Non-co-operation, though, a
religious and strictly moral movement, deliberately
aims at the overthrow of the Government, and is
therefore legally seditious in terms of the Indian
Penal Code. But this is no new discovery. Lord
Chelmsford knew it. Lord Reading knows it" ... "we
must reiterate from a thousand platforms the formula
of the Ali Brothers regarding the sepoys, and we
must spread disaffection openly and systematically
till it pleases the Government to arrest us." It will
hardly be believed that even after this no steps were
taken against him. Towards the end of the year he
said "Lord Reading must clearly understand that the
non-co-operators are at war with the Government.
They have declared rebellion against it." It was after
this that there was an attempt to bring about a
conference between him and the Government which
was contemptuously brushed aside by him. One of
the mopla leaders when tried for rebellion pleaded
that he was under the impression that the British
Government no longer ruled the country and had
abdicated. There is very little doubt of the
unfortunate fact that there was a general belief that
the Government was powerless and could be safely
defied by Gandhi and his congress.
 APPENDIX I
VICEROY'S SPEECH.

"A few Europeans and many Hindus, have been murdered,

communications have been obstructed, Government offices burnt
and looted and records have been destroyed, Hindu temples sacked,
houses of Europeans and Hindus burnt, according to reports Hindus
were forcibly converted to Islam and one of the most fertile tracts of
South India is faced with certain famine. The result has been the
temporary collapse of the Civil Government, the offices and Courts
have ceased to function and ordinary business has been brought to
a standstill. European and Hindu refugees of all classes are
concentrated at Calicut and it is satisfactory to note that they are
safe there. One trembles to think of the consequences if the forces
of order had not prevailed for the protection of Calicut. The non
Muslim in these parts was fortunate indeed that either he or his
family or his house or property came under the protection of the
soldiers and the police. Those who are responsible for causing this
grave outbreak of violence and crime must be brought to justice and
made to suffer the punishment of the guilty.
 Effect of violent preaching
"But apart from direct responsibility, can it be doubted that when
poor unfortunate and deluded people are led to believe that they
should disregard the law and defy authority, violence and crime must
follow? This outbreak is but another instance on a much more
serious scale and among a more turbulent and fanatical people, of
the conditions that have manifested themselves at times in various
parts of the country and, gentlemen, I ask myself and you and the
country generally what else can be the result from instilling such
doctrines into the minds of the masses of the people? How can there
be peace and tranquility when ignorant people, who have no means
of testing the truth of the inflamatory and too often deliberately false
statements made to them, are thus misled by those whose design is
to provoke violence and disorder. Passions are thus easily excited to
unreasoning fury.
 The Leader of the Movement
"Although, I freely acknowledge that the leader of the movement
to paralyse authority, persistently, and, as I believe, in all
earnestness and sincerity, preaches the doctrine of non-violence and
has even reproved his followers for resorting to it, yet again and
again it has been showed that his doctrine is completely forgotten
and his exhortations absolutely disregarded when passions are
excited as must inevitably be the consequence among emotional
people.
 Its inevitable result
"To those who are responsible for the peace and good government
of this great Empire and I trust that to all men of sanity and
common sense in all classes of society, it must be clear that the
defiance of the Government and constituted authority can only result
in widespread disorder, in political chaos, in anarchy and in ruin."
 APPENDIX II
DIABOLICAL ATROCITIES.

Calicut, Sept. 7—In my first article I dealt with the prime causes of
the present outbreak, the dangerous game played by the leaders of
the Khilafat and Non-Co-operation movements in Malabar which set
the whole of Ernad and Walluvanad ablaze, and the extent of
plunders, murders and forcible conversions committed by the Mopla
rebels. In this article I intend to confine myself to the nature of the
atrocities committed by them and other details.
The experiences I am about to relate will satisfy every Hindu
endowed with ordinary common sense that the Moplas resorted to
most repugnant fanaticism, which may be ascribed to nothing but
selfishness, love of money and love of power, which are the
prominent features of the present outbreak. Refugees narrate that,
after forcibly removing young and fair Nair and other high caste girls
from their parents and husbands, the Mopla rebels stripped them of
their clothing and made them march in their presence naked, and
finally they committed rape upon them. In certain instances, devoid
of human feelings and blinded by animal passion, the Moplas are
alleged to have utilised a single woman for the gratification of the
carnal pleasures of a dozen or more men. The rebels also seem to
have captured beautiful Hindu women, forcibly converted them,
pierced holes in their ears in the typical Mopla fashion, dressed them
as Mopla women and utilised them as their temporary partners in
life. Hindu women were threatened, molested and compelled to run
half-naked for shelter to forests abounding in wild animals.
Respectable Hindu gentlemen were forcibly converted and the
circumcision ceremony performed with the help of certain Musaliars
and Thangals. Hindu houses were looted and set fire to, will not all
these atrocities remain as a shameful image of the Hindu Muslim
"unity", of which we have heard much from the Non-Co-operation
Party and Khilafat-wallahs? The ghastly spectacle of a number of
Hindu damsels being forced to march naked in the midst of a
number of licentious Moplas cannot be forgotten by any self
respecting Hindu, nor can it be erased from their minds. On the
other hand, I have never heard of the modesty of a Mopla woman
being outraged by a Mopla rebel. "Times of India."
 APPENDIX III
MALABAR'S AGONY.
 By Annie Besant
It would be well if Mr. Gandhi could be taken into Malabar to see
with his own eyes the ghastly horrors which have been created by
the preaching of himself and his "loved brothers," Muhommad and
Shaukat Ali. The Khilafat Raj is established there; on August 1, 1921,
sharp to the date first announced by Mr. Gandhi for the beginning of
Swaraj and the vanishing of British Rule, a Police Inspector was
surrounded by Moplas, revolting against that Rule. From that date
onwards thousands of the forbidden war-knives ware secretly made
and hidden away, and on August 20, the rebellion broke out, Khilafat
flags were hoisted on Police Stations and Government offices.
Strangely enough it was on August 25th 825 A.D. that Cherman
Perumal ascended the throne of Malabar, the first Zamorin, and from
that day the Malayalam Era is dated that is still in use; thus for 1096
years a Zamorin has ruled in Calicut, and the Rajas are mostly Chiefs
who for long centuries have looked to a Zamorin as their feudatory
Head. These are the men on whom the true pacification of Malabar
must ultimately depend. The crowded refugees will only return to
their devastated homes when they see those once more in safety in
their ancestral places. Their lands, which they keep under their own
control, are largely cultivated by Moplas, who are normally hardy,
industrious agricultural labourers.
Our correspondent has sent accounts of the public functions
connected with my hurried visit to Calicut and Palghat, and that
which I wish to put on record here is the ghastly misery which
prevails, the heart-breaking wretchedness which has been caused by
the Mopla outbreak, directly due to the violent and unscrupulous
attacks on the Government made by the Non-Co-operators and the
Khilafatists and the statements scattered broadcast, predicting the
speedy disappearance of British Rule, and the establishment of
Swaraj, as proclaimed by the N.C.O. and Khilafat Raj as understood
by the Moplas from the declarations of the Khilafatists. On that,
there is no doubt whatever, so far as Malabar is concerned. The
message of the Khilafats, of England as the enemy of Islam, of her
coming downfall, and the triumph of the Muslims, had spread, to
every Mopla home. The harangues in the Mosques spread it
everywhere, and Muslim hearts were glad. They saw the N.C.O.
preachers appealing for help to their religious leaders, naturally
identified the two. The Government was Satanic, and Eblis, to the
good Muslim, is to be fought to the death. Mr. Gandhi may talk as he
pleases about N.C.O.s accepting no responsibility. It is not what they
accept; it is what facts demonstrate. He accepted responsibility for
the trifling bloodshed of Bombay. The slaughter in Malabar cries out
his responsibility. N.C.O. is dead in Malabar. But bitter hatred has
arisen there, as fighting men from the dragon's teeth of Theseus.
That is the ghastly result of the preaching of Gandhism, of N.C.O. of
Khilafatism. Every one speaks of the Khilafat Raj, and the one hope
of the masses is in its crushing by the strong arm of the
Government. Mr. Gandhi asks the Moderates to compel the
Government to suspend hostilities, i.e., to let loose the wolves to
destroy what lives are left. The sympathy of the Moderates is not, I
make bold to say, with the murderers, the looters, the ravishers, who
have put into practice the teachings of paralysing the Government of
the N.C.O.'s, who have made "war on the Government" in their own
way. How does Mr. Gandhi like the Mopla spirit, as shown by one of
the prisoners in the Hospital, who was dying from the results of
asphyxiation? He asked the surgeon, if he was going to die, and
surgeon answered that he feared he would not recover. "Well, I'm
glad I killed fourteen infidels," said the Brave, God-fearing Mopla,
whom Mr. Gandhi so much admires, who "are fighting for what they
consider as religion, and in a manner they consider as religious."
Men who consider it "religious" to murder, rape, loot, to kill women
and little children, cutting down whole families, have to be put under
restraint in any civilised society.
Mr. Gandhi was shocked when some Parsi ladies had their saries
torn off, and very properly, yet the God-fearing hooligans had been
taught that it was sinful to wear foreign cloth, and doubtless felt
they were doing a religious act; can he not feel a little sympathy for
thousands of women left with only rags, driven from home, for little
children born of the flying mothers on roads in refuge camps? The
misery is beyond description. Girl wives, pretty and sweet, with eyes
half blind with weeping, distraught with terror; women who have
seen their husbands hacked to pieces before their eye, in the way
"Moplas consider as religious"; old women tottering, whose faces
become written with anguish and who cry at a gentle touch and a
kind look waking out of a stupor of misery only to weep, men who
have lost all, hopeless, crushed, desperate, I have walked among
thousands of them in the refugee camps, and some times heavy
eyes would lift as a cloth was laid gently on the bare shoulder, and a
faint watery smile of surprise would make the face even more
piteous than the stupor. Eyes full of appeal, of agonised despair, of
hopeless entreaty of helpless anguish, thousands of them camp after
camp, "Shameful inhumanity proceeding in Malabar," says Mr.
Gandhi. Shameful inhumanity indeed, wrought by the Moplas, and
these are the victims, saved from extermination by British and Indian
swords, For be it remembered the Moplas began the whole horrible
business; the Government intervened to save their victims and these
thousands have been saved. Mr. Gandhi would have hostilities
suspended—so that the Moplas may sweep down on the refugee
camps, and finish their work?
I visited in Calicut three huge Committee camps, two Christian,
and the Congress building and compound where doles of rice are
given daily from 7 A.M. to noon. In all, the arrangements were good.
Big thatched sheds, and some buildings shelter the women and
children, the men sleep outside. They are all managed by Indians,
the Zamorini's Committee distributing cloths and money to all,
except the Congress committee, which work independently and gives
food from its own resource. At Palghat, similar arrangements are
made by the Zamorini's Committee, and the order and care in
feeding are good to see.
Let me finish with a beautiful story told to me. Two Pulayas, the
lowest of the submerged classes, were captured with others, and
given the choice between Islam and Death. These, the outcaste of
Hinduism, the untouchables, so loved the Hinduism which had been
so unkind a step-mother to them, that they chose to die Hindus
rather than to live Muslim. May the God of both, Muslim and Hindus
send His messengers to these heroic souls, and give them rebirth
into the Faith for which they died. New India, 29 November 1921.
 Wilful murders of Hindus and arson were first begun in my own
place by Chembrasseri Thangal and his Lieutenant, another Thangal.
You might have read accounts written by me in the Malabar journal
which was sent to you last time. This contagion began to spread like
wild fire and we began to hear of murders daily. Within a fortnight
cold-blooded murders of Hindus became very common. From within
the borders of Calicut and Ernad taluks refugees come in large
numbers with tales of murders and atrocities committed by the
rebels. At Puthur Amson in Ernad only 12 miles northeast of Calicut
—One day in broad daylight twenty-five persons who refused to
embrace Islam were butchered and put into a well. One out of these
who narrowly escaped death got out of the well when the rebels left
the place and ran to Calicut for life. He is now in the hospital. So the
accounts must be true as he himself was one of the victims.
During the last week news of numerous murders and forcible
conversions came from another quarter also, Mannur near Aniyallur
and Kadalundi railway station in Ernad taluk. This place also is only
14 miles away from Calicut. Every train to Calicut was carrying with
it daily hundreds of refugees during the last week. If there were ten
thousand refugees fed by the Relief Committee last week, it must
have fed fifteen thousand this week. According to the statements
given by them there must be at least fifty murders and numerous
cases of conversions and house-burning. Can you conceive of a
more ghastly and inhuman crime than the murders of babies and
pregnant women? Two days back I had occasion to read a report
given by a refugee in Calicut. A pregnant woman carrying 7 months
was cut through the abdomen by a rebel and she was seen lying
dead on the way with the dead child projecting out of the womb.
How horrible! Another: a baby of six months was snatched away
from the breast of his own mother and cut into two pieces. How
heart-rending! Are these rebels human beings or monsters? From
the same quarters numerous forcible conversions are also reported.
One refugee has given statement that he had seen with his own
eyes that the heads of a dozen people were being shaved by the
rebels and afterwards they were asked to recite some passages from
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