This article argues that the formulation of the 1920 stabilization package for India can be understood only against the background of the threat that its appetites for gold posed to Britain's already delicate postwar liquidity position.This threat determined the deflationary character of the package. The article not only takes issue with existing interpretations of the particular stabilization episode, but more generally suggests that India's significance to Britain's interwar economy may be reinterpreted in its light. The role of the periphery in Britain's adjustment to new circumstances in the interwar period deserves further research.