Mir ft?--« ' LIBRARY OF THE UNIVERSITY OF CALIFORNIA. Accession .tJ..UU.Ü.D. • ^^^'T^'^ ^ p i i VT V r ECONOMIC STUDIES OF THE UNIVERSITY OF CHICAGO NUMBER III. NOW READY No. I. THE SCIENCE OF FINANCE EyGj riAV COHN. h. Veblen Translated from the German by 8vo. pp. 12 + 800 ; price $3.50 Dr. T. No. II. HISTORY OF THE UNION PACIFIC RAILWAY By Henry Kirke White IN PREPARATION No. IV. HISTORY OF THE LATIN UNION By Henry Parker Willis THE INDIAN SILVER CURRENCY AN HISTORICAL AND ECONOMIC STUDY BY KARL ELLSTAETTER TRANSLATED BY J. LAURENCE LAUGHLIN HEAD PROFESSOR OF POLITICAL ECONOMY IN THE UNIVERSITY OF CHICAGO CHICAGO Cf)e ^anibersitg of («Tttrago Vrrss 1895 Copyrighted by THE UNIVERSITY OF CHICAGO 1895 GENERAL Chf janitocrsitn of Ct)icaDO ^Drr»» PREFACE. In the discussion about standards, to no country is more attention drawn than to India; and rightly, since the fate of silver is to be decided, above all, in India. But, on this point, there exists in the Indian question considerable confusion, — as in so many parts of the currency question. Many try to veil their lack of clearness under dogmatism ; and talk about axioms and elementary propositions of economics, which need no proof. I have tried to base my conclusions principally upon the official documents which have been published at the initiative of both the English and Indian authorities, without a priori conceptions and in the interest of no economic or political party whatever, — for which one is unfortunately always obliged to give assurance in the discussion of the currency. It is not consonant with the spirit of a scientific work to intro- duce into the field of investigation matters which cannot yet be grasped in their entirety, and upon which those closest at hand cannot yet form any judgment. The role of prophet is a thank- less one in economics ; he who wishes to give himself up to picturing the future stands quite outside of science. For this reason, I determine to investigate in this work the events only up to that point of time — to June 26, 1893 — when the Indian Government closed its mints to the free coinage of silver. Should this investigation contribute somewhat to a clearer understanding of Indian affairs, I shall have accomplished my purpose. 96008 In conclusion, permit me to express my most profound thanks to Herr Geh. Hofrat Prof. Dr. Brentano and to Herr Prof. Dr. Lotz, the directors of the economic seminar in the University of Munich. Especially to Herr Prof. Dr. Lotz do I owe the greatest thanks ; he introduced me to the study of money, inspired my work, and during its jjrogress supported me with advice and necessary scientific materials in the kindest way. Karl Ellstaetter. Munich, February 24, 1894. CONTENTS. CHAPTER I. THE INDIAN MONETARY SYSTEM. — MOVEMENT OF THE PRECIOUS METALS. — THE USE OF THE PRECIOUS METALS. § I. The Monetary System I § II. Imports of I'recious Metals 5 §111. The Use of the Precious Metals in India ------- 8 CHAPTER II. THE INFLUENCE OF CHANGES IN THE PRICE OF SILVER ON TRADE, AND ON THE INDUSTRIAL AND AGRICULTURAL PRODUCTION OF INDIA. § I. Fluctuations of the Exchanges - - - - 2i § II. Effects of the Fall in the Value of Silver A. Effect on Prices 25 B. Exportation of Wheat from India 38 C. The Cotton Industry ---------- 44 D. Movement of Trade in General ------- 55 CHAPTER HI. THE FINANCIAL CONDITION OF THE EAST INDIAN GOVERNMENT. — COMPLAINTS OF ITS OFFICIALS. § I. The Condition of the Government 58 A. Means of Obtaining Gold - - - - ^ - - - - 60 B. Expenditures of the Government (a) Those to be Paid in Gold - - - 63 (b) Those to be Paid in Silver -------- 65 C. The Income -.-.------. 67 D. Criticism - - 73 §11. The Complaints of Officials 75 via CONTENTS. CHAPTER IV. HISTORY OF THE INDIAN SILVER CURRENCY. § I. The Earlier Times to 1835 81 A. The Silver Money 81 B. Gold (a) The Mohur 83 (b) The Pagoda - - 84 §11. Attempts at Reform since 1835 - - ■ 8s APPENDIX I. Statement of Sir David M. Barbour concerning the Introduction of the Limping Gold Standard into India, June 21, 1892 107 APPENDIX II. Tables of Exports and Imports of Merchandise and Precious Metals. — Coinage. — Receipts from Sale of Bills and Cable Transfers on Indian Govern- ment. — Paper Money Circulation - - - - - - - - 115 APPENDIX III. Graphic Representation of the Exports of Wheat and the Rates of Exchange - 117 LITERATURE. [except titles mentioned in the text.] A. OFFICIAL DOCUMENTS. Reports of the Royal Commission Appointed to Inquire into the Recent Changes in the Relative Values of the Precious Metals (Gold and Silver Commission), With Minutes of Evidence and Appendices. 4 vols.; London, 1886-88. Report of the Committee Appointed tu Incjuire into the Indian Currency. London, 1893. Minutes of Evidence taken before the Commission Appointed to Inquire into the Indian Currency together with an Analysis of the Evidence and Appendices. London, 1893. Papers Relating to a Gold Currency for India. London, 1865. Reports of the Royal Commission Appointed to Inquire into the Depression of Trade and Industry with Minutes of Evidence and Appendices. 5 Vols.; London, 1886. Financial Statement of East India. London, 1893. General Report of the Census of India, 1891. London, 1893. Statement of the Trade of British India with British Possessions and Foreign Countries for the Five Years, 1885-86 to 1889-90. London, 1891. Statement Exhibiting the Moral and Material Progress and Condition of India During the Year 1889-90. London, 1891. Statistical Abstract Relating to British India from 1S82-83 to 1891-92. London, 1893. Statistical Abstract for the United Kingdom. Various years. B. OTHER LITERATURE. W. W. Hunter: The Indian Empire. London, 1882. Ottomar Haupt: L'Histoire mondtaire de notre temps. Berlin and Paris, 1886. W. Lexis : Article, " Silber und Silberwährung," in the Handwörterbuch der Staats- wissenschaften. Bd. V. The same: "Der gegenwärtige Stand der Währungsfrage," in the Jahrbucher für Nationalökonomie und Statistik, 3. Folge ; Bd. VI., p. 11. R. Chalmers : History of Currency in the British Colonies. London, 1893. X LITERATURE. J. Wolf: Thatsachen und Aussichten der Ostindischen Konkurrenz im Weizenhandel. Tübingen, i886. A. J. Macdonald : " Banking in India," in the Journal of the Institute of Bankers, 1890, p. 277. E. Nasse: "Das Sinken der Warenpreise während der letzen 15 Jahre," in the Jahr- bücher für Nationalökonomie und Statistik, Neue Folge ; Bd. XVII, pp. 50 and 129. G. Ruhland : " Aus dem Verfassungs- und Verwaltungsrecht des britisch-indischen Kaiserreichs," in the Zeitschrift für die gesammte Staatswissenschaft, 49 Jahr- gang (1893), pp. 223 and 408. J. Laurence Laughlin : "Indian Monetary History," in the Journal of Political Econ- omy, Chicago, September, 1893, p. 593- Guilford L. Molesworth : " Indian Currency," in the Annals of the American Academy of Political and Social Science, Philadelphia, January, 1894, p. i. Deutsches Handelsarchiv, published by the Imperial Department -of the Interior. Various years. The London Economist. Various years. Journal of the Institute of Bankers. Various years. CHAPTER I. THE INDIAN MONETARY SYSTEM. ~ MOVEMENT OF THE PRECIOUS METALS. — USES OF THE PRECIOUS METALS IN THE COUNTRY. § I. THE MONETARY SYSTEM. The circulating medium of British India separates itself into three parts. The chief portion is made up ( i ) of the money coined by the royal Indian Government. Of far less importance than these are (2) the currency notes ; and of still less importance is (3) the coin circulation of the Native States. Let us first give attention to the coin circulation of the Native States. Quite a large number of Native States in all parts of India exercise the right of coinage, a privilege upon which they jealously insist, because it is regarded as a mark of sovereignty.* In each the standards are very different. The chief silver coin is the rupee with, however, many varieties in the different states. In 1835, when the present standard was introduced, there was a list of not less than 300 different kinds of rupees then existing (many of these doubtless out of use) all more or less varying from each other. The attempt made by Act IX of 1876 to bring about the acceptance of a common standard of money through the whole of India failed. For the Native States that obliged themselves not to coin for 30 years at least, and not to allow any coins like the Anglo-Indian to be struck under their author- ity, the act ordains that the royal Indian Government should strike coins which should be uniform in weight and fineness with those of British-India, and should have a device different from those formerly used by the respective states. Such coins should then be the legal means of payment in all India. ' Report of Indian Currency Committee, § \2\ et seq. I 2 INDIAN SILVKK CURRENCY. Up to this time only four small states have accepted the pro- visions of this law, so that the much desired uniformity has not been gained. The information as to the coinage of the different Native States is not sufficient to enable us to state the amount of it. There is, however, ground for the opinion that it is not very considerable. Hyderabad, the largest Native State, coined in 1887-8 816 gold tolas, and 15,051 silver tolas; in 1888-9 7^4 gold tolas, and 1,776,421 silver tolas; a tola being equal in weight to a rupee. The value of the rupee of Hyderabad, known as the Halli Sicca rupee, is about 14 [)er centum less than the rupee of British-India. The state of Baroda coined in 1883-4 800, 000 rupees; and in 1884-5 900,000 rupees. In the three following years, however, none were coined ; in 1891 the mint was provided with new machinery. The mint of Cashimir does not appear to be any longer active. Mysore and Rewah are said to have no mint ; the coinage of Holkar in Indore, of Bhopal, and of Tra- vancore are said to be unimportant. These coins also circulate in the British provinces, especially in those lying on the borders of the respective Native States ; thus the coins of Galkwar from Baroda and of Nizam from Hy- derabad — both the best-known "native" rupees — are received without objection far within the British limits. Their deficiencies in value arc known and a corresponding discount made.' A far more important role than that of the coins of the Native States — in the failure of a gold medium for the indis- pensable wholesale exchanges — is played by the paper means of payment. Previous to 1862 the notes of the Presidency- Banks circulated, as well as the Promissory and Treasury notes issued bv the Government.^ The "promissory notes" were drafts on the Treasury for the payment of interest on the j)ublic debt; the "treasury notes" were a kind of treasury-bills and bore interest, which varied very materially from time to time. The notes of the Prcsidency- ^ Minutes of Indian Cttrrency Committee, Question 2679. * Journal of the Institute of Bankers, 1 890, p. 292. MONETARY SYSTEM. 3 Banks were received as metallic money. For their security an amount of Government "treasury notes" equal to one-fourth of the quantity of the Bank notes in circulation must be depos- ited. The right to issue notes by the Presidency Banks, which had been transferred by Acts VI of 1839, III of 1840, and IX of 1843 to the banks of Bengal, Bombay, and Madras — was, accord- ing to the rccjuirements of Act XIX of 1861, to cease from March ist, 1862. This act (of 1861) further provided that a special "Department of Issue" should have entire charge of the issue of paper ; and required also that all the precious metals, coined or in bars, which the department receives for the issue of currency notes, should be held as a reserve, with the proviso that 40,000,000 rupees — or another sum to be determined by the Governor-General — might be invested in State-paper; and that the aforesaid reserve, metallic as well as State-paper, should be kept apart always ready for the redemption of the currency notes. By the Act III of 1871 this law was amended, and it was provided that henceforth 60,000,000 Rs. of the reserve could be invested in Government paper. Act XV of 1890 raised the amount to 80,000,000 Rs. The circulation of currcncv notes amounted' on the 31st of March : Rx. 1871 ..... 10,437,291 1876 10,999,927 1880 12,357,727 1884 12,756,541 1885 14,576,904 1886 14,173,272 1887 13,876,836 1888 ------ 16,424,379 1889 15,737,813 J890 15,771,780 1891 25,690,449 1892 -..-.. 24,076,408 1893 26,401,820 'Appendix to the Minnies of the Indian Currency Committee, p. 260. The amounts in Indian Currency are expressed in the following pages partly in rupees (abbreviated to Ks.) and partly — after the manner of the Indian statistics — in an ideal unit of 10 rupees, the English pound of reckoning (abbreviated to Rx). 4 INDIAN SILVER CURRENCY. The extraordinary rise in 1891 was the consequence of an exceptionally great speculative shipment of silver to India in that year.' The banks at that time preferred to exchange the silver which had collected in their hands for Treasury notes. They sent the silver to the Currency Department and there exchanged it for notes, so that the paper circulation increased to an exces- sive amount. The statement of the banks ^ at the end of 1890 shows an enormous increase in the supply of Government Treas- ury notes. By far the most important role, moreover, in the circulation of the country is naturally played by the species of money coined by the British-Indian Government in the mints of Bombay and Cal- cutta. As a unit, Act XVII of 1835 introduced the silver "Company's rupee" of 180 grains Troy weight, \^ fine, and therefore containing 165 grains (10,692 g.) fine silver. All silver brought to the mint up to June 26, 1893, was coined at seigniorage charge of 2.25 per centum. The subsidiary coinage was regulated by the Indian Coinage Act (Act XXIII) of 1870. A gold coin was also struck, the gold mohur, but only to an inconsiderable extent. Since 1835 there was coined: Silver' 1835-6— 1884-5 - 1885-6— 189I-2 - Gold 1835-6— 1884-5 - 1885-6— 189I-2 2,445.444 The gold mohurs were receivable from 1841-1852 only in the treasuries, and are today only bought and sold. ^ Minutes of the Indian Currency Committee, Questions 111-112, 266-270, 275- 278, 323-325- 'See the Appendix to the Minutes of Indian Currency Cominittce, p. 255 et sec/. 'For the figures to 1884-5, compare the Third Report of the Commission on Depression of Trade, p. 385 et seq. from 1885-6 on, the official figures given in the appendix to the Minutes of the Indian Currency Committee, p. 240. *\n this amount, the old rupees re-coined after the passage of the law of 1835 are purposely not included. Rx. 275.053,443 60,241,386 335,294,829^ 2.352,399 93.045 IMPORTS OF PRECIOUS METALS. § II. IMPORTS OF PRECIOUS METALS INTO INDIA. Amount of silver : Rx. Rx. Total Import Imports Less Exports 1835-6— 1884-5 319,183,600 263,813,338 1885-6— 189I-2 80,347,557 71.372,993 399.531.157 335.186,331 137,083,018 127,888,103 1885-6— 189I-2 27,971,028 23,411,682 Amount of gold : 1835-6- 1884-5 137,083,018 127,888,103 165,054,046' 151,299,785 A comparison of these figures with the amount of silver coins struck shows that the most of the silver imported into India is coined. It would be a mistake, however, to draw therefrom the conclusion — as is very frequently done — that all these coins are now in use as money. This is disclosed by the following facts : The imports of the precious metals into India, in the first place, do not depend upon the needs of the circulating medium, but quite essentially on the purchasing power of the people ; that is, on the fact whether they can save more or less ; and, further, whether certain exceptional events demand a very great expenditure in coin by the Government, etc. A cursory glance over the history of imports of the precious metals into India shows us this. Previ- ous to 1855-6 the imports of the precious metals were small; and the four years following were for India exceptionally troub- lous. In 1857 there broke out in the north of the Empire the frightful uprising of the Sepoys, which moved the British Gov- ernment to take away the control of the country from the East India Company and required unusual public expenditures. As a consequence there was imported more than exported from 1855-6 to 1859-60: Rx. 50,362,475 silver, " 16,091,219 gold. The next two years were normal. In 1861, however, the Amer- ican Civil War began. The Southern states of the Union could 'The same sources as given above for the coinage. 6 INDIAN SILVER CURRENCY. no longer provide the Liverpool market with cotton ; and there ensued that frightful crisis for the Lancashire industries to which the English have given the fitting name of the "cotton famine." From India, in particular, was a supply of the indispensable raw material sought for, and exceptionally high prices were paid for it. The value of the exports of cotton from India rose from Rx. 4.64 millions (1859-60) to Rx. 27.57 millions (1865-6). Conse(juently the imports of the precious metals increased very greatly : Silver Excess Imports Over Exports 1860-I - . - - Rx. 5,328,009 1865-6 --.--" 18,668,673 Gold 1860-I . - - - " 4,232,569 1865-6 ------ 5,724.476 The next years were quieter. In consequence of divers bad harvests, as well as of the panic in India succeeding the cotton famine, a considerable decrease in the imports of the precious metals ensued. In 1870-1 only Rx. 941,931 of silver was imported in excess of exports. After 1870 began that fall in the price of silver, the chief causes of which some people seek for in the increased produc- tion of silver, and others in the continued withdrawal of silver from the role of a European metallic standard. However, before the fall in the price of silver could exercise its full influence on India, a frightful catastrophe befell the country.' In 1875 the monsoon did not appear in Mysore; a great drought and a fatally bad harvest was the result. In the summer of 1876 this was repeated throughout the whole Deccan. In the autumn of the same year, the northeast monsoon did not appear in the southeast of the Presidency of Madras ; the harvest failed over an extensive region ; and, since the harvest of 1875 had been small, famine prices were soon demanded everywhere. In addition the drought in 1877 had reached the north ; the pro- vinces of the northwest, Punjab, Räj])utäna, and the Central pro- ' Hunter, The Indian Empire, p. 429. IMFORTS OF PRECIOUS METALS. 7 vinces suffered dreadfully. Until 1879 the famine continued; then came the cholera, which, especially in the limits of Madras, swept off hundreds and hundreds of thousands. In the years 1877 and 1878, according to the estimate of the " Famine Com- mission," the population was reduced by 5.25 millions. The result of this unexampled catastrophe was, oT^course, a serious decrease in the purchasing power of the people and consequently of the imports of the precious metals. In 1875-6 the net amount of silver imports was Rx. 1,555-355; and of gold, Rx. 1,545,131. Both the next years show a marked importation of silver, because the Government — in order to counteract the dis- tress — sent large sums to India. Yet the net importation of gold fell seriously, amounting in 1876-7 to Rx. 207,349 1877-8 " " 468,129 and in 1878-9 the exports exceeded the imports by Rx. 896,173, After the distress was removed, the purchasing power of the Indian people again increased. The balance of trade was never before so favorable. The imports of the precious metals increased very markedly. In the years 1 880-1 to 1884-5 ^^^ average yearly excess of imports over exports of silver amounted to Rx. 6,080,727, and of gold to Rx. 4,712,899 ; in 1885-6 to 1889-90 of silver to Rx. 9,635,135, and of gold to Rx, 3,072,343. Strange to say, we find especially large imports of the precious metals in 1890-1. The American coinage law raised the price of silver, which for a time (May 1889) had fallen below 42 pence, to 54>^d. (August 1890) The average price for 1890 was 47|J'id. as compared with 42yJ)d. for the year 1889. In connection with this rise in the [)rice of silver there followed a movement of the net imports of silver up to Rx. 14,175,136, It is generally stated that this import in great part originated with speculators ; and the bank statements prove this. (Cf. p. 4,) A report of the imperial German Consul-General' at Calcutta says on this point: "While the high prices of silver existed, it was profitable to bring silver to India. The quantity of silver ^Deutsches Handelsarchiv, 1891, vol. ii. p. 619. 8 INDIAN SILVER CURRENCY. imported in the year 1890-1 far exceeded the needs of trade, and this silver brought into India for the purposes of specula- tion is not therefore to be found in circulation, but rests in the bank like capital waiting for investment." According to this, as /it appears, the Indian speculators in silver were waiting for a ; higher rise in the price of silver, because in no other way can the ; phenomenon be explained. There apparently existed among the people no need for this quantity of silver ; they rather profited ■ by the opportunity after so long a time to be able to acquire gold at a low rate; and the consequence was an excess of imports of gold over exports of Rx. 5,636,172. The reaction soon fol- lowed. When, in spite of the Sherman bill, the price of silver in 1891 again dropped, and the speculators beheld themselves cheated in their expectations, the speculative shipments of silver again ceased; but, in consequence of the unusually favorable balance of trade (exports of goods amounted to Rx. 108,173,592 as against imports of Rx. 69,432,383) the excess of silver imported rose to the height of Rx. 9,022,184. The year 1892 brought a very precipitate fall in the price of silver, the quotation in the London bourse falling below 38d. That was an opportunity for the Indians, which had never before occurred, to get silver in exchange for gold ; never before could one buy so much silver with one's gold. Hence the Indian statistics for 1892-3 show the phenomenon, to that time unheard of (except the unusual case of the famine of 1878-9 in which, however, the excess of exports over imports of gold was only Rx. 896,173) of y^ an excess of exports over imports of gold of Rx. 2,812,683. At the same time the imports of silver, of course, rose, since the balance of trade continued to remain favorable ; although the height of the net imports of silver in the year 1 890-1, namely Rx. 12,863,569, was not reached. § III. THE USE OF THE PRECIOUS METALS IN INDIA. From what has been said in the previous section it appears that the imports of silver into India depend upon anything rather USK Ol' THE PRECIOUS METALS. than upon the needs of the country's cuculating medium. We found, to be sure, that almost all the imported silver is coined ; but that, however, is far from saying that these silver coins remain in circulation. In many cases the coining appears to have value to the native only in that, when he has a rupee, he knows exactly how much of the commodity silver he has. All experts on Indian conditions agree on these points. Sir David Barbour, in his estimate of June 21, 1892, states the existing circulation of rupees to be Rx. 1 1 5,000,000.' Accord- ing to other very careful computations, it is Rx. 120,000,000; while the figure stated by Ottomar Haupt, of Rx. 180,000,000, is probably too high. It should not, however, escape attention that the coined rupees are shipped again to a very considerable amount out of the country ;^ for the Indian rupee supplies the medium of exchange for East Africa, Ceylon, and the countries on the Persian Gulf. By far the greatest part of the exports of silver from India go to the countries mentioned; 3 while to Europe a very small amount of silver, and to America and Australia absolutely none, is exported. An exact determination of the amount of rupees to be found in actual circulation in India is absolutely impossible, because, as has been already expounded, great quantities of silver in the form of coins are hoarded, and it is not easy to draw the line between the hoarded rupees and those which might again come into circulation. It has long been recognized that the hoards in India were exceedingly large, and yet, until recently it was impossible to get authentic information thereon. The experts heard before the various English commissions have expressed themselves wholly in generalities. It was hence very commendable in Sir David Barbour that, in 1886, he began exact investigations on this 'Appendix to Minutes of Indian Currency Coininittee, p. 147. Cf. also p. 273. * For the regions under the control of Germany, German rupees are now struck. 3 According to the statements of the Statistical Abstract these are : To Ceylon To Africa To Arabia and Persia 1889-90 Rx. 602,221 Rx. 217,564 Rx. 236,366 1890-91 " 650.750 " 188,930 " 142,038 1891-92 " 769.150 " 51,333 " 281,532 10 INDIAN SILVER CURRENCY. highly important matter, the results of which he laid before the Royal Gold and Silver Commission.' During his eight years of activity as Magistrate and Collec- tor (the highest administrative ofificerof a district) in the inte- rior of the Indian Empire, in daily contact with the native popu- lation, this eminent financier had a rich opportunity to get exact information on the conditions in question. In the first place, it is true of both metals that they are changed into ornaments in extraordinary quantities. Even the "globe-trotter" hurrying through the country with the speed of an express-train is impressed with the way in which the natives are loaded with the precious metals. One cannot take up a book of travels on India in which the author does not give expres- sion to his amazement on this point. Just as soon as the Indian has saved anything, he buys himself an ornament, the rich, one of gold, the less wealthy, one of silver. So far as gold is concerned, it is the article of an extensive trade in India. The gold-traders obtain their gold in Calcutta or Bombay, and sell it in small quantities to the people who desire it. According to the assurances of the experts, when a banker, or gold-trader, does business with an Indian, he is always ready to take gold in payment, because he knows its market price, and can almost always carve out a profit. Gold mostly circulates in the form of sovereigns, or of bars weighing lo oun- ces, yVW fi^^- Still, one cannot speak of a gold circulation in the ordinary sense of the word : it is only an article of trade. A relatively small quantity of gold is directly lost. This holds true, for example, of the cloths worked with gold, which frequently contain lO per centum of gold. The gold can be recovered, it is true, by burning the material ; but it is said not to happen frequently. We learn from Delhi of a remarkable way of using gold." In the native ceremonial, if one wishes to give a visitor a sign for his departure, he gives him a "pledge," i. e. a little ornament, ' First Report, Questions 1095 et seq. ; as well as Appendix V, A-D. ' First Report of Gold and Silver Commission, Question 1 131. USE OF THE PRECIOUS METALS. II which contains a small (luantity of gold. Although the (juantity of the preciou-s metal contained in it is too diminutive to permit the receiver to convert it into value, yet — what is undoubtedly only a remotely approximate estimate — about ;^I00 are daily used in Delhi for "pledges" for guests. A great quantity of gold escapes into the treasuries of the Rajahs. Mr. Barbour laid before the Gold and Silver Commis- sion, for example, a detailed description of the stored-up wealth of the Maharajah of Burdwan. Seven great vaults are filled with gold, silver, and precious stones, all worked up into dishes, table- equipment, articles for religious ceremony, and even stools and tables ; besides, there are heaps of coins and uncoined metals. These vaults are under the charge of the Ranee, although even she may enter them only in the company of the Rajah. An extract from a report of a post-of^ce official, who is regarded as especially trustworthy, which was published at the same time, is interesting.' He ascertained from a native prince that he annu- ally caused ;^40-45,000 of gold to be bought in Bombay and Calcutta and sent with the greatest secrecy to his residence, to be stored there. At the conclusion he says: "If inquiry be made, it will most probably be found that this is really the case ; but the mischief which such an inquiry will cause by exciting distrust and suspicion of the real intentions of the government will be serious, and should not, I think, be risked without urgent reasons, and then only with great caution." It is seen from this what strong reason there is for not possessing as yet any authen- tic, official information as to the hoards. The stored-up treasures are treated like a gallery of ances- tors ; they are not drawn upon, so long as any other shift is pos- sible, and it is regarded as a matter of family honor not to touch them. Thus, Mr. Barbour tells of a prince who, although at his death he left ;^4,000,000 — a great part of it in precious metals — in the year 1877 willingly allowed ^^500, 000 to be advanced by the government rather than draw upon the family treasure. The quantities of the precious metals, likewise, which are col- ' First Report of Gold and Silver Commission, p. 323. 12 INDIAN SILVER CURRENCY. lected in the temples are very considerable. These are quite as unlikely to be touched as those in the vaults of the princes. The answer to the question, What is done with the silver? is much more difficult. For, in this, one does not have to do with a relatively small number of rich people, but with the millions on millions who make up the mass of the Indian population. In order to obtain at least a foundation for this matter, E. J. Sinkin- son, Accountant General of the Punjab, at the suggestion of Mr. Barbour, in 1886 tried to ascertain how much silver was absorbed by the mountain population of Simla. The conditions existing here are exceedingly favorable for an investigation of this sort. It is one of the smallest districts of all India, containing in its limits of 102 English square miles 44,642 inhabitants.' It is wholly shut in by mountains. Owing to the presence of a great number of Europeans during the summer — Simla is, as is well known, the residence of the Central Government of the Indian Empire in summer — much money is expended there which does not flow back to the plains. Mr. Sinkinson's report says : ^ "The silver remittances from treasuries in the plains to Simla and Kasanli (a sub-treasury of Simla) during the last 25 years have been as follows : 1861-1886, Total, Rs. 66,402,850. "The amount of silver brought to Simla, otherwise than in remittances on account of government, may be neglected. European and native bankers and traders replenish their resour- ces when necessary by currency notes which the Simla treasury is always prepared to cash. "The amount of silver brought by visitors is insignificant. Remittances of coin to the plains are never made, either by the Government, or bankers, or merchants. Remittances are made either by currency notes or by treasury bills on Bombay, Cal- cutta, Umballa, Lahore and Delhi, which the treasury is always prepared to grant. ' Census Report of i8g/, p. 19. ' First Keport 0/ Gold aud Silver Commission, Appendix V, A. USE OF THE PRECIOUS METALS. 13 "The currency notes supplied to the Simla treasury during the last three years have been : ■' Rs. 1883-4 834,000 1884-5 1,345.000 1885-6 ----- 1,541,000 "The treasury bills issued by Simla treasury during the last three years have been : Rs. 1883-4 ----- 780,700 1884-5 - 1,475.400 1885-6 . . - . - 1,969,500 "The aggregate of these notes and bills represent remittances on account of banking, trading, etc., made to the plains. "A portion of the silver sent to Simla by government event- ually returns to the plains. The Simla market is supplied with cattle, grain, and miscellaneous supplies largely from the plains. "A large portion of these supplies is brought by intinerant peddlers, who take back cash with them for fresh purchases in the villages where currency notes would not be accepted. I have not been able to procure any satisfactory information from the Simla octroi returns, as it is impossible to make any accurate distribution of the amount of business done by large dealers, who would not remit cash, and by intinerant traders with small capital, who take back cash. Most of the grain supply of Simla is brought up by Zamindars from Ludhiana and Ferozepore, who take back coin. The retail grain dealers are mostly Hosiarpore and Kaugra men, who come to Simla for the season, and are believed to take back their profits in coin. The cost of carriage of supplies is also considerable, and nearly all of it is taken back in cash. So are the savings of carpenters, masons, and domestic servants from the plains. Looking to the class of people who take back coin, and to the fact that it is certainly not taken in large quantities at a time, I do not think that it can exceed one- third of the amount sent to Simla by the Government, or about Rs. 1,100,000 yearly. Applying this to the results of the past six years, it may be taken that the present annual absorption of silver by the hill population is about Rs. 2,200,000 a year. V 14 INDIAN SILVER CURRENCY. AMOUNT OF SILVER SENT TO SIMLA. Rs. 1880-I - - - . . 3,293,000 1881-2 3,200,000 1882-3 3,288,000 1883-4 4,115,00c 1884-5 3,148,000 1885-6 2,468,000 3) 19,512,000 6,504,000 6) 13,008,000 2,168,000 This result is the more curious when it is considered how sparse the hill population is, and that the Thibet traders ordi- narily take back grain and not silver. I think that the hill popu- lation is acquiring wealth rapidly. It is certain that many of the hill rajahs, notably those of Rampore, Busahir, and Bilas- pore, have accumulated large stores of silver ; and it cannot have escaped observation how the fact of growing wealth is reflected in the amount of silver and gold ornaments now worn by hill women. It is nearly 10 years since I first came to Simla, and the change in this respect in that period is sufficiently striking." Of the silver thus absorbed, it is certain that only a small part remains in circulation ; but one may not generalize from the example of the mountain people without wider knowledge, for there are probably few places in India where the people have such favorable chances for large earnings as at the summer residence of the viceroy. In regard to the amount of the silver circulation, the fact should not escape attention that probably in no country of the world are there so many money-lenders, or, as the English some- what euphemistically call them, bankers, as in India. Sir Richard Temple estimates their number at 250,000, or nearly TTTTTü" of the population.' They, of course, always possess con- ^ Journal of the Institute of Bankers, 1890, p. 300. This figure cannot be an over- estimate, for according to the last enumeration the number of money-lenders and their dependents amounted to 1,128,288. Under this, however, are included pawn-lenders, who in the country appear to do a " banking " business frequently in the form of making advances on ornaments. — Census Report, p. 107. USE OF THE PRECIOUS METAI.S. 15 siderable ready money. Still, the aniount of this should not be overestimated ; for a great part of the business is so conducted that the banker (almost every village has one) advances corn in kind to the farmer at the planting-season, and has it paid back to him again after the harvest with usurious interest. On the question of the distribution of the precious metals a letter from a former Inspector-General of Police in Punjab, pub- lished in the London Economist ,^ is interesting. This ofificial had prepared an approximate estimate of the amount of gold and silver which was stolen for three years in the Punjab, and arrived at a sum of about Rx. 60,000 for each metal. While this sum of silver, however, was spread over the whole land, gold was stolen chiefly in only those districts which contain the larger cities, such as Delhi, Amritsur, Peshawur, Multan. Is there no prospect that some of the enormous masses of the precious metals which have disappeared in India in the course of thousands of years, may again come to light ? Only in case the balance of payments of the country should disclose a per- manent indebtedness. At the time of a general famine the imports of gold, to be sure, diminish — nay, are even converted into an export of gold ; yet, this is naturally only a passing phenomenon. At the close of the seventies, as already men- tioned, a frightful famine raged in the most dissimilar parts of the mighty empire ; at that time the gold movement of the country amounted in Rx. to : Imports of Gold Exports of Gold Excess 1875-76 1,836,381 1,443,711 ( i;78 Q27 291,250 1,236,362 1 I rn -rnS 1,545,131 207.349 468,129 -896,173! 1,750,504 1876-77 1877-78 .. 1878-79 . I 463 O^O ' ' li.c\ 001 1879-80 2,050,393 299,889 Average 1,674,492 1,059,504 614,988 At other times the excess of gold imports is about 8 to 10 •No. 2582 (February i8th, 1893), P- 205. i6 INDIAN SILVER CURRENCY. times as large as during these years of famine. The year 1892-3, however, presents a very marked exception, such as the Indian statistics had never before recorded. The imports of gold amounted to Rx. 1,781,789, the exports on the other hand to Rx. 4,594,472; hence excess of exports was Rx. 2,812,683. These facts permit no other explanation than that the natives, because of the strikingly low quotations of silver — or, as seen from their standpoint, because of the strikingly high quotations of gold, — were induced to exchange their gold for an extraordi- narily large amount of silver. The influence of a famine makes itself felt in silver in that more ornaments, old silver coins, etc., are sent in to the mint. Although the amount of ornaments so coined is quite small in ordinary years, yet from 1877 to 1880 Rx. 4,500,000 of silver ornaments came to the mints at Bombay and Calcutta. The imports of silver did not diminish in these years, because the Government sent large amounts of silver to India in order to institute measures of relief with the necessary energ}'. Very gradually a few enlightened people are beginning to find it profitable to invest their savings, after, so to speak, a more European fashion, instead of buying ornaments with them, or burying precious metals in the earth ; thus there is already said to be in the hands of the natives a very considerable part of the stock of the cotton mills in the presidency of Bombay. But the savings banks also are becoming more and more naturalized. The deposits' amounted to : Total Deposits Rx. 1884-85 4,687,082 1885-86 5,081,183 1886-87 5.795,249 '887-88 6,675,571 1888-89 7,622,544 1889-90 7,531,868 '890-91 8,062,241 1891-92 8,886,372 Financial Staieinent, 1 893-4, P- 70. Average Deposit Rx. USE OF THE PRECIOUS METALS. As can be inferred from the decrease in the average amount of the single deposits, people of small means are beginning to make use of the savings banks. The same phenomenon is evidenced by the Postal savings banks. The statistical abstract gives the following figures :' Number of Native Depositobs Deposits of Natives Rx. Average Deposit Rx. 1887-88 227,865 273,696 315,121 362,368 411,107 4,223,252 q,oo8,203 5.047.546 S,S70,820 6,170,175 185 I888-S9 1889-90 1890-91 . ... 183 160 154 I 50 1891-92 For the year 1889-90, it was reported : "The figures of the last two years seem to show that the savings bank system is beginning to reach the agricultural popu- lation in the districts. The number of depositors who are far- mers is almost twice as great as it was two years ago ; and the increase of this class of depositors in 1889-90 was 42.62, a far higher percentage of increase than in the depositors of any other class." Yet, probably all this above-mentioned tendency cannot easily eradicate hoarding from the habits of the people ; it is a usage much too deeply rooted. For centuries have the unwar- like Hindoos been accustomed to be robbed of their property by the bold Mahrattas, often too by robbers ; too frequently had the enemy invaded the country and despoiled it of what they could find. In addition to this, an Asiatic ruler seldom had any other purpose than to fill his own purse as quickl}- as possible with the wealth of his subjects. Consequently, nothing was more natural than that the native, never sure of his possessions for an hour, should acquire the habit of investing his money in objects which could be easily hidden, such as precious metals and jewels. Con- sideration, moreover, must be given to the wife and children. Even if a man knows that he is acting more wisely when he invests his savings in securities, in savings banks, etc., still after ^ Statement on Moral and Material Progress of India, p. l8o. l8 INDIAN SILVER CURRENCY. his death his widow would be at a loss, because an uninstructed Hindoo woman would not know what to do with the documents. It was an advantage for Europe and America that the native Indians persisted in their ancient customs. If there were no export of silver from Europe to India, the price of silver must have fallen in a fashion radically different from that which has so far taken place ; for the largest and most regular customer would have been taken away. This, however, has not always been so regarded. In the fifties and sixties when, in consequence of the discoveries of gold in California and Australia, gold was almost the only metal coined in the countries of Europe having a double-standard, and when silver on the other hand flowed away to India, which took large amounts because of the Sepoy Rebel- lion and the "cotton famine," a very real solicitude was widely entertained. A report of the Chamber of Commerce at Bombay to the viceroy, Sir John Lawrence, in the year 1864,' runs : "9. That India alone, therefore, has consumed during the last six years on an average 15 per cent., and last year nearly 50 per cent., more silver than the world annually produces. "II. That great scarcity and enhancement in the value of silver must inevitably ensue from this excessive disproportion between demand and supply. "12. That the inevitable decrease in the amount of our currency, therefore, just at a time when the amount of com- modities to be circulated has so enormously increased, and a consequent violent derangement of prices, cannot fail to be most disastrous to India. "13. That the continued drain of silver for India must derange, if not eventually destroy, the silver currency of all other nations. " 14. That it is the interest of the world, as well as of India, to check the exhaustive drain of silver, by the introduction of gold into our currency." If gold were to be substituted for the word "silver" in this interesting extract, it might be thought we were listening to a ^Papers Relating to a Gold Currency /or India, London, 1865, pp. 7 et seq. USE OF THE PRECIOUS METALS. 19 Cassandra-like warnintr, such as arc now the order of the day in regard to the exports of gold to India. The fear is now often expressed that the continued movement of gold to India must bring confusion, if not eventual destruction, to the gold standard of all other nations. It remains to wait and see whether this fear is better founded than that entertained in regard to the silver standard thirty years ago by the first Chamber of Commerce of the Indian Empire. The production of gold has until now sufficed to supply the needs of the civilized world as well as of India. And even if, in the further development of the latest monetary reform, a limping gold standard should be established in India, gold would then, as always before, be required on the whole only for foreign trade and the inland hoards ; a very small amount would be required for the inland medium of exchange, because gold coins, in by far the greatest number of Indian exchanges, represent far too great a value. That the Indian demand for silver, even after the cessation of the free coinage of silver, will cease abruptly, is scarcely to be supposed ; for it is precisely the vast masses of people, who have hoarded their little savings in the form of silver from the earliest times ; and it is impossible for them to transfer these into gold, because for them gold is so dear as to be out of reach. There is yet a further consideration : accord- ing to the estimate of Mr. Barbour, in a population of 287 mil- lions and an active circulation of 1150 millions of rupees, there are only four rupees per capita, a very extraordinarily small sum, even in comparison with the poorest countries of Europe. This is explicable only on the ground that the vast mass of the Indian population are yet living wholly in a state of barter. This extends, as the last census reports emphasize, over the entire country population, and the Indian agricultural population, to the number of 260 millions, make up the enormous majority of the inhabitants. The "village community," which is spread over all India, forms a world in itself, and the village artisans, among whom, strangely enough, the jeweler belongs, are paid by barter, either bv the conveyance of a piece of land, or by a share of the harvest. But, in more recent times, elements have joined 20 INDIAN SILVER CURRENCY. this microcosm, which are not essentially its own ; and the small dealers, the grain-traders, etc., form the means of communica- tion with the outside world. Inasmuch as these trade from vil- lage to village, they no longer depend upon barter, but use money in their transactions. With the development of trade these dealers penetrate deeper and deeper into the interior of the country, and thus conduce to the extension of the monetary regime. The more this is widened, the greater will undoubtedly be the demand for a metallic medium of exchange in India. Then, since the hoards, as we said above, are for the greater part com- posed of coined rupees, an increased demand for the circulating medium will probably be first supplied from these ; ' so much the more, since recently the native obtains for the coined rupee more silver than the weight of the silver in the rupee. If these coins, coming out of the hoards into free circulation, should be re])laced by hoards of uncoined silver, a larger import of silver would thereby be occasioned. In the remoter future, however, should the natives perceive that uncoined stores of silver — in conse- quence of the cessation of the free coinage of silver — are exchanged only at a loss, then coined silver would be again pre- ferred for hoarding purposes, that is for the laying up of an "honest penny." Then the Government which has reserved to itself the right to coin the silver in case of need, would be obliged, in order to satisfy an increasing demand for the circula- tion, to coin a larger amount of silver, and to import it into India for this purpose. From all these considerations it can scarcely be claimed — as has so often been done either by the advocates of the gold standard, or by the bimetallists, in the first shock on the cessa- tion of Indian coinage — that the role of silver has been played to the last act ; since, so long as the vast masses of people in eastern Asia hold fast to silver, it is not to be suj)posed that it has lost its character as a money metal. "Mr. Goschen called attention to this possibility in the House of Commons, December 13, 1893. CHAPTER II. THE INFLUENCE OF CHANGES IN THE PRICE OF SILVER ON TRADE, AND ON THE INDUSTRIAL AND AGRICULTURAL PRODUCTION OF INDIA. § I. FLUCTUATIONS OF THE EXCHANGES. Up to the cessation of the free coinage of silver in India — ordained in 1893 — complaint was especially made of two evils which made themselves felt in the trade with countries having a gold standard: (i) the violent fluctuations in the rate of exchange, and (2) the depreciation of silver. Each of these must be sharply distinguished from the other. First, we shall treat of the effect of the continual fluctuations of the rupee on the foreign trade of India. Upon the importance of it opinions are divided : as it is, very many experts assure us that the repre- sentations on this subject are very much exaggerated. Almost all the experts called before the Gold and Silver Commission, as well as before the Herschell Committee, admit that in normal times those engaged in trade can protect themselves against the fluctuations in the rate of exchange which take place between the reception of the order and the delivery of the goods ordered. The Indian importer first simply transmits by telegraph to his European house the orders which come to him from the home merchant. Only on a confirmed order is work begun ; con- signees are unwilling to keep warehouses full of goods ready for sale on account of the great risk. On the completion of the order, the importing house [in India] can protect itself against the fluctuations of exchange by buying of a banker on the spot gold-values to the amount of the rupees which he is to receive on the delivery of the goods from the one who gave the order. Of course, the banker does not undertake this risk for nothing; 22 INDIAN SILVER CURRENCY, Still the premium may be small, because there exists a great market for bills to and from India, as well as for Government bills. Only in times of very violent fluctuations are the bankers said to refuse to buy or sell bills, at longer time than the trade with India demands, to customers to whom they do not have to pay especial attention. In other ways, too, just such violent fluctuations of the exchanges are undesirable for trade; in such times the Indian holds back his orders entirely, and it is credible that — as is pretty generally asserted — in periods of violent fluctuations in the rate of exchange, trade for a time comes to a complete stand- still. The importer gets into a bad situation when, by some unfor- tunate circumstance such as cannot be avoided in the trade with so distant a land as India, the delivery of the goods is delayed and meanwhile the rate of exchange has fallen ; in such a case it is said to happen frequently that the Indian dealer refuses to fulfill his contract, and the importing house has to carry the loss. In such cases a compromise is generally made at a lower price, and the sums thus lost are said to be not inconsiderable.' To this point have we gone in picturing the processes by which the Indian importer finds it possible, in normal times during the existence of a silver standard, to give orders on the basis of gold values to the European manufacturer. If, however, a European manufacturer was found ready to take orders on the basis of the rupee-standard, then the protection from the exchanges was, of course, the concern of the manufacturer. To what extent the firms engaged in the Indo-European trade protect themselves against fluctuations in the rate of exchange by time-contracts in bar-silver, I could not learn. A time-contract in silver would have exactly the same result as a transaction in long-time bills of exchange ; because the rate of exchange on India, up to the cessation of the free coinage of silver, followed exactly the fluctuations of jjrice in the silver market. Let us suppose a case in which the protection against ' Gold and Silver Commission, Question 2264. FLUCTUATIONS OF THE EXCHANGES. 23 the exchanges is the concern of the European manufacturer. Should a Manchester cotton spinner, for example, accept an order in January 1892, for cotton yarn to be delivered at Bom- bay, payable on July I in rupees, he would be entirely protected against any influence arising from fluctuations in the rate of exchange if he should sell a corresponding amount of bar-silver for the last of June 1892, in bianco, at the quotation of the day on the London Exchange. If the rate of exchange falls below this, then he loses on his goods-contract, although he gains by the speculation in the fall of silver ; if the rate of exchange rises, then he loses on silver, but gets a profit on the delivery of the goods. How far this method, however, has come into use as a protection against the exchanges, I could not, as already men- tioned, learn. The reverse of these operations, as when the importer into India undertakes to cover any loss from exchange, of course, always take place in the export trade ; and the exporter from India, or the importer into England, can always protect himself by time-dealings in bills [Devise?i.] or in bar-silver, at the last moment on the departure of the ship on which the goods bought or sold are freighted. In the computations the cost of insurance against loss by exchanges is as exactly worked out as the cost of marine insurance. The condition of the Indian importer occasionally assumes an unpleasant phase, if he is obliged to wait until he receives the money from his customers. In recent years, as a rule, he lost nothing, for the price of silver steadily fell, and it was favorable to him ; he lost nothing, nay he could even gain a profit by the rise in the prices of his goods caused by a decline in the rate of exchange. Only in 1890 things went badly; the rate of exchange then rose high ; the prices of European goods corre- spondingly fell, and the dealers who had to sell the imported goods, had to meet the loss. The native merchants of Kurra- chee, an exceedingly flourishing seaport at the mouth of the Indus, because the firms engaged in the importation of cotton 24 INDIAN SILVER CURRENCY. goods lost heavaly in 1890 by the sudden rise of exchange, and the exporters of grain also had lost heavily by the fall in 1891, resolved, as a consequence, in 1892 to buy no more European goods/ The former had obtained the goods when the exchanges were low, and when the prices of goods consequently were high ; then when the rate of exchange rose and as a result the prices of cot- ton goods fell, they had to face the danger of losing, and they tried to raise prices by holding back their goods. The specula- tion miscarried, because large quantities of goods came from Bombay, so that prices could not be kept up. The sudden rise of exchange in 1890 had another and signifi- cant influence on the trade of Kurrachee.^ A great wool trade is carried on in this city ; the wool is brought down the Indus from Afghanistan and there sold to dealers who cleanse and ship it. As a result of the rise in the rate of exchange in 1890 the price of wool dropped very seriously ; then the Afghans were told that it was the rupee that was at fault. The honest sons of the mountain believed that the Government had done something [or other] wrong to the rupee. They wrote to Afghanistan not to send any goods until the sircar or Government should leave the rupee alone. By this means trade was very sensibly injured, but because the rise of exchange was only temporary, it soon resumed its normal course again. The judgment as to the operation of the fluctuations of exchange during the time of the free coinage of silver which the Herschell Committee states in section 25 of its report is impor- tant on this point : " It is said that legitimate trade is replaced by mere speculation and gambling. There seems to be a com- mon agreement amongst those who differ in their views upon almost all other points, that trade is seriously harassed by these fluctuations, though the estimates do not all agree as to the character and the extent of the inconvenience arising from this cause. It does not appear to be certain, even in the view of * Minutes of the Indian Currency Cominittee, Questions 311 et seq., and also p. 154- ^ Ibid., Question 312. EFFECTS OF THE FALL IN THE VALUE OF SILVER. 2$ those wlio are most strongly sensible of the niischievous effects of fluctuations of exchange, that the volume of trade over a series of years has been diminished from this cause, though there seems a common agreement that any sudden or violent fluctuation almost paralyzes business for a time. It is to be observed that it is not so much the fall of exchange which is complained of, as the fluctuations, whether in one direction or the other. Some of those who admit the mischief to trade of exchange fluctua- tions allege that the extent of the mischief is not serious, since provision can be largely made against the effects of these fluc- tuations through the medium of banks, but it is clear that the trades cannot completely safeguard themselves in this way, and that such security as they obtain in this respect must be paid for. It must be remembered that before the fall in the price of silver began, and the fluctuations in the rate of exchange dependent upon it, the rates of exchange varied very consider- ably during particular years, though, no doubt, the fluctuations have been much more frequent and considerable since that time. "Upon the whole it cannot be doubted it would be well if commerce were free from the inconveniences of fluctuations which arise from a change in the relation between the standard of value in India and in countries with which her commerce is transacted. It must not be assumed that the adoption of the same standard for the United Kingdom and India would remove all the disquieting causes of the disturbance of trade of which complaint is made. If the commodity which lies behind the exchange transaction is one that continues to fall in relation to gold, the risk which arises from bargains in a falling market will still be present. The liability of the standard of the one country to fall, in relation to the other, causes, however, an additional risk, and consequently increased disturbance to trade." § II. EFFECTS OF THE FALL IN THE VALUE OF SILVER. A. EFFECT ON PRICES. Much more important, however, is the question, how the fall in the price of silver per se affected not only trade, but the 26 INDIAN SILVER CURRENCY. industrial and agricultural production of India. The question is the more difficult to answer, because the period, in which the relation between gold and silver changed so seriously, witnessed a complete revolution in the conditions of trade in the country. In 1869 the Suez Canal was opened, and thereby eastern Asia was first brought very near to Europe. Hand in hand with this came an increasing tendency to replace sailing vessels by steam- ships. Steamships Total Year Entering Clearing Number Tonnage Number Tonnage Number Tonnage 212 686 711 1043 234,782 1,018,103 1,152,440 2,019,482 208 773 934 1268 229,416 1.115,769 1 1,433,480 ' 2,412,341 420 1459 1645 231 1 464,198 1880-81 2,133.872 1882-83 2,585,920 4.431,824 Ships of All Kinds. 1882-83. 1891-92. 5864 568b 3,538,878 4,308,375 5851 5472 3,533,006 4,282,276 11,715 11,158 7,071,844 8,590,651 Not less important is the increase of railways. On Decem- ber 31, 1870, there were in operation 4475 English miles. In 1880 there were already 9308; in 1890, 16,404, and on March 31, 1893, 18,042 miles. The annual average in English miles put into operation in 1871-1880 was 453-3; in 1881-1890, 709.6; from January i, 1891, to March 31, 1893, 728. The increase is, therefore, not only absolutely very large, but it is also an extraordinary progressive rise. As a matter of course a revolution is thereby created in the domestic trade of the Indian penisula, similar to that caused by the opening of the Suez Canal in the trade with Europe. Parallel to it goes a considerable reduction in the rates of freight by land and water. In a publication appearing shortly before his death, Das Sviken der Warenpreise ivähreiid der Letzten fünfzehn Yahre — the most valuable investigation on Indian EFFECTS OF THE FALL IN THE VALUE OF SILVER. 27 economics which 1 have met with in German literature, — Nasse gives the following figures from the Statement of the Trade of British hidia, 1887 : RATES OF FREIGHT FOR RICE AND WHEAT FROM CALCUTTA TO LONDON BY STEAMSHIP VIA THE CANAL. The decrease in the rates of freight since 1870, therefore, amounts to 52.08 per centum. The author adds the following remarks: "At present the freight from Calcutta to London on wheat costs 24 per centum, and that on rice 20 per centum, of the price in Calcutta. As a consequence of the lowering of freights one-half both these commodities can be sold on the London market about 24 and 20 per centum cheaper than they were in 1872. The freight on linseed amounts now to 14 per centum, on jute to 13 per centum, on cotton to 4. 50 per centum, of the Calcutta prices. Hence, the cost of laying down in Lon- don of all these various commodities, which constitute the most important part of Indian exports of merchandise, have been very essentially reduced by the decline in ocean freights." In recent years the reduction of freights has been no longer so considerable. The following statement is taken from the 28 INDIAN SILVER CURRENCY. reports of the Imj)erial Consulate at Madras published recently in Volume II. of the Deutsches Handelsarchiv (the ocean freights from Madras to English ports being given for each fifty cubic feet): 1889 1890 1891 1892 s. d. s. d. 32 6 to 45 37 6 ' 40 37 6 ' 45 37 6 ' 4S 32 6 ' 37 6 s. d. s. 60 to 75 70 SO " 60 57 6 62 6 " 67 The freight, according to the same authorities, on grain amounted for each 20 cwt. to 32s. 6d.; rose in October of the same year to 45s., and fell in the second half of the year 1892 to 22s. 6d. The charges for sugar for the same periods were 35s., 45s., and 23s. gd. The reduction of freight on the two last articles is much more considerable than that on cotton and indigo. But, in general, the downward tendency of ocean freights appears in recent years, with the exception of the short time of depression in 1889-91, to have been established. The cost of inland transportation has also seriously declined, to which the completion of the Indian railway system has chiefly contributed. Thus the fertile grain districts of the northern plains of India have, for example, direct railway connection not only with Bombay but with Calcutta. Inasmuch as the owners of these lines are different, it already results from competition that no railway charges very high rates. To this matter the German Consul-General at Bombay drew attention as early as the year 1881.' Moreover, one ought not to forget the follow- ing facts : India is a possession wholly dependent upon England ; there is either state-ownership of railways, or they have a state guarantee of interest. If a deficit exist in the Indian budget through allowances to the railways, it is not covered by Eng- land, although the advantages of cheap freights on Indian rail- ways accrue to the English. ' Deulsches HanJelsarc/iiv, l88i, II. Bd., p. 408. EFFECTS OF THE FALL IN THE VALUE OF SILVER. 29 In addition to the fall in freight rates is the increasing elim- ination of the middleman. This was a standing complaint of the English merchants heard before the Royal Commission on the Depression of Trade. This phenomenon is especially felt in India; as already mentioned, the Anglo-Indian merchant has become in many cases only a simple agent, or jobber, between the European producer and the Indian dealer, or vice versa. In the face of these facts, how is it with the theory that the fall in the standard of value of a country is favorable to exporta- tion, but unfavorable to importation in the countries, respec- tively, — a theory which found many defenders' before the Royal Gold and Silver Commission, and of which Herr Professor Dr. Friedberg at the sitting of the Prussian House of Deputies on January 25, 1894, said:=^ "This is a simple axiom, that a depreciating standard necessarily encourages the importation of grain [sc. into the countries having a gold standard). Gentle- men, the proposition that a cheapened standard serves as a pro- tective tariff for the country concerned, that it acts as an incen- tive to exports and discourages imports, is so far undeniable that if anyone doubts it, certainly no one can discuss it with him." (Very true! Bravo! from the right). " Indeed, gentlemen, it is one of the most elementary propositions of political economy." This is the somewhat loud repetition of an argument which Nasse disproved in the following words, simpler certainly than his opponents: "The immediate consequence of a change in the relative values of the two metals is a corresponding change in the relative values of ( i ) the money circulating in countries having a silver standard to (2) that circulating in countries having a gold standard, — which is expressed in the rate of exchange. But if the standard of value of a country depreciates in comparison with that of other lands, only exported and imported articles will first be affected in their relative values by the change. The rising rates of foreign exchange must raise their i)rices. The relative prices of other commodities, however, are not affected for a con- ' Cf. the statements of Barclay, Fielden, Gibbs, McLean, Nicholson, and Tidman. '' Stenographic Report, 1^. \22. 30 INDIAN SILVER CURRENCY. siderable time by the change in the value of the home, as com- pared with the foreign, circulating medium. The wages of labor, and a variety of conditions affecting the prices of articles of daily use are only gradually changed. The further result follows that for a time the production and the exportation of exportable articles obtains an increased profit, and the consumption of imported articles that have become relatively dearer is diminished. The fall in the value of silver, to go on, has made it possible for countries using silver to offer their articles of export on the European market at lower prices than those at which they could formerly furnish them, since their cost of production, reckoned in silver, remained unchanged ; on the other hand they received by sale in foreign countries payment in a gold medium, which, in consequence of the change in the relative values of the two metals amounts to a greater quantity of silver money than in the earlier period. The supply of articles for exportation to silver- using countries has, therefore, depressed their price in the world's markets. Vice versa, the cessation of exportation to silver-using countries must exercise a certain depressing influence on the price of articles of export in the gold-using countries." It then became possible, through this shifting of prices, for the Indian producer to extend his exports at the expense of the producer in gold-using countries, but the importation into silver- using countries by the latter [i. e., gold-using countries) was thereby rendered exceedingly difficult, nay often impossible. In order to establish in how far this theory applies to India we shall have to ascertain how Indian prices have been affected since 1870 ; what influence the fall of silver has had on the shap- ing of prices, and how the foreign trade of the country especially has been affected. As concerns the effect on prices, it would certainly be a great error to suppose that the rates of exchange had remained especially steady in former times, and that prices had undergone great fluctuations only after these changes had come about. The opposite is correct. Owing to the completion of the system of railways, as well as the opening of the Suez Canal, the possi- EFFECTS OF THE FALL IN THE VALUE OF SILVER. 3 1 bility of (juickly replenishing stocks of gjods imported from Europe in case of necessit}' has allowed the working of domestic prices to go on much more regularly. Taking the price in January 1873 as 100, the quotations of gray shirtings fluctuated in India, in 1861-72, between 215 and 93; in 1881-92, only between 84 and 74; of mule twist. No. 40, in 1861-72, between 218 and 'j'] \ in 1881-92, between 81 and 62; and of Doodiah wheat, in 1861-72, between 130 and 59; in 1881-92, between 103 and 72. Such differences of prices in the same province, as are found, for instance, in the prices of wheat in Bengal in 1868, are today wholly impossible; at that time one rupee exchanged in Patna for 30.61 seers,' while in Hazaribagh, situated in the same province, the famine price of a rupee for 3.77 seers was exacted, or nearly eight times as great as in Patna. Much more important to us is the question whether the prices of Indian goods reckoned in silver have risen or fallen in the last two decades, or whether they have remained stationary. In the period to 1886, Nasse was able to establish only a slight fall in the prices expressed in silver. In answer to the question how the matter stands today, Mr. J. E. O'Conor, the admirable statistician of the Indian Government, assistant secretary to the Department of Finance and Commerce, laid before the Herschell Committee a short statement which affords satisfactory informa- tion.^ Mr. O'Conor makes use of the method of index numbers and takes the price of March 1873, as lOO. The results are shown in Table I, on page 32 : The articles here chosen compose about one-third of the total imports, but a great number of other imported articles fol- lows their price-movements. Because the fluctuations in the price of "gray shirtings" influenced the changes in price not only of unbleached, but also of bleached and colored fabrics. The fluc- tuations in the price of iron also controlled those of hardwares, machinery, manufacturing implements, and railway supplies. 'One seer = 2.057 English pounds. 'Appendix to Minutes, pp. 161 et seq. • 32 INDIAN SILVER CURRENCY, These selected articles are, therefore, to be regarded as the rep- resentatives of at least one-half of the imports, and only this part of the imports really affects the great mass of the popula- tion. The other half of the imports consists of goods which are either not articles of necessity, or are mainly consumed by Euro- peans, or are used in such small quantities that they play no role in the domestic economy of the people. TABLE I. WHOLESALE PRICES OF IMPORTED ARTICLES AT CAL- CUTTA. Period Gray Shirtings 8K lbs. Mule Twist, White, No. 40 Mule Twist, Turkey Red, No. 40 Braziers' Copper Iron, Flat, Bolt, Bar 1861-1865 145 128 93 79 78 80 74 74 146 122 92 83 77 71 70 64 64 69 89 67 61 62 62 64 1866-1870 1871-1875 117 104 83 62 CI 88 92 88 78 1876-1880 1881-1885 1886-1890. . . 1891 56 72 1892 It can be accepted that the price of woolen goods reckoned in rupees, since 1873, has fallen about 26 per centum, of woolen yarns about 36-43 per centum, of iron about 36 per centum, and of copper about 28 per centum. So far as regards imports. Mr. O'Conor remarks on these figures: "In general it is to be said that — with the exception of rice, which since 1887 shows a marked tendency to move upward, and of jute — all the impor- tant staple articles in the export trade have either not risen or have fallen in price." This might be a matter for congratulation to us, so far as it concerns articles which we must draw from the tropics and in which we are not competing in India. It is quite a different matter in the case of wheat and spun cotton, but of these later. It would be a very great error, in mv opinion, to assign, as has frequently been done, to the "appreciation of gold" — which is so often asserted, but never proved — the stability or fall of most of the wholesale prices reckoned in silver. First, attention should be called to the following facts: According to the state- EFFECTS OF THE FALL IN THE VALUE OF SILVER. •33 ments ot the Economist ("Commercial History and Review" for 1873 and 1892) the price of Mule Twist, No. 40, fair, second quality, on March i, 1873, was I5d.; the price of the same article in January 1892, was 8d. The price therefore has fallen 46.67 per centum. Accordins^ to our Table I. the cheapening of the price reckoned in silver [in India] of Mule Twist, white, No. 40, between March 1893 and January 1892 was 36 per centum. If we consider the changes meanwhile arising from the relations of gold or silver, it appears that the price of cotton yarn, reck- oned in gold in Calcutta has fallen from 1873 to 1892 about 54 per centum. That the downward movement of prices has been more violent in Calcutta than in Manchester becomes clear, in view of the great decline in the cost of transportation which in the last twenty years has affected the exports of English cotton goods to India by a reduction of freight charges and the like. TABLE II. WHOLESALE PRICES OF ARTICLES OF EXPORT AT CAL- CUTTA, BOMBAY, AND RANGOON. MARCH 1873= 100. Articles f 1 1 00 1 87 102 100 115 "5 84 109 85 79 104 98 128 123 100 no io8 96 i I 1 S 128 104 113 87 88 82 85 90 103 88 97 95 70 112 100 114 III 120 lOI 108 107 104 no 103 103 102 67 86 98 n6 148 154 97 "3 94 108 104 103 153 144 94 94 81 83 103 96 88 100 lOI 104 122 126 157 84 77 95 97 132 123 105 69 77 81 no 99 90 87 93 124 134 122 151 83 94 104 104 163 153 no 54 74 77 86 81 84 81 87 147 143 133 164 87 93 97 103 126 "5 93 50 70 77 86 65 75 89 op'^'" JMa£ :::::::::::;:: 88 162 I6q 156 ( Ngakyiiok (Rangoon) ( Calcutta 194 103 ^^''^'^^^ \ lioml.av n8 f Calcutta n2 Linseed \ ,, ^,_„ no ( Picked 2 36 J"'^ ] Ordinary 231 132 41 65 Cotton Cloth, 44-inch, 24yds., 8 lbs .... 77 74 66 The purchasing power, furthermore, of the rupee in recent years appears to have measurably fallen, at least in comparison 34 INDIAN SILVER CURRENCY. with those articles which are not objects of foreign trade, especially in comparison with the different kinds of grain. Mr. O'Conor has laid before the Herschcll committee the index numbers of retail prices of the most important cereals in the principal markets, taken from the fourteen daily quotations published by the government. Make allowance for the fact that India was afflicted with two serious famines, between 1866 and 1870, and between 1876 and 1S80: TABLE III. Rice (10). Wheat (16). Jawar' (15). Bajra' (15). Ragi' ( 3). Gram (10). Barley (8). ^ ^ ^ s £' 1 " M M .i vi § S co" s 1 " " 103 130 102 140 116 135 103 133 95 127 96 117 122 140 100 146 96 122 120 131 102 147 99 122 149 185 92 209 103 103 88 149 98 130 93 114 80 108 95 "3 90 113 149 135 138 137 138 129 131 The figures in parentheses after the name of each kind of grain is the number of markets from which the quotations of the average prices are reckoned. As Mr. O'Conor remarks, these index numbers represent the high range of prices for each kind of grain in the districts where they are produced and consumed in the greatest quantities. The absolute average prices in Seers per rupee are as follows : TABLE IV. Wheat (99) Rice (90) Jawar (95) Barley (54) Bajra (86) Average of these kinds of grains. ^ a K ^ I s ra <£■ ^ g " " 21.36 15-45 19.46 16.35 19-98 21.66 17.42 19.14 15-30 18 21 25.78 21.25 25-30 20.42 27.64 35.60 25.81 28.54 26.94 30.48 24.27 19.90 22.38 18.91 24.22 25-73 19.97 22.96 19.58 24.11 16.05 15-41 21.17 24-25 19.49 14.05 13-91 18.44 20.30 16.57 19.28 16.15 ' Jawar is Yorghum Vulgare ; Yiz!)xz., Penisetum TyphoiJeuvi ; V^n^\, Panicum Mil- liaccum; and Gram does not appear as an export. EFFECTS OF THE FALL L\ THE VALUE OF SILVER. 35 According to the computations of the Economist,^ on the basis of the Blue-book on Prices and Wages in India, the retail prices in rupees per cwt. were as follows : TABLE V. Rice . , Wheat Barley Jawar . Bajra , Gram . 1871-1875 I 876- I 880 1881-1885 1886-189O 41.4 47-3 45-8 55.6 42.1 51-7 43-6 52.7 28.6 31.8 26.7 33-4 31.2 41.4 29.5 38.4 36.2 46.6 34-5 32.7 32.6 38.1 3..^ 38.1 62.0 61.3 40.0 43-6 48.6 44.6 A report to the secretary of state for India, dated October 5, 1892, No. 272, signed by the whole Indian ministry, remarks upon this movement of prices as follows : "The length and breadth of the country is now traversed by railways, and numerous steamship connections on the coast fur- nish opportunities for exchange of goods, all of which twenty years ago did not exist. Consequently prices can never sink so low as formerly in times of superabundance, when the demand was merely local and usually less than the supply, and when therefore the price was more or less settled by tradition and custom. Today there are relatively few districts from which grain cannot be easily taken to distant regions, where the supply is less than the demand, or even to foreign lands. The oppor- tunities for trade are today so multiplied that the traders will not dispose of their supplies at low prices in a local market, so long as they know they can obtain higher prices if they export their grain, or send it to another Indian market. Prices are therefore controlled by free competition and by a steadily increasing demand, and in the future they will remain at a higher level. "The wholesale prices of rice and wheat — the only two cereals — in regard to which exportation, as compared with local demand, plays a considerable ]:)art, are to a great extent influ- ' September 3, 1892, p. 1120. 36 INDIAN SILVER CURRENCY. enced by the prices of European markets expressed in gold and by the temporary movements of exchange." [Not, however, the reverse!] "As concerns the retail prices of breadstuffs it is to be remarked that in the last three or four years loud complaints have been continually made regarding the high prices of those kinds of grain which serve as the main subsistence of the people." We can, however, quietly accept the fact that not only have the changed conditions of trade raised the prices of grain, but also that a diminution in the purchasing power of the rupee has contributed to this. This diminution in the purchasing power of the rupee has already extended so far that wages have risen quite considerably in recent years. It is well known that wages especially follow very slowly upon a change in the purchasing power of money; above all, of course, in a country like India which is so much under the control of tradition and custom. Appendix II. in the preliminary report of the Herschell Committee gives the following proof of this : WAGES IN SKILLED AND UNSKILLED LABOR IN RUPEES, ETC. PER MONTH. Year Able-bodied Agricultural Laborer Percentage IF 1873-1876 BE 100 Syce OR Groom Percent- age Common Mason, Carpenter, or Blacksmith Percent- age 1873-76 1877-81 1882-86 1887-91 R. A. P. 6 II I 6 7 II 6 8 8 7 I 8 100 96 97-7 106. 1 R. A. P. 6 7 3 6 7 4 6 II II 6 15 8 100 100 104.5 1 08. 1 R. A. P. 14 9 2 14 II II 15 11 10 16 14 5 100 I0I.2 108 116 On a stationary purchasing power of silver in India — or of an appreciation of gold, which for many other reasons cannot be accepted — one would hardly lay emphasis in view of the fact that wages, in spite of the increase in jiopulation by fully 27.8 millions' from 1881 to 1891, have in certain callings risen quite considerably. ^ Census Report of 1891, p. iii. Of course, the figures of population of 1891 on which the above comparison is made, does not include those parts of tiie country which were incorporated into the Indian Empire only after 188 1. EFFECTS OF THE FALL IN THE VALUE OF SILVER. 37 Certainly, what has just been said about the movement of prices does not hold true for that portion of the lowlands where a complete state of barter exists. The report on the census of 1891 remarks on this (p. 97): "It is the absence of all competi- tion which is striking, in regard to all the non-agricultural services rendered to the village community. In the greatest number of cases — and this applies undoubtedly to the whole of India where the village system prevails — services of this kind arc paid for either by a transfer of a piece of village land, in which each of these lots is known by the service rendered, or by a fixed amount of grain, etc., from each harvest, for which amount the individual possessors of land must provide. In those cases in which cash is paid, the price is apparently ruled rather by tradition, which yields but slowly to change, than by considerations affecting the value in the open market. There is no incentive for the new people to be progressive, nor to underbid the old. With the improvement of the means of communication and of general security on the roads, perhaps the "higgling of the market" — to use a phrase from political economy — has found its way into the Indian village; but, as a rule, that which is prepared in the village itself and not imported, nor brought for sale to the inter- communal market, is exempt from competition. It is tradition, that, as in the days of Pindar, governs everything.' It is, however, quite another matter, if we turn to the dealer in imported goods and to those who do not belong to the orig- inal organism — for they were only connected with the life of the village after that institution ceased to exist — or to the "out- siders," as Sir H. Maine expressed it. They reallv form a ' "Das ganz Gemeine ist's, das ewig Gestrige, Was immer war und immer wiederkehrt, Und morgen gilt, weil's heute hat gegolten, Denn aus Gemeinem ist der Mensch gemacht Und die Gewohnheit nennt er seine Amme. ******* Das Jahr übt eine heiligende Kraft, Was grau vor Alter ist, das ist ihm göttlich." — Cited from Schiller in the Report on the Population of East India. 38 INDIAN SILVER CURRENCY. market, which the same author says was a neutral piece of land, so destined for this purpose that the village communities situated around it and shut in on themselves could meet there. Now- adays, traders of this sort are found in each village, and to the casual observer the impression is given that they stand on the same basis as the rest of the community. But they form no organic part of the real village community, and on the occasion of the village festivals — in which the system appears very exclusive — they have no well-established place. These remarks apply to the shop-keeper, the spice-dealer, the grain-trader, the money-lender (who can be included with those just mentioned), and to the tailor, whose labors are certainly not needed by the greatest part of the population, except in the north where the breech-cloth and the sari have been in great measure supplanted by trousers, for both sexes. All these are in the village, but do not belong to the village. Among these, therefore, methods of barter no longer exist, but an economic monetary system prevails ; they form the free market. B. EXPORTATION OF WHEAT FROM INDIA. The most serious question for Germany is, How has the exportation of wheat from India been modified since the begin- ing of the fall of silver ? As to that it can be laid down, in spite of all the claims of our landed interests, and in spite of all Professor Friedberg's talk about axioms and the most elementary propositions of political economy, that there cannot be noted the smallest connection between the exportation of wheat from India and the fluctuations in the prices of silver — as appears from Table VII. (p. 39). It might be of interest here to listen to the views regarding the wheat trade of a most competent judge of the relations involved, the oft-quoted director of the statistical bureau of the Indian Empire, Mr. J. E. O'Conor. In his " Review of the Trade in India in 189 1-2 " he says : ' " Much misapprehension appears still to exist in regard to * Economist, " Monthly Trade Supplement," October 15, 1892, p. 10. EXPORTATION OF WHEAT. 39 the conditions which have permitted the deveh)i)nient of the wheat trade and in regard to the progress which it has made. It may be useful, therefore, to recapitulate the facts briefly. They are these : Until the opening of the Suez Canal no trade in wheat was possible, the cost and duration of the transit around the Cape having the double effect of making Indian wheat too dear for the European market and of spoiling it by giving weevils time to do their work of destruction. After the opening of the canal it was TABLE VII. EXPORTS OF WHEAT FROM INDIA. Year Ending March 31 QUANTHT (IN 1000 CWT.) Value (in iooo Rx.) Average Rate OF Exchange 1877 5,587 6,373 1,057 2,202 7,444 19,901 14,194 21,001 15,851 21,009 22,264 13,538 17,610 13,799 14.320 30,303 1,958 2,874 520 1,124 3,278 8,870 6,089 8,896 6,316 8,005 8,626 5,562 7,523 5,791 6,042 14,380 s. d. I 8.51 1878 I 8.79 1879 I 7.79 1880 1881 1882 18S3 I 7-96 I 7.96 I 7.89 I 7-52 1884 I 7-54 1885 I 7.31 1886 1887 18S8 1 6.25 1 5-44 I 4.90 1889 i8qo 1891 • 1 4.38 1 4.57 I 6.09 1892 I 4-73 discovered that there was still an impediment to the trade in the existence of an export duty of three annas the maund, or, say, about five rupees the ton. On the representation of the Bombay Chamber of Commerce this duty was removed in January, 1873. At that time the quantity exported was only 394,000 cwt., but with the removal of the duty it increased until it exceeded six millions cwt. in 1877. The greatest [)art of the exports, how- ever, was from Calcutta, for Bombay and Kurrachee were not yet linked by uninterrupted railway communication with the vast wheat fields of the northwestern jjrovinces and the Punjab, whence are now drawn the largest part of the supplies available 'Appendix to Minutes of Indian the Currency Conwiittee, p. 241. Cf. also the graphic representation at the end of this book. 40 INDIAN SILVER CURRENCY. for export. Then followed the great famine of 1877, 1878, and 1879, raising prices in India to a level that interrupted the export business. With the return of plenty, a reduction of prices, the. completion of railway communications, and consequently the reduction of cost of transport, trade was able to take its full development. In 1 880-1 the exports were still under 7.50 millions cwt. ; in the following year they approached 20 millions. The trade, in fact, owing to the circumstances here mentioned, really began only in 188 1-2. Since then there has been no appreciable development. Until 1 890-1 the exports were in three of these years only somewhat in excess of those of 188 1-2, while in six of these years they were much below them. Last year's exports were abnormal, and it is unlikely that such circum- stances will recur soon. Considering the whole trade, it may be said that the average quantity of wheat which Europe will take from us in ordinary times is not quite one million tons, and that we have not on the whole exceeded that quantity since we first supplied it ten years ago." The exceptionally large exportation of 189 1-2 is to be ascribed to the failure in the harvests in Europe, to the Russian interdict on the exportation of grain, and to the resulting rapid rise of price on the European corn markets ; as a result, it was exceptionally profitable to export grain from India. It is to be seen that so weighty an authorit}^ as Mr. O'Conor ascribes the exportation of wheat simply to the changed condi- tions of trade, and docs not devote a word to the fall in the price of silver. Indian wheat, however, is today landed much more cheaply on the European market than twenty years ago, and this also is to be ascribed exclusively to the changed conditions of inter- course and trade. A wholesale merchant, F. Comber, a prom- inent figure in the Anglo-Indian trade, made definite statements on this point before the Royal Gold and Silver Commission.' The difference of ocean freights is not (]uitc so great here as in the official tables given on page 27, although it is still inipor- ^ Second Report, p. 252. EXPORTATION OF WHEAT. 4 1 tant enough to exj)lain, in great part, the fall in jirices in iMig- land. Jubbul[)ore was already connected by railway with Bombay in 1873 ; but the cheapening of inland transportation is not there- fore alone due to the fact that the corn district in question had only been opened to the markets of the world from about that time; and the fall in freights expressed in English gold is partly to be explained by the fall in the price of silver. No regard has been given to the transportation from the places of production TABLE VIII. COST OF TRANSPORT OF WHEAT FROM INTERIOR DEPOTS IN INDIA AND AMERICA TO UNITED KINGDOM, PER QUARTER. if |3 5;.S < Cost of Carriage Indian Wheat Cost of Carriage American Wheat Reduction Compared WITH 1873 IN Year Is P ll 1 1 3° 2e II si 1 1 1 B 2 2 e 2 „ 1873 s. d. 58 8 s. d. 9 8 s. d. 13 s. d. 22 8 s. d. 6 5 s. d. 7 s. d. 13 5 s. d. s. d s. d. 1874 1875 1876 1877 55 9 45 2 46 2 56 9 9 7 6 10 6 6 6 7 II II 11 4 10 6 9 2 21 6 18 2 17 15 9 4 8 3 10 3 2 3 9 6 6 6 5 6 4 ID II 2 9 10 8 8 8 7 2 II 13 6 12 b I II 4 6 5 8 6 II 2 3 3 7 4 9 4 10 Average of 4 years 51 7 4 ID 9 18 I 3.0 5 8 9 6 7 8 4 7 3 II •1878 1879 1880 1881 1882 46 5 4310 44 4 45 4 45 I 6 3 6 4 6 4 6 4 6 5 4 10 6 3 8 I 9 2 6 10 11 I 12 7 14 5 15 6 13 3 3 I 3 10 4 I 2 9 2 8 5 4 2 3 10 2 10 2 7 8 I 8 7 II 5 7 5 3 12 3 14 10 14 4 13 4 13 7 II 7 10 I 8 3 7 2 9 3 5 4 5 5 5 6 7 10 8 2 Average of 5 years 45 6 4 7 13 4 3 3 3 8 6 II 13 8 9 3 6 6 1883 1884 1885 1886 41 7 35 8 32 10 31 33 1 1 5 8 5 7 5 4 5 I 4 II 6 2 4 3 4 TO 3 10 4 6 II 10 9 10 10 2 8 II 9 5 2 10 2 2 1 II 2 II 2 9 2 8 2 4 2 2 2 2 I 8 5 6 4 6 4 I 5 I 4 5 17 I 23 25 10 27 8 24 9 10 10 12 10 12 6 13 9 13 3 7 " 8 II 9 4 8 4 9 Average of 4>^ years 350 5 I 4 9 10 I 2 6 2 2 4 8 23 8 II 7 8 9 'This does not include cost of transport from the producing districts to Jubbul- pore and Chicago. 42 INDIAN SILVER CURRENCY. to Jubbulpore, which has been very essentially cheapened by the building of roads, railways, and canals. In addition, there is a very admirable organization of the export trade in grain. The great English firms have their offices at the principal markets in the interior of the great empire, and when the merchant cables from the Metropolitan Corn Exchange in Mark Lane the quotations of wheat to his agent at Jubbulpore or Cawnpore, this agent, on the basis of the railway and ocean freights as well as of the rates of exchange, can immediately compute how much he ought to pay the Zamindar. By this centralization of the wholesale trade expenses are naturally largely reduced. If attention be further drawn to the fact that transportation from the places of production to the grain markets of the interior has been made very much easier and cheaper by roads, railways, and canals, and that the grain districts of the valleys in northern India are now all con- nected with the sea, it is nonsense to ascribe the falling or stationary wholesale prices of wheat to the fall in the value of silver either alone or in great part. If we compare the retail prices of wheat given in our Tables III, IV, and V, with those of the wholesale prices contained in Table II, and note how the latter have remained stationär)' while, on the contrary, the former have risen very considerably, it is impossible to find any other explana- tion for this than the cheapened cost of movement to the grain markets and the significant reduction of expenses in the wholesale trade. A genuine creation of myths has apjjcarcd in connection with the exports of wheat from India. Dr. Arendt, for example, claims in his Leitfadeti der lVähru?igs- Frage, p. 31 : The English agriculturist was not able to protect himself without customs duties against the agricultural competition of India; and, hence, already more than one-half of the English area is today out of cultivation. This last statement is pre-eminently false. The whole superficies of England amounts to 77,642,099 acres ; in which, however, are comprised the numerous waterways partic- ularly in England, as well as extensive districts in Scotland EXPORTATION Ob' WHEAT. 43 which liad been turned into shcej) pastures in the hist century in consequence of the sad events following the battle of Culloden, and which have later gone entirely out of cultivation. Of the above, there were, in 1892, 47,977,903 acres in cultivation, being 61.8 per centum of the whole area under culture ; while in 1871-75 there were only 46,984,106 acres.' Since the appearance of Indian competition, therefore, the cultivated area has even increased. On the other hand, it is true that in consecjuencc of international competition the acreage chiefly planted in wheat as well as in other cereals has steadily declined since 1871-75. While, in 1871-75, 3,737,140 acres were planted in wheat, and 11,543,577 acres in other cereals; in 1892 the figures were, respectively, 2,298,607 and 9,328,701 acres. Furthermore, the income from land deduced from the schedules of the income tax has fallen from 1877 to 1892 from ^^69, 438, 632 to ;^57,39i,846, undoubtedly in consequence of international competitipn. There were, from 1877 to 1892, 1225.19 millions cwt. of wheat and wheat-flour imported into the United Kingdom, of which 120.79 millions cwt., or 9.86 per centum, were imported from India." It would now be exceedingly interesting to learn from Dr. Arendt on what ground he concludes that it is precise!}' the 9.86 per centum, and not the other 90.14 per centum, of wheat imports — since as regards wheat we are here concerned solely with Indian competition — which has injured the English producers of grain. Or is he, perhaps, putting forth a theory of "marginal losses" on the analogy of marginal utilities ? But another main argument, also, of our bimetallistic agrarians is good for nothing — the argument that it is impossible for our agricultural interests to compete with the grain from silver-using countries, because it receives a premium on export due to the fall in the value of silver. India being the only silver country from ' All these figures are taken from the Agricultiiral Returns for Great Britain, 1892. =" These figures are taken from the Statistieal Abstracts for the United Kingdom 1877-91 and 1878-92. 44 INDIAN SILVER CURRENCY which Europe draws grain — in foreign trade America and Roumania pay gold, Russia, Austria-Hungary, and the La Plata states as yet have solely a paper, not a silver standard — it is exactly in India where we see that ( i ) the fall in the price of silver has not had the slightest influence upon the exports of wheat ; that (2) rather the purchasing power of the rupee in recent years as compared with grain has declined quite considerably (and in reality fell similarly with the quotations of silver); that (3) the cheapening of Indian grain on the European market is to be ascribed to the improvement and the cheapening of means of communication, as well as of abetter organization of trade; and finally that (4) India does not control the price of grain on the European market, — but, quite the reverse, grain is only exported from India when the character of the Indian harvests and the European quotations of prices make it profitable. C. THE COTTON INDUSTRY. To England by far the most important part of the trade with India is in cotton goods. To be sure, it is no longer as it was up to the seventies when more than one-half of the whole Indian imports consisted of English cotton goods ; but even yet fully 41 per centum of the total imports into India in 189 1-2 were products of the Lancashire industries. About 300 millions rupees of English cotton goods have been on the average imported into India each year since 1886. Mr. O'Conor calls the EXPORTS OF COTTON YARN AND COTTON CLOTHS TO INDIA AND EASTERN ASIA. Yarn in Millions of English Lbs. Total Exports To China, Japan, Straits, etc. 1887 1889 1890 189I 1892 l.bs. 251 .0 252.3 258.4 245.5 233 -2 Lbs. 51-5 48.6 52.5 53-2 42.1 Per Cent. 20.52 19.26 20.32 21.67 18.05 Lbs. 35-3 35-7 38.1 28.0 31-9 Per Cent. 14.06 14.15 1475 I I .40 13.68 COTTON INDUSTRY 45 Cloth in Millions of Yards Year Total Exports To India To China, Japan, Straits, etc. 1887 Yds. 4904.0 5001.5 5124.2 4912.6 4873-3 Yds. 1973-4 2138.7 2189.6 1964.8 1974-6 Per Cent. 40.24 42.76 42.73 40.00 40.52 Yds. 763.0 759.2 806.7 823.2 779-6 Per Cent. 15-56 15.18 15-74 16.76 15-99 1889 . . . 1890 . . . 1891 . . . 1892 importation of cotton goods the backbone of the Indian imports; and, similarly, it can be said that this importation, together with that to the rest of eastern Asia, is the backbone of the exports from Lancashire. This is shown by the above tables. For some years the English cotton manufacturers have com- plained of the excessive losses caused by the fall of the price of silver to their exports to Eastern Asia. Without doubt the prices of their manufactures have heavily fallen, as the following extract from the Eco7iomist tables of prices shows : Year Mule No. 40 Fair 2d Quality Gold End Shirtings 40 in. 66 Reeds 375^ yds. 8 lbs. 12 oz. 1873 January i d. 15 11;^ 914- 83/8 7 8X s. d. II 3 9 loK 7 loK 7 4 7 0« 7 loK 1877 •' I 1883 " I 1887 " I 1892 September i Yet, according to the statements of the Economist, the profits of the spinning mills were not bad. It gives the following figures for the largest stock companies (see next page) : The bad results of the two last years are explained, according to the statements of the Economist, by the fact that in 1891, in expectation of a small crop of cotton in America, the manu- facturers laid in their raw material at high prices ; but when the crops turned out unexpectedly good, the price of cotton as a consequence fell excessively, and the manufacturers found they ' Lowest point. 46 INDIAN SILVER CURRENCY. Year Number of Factories For Each Factory 1892 90 93 go 86 1-oss 101,434 Gain 10,763 " 376,041 " 220,587 " 250,932 " 85,810 Loss 61,718 " 2,730 Gain 125,000 i. II27 "5 4178 2565 2952 975 615 31 2083 1891 1890 1889 1888 85 88 go 87 60 1887 1886 1885 1884 had made a serious mistake. In 1892 took place the greatest stoppage of labor which had ever been seen in Lancashire — first, the Stalybridge lock-out, which brought to a standstill for three weeks 18 million spindles, and then the great strike which lasted from November 7, 1892, to March 1893, during which time 15 million spindles were idle. In 1892 something more than y^ of one per cent, was earned on the large working capital of the factories just mentioned (^^3, 629, 078 of capital stock, includ- ing on the average ^^3,44 1 ,028 loans bearing 4 y^ per cent, interest) . In 1 891 there was paid an average dividend on the capital stock of 6s. per £\(^o\ in 1890, of ;^ 10 i8s.; in 1889, of ;^6 12s. 6d.; and in 1888, £'j 8s. 3d. It is to be seen from this that the Lancashire industries can subsist in spite of the lowered value of silver, and notwithstanding the fact that one-half their exports go to silver-using countries ; although I will not wholly deny that a higher rate for silver would be very much more favorable for them, and that, as formerly mentioned, they suffer severely from violent fluctuations of the exchanges. This industry with its exceptionally large capital has been, to the present time, pre- cisely in the condition to make up every fall of price, to a certain extent, by improvements in processes, and by larger investments of capital. And, in the main, it was not the fall in the price of silver which drove the English cotton manufacturers into the bimetallic camp ; it was, for the most part, rather the fear of the extremely flourishing industry in India which was competing against them, and whose immense progress was ascribed to the fall in silver COTTON INDUSTRY, 47 acting as a protective tariff. And, in reality, there is every reason for Lancashire to look with anxiety on the spinning and cotton-cloth mills at Bombay, whose growth is truly astonishing. INDIAN COTTON INDUSTRY. 1876-77 1880-81 1 884-8 "5 1887-88 1888-89 1889-90 1890-91 1891-92 47 58 81 97 108 114 125 127 Spindles 1,100,112 1,471.730 2.037.055 2,375,739 2,670,022 2,934,637 3,197,740 3,272,988 9,139 13,283 16,455 18,840 22,156 22,078 23.845 24,670 Yarn (in Cloth (in 1000 lbs.) 1000 yds.) 7,927 26,901 65,897 113,451 128,907 141,950 169,275 161,253 15,544 30,424 47,909 69,486 70,265 59,496 67,666 73,384 EXPORT OF COTTON YARN AND COTTON GOODS FROM THE UNITED KINGDOM TO CHINA, HONG KONG AND JAPAN.' Year Yarn in 1000 lbs. Cloth in 1000 yds. 33,086 46,426 38,856 35,354 44,643 35,720 37,869 27,971 394,484 1880 509,099 1884 439,937 1887 618,146 1888 652,404 1889 557,004 633,606 595,258 Indian spinning mills have, in particular, grown rapidly in the last I 5 years, and they have entirely beaten the English on the Eastern Asiatic market ; on the other hand, England still entirely controls Eastern Asia in cotton cloth. These facts affords us efficient guidance as to where we have to search for the reasons why the Indian cotton industry has shot up so extraordinarily. The manufacturers of Lancashire claim, as already mentioned that the fall of silver is solely responsible for it. Mr. J. C ' These tables, taken from the Appendix to the Minutes of Indian Currency Com- mittee, p. 244, do not wholly agree with those of the Economist, because the latter includes Java, Straits Settlements, etc. Rs. s. d. 39-84 - = 79 8X 26.63 = = 53 3^ Rs. s. d. 39-84 - = 59 9X 26.63 -- = 39 iiK 48 INDIAN SILVER CURRENCY. Fielden, a prominent leader of the Manchester bimetallists, tried to explain the phenomenon before the Royal Gold and Silver Commission,' as follows: At the end of 1885 good DhoUera cotton cost on the Bombay market 180 rupees per candy of 784 pounds. At the same time yarn 20's cost at Bombay 6^ annas per pound. If it is reckoned that 116 pounds of raw cotton is used to make lOO pounds of yarn, the following results are reached : (i) Exchange, 2S. Per Rupee. For 100 lbs. yarn is received - - - - 116 lbs. raw cotton costs - - - - Leaving for the spinner - - - -13. 21 = 26 5 = 3. 1 yd. per lb. (2) Exchange, is. 6d. per rupee. For 100 lbs. yarn is received - 116 lbs. rawr cotton costs - - - Leaving for the spinner - - - - 13.21 = 19 g^ = 2.47d. per lb. Mr. Fielden now says, furthermore, that the Lancashire spinner cannot produce under 2-2 ^^^d. per pound. But the freight is ^d.; consequently, at a rate of 2s. to the rupee he makes a fair profit, while at a rate of is. 6d. he is no longer able to compete with the Indian. At first sight this argument has about it something very taking, but on going to the bottom of the matter one finds much to suspect. Apart from the fact that the rupee has never, in the last 30 years, reached a rate of 2s. — this rate especially at the present time being unattainable — it seems as if the freight was set somewhat low at ^d. When cotton in Bombay costs 180 rupees per candy, in Manchester it costs considerably more. The Lancashire spinner has still to pay for the pressing of the cotton in India, ocean freight to Liverpool, insurance, commission to the broker on the cotton exchange, insurance against rates of exchange, and railway transportation from Liverpool to Man- • Second Report, p. 129. COTTON INDUSTRY. 49 ehester. Then lie has to pack the cotton yarn when ready, and provide for freight, insurance, etc. And can all this be done for ^d. per pound? Mr. Comber, himself the head of a house engaged in the trade between Lancashire and India — whose interesting testimony before the Gold and Silver Commission will be presently discussed — gives the expenses of transportation as i.igd. If we take the average between the statements of Messrs. Comber and Fielden, and reckon the cost of freight at about id., then the Lancashire spinner, at a rate of 2s. to the rupee, would just about cover his cost; at a rate of is. lo^^cl- (the quotation corresponding to the ratio of i : 151^) he would have a small loss. But there is yet an additional consideration. Mr. Fielden, in his computation, starts from prices as they were at a time when the rate was is. 6d.; but at a rate of 2s. the Indian spinner could also work more cheaply; his manufacturing plant would stand him considerably less ; for interest and sinking-fund on the capital contributed in gold he would have to produce much less ; he would obtain his coal, which he has to bring from England, cheaper; he would undoubtedly hire his European employees at lower salaries ; and, in short, he could save largely in expenses. It cannot possibly be proved by Mr. Fielden's figures that it was the fall in the price of silver which made competition with Bombay impossible for the English cotton spinners. As opposed to this idea let us note the statement of Mr. Comber, the one frequently referred to previously, before the Gold and Silver Commission.' He says (Question 8220): "I quite disagree with the opinion that the large development of the cotton industry in India is due entirely, or even chiefly to the fall in silver. I desire to say that, on the contrary, the Indian mills derive only a trifling and temporary benefit from the changed relations between gold and silver, and that their remarkable development of late years is due chiefly to other and natural advantages which the Indian spinner enjoys over his Lancashire competitor in the production, not of all kinds of yarn, but of those descriptions which can be made from Surat cotton, that is ^Second Report, pp. 141 f/ seq. 50 INDIAN SILVER CURRENCY Indian cotton. Before entering into details, I may state broadly that these advantages arise principally from the Indian spinners' proximity to the place where (i) the cotton he uses is grown, and (2) the yarn he spins is consumed." Mr. Comber then proceeds to explain that a readjustment similar to that which is going on between Lancashire and India is showing itself in the United States. Here the cotton industry is moving more and more from the North to the cotton-producing states of the South, in spite of the fact that both the North and South possess the same currency and even the same high pro- tective tariff system.' He gives the following tables : Southern States of Union India Spindles Looms Spindles Looms 1886-7 1,213.346 579,320 27,963 12,329 2,421,290 1,461,590 18,536 13,502 1879-80 ... 654,026 117 15,634 127 959,700 65% 5,034 CONSUMPTION OF RAW COTTON. COTTON DELIVERED TO MILLS, IN THOUSANDS OF BALES. ,886-7 i88c^8i Increase Increase per centum Northern States 1727 398 726 1710 205 379 17 193 347 94 91 India And, as in India, it is distinctlv the coarser grades which are produced in the southern states of the North American republic. Another statement laid before the Commission by the same authority is very interesting, because it clearly shows that it is • " As the Northern mills enjoy equally with the Southern the advantaj:fe of pro- tective duties, and have increased during the six years to so small an extent, it is clear that the development of the Southern mills is not due to protection, but to the advan- tage which they possess in common with the Indian mills, viz., proximity to the areas of production of raw and consumption of manufactured cotton." — Comber, j^/ § 3i' 60 ' INDIAN SILVER CURRENCY. items of the budget one by one, permit me to briefly explain in what manner the gold payments are made in England. A. MEANS OF OBTAINING GOLD. Payments in gold' are made by the "India Council" in London selling through the Bank of England to bankers and merchants, who have to remit to India, council-bills payable, in rupees or telegraphic transfers, on the Treasury at Calcutta, Bombay, and Madras, which ever is desired. It was not always so. When the Crown took away the Govern- ment of India from the East India Company, and found itself obliged to make large gold payments in England, it originally preferred to make gold loans, because the remittance of coin was impracticable. Between 1857 and 1862 the Indian debt in sterling thus rose from ^^4, 000,000 to ^^3 5, 000, 000. At that time, the foreign trade of the country did not make the show it does today ; the exports of merchandise were not very much larger than the imports, and remittances of the precious metals could convert a favorable into an unfavorable balance. If we include shipments of the precious metals between May i, 1855 and April 30, 1862, the imports exceeded the exports. Then, in consequence of the American War, came the immense pros- perity of India; in the years 1862 to 1865, the annual excess of exports (including the precious metals) amounted to Rx. 13,500,000. Since then, until 1893, in spite of the great move- ment of silver from Europe, the Indian exports continually exceeded the imports — as is quite explicable in a country regularly obliged to send abroad interest on its debt ; the traders therefore, had to remit to India, annually large sums as an equivalent for the surplus value of exports over imports — sums, which in reality equaled the amount which the Government had to pay in England. Since then, the Indian Government has found it possible to offset their demands for gold remittances over against those of trade and thus by simple exchange operations avoid the sending of coin. This, therefore, presents a method by means of •Palgrave, Dictionary of Political Economy, ^\i\c\t " Councils Bills." CONDITION OF THE GOVERNMENT. 6 1 which the merchants engaged in trade between Fingland and India — or, more correctly, their bankers — procure the ready money which the Indian Government needs to meet their obliga- tions, while the latter covers the j^ayments of merchants in India. Formerly, these council-bills consisted exclusively of bills of exchange, which the Bank of England put on sale each Wednes- day, in regard to which, however, it was usually provided that only a fixed amount on Madras would be furnished. But this became gradually modified because the establishment of a tele- graphic connection with India completely changed the character of the trade. The bill of exchange involved too much time, and the Indian Government found that it received more for tele- graphic transfers than for exchange ; for this reason it decided, in January 1 882, to sell telegraphic transfers as well as bills. From the beginning these telegraphic transfers were in good demand, and now their amount generally exceeds the bills, especially when there is a pressing demand for money on the Indian money market. There is a further innovation in that remittances can also be had on another day than Wednesday ; it became the practice to allow further sales on Thursday, which allowed the banks to complete their remittances by paying a slight increase in com- parison with the Wednesday sales. The Bank of England makes known from time to time in the reports of the money markets in the newspapers what the lowest price is, what amounts are for sale, and how much is sold. The sales of the India Office should not be regarded from any other point of view than that there remains to the Indian Government, — which has to pay cjuite a large part of its current expenditures in England, and that too in gold — only the choice (if it is unwilling to create debt continually) of either remitting silver to India, or of selling bills or telegraphic transfers. Now since India has had to the present time a favorable balance of trade, and since the receivers of Indian goods must therefore buy more bills on India than are created by the merchandise dealings, it would have been in the highest degree foolish for the 62 INDIAN SILVER CURRENCY. Indian Government to have followed the former method — i. e., remit silxer. That the council-bills depress the price of silver is, of course, true, since they diminish the demand for silver; but if we comprehend that the Indian Government would remit silver and sell it in London in order to meet its obligations in gold, the effect on the silver market in that case would not be any more favorable. The sale of government bills conforms simply to the needs of the Indian Government for gold. Mr. Arendt' is in error in saying : when the sale of Indian Government exchange increases, the price of silver falls, and vice versa; "he who has eyes" ought to be able to see this from the figures given in his own state- ments. It is true, of course, that the amount of exchange paya- ble in silver must increase with every fall in the price of silver, in order that the same amount of gold can be bought as formerly. But Mr. Arendt does not limit himself to this. In general, he does not give the figures of the council-bills in silver but uses as the basis of his argument figures in pounds sterling. Here I may be permitted to ask, from where has Mr. Arendt taken the figures with which he intends to prove his proposition. All his other figures, so far as I can audit them, including those on the sales of council-bills from 1870-75, are correct. But the figures for the sale of council-bills in the years 1876-81 are wrongly stated. Mr. Arendt gives for the six years 11. 51, 8.64, 13.98, 14.70, 15.48, and 16.27 millions pound sterling; while the correct figures for 1875-6 to 1880-1 are 12.39, 12.70, 10.13, 13.95, 15.26, and 15.24 millions pounds sterling.'' If Mr. Arendt had used the correct figures here, he could not have reached his false conclusion as to the connection of the depreciation of silver with the increase of council bills. We intend to further treat these expenditures of India in England in more detail. ■ Otto Arendt Open Leiter to Ludwig Bamberger, Berlin, 1882, p. 50. "See the tables at the end of the book which have been taken from the ofticial. Englisli sources. Arendt quoted formerly the figures of tlie fiscal years 1S69-70 to 1874-5. CONDITION OF THE GOVERNMENT. 63 B. THE EXPENDITURES OF THE GOVERNMENT. (a) TO liE I'AID IN GOIA) (lIOME CHARCES). Let me previse that these expenditures to be paid in gold are designated in the Indian budget in the following manner: First is given the amount in pounds sterling, then comes a head- ing "exchange," and the sum of both of them givqs the amount in English pounds of reckoning (Rx.). This is derived from the fact that the Indian statistics originally regarded the pound sterling as equal to ten rupees, a supposition which has no real justification, because the parity of the rupee at a price for silver of 6o%d. per ounce is is. lo^d. In 1 891-2 the rate which the Secretary for India obtained at his sales of council-bills and tele- graphic transfers was is. 4.793d.; and under "exchange" is given in the budget Rx. 6,973,213. In 1892-3 there was a revised estimate of is. 3d. ("exchange," Rx. 9.938,200); in the budget for 1893-4, is. 2^d. ("exchange," Rx. 9,935,900). The total expenditures of the Indian Government in England amounted, in 1891-2, to ;^I5, 974,699 ; in 1892-3, to ;^i6, 563,- 600; and for 1893-4 they are estimated at ;^i 5,843,800. About 15-16 millions pounds sterling have the expenditures of the Indian Government in England oscillated for a series of years ; they form, therefore, a very important part of the current expenses, which annually must be paid in the mother country. The most dangerous thing about it is that the largest items — the payments for interest on the national and railway debts contracted in gold — show a tendency to rise, because the Indian Government is obliged for the most part to place its loans in England. The increase of the burden would have been more seriously felt, if it had not been possible for India to make a very considerable saving in recent years by conversions. Since 1887 there remain only 3 and 31^ per centum Indian sterling loans, which bear about the same rate as the German national debt, which pays }4 per centum more. India, therefore, has unusually high credit on its gold loans ; but on its silver loans it has to pay nearly ^ per centum of interest more, as the annexed table ' shows : 'Appendix to Indian Currency Committee, p. 272. 64 INDIAN SILVER CURRENCY. QUOTATIONS OF INDIAN NATIONAL DEBT. 4 Per Cent. Rupee Loan Indian Sterling Loan Year Quotations in Calcutta Quotations in London Quotations of India Council - Bills 4 Per Cent. 3»^ Per Cent. 3 Per Cent. Highest Lowest Highest Lowest Highest Lowest Highest Lowest Highest Lowest 1873 1877 1880 105 q8^ loir« col/ 97 88;^ 81 H 81^ 71U 87X 8034: 74;^ 94 >^ 81 7714: 78X 67% 68|4^ d. 22% 22X 20H I9l< i8i\ 20|| tXi/ d. 21^ 16% 16/8 14/8 106)4 I04H lOSH I04H 102^ lOiX IO2X 102^ lOI^ 100 >^ 100 nolä 1884 1887 1890 189I 1892 100 >^ 193% 107U io8}| 95A 95Ä 96II 1041V i03ii 107/8 103X 108 j!^ I09>^ 109 >^ I01|^ looX I05X 105 lobyi 96X 92>^ 100^4: 99 98K 91K 85H 95X 74X 94/^ 62 1 16Ü 94% .„ The Indian Government would have had great difficulty also in placing their silver obligations, if they had issued no other kind. For the English investor preferred a less rate of interest to buying a bond with a fluctuating income ; and the Indian investment market is far from being sufficiently developed to satisfy the pecuniary needs of the government. A large sum is constantly required especially for railway construction, and hence the sterling debt rose from ;^68.i4 millions in 188 1-2 to ;^I07.40 millions in 189 1-2. The annual requirements for the permanent national debt are at present about £2.^ to 2.6 mil- lions, and, for the railway debt and for sinking-fund payments on the railways purchased by the state, about ^3.5 millions. In addition, there is an item of ^2.1 millions for the guaranteed private railways. The service of the public debt, including sinking-funds and payments to the guaranteed lines, therefore, rises to ^8.3 millions, or more than half of the demands of the Indian Government in England. Next to the service of the public debt comes the provisions for pensions ; under which there is to be paid in gold for pen- sions, retirement-payments, etc., for the army ("non-effective army") about ;iC2.2 millions; for the civil administration about ;^2.o millions, — or an annual total of about ;^4.3 millions. The third large item of gold payments is that stated under "army effective" as about i^2. 4 millions. The expenditures of CONDITION OF THE GOVERNMENT. 65 especial importance arc those for transjjortation of trooj).s, mobi- lization, etc. The other items are of much less im})ortance : for cost of administration in England about one-half million pounds sterling are paid. The remaining expenditures in gold are too insignifi- cant to recjuire mention. {d) TO BE PAID IN SILVER. It would carry us too far afield to speak here in detail regarding the ex|)enditures to be paid in silver. But above all, attention should be directed to the army budget ; the expenses for the army are exceedingly large. They amounted in recent years to about Rx. 15.6 millions; and if we include the expenses to be paid in England mentioned above, and adding loss by exchange, we reach the large sum of over Rx. 23.5 millions. The strength of the army was, in 1889-90, 72,444 Europeans, 145,363 natives, and 998 ofificers of various ranks, — or in all 218,805 men. The Indian Army budget is ris- ing slowly, because the cost of maintaining the British troops is yearly becoming dearer. For the pay' of British troops stationed in India or in other parts of the British possessions is fixed in sterling, and must be reduced to the standard of the country where the respective troops are serving at a rate to be determined annually and approximating as nearly as possible to the yearly average. In addition, if we include the fact that the obtaining of gold for that part of the army expenses to be paid in England becomes dearer yearly with the fall in the price of silver, there results a rise in the budget from Rx. 20.7 millions (1889-90) to Rx. 23.0 millions (1893-4). The expenditure of 230 millions rupees for the army is no light burden for India, especially if we regard these two things. In the first place a large ])art of the army is maintained only from the point of view of European politics ; because, in case of a conflict between England and Russia, an attack of the latter power on India is feared, and the garrisons in the northwest are strong, much stronger than the ^ Financial Statement ioT: 1 893-4, p. II. 66 INDIAN SILVER CURRENCY safety of the country would otherwise require;' for the eventual invasion of the enemy is to be expected from there. But, sec- ondly, the strength of the Indian Army is partly determined by the fact that Indian troops are for the most part used in the colonial wars of the English, as against Afghanistan, in Egypt, and in South Africa ; and consequently a greater effective strength is required. *rhe Indian debt contracted in silver is likewise very consid- erable, but, for the reasons above given, it increases much more slowly than the sterling debt. In 189 1-2 it amounted to Rx. 102.69 millions as against Rx. 88.65 millions in 1881-2. The cost of the civil administration is partly borne by the Indian Empire, but partly also by the provinces and local gov- ernments. The latter have to meet almost entirely the cost of building roads, of justice, of police, and of schools, and partly of the expenses of collecting the taxes (but excluding a large part of the administration of the land tax). The remaining costs of administration are covered by the Empire. The figures of the budaret are as follows : EXPENSES IN INDIA (inclusive of army AND railways). Expenditures of Empire Expenses of the Provincial and Local Governments Rx. 41,296,663 41,341.600 42,464,200 Rx. 24,708,097 1892-3 revised estimate 23,623,500 24,108,100 Under administration, that for the railways requires only slight aid. The provision for railways is included under interest payments of the railway debt and the transactions with the guaranteed lines : Income Expenditures Deficit Rx. 19,938,046 19,064,200 19,551.700 Rx. 20,253,910 20,775,000 21,545.^00 Rx. 315.864 1892-3 revised estimate 1893—4 estimate 1,710,800 1,994,100 " It should not be forgotten that the semi-military, organized police amounted in 1891, according to the Statistical Abstract, p. 60, to 152,499 men. CONDITION OF THE GOVERNMENT. 67 The sums are balanced by the surplus of the j)ost office, tele- graphs, and mint, which in the three years amounted to Rx. 146,548, 227,100, and 111,500 respectively. (c) THK INCOME.» The chief source of income is the land tax. The results (for the Indian Empire, the provinces, and the local governments com- bined) were as follows, — or more than one-fourth of the total income of the state : 1 89 1-2 definitive 1892-3 revi.sed estimate 1893-4 estimate Gross, excluding " Refunds and Drawbacks" Rx. 23,901,284 24,800,500 25,101,200 Cost of Collection Rx. 3.835,126 3,956,100 4,112,300 Net Rx. 20,066,158 20,844,400 20,988,900 In India the state or monarch has always had a share of the rent or increment derived from real estate. This tax is levied according to a valuation in which are included estates whether cul- tivated by the owner or rented. In certain districts, which annu- ally pay about Rx. 4,311,000, the valuation was definitely fixed for all future time about lOO years ago. The remaining parts of India are newly valued at periods of from 10 to 30 years. In the case of large estates of a few hundred up to several thousand acres the share is usually about a half of the rent enjoyed by the owner. In the case of small estates farmed by their owners, the land tax is levied on the cultivated area at a rate determined in each case by the fertility of the soil, and representing about one-half the net product. The districts valued for all time com- prise the greater part of Bengal, a quarter of Madras and cer- tain districts in the south of the northwestern provinces. As concerns the portions valued at briefer intervals, the land situ- ated in the northwestern provinces, in Punjab, Oudh, the central provinces and Orissa is held in communal ownership or by large ' The statements regarding the tax system are taken, when not otherwise men- tioned, from r/ie Statement exhibiti7ig the Moral and Material Progress and Condition of India, 1889-90 ; the tables of figures, as in former quotations, from the Financial Statement. 68 INDIAN SILVER CURRENCY. proprietors ; while in Bombay, Burma, Assam and Berar, as well as in the greater part of Madras, the land is cultivated by small proprietors. In the districts valued for the indefinite future the land tax amounts to about two-thirds of a rupee per acre of cul- tivated land, and represents about one-fifth of the net product, or about one-twenty-fourth of the gross product. On the aver- age the natural advantages of climate and of soil are greater here than in the districts revalued periodically. In the latter the land tax amounts to about one and one-half rupees per acre of cultivated land, which is somewhat less than one-half of the actual or estimated net product, and probably one-tenth or one- twelfth of the gross product. The figures of the net product and the land tax vary greatly according to the fertility of the soil, the climate, the rainfall and the possibility of bringing the produce to market or to the seacoast. Payment for water which is delivered by the state canal, or reservoirs, for the purpose of irrigation is regulated either according to the extent of the area irrigated or of the water used. If a land owner or a tenant undertakes improvements he is not thereby more heavily mulcted by the land tax." That so unusually heavy a tax — at least to the European mind — can be increased only with difficulty is clear without fur- ther explanation. Besides, the Indian farmer is in such a pitiful material condition, he groans so heavily under excessive exac- tions both from the landlord and the usurer, that an increase of the land-tax would easily entirely annihilate him. In their own interest the English dare not act like Asiatic conquerors who squeeze the last drop of blood out of the people and wholly ruin them without comj)unction in order to enrich themselves. Next in importance to the land-tax comes the tax on salt ' Details on the land tax are given by : Wolf, Thatsachen und Aussichten der Ost- indischen Konkurrenz im Weizenhandel, p. 52 et seq.; KnhlSind, Aus dem Verfassungs- und Verwaltungsrecht des Britisch-indischen Kaiserreiches,)^. 408; Hunter, The Indian Empire, p. 333 et seq. The latter gives much lower figures than the official report above cited. According to him, the officers entrusted with the collection of the land tax make so many deductions in favor of the farmer that the tax on the average amounts to only 5.50 per centum of the gross product. CONDITION OF THE GOVERNMENT. 69 which yields a yearly net of about Rx. 8.1 millions. It is levied either as an import-duty upon all salt imported, or as a tax upon that produced in India. Its rate fluctuated formerly from one- fifth rupee in Burma to three and one-fourth rupees in Bengal for a maund of 82 lbs. In 1 889-90, it amounted to two and one-half rupees in the whole of India except in Burma where only one rupee was levied. It is also very difficult to increase the salt tax, because the poorest people are heavily burdened by it. Opium brings in not much less than salt ; although in this case the tax does not fall on the Indians, but on the Chinese ; since it is levied only on the opium transported to China, and this has almost no competition. The returns from it, exclusive of the very considerable cost of collection, are from Rx. 5 to 6.5 millions. The results vary largely, because they depend upon the condition of the market and upon the fate of the crops. The opium tax is levied partly through a monopoly in Bengal, partly through the duty upon all opium exported from the native states. Although the poppy grows wild over the largest part of India, its cultivation on British soil is permitted only in parts of Ben- gal, the northwestern provinces and Oudh. A few thousand acres in Punjab are cultivated for local use. The opium-farmer in the monopoly districts receives aid which enables him to pre- pare the soil for the crop. He then has to deliver the whole product to an opium-agent at a fixed price, through whom it passes to the state factory at Patna and Ghazipur where it is then prepared for the Chinese market. The boxes of prepared opium are disposed of at monthly auctions in Calcutta; to prevent speculation and to keep the price steady the quantity of opium to be offered for sale at each auction is published a year beforehand. In 1892-3, 48,850 boxes were sold at an average of 1247 rupees per box, while the estimate had assumed only 1050 rupees. For 1893-4 an average price of 1250 rupees is anticipated, although less will be brought to sale on account of a poor crop. 70 INDIAN SILVKR CURRENCY. In many native states of Rajputana and of Central India opium is likewise cultivated. These states have entered into contracts with the Anglo-Indian government in which they bind themselves to adapt their own to the British system and to pre- vent smuggling. Upon all the opium which is exported from their territory for the Chinese market they raise a considerable tax, and this opium pays into the Indian tax collectors a return which a few years ago was lowered from Rs. 650 to Rs. 600 a box. An increase of the income from opium does not depend upon the Indian Government but upon the outcome of the crop. The next important source of income is the excise, which yields a net of Rx. 4.9 to Rx. 5.0 millions. This is partly levied by granting a monopoly of the sale of spirituous liquors and poisonous drugs to a county [Bezirk), and, partly, the sale of these articles is permitted only to the possessor of a license. In several regions also a brandy tax is levied according to the percentage of alcohol in the product.' The excise does not seem capable of increase, because for the most part the tribes addicted to drink live in forests and mountains difficult to watch, and in these sparsely settled regions the material for illicit distillation is easily obtained. Tobacco, sugar, tea and coffee are untaxed ; they grow throughout all India and are consumed by all classes of people. Tobacco is cultivated in almost every village, and old and young, man and woman, smoke. Regarding the possibility of a tax on tobacco and sugar, the report of the Herschell Committee says, § 42: "To procure a revenue from them by means of taxation would involve constant and vexatious interference with the peo- ple, and the cost of collecting and enforcing the tax would be enormous in proportion to the sum realized. Those who have given evidence on this subject, and who entertain the gravest objections to an increase of the salt tax, arc nevertheless of opinion that, with all its evils, this would be preferable to an attemj)t to raise a revenue by a taxation of sugar or tobacco." 'For details see Statement Exhibititig the Moral and Material Progress and Con- dition of India, 1889-90, p. 90; and Ruhland, loc. cit., p. 442. CONDITION OF THK GOVERNMENT. 7 1 The income from stamps is very considerable. The returns from them are rapidly rising. In 1 86 1-2 they amounted to Rx. 1.7 millions; today they are nearly Rx. 4.3 millions. The stamp duties are levied according to Act VII. of 1870 (Court Fees Act) which lays a tax on complaints, petitions and other documents to be brought before the civil, criminal and revenue courts; and also according to Act I. of 1879 (Stamp Act) taxes are laid upon papers required in trade, such as bills of lading, evidences of debt, checks, bills of exchange, quittances, etc. The tax collected from the dealings of private persons with the public authorities constitutes two-thirds of the income from stamps. There exists, besides, an income tax, according to Act II. of 1886. All incomes arising from salaries, pensions and interest on investments, if they amount to more than Rs. 2000 annually, pay five pie per rupee (2.6 per cent.); if below Rs. 2000, four pie per rupee (2 per cent.). Companies have to pay five pie on each rupee of their net income. Every income from other sources pays a tax according to a scale, which rises progressively from Rs. 10 on Rs. 500 to Rs. 42 on Rs. 1999. The tax on incomes over Rs. 2000 is, as in the first case, five pie per rupee. All annual incomes under Rs. 500 are untaxed, as are also all those arising from agriculture, and the salaries of military men, provided they are less than Rs. 500 per month. This tax yields something over Rx. 1.6 millions. The introduction of an income tax was regarded with very great dissatisfaction by the Euro{)can officials of the government, because they had been seriously injured besides this by the fall in the rate of exchange, and they rather expected an alleviation than an addition to their burden. And yet the income tax is the necessary completion of the existing system of taxation. Agriculture is heavily burdened by the land-tax, and it is not more than right and just that the incomes from commerce and industry, which are exceptionally large in India, and which would be wholly exempt without the income tax, should also contribute something to the burdens of the state. That the officials, whose 72 INDIAN SILVER CURRENCY. salaries are quite exactly known, should be most seriously affected by this tax is in the nature of things, in a country like India. The customs duties have so far brought in relatively small returns — only about Rx. 1.50 millions — because India has had nearly complete free trade. Of the import duties only that on spirituous liquors is moderately profitable ; it yielded, in 189 1-2, Rx. 589,684. There exists, further, an import duty of six pie per gallon on petroleum and other mineral oils. The import duty on salt has already been spoken of under the salt tax, and is also presented there in the Indian budget. A tax of no financial gain, but one extremely characteristic in the ways and means of Anglo-Indian colonial policy, is that on weapons and munitions, which ranks third among existing import duties. It is almost prohibitive : guns pay, e. g., Rs. 50, pistols Rs. 15. -But persons who have weapon permits pay only 10 per cent, ad valorem on weapons destined for their own use. This duty on weapons may have contributed not a little to the result that the quiet and safety of the country is today so marked. Of the system of export duties so fully elaborated by the Mohammedans in earlier times there now exists only an export duty on rice, of three annas per Indian maund of 82 1 pounds, whose amount varies with the outcome of the crop. The remaining income from forests, tributes of the feudal states, etc., are small. The total income of the Empire from taxes and duties amounts to : 1 891-2 derinitive - Rx. 49,969,887 1892-3 revised estimate . - - - " 51,473,400 1893-4 estimate ------- 50,103,200 The provinces and local governments, to cover their expendi- tures, raise sums in addition to the land-tax and stamp-duties, and also their own provincial taxes, which are placed at: 1891-2 definitive Rx. 24,467,173 1892-3 revised estimate . - - - " 23,259,700 1893-4 estimate " 23,356,900 If the income from railways, as given above, is counted in Rx. 89,143.283 " 00,021,200 " 90,005,700 Rx . 88,675.748 " 91,103,100 " 91,600,800 Rx . 467.535 " 1,081,900 " 1,595,100 CONDITION OF THE GOVERNMENT. 73 here, and also the smaller returns from waterworks, etc., the total of the income amounts to : 1891-2 definitive ----- 1892-3 revised estimate 1893-4 estimate - - - - - If we set off the ex})cnditures of: 1891-2 definitive - - - - - 1892-3 revised estimate 1893-4 estimate there results : 1891-2 a surplus of . - - - 1892-3 a deficit of - - - - 1893-4 a deficit of - - - - (^ IO2K 991^ 102 99^ 101 Average lOI^ 100^ I00>^ lOiX 101 101 H 1 02 A loiYz 100% 100^ As to the effects of this monetary system on the country, all ' Compare also the interesting statements collected concerning the currency of Canada. West India, British Guyana, Brazil, and other states in the Report of the Indian Currency Committee. "Appendix to Afinutes of the Indian Currency Committee, p. 232. HISTORY OF TIIK IXDIAX SILVER CURRENCY. 99 are not of the same opinion. Van den Berg, formerly President of the Bank of Java, and now President of the Netherlands Bank, said in 1886 that the crisis of that time — which threatened with annihilation the two most important branches of industry in the country, the cultivation of coffee and cane sugar — was mainly due to the introduction of the limping gold standard. In res- pect to the mother country, he did not at all recommend a return to the silver standard ; but yet he warned every Asiatic govern- ment against loosening their hold on the use of silver as a money metal, and urgently advised, rather, a courageous assump- tion of the losses arising from a depreciating standard. Mean- while the crisis has disappeared.' Whether the gold standard was the cause of it is more than doubtful. On the other hand, the difficulty is explained by the general depression then existing, and, as regards sugar, by the competition of beet sugar. Sir David Barbour, in his special statement in the Final Report of the Gold and Silver Commission (p. 147), remarks: " Neth- erland India, where the gold standard was adopted, has assuredly not gained by the change in comparison with the other Asiatic countries which maintained the silver standard." Furthermore, the Chamber of Commerce of Sourabaya, not very long ago requested the Dutch minister for the colonies to investigate the monetary conditions^ of Java, where the chamber asserted that the existing currency was very satisfactory. The minister for the col- onies, Keuchenius, then said in the first chamber of the States Gen- eral, on January 31, 1890, that he very much doubted whether the monetary system prevailing in the Dutch P^ast Indies was sound ; it had the appearance to him of resting on a fiction, and on this account he approved of the investigation. Keuchenius, however, shortly after left ofifice, ostensibly in consequence of the recep- tion accorded the above declaration. The opponents of an Asiatic gold standard, in fact, admit that the exports of Java have not suffered ; but they believe they would have developed to a very much greater extent, especially to the East Asian silver- ' Appendix to Minutes of the Indian Currency Committee, p. 232. ' Minutes of the Indian Currency Committee, Questions 1767 et seq. 100 INDIAN SILVER CURRENCY. using countries, if they had not been retarded by the conditions of the currency. But others point to the fact that during the existence of the limping gold standard the welfare of Java has risen exception- ally ; that elsewhere the farmer is seldom found in so fortunate a condition as precisely here. This, for example, is the opinion of Mr. Kensington, a high ofificial of the British-India finance ministry who, in a report of September 21, 1892, expressed^ himself as remarkably well pleased with what he saw in Java. To return to India. The opinions regarding the experiences of Java, therefore, following from the enactment of the pure sil- ver standard, do not agree; and on this precedent alone India would probably not be induced to abandon the silver standard. Yet a change was allowed to take place in the conditions of the currency because there was scarcely any other feasible way than the cessation of the free coinage of silver. To be sure, many other recommendations were made, but all — and rightly — were found to be impracticable. Among the earliest was the talk about the adoption of a high seigniorage of perhaps 10 per centum, or of a duty on silver. The former meas- ure would have led to the same disadvantages which are now feared from the cessation of silver coinage. The financial gain would likewise have been quite unimportant ; for it is safe to suppose that in case of the adoption of such a mint charge the coinage would have very materially diminished. Against a high import duty on silver, the dif^cultics of collection and the dan- ger of smuggling are especially to be urged. It is also very questionable whether, by the adoption of a duty on silver, they would accomplish the purpose of raising the rate of the rupee and limiting the importation of silver, since it is not to be overlooked that the price of silver in the world's markets would fall exactly in proportion to the amount of the duty, if the Indian purchaser would not submit to give more. If they should establish a sliding mint charge, or silver duty, it would open the door to the wildest sj)eculation ; and as regards the collection of the silver • Appendix to Report of the Indian Currency Committee, p. 232. HISTORY OF THE INDIAN SILVER CURRENCY. 101 duty the difficulties of administration would be inordinately increased. Yet the coinage of a heavier rupee would give even less hel[) ; for after a short time — provided that the price of silver should fall — the dif^culties would be the same as exist today. Others again recommended that they should introduce gold as the unit of account, without the coinage of gold, which should be based on a reserve to be kept by the Bank of England in India; others advised the use of a certain amount of gold as a standard for foreign and for wholesale transactions, treating the coins for domestic trade like fractional currency. Further schemes advocated were : the declaration of the rupee as a legal tender in the United Kingdom ; the introduction of the gold standard with gold in circulation, fixing the ratio between both metals from time to time according to the condition of the mar- kets for the precious metals ; the issue of treasury notes, based on gold, but simply redeemable in rupees at the daily quotation then existing; the striking of coins made of a composite of gold and silver ; the adoption both of a silver and of a gold standard which should exist side by side independent of each other; the coinage of gold money, but only of large denomina- tions (perhaps from 5000 to 10,000 rupees), as the legal tender, degrading the rupee to the level of token money — and to base the paper money on gold alone, but redeemable in gold and silver. That these propositions amounted to nothing, is evident at first glance. For their venturesome quality some of them are particularly grotesque. It is yet too soon to decide whether the Indian Government has acted rightly in closing its mints to silver ; a knowledge of the effects of the measure is needed for that. As I possess no gift of prophecy, I beg that the following statements be treated simply as my personal view, obtained by an unprejudiced examination of the case, and which does not lay the least claim to absolute certainty. I believe a distinction should be made between Indian and 102 INDIAN SILVER CURRENCY. English interests. It would certainly be a matter of indifference to the great mass of the Indian people what the standard of the country was, since barter yet prevails in almost all the level part of the land. Only as a tax-payer is the Indian interested that the currency should be as good as possible, and thereby the financial condition of the Government be as strong as possible. But on the other side, the price of silver in the world's mar- kets must fall heavily on account of the cessation of silver coin- age, and consequently the national welfare of India would be seriously threatened. For with such an exceptionally large supply of Indian silver, which Mr. Harrison' estimates at Rx. 510 millions, or 54.55 millions kilograms, the losses would amount to hundreds of millions of marks. On this it is to be noted that a great part of the silver hoards consist of coined rupees, and that their value is more firmly fixed by the fact that the native parts with his ornaments only with difficulty ; only in times of great distress, such as the frightful famine at the close of the seventies, are ornaments brought to the mints (at that time in three years 45 millions rupees). This is true. But who knows how much silver was melted at that time by the dealers in precious metals before they were brought to the mints? And is it not a misfortune of the worst kind if a native forsakes his last anchor of salvation, his ornaments, in the moment of his greatest need? From time immemorial have the largest classes of the population invested their total savings in silver ; so that a sudden fall in its value is not to be treated without consideration, as from the English point of view it is likely to be. It is urged further that, in case the difference between the value of the coined rupee and its silver contents should become too great, counterfeit coins of full weight would be coined. That would certainly be very undesirable ; and the counterfeit pieces would very easily enter into circulation, since, as the Report of the Hcrschell Committee itself admits, the native is influenced much more by the weight of metal in the coin than by its external appearance. To this it is answered that very 'Appendix to Minutes of the Indian Currency Commillce, p. 307. HISTORY OF THE INDIAN SILVER CURRENCY. IO3 bulky and costly machinery is rc(|uircd for counterfeiting — in case it should be ]M-üfitablc — and such it woultl be difficult to obtain. Against this it is to be said that the Indians are famous as exceptionally clever workers in metals, and how could a European police prevent unauthorized coins from being made in a country' of nearly 300 millions of inhabitants ! It is my opinion that this danger is over-estimated ; the experience of Germany with its thalers, and of the Latin Union with its five-franc pieces, permit this conclusion. The currency reform is probably of most danger to the Indian industries which export to East Asia. Although the exports of India to China, Japan, etc., are only one-half as large as those to the gold-using countries, there are no corresponding imports such as come from Europe, and the Indian balance of trade is kept so strongly favorable only by the trade with East Asia. Now India has a different currency from the countries which form its mainstay. What will be the effect? That the export of opium to China should seriously decline does not appear very likely, for the Indian opium is there a luxury for which something more can be exacted. But how as to the cotton industry? They have now the disadvantage as compared with Lancashire that they do not in the least possess any such organized money market as the English manufacturers have at hand in the London markets, and which is absolutely necessary to enable them to compete. It will probably now become very much easier for the infant cotton industry of China and especially of Japan to again drive the Bombay peo{)le from the home market. That the exports of India to gold-using countries would be injured by the closing of the mints, I do not believe; ic is the contrary. To all appearances the rate of exchange will now remain very much steadier than formerly, when it was entirely independent of the condition of the silver market ; and that is an invaluable gain to trade. The view that the deprecia- tion of silver served as a premium on exports in Indian trade has now very little value ; for we said, in Chapter II., that at least for the exports of Indian grain a favorable effect of the currency 104 INDIAN SILVER CURRENCY. was not proved, and that India's exports, as well as its ability to compete in the world's markets, depend far more on other things than on the condition of the exchanges. In this question the English should be distinguished from the Indian interests; they do not always coincide. But even England's interest depends not so much on a rise as on the sta- bility of the rates of exchange, although a rise would be of great advantage to the United Kingdom. There are also the firms engaged in exportation to East India. To them it is certainly not important to keep the rates of exchange steady, but if possible to raise the value of the rupee. That the interests of the European officials in India espe- cially demand a change of the standard, probably no one would claim ; a measure such as Ceylon adopted, by fixing the salaries of its officers at is. lo^d., would have served the same pur- pose. This, however, would have the same effect as the adop- tion of an obligation to pay in gold, because it would have bur- dened the Indian tax-payer to the same extent. But something must be done, if the integrity of the bureaucracy and therewith the position of England in India is to be preserved. Finally this plays a chief role : it is the interest of England to keep the Indian Government in a strong financial condition so that it may be able to aid in the defense of the British Empire, as it has done to the present time. Since English rule in India undoubtedly means a great gain to civilization, and its mainte- nance is also highly desirable in the interests of the Indian peo- ple, the interests of India and those of England here may partly coincide. Whether the measure adoi)tcd was the right one, it is too soon, as before observed, to decide. But after the closing of the mints the currency policy of the Government does not appear to have been free from error. I do not think it was proper, dur- ing the period of the crisis naturally following such a thorough- going measure, for the Indian Government to try to continue the sale of council bills at a time when the country's balance of trade — only temporarily, one would hope — became unfavorable. In HISTORY OF THE INDIAN SILVER CURRENCY. IO5 the end such exceptionally skillful business men as the English may here succeed in finding the right way, since it is a matter of vital importance to their power in the world. They will surely succeed also in preventing the Indian cur- rency from becoming dangerous to the gold standards of Europe. For should the Indian Government sometime succeed in keeping a permanently stable rate of exchange, in order to prepare for the coming of the limping gold standard, — the mother country would look strictly to see that no scarcity of gold should result — which would be of most serious import to her. In the main I believe that the effect on the gold supplies of the world of finally intro- ducing the limping gold standard into India is overestimated. Gold can always be used as money in India only to a limited extent ; it is even claimed that the present silver coins are of too great value for the great mass of the Indian transactions, and that therefore copper coins are mostly in daily use.' How then would it be with gold coins? The English have no sentiment in colonial policies. They will be first of all careful that the currency policy shall not injure them, nor Europe. 'Compare Dr. G. Ruhland, "Zwei bimetallistiche Theorien," in the Frankfurter Zeiiuttg, Morgenblatt No. 36, February 5, 1894. APPENDIX I. MINUTE BY THE HONORABLE SIR DAVID BARBOUR,' K. C. S. I. 1. In dealing with the currency of British India it is necessary to draw a distinction between the active rupee circulation and the total number of rupees in existence. A large proportion of the rupees issued from the mints and not melted down are kept as permanent hoards and fulfill none of the functions of money. This distinction cannot, however, be sharply drawn, as rupees are always liable to pass from hoards into the active circulation, and vice versa. What I call the active rupee circulation may be held to include all the rupees which at some period of each year are used as money. The total active rupee circulation has recently been estimated at Rx. 115,000,000. Without accepting these figures as more than an approximation to the truth, they are sufificient to show that a gold standard with a purely gold currency is impossible in India. To establish a gold currency in India with a full legal tender currency composed entirely of gold, it would be necessary to withdraw from circulation about 1,150 millions of rupees, to melt them down, and sell them for what they would fetch as silver bullion, and then to replace them by about ;;^77,ooo,ooo worth of gold. In the present conditions of India and of the silver and gold markets this would be an impossible operation. Moreover, a gold standard with a purely gold currency of full legal tender coins would not suit India (even if it were possible to introduce it), because the gold coins would in practice be of too great value to suit the vast majority of Indian transactions. 2. It follows from what has been stated in the preceding paragraph that if we are to have a gold standard in India, a large proportion of the circulation must consist of silver coins, and these coins must be a legal tender to any amount. The example of France and other countries shows that it is possible to have a gold standard, although a large per- ' Appendix I., Minutes of the Indian Currency Committee, p. I47. 107 I08 INDIAN SILVER CURRENCY. centage of the circulation consists of overvalued silver coins which are legal tender to any amount. In order that the gold standard may be effective, a limit must, how- ever, be placed to the number of such coins, and they must be con- vertible into gold coins, either without payment of premium or on pay- ment of a trifling premium, whenever any person wishes for gold coins in exchange for silver coins. So long as the silver coins are freely exchangeable for gold coins in accordance with their face values, the gold standard is effectively maintained. 3. I have no doubt that even with a gold standard the people of India would in almost all their transactions prefer to employ silver rupees. It is improbable that a gold coin of less than Rs. 10 in value would be issued in India, and such a coin would be quite unsuited for ordinary Indian transactions. Rs. 10 represents, generally, much more than a cooly's wages for a month, and if a cooly received his wages in the form of a single coin he would immediately exchange it for smaller coins. We could not pay our soldiers or police in gold coins. Payments to the opium cultivators could not be made in gold ; neither could the ryots pay their rents in gold. There would also be a not unreasonable dread among the common people that gold coins might be of light weight ; they would generally be unwilling to accept them, and for monetary purposes in ordinary life gold coins would hardly be used. This would be the case, I believe, even if gold coins of the value of only Rs. 5 each were issued. 4. It may, then, be taken for granted that with a gold standard the great bulk of the Indian currency must continue to be silver rupees, and that for monetary purposes there would ordinarily be no consid- erable demand for gold coins in exchange for silver. On the contrary the demand for monetary purposes would rather be for silver coins in exchange for gold coins. Gold coins would only, as a rule, be required in exchange for silver coins, when gold was required for hoarding, for export, or to be melted down for ornaments. It follows that with a gold standard India would require, and would use, a very large amount of silver rupees, and would neither require nor use a large number of gold coins. Any gold coins that were put into circulation, and were not melted down or hoarded, would very quickly find their way into the hands of APPENDIX. 109 bankers and dealers in bullion, into the government treasuries and into the Paper Currency Reserve. 5. For the purpose of introducing a gold standard into India, we might stop the free coinage of silver, adopt measures for accumulating a store of gold, and, when what was considered a sufficient stock of gold had been obtained, we might open the mints to the free coinage of gold, make gold coins a legal tender and guarantee by means of our accumulated stock of gold the exchangeability of silver for gold coins according to their face values. I do not recommend this plan ; the accumulation of a sufficient store of gold would be a measure too expensive for a country situated as India is, and when it had been accumulated and the exchangeability of the silver coins for gold coins had been guaranteed by means of it, there would be a very great risk of the whole stock of gold being drawn away in exchange for silver rupees. If this should happen, and I think it would happen unless our stock of gold was very large indeed, the gold standard would cease to exist, and we should find ourselves exactly where we started. 6. The only measures for the introduction of a gold standard into India which seem to me feasible are the following : (i) The first measure would be the stoppage of the free coinage of silver. Government would retain the right of purchasing silver and coining it into rupees. (2) The next measure would be to open the mints to the free coin- age of gold. Any man bringing gold to the mints would be entitled to have it coined into gold coins, which would be legal tender to any amount. It would be desirable to stop the free coinage of silver some time before opening the mints to the free coinage of gold. It would be a valuable guide to us in subsequent proceedings to know exactly what effect the stop- page of the free coinage of silver had on the gold value of the rupee. The new gold coins might be a lo-rupee piece and a 20-rupee piece. 7. The weight and fineness of the gold coins to be issued from the mint would be such that the par of exchange between them and the sovereign would be the exchange which it was desired to establish between India and England. For example, if we wished the rupee to be worth is. 4d. the lo-rupee coin would contain as much gold as was worth (is. 4d.) X 10=160 pence. no INDIAN SILVER CURRENCY. The quantity of fine gold in the lo-rupee piece would be ^|^, or two-thirds of the quantity contained in the sovereign. 8. The question of the ratio at which we should change from the silver to the gold standard would require careful consideration. We ought not to think of going back to the old ratio of 1:15^. Neither ought we to adopt the very lowest price to which silver may have fallen at any time, or to consider ourselves bound to accept the market ratio of the very moment at which the change was made. A ratio based on the average price of silver during a limited period before the introduction of the gold standard would probably be both the safest and the most equitable. 9. We may be quite sure that, on the introduction of the gold standard, bankers and bullion dealers away from the Presidency towns and, perhaps, in the Presidency towns, would charge something for changing silver coins for gold ones. The general public, however, would very seldom require to make such exchanges, and, if all Govern- ment Treasuries were required to give gold coins for silver coins when- ever it was possible for them to do so, there could not be any consid- erable premium on gold coins so long as there were such coins in the public Treasuries or in the Paper Currency Reserve, and the gold stand- ard would, subject to the above condition, be effectively maintained. 10. After the above measures had been carried out, it might happen that no gold was brought to the Mints to be coined and put into circu- lation, and that the rupee fell in value below is. 4d. Or, it might happen that though gold was brought to the mints for a time and the rupee was worth is. 4d., yet subsequently gold ceased to be brought to the Mints, the gold coins disappeared from circula- tion, and the rupee fell below is. 4d. If gold were not brought to the Mint to be coined and put into circulation, or if gold coins disappeared and gold ceased to be brought to the Mints, it would be a sign that the rupee currency was redundant, or, in other words, that there were too many silver rupees in circula- tion, that consequently their value had fallen below is. 4d. each, that gold coins had been driven out of circulation, and that the gold stand- ard was no longer effectively maintained. The remedy in such case would be to contract the rupee cur- rency, and to adopt any feasible measures for improving the general financial position of the country. An improvement in the general finan- cial position would give increased confidence, and the reduction of the APPENDIX. I I I rupee currency, if carried far enouL(h, must ultimately restore the value of that coin. 11. The greatest danger from the cause just indicated would arise immediately after the first introduction of the gold standard, and would be brought about by silver rupees being returned into India from for- eign countries, and by their being thrown into active circulation from Indian hoards. I think that Indian rupees would certainly be returned to India from abroad when their value in India became greater than their bullion value, but I now doubt very much if Indian rupees would be largely brought out of hoards. It is more likely that exist- ing hoards of rupees would practically remain unaffected. I formerly held a different opinion on this point, and believed that rupees would be largely brought out of hoards when they were given a value exceed- ing that of the metal contained in them. 12. The reduction of the rupee currency in the manner just indi- cated, if it became necessary, might or might not prove a very expen- sive measure. It could, of course, be spread over a number of years, but until it had been carried out to a sufficient extent the gold standard would not be effectively maintained. When the rupee currency had once been sufficiently reduced I should not expect any serious difficulty in the future. Looking to the increase of population in India, to the rapid open- ing out of the country, and to the comparatively small part which credit plays in Indian trade, it may fairly be held that even with a gold standard an increase of the rupee currency would be required every year, and that increase I place at not less than Rx. 1,000,000 yearly. It might be considerably more, twice or three times as much. When the coinage of rupees was stopped, any redundancy of the silver cur- rency would be diminished yearly by this amount without any action on our part. It is also not impossible that rupees would continue to be withdrawn from the active circulation to be hoarded as at present; they would certainly be hoarded by persons whose savings were small. This cause would still further reduce any temporary redundancy of the silver currency at first starting. Of course while the reduction of the rupee currency was in progress we would not have an effective gold standard, but even during that period of uncertainty I should expect the exchange with England to remain much steadier than it has been during the last few years. It would cease to be blown up and down by every breath of speculation, and, if we could establish confidence in 112 INDIAN SILVER CURRENCY. our measures, the rate of exchange would tend strongly towards the rate we had decided to maintain, and would only diverge from it under the pressure of real economic forces. A nation that possessed a fairly satisfactory standard of value might well hesitate to expose itself even temporarily to the evils of an incon- vertible standard, but no such argument applies in the case of India. We already labor under difficulties which are quite as great as those to which an inconvertible paper standard would expose us. The prospect of being unable for a time to effectively establish the gold standard need not, therefore, deter us from the attempt to do so if we see a prospect of success in the future. 13. It is also possible that under certain conditions of trade there might be more gold brought to the Mint and put into circulation than was required for ordinary use as currency. In that case the public would get rid of the gold coins by paying them into the Government Treasuries. Gold might accumulate in these Treasuries, and the Government could not in practice relieve the Treas- uries by forcing gold coins on persons who preferred to receive pay- ment in silver. The proper remedy for any such accumulation of gold would be for the Treasuries to pass the gold coins into the Paper Currency Reserve, which could absorb several millions without difficulty, and the Paper Currency Reserve could be relieved, when necessary, by remit- ting the gold to England in payment of debts, its place being taken by silver rupees. No serious difficulty arising from an over-supply of gold coins need, therefore, be feared. 14. It is important to consider what the additional demand for gold would be, owing to the establishment of a gold standard in India. Taking the active circulation at Rx. 115,000,000, I think that gold coins to the value of one-fifth of that amount would be an ample pro- portion of the active circulation for the purpose of maintaining the gold standard. This would be Rx. 23,000,000 worth of gold, or, say, 1 5,000,0000 pounds sterling. I believe that the gold standard would be maintained effectively with a smaller amount of gold, and that gold in excess of ;^i 5,000,000 in theactivecirculation would be unnecessary and might be a source of positive inconvenience. When we had arrived at normal conditions the yearly additions of gold required for the active APPENDIX. 113 currency would be small, and would probably not exceed ;^20o,ooo yearly. 15. It is more than probable, however, that the substitution of a ^^old standard for a silver standard would lead to the increased use of gold instead of silver for hoarding. On the question of the extent to which this substitution of gold for silver would ultimately be carried, I am unable to offer any opinion. Silver is at present used for hoarding (as a store of value), and for ornament. When it ceased to be the monetary standard of India it would be less suitable for hoarding, but it might continue to be largely hoarded in the form of rupees, and, on the other hand, silver bullion would fall considerably in value and price, and its greater cheapness would tend to increase its use for purposes of ornament. It must be uncertain to what extent gold would begin to take the place of silver for hoarding and ornaments after the establishment of a gold standard, but in the first instance, at any rate, the extent of the change would probably not be considerable. It is held by some that, if a gold standard were established in India, a great deal of the gold that is now hoarded or held in the form of orna- ments would be brought to the Mints, coined, and put into circulation. I have never been able to accept this theory. Why should a native of India give up his habit of hoarding, or an Indian lady cease to take a pleasure in the wearing or possession of gold ornaments, merely because the Government of India had established a gold standard ? There is, however, a large amount of gold imported into this country every year, and there must always be a considerable amount of gold in the hands of bullion dealers. I think that if we had an effective gold standard it is very likely that all this gold, which is, as it were waiting till the time of absorption arrives, would be coined and become part of the circulation for the time. To facilitate this result, I would propose not to charge any seigniorage on gold coins. 16. In this paper I have dealt with the question of a gold standard for India from a practical point of view. Many objections, founded on considerations not of an immediately practical nature, may be raised to the introduction of a gold standard into India. Some of these objections appear to me to possess weight ; others I believe to be imag- inary. I have no hesitation in saying that an international agreement for the free coinage of both silver and gold, and for the making of them full legal tender at a fixed ratio, would be far better for India 114 INDIAN SILVER CURRENCY. and all other countries than the establishment of the single gold stand- ard, even if the latter course be possible. Under the former system the worst result that could happen would be the disappearance of one of the metals from circulation, but this would only happen by the other metal taking its place and gradually driving it out, and under such circumstances all countries would have the same standard. The general adoption of the system of double legal tender would be a perfectly safe measure, and would be a final settlement of the question. The attempt to establish a general gold standard is not free from risk. History affords instances of the establishment of a gold standard in one or more countries, but sooner or later the standard was changed. It may, however, be that the conditions of gold mining have so greatly changed that a gold standard can now be maintained for an indefinite period. 17. With regard to the question of the expediency of attempting to introduce a gold standard into India, I do not go further than say- ing that, if a general agreement for the free coinage of both silver and gold at a ratio cannot be obtained, and if the United States does not adopt free coinage of silver, I think an attempt should be made to establish a gold standard in this country. I believe that a perpetuation of the difference of monetary standards between England and her Indian Empire would be a source of incal- culable mischief to both England and India, and that such a state of things should not be accepted until it has been proved by actual experiment to be absolutely unavoidable. June 21, 1892. .2§ QO C 3 " ^5 hh' X " < -S-S II .^ :$: ä. C- 'S V I — 1^ 5> a > UOpEI -n3J!3 XauojM JadEj J3d •zggi 3Joj3q Xauoiu Ed a^Bjs }o uoijBinDJiD OM CT re n ' I^ «^ OO CTn r^'f ~ "AUS J. OS ^ o oo On r^ -i N TJ- t^ CS JO m ON t^ o 0' CT M JO sjioduiT JO ssaoxa - ■^ m "^ - O N t^ « o »; CT ^^ re pT 00* " rT tC -T o* in CT cT N* Ö CT> 30* 0" "030 tC x' ■* 00 o >- 00 TO " " o t^ m t^ o O r< ri moo "T J3Ai!s JO siiodxg j.Oi N s r^ CT m- t^O CT- ^ °o^;t;; O - CT Vt -f in o_^ -r re ON " " - " " - "" " - ~ ~ x 5;: o o m r^oo m o CT re in CS t^ t^oo Q ■T m CT CT -r J3A1!S JO suodiui •-1 o ^ § m ON f^oo 00 o -_ r^ t^_ CT ro O rö oo* oT (nTjo* d* On CO o" o* c> re -f « 2^ 30 w, CT ^ «0 CT CT P» 0*00*0* c>ao* p» P3UI03 pioo JO 3n,EA ■i' u. T ^ S^^^N? o m. CT - ■^O O m re m, o. 00 ao 00 p) wi ! ►1 P-. M 1 X r^. o CT^ t^ O " reNO Tj- 30 re rj- 30 30 c „ ■* M On On cs PIOQ _« r^ O CTOO M 30 reco T a- T o N »r in CT> JO sjjodiui JO bS33xg -§ r^. r<0 a^ ^. 0 30 30 o ^,^A-.^ «" N* pT N -f '^ re T? u=io*ao* cR r^ u^ re Tj- u^ in PICO JO siiodxg -§ O rj ^ 5 -^^2- ^ O o re r^ m « re CS re cs ^^s*=g. r^ - X' ro ON ro ON 00 o o t^oo 30 M O CN| m in re re — t^ pioo JO siioduii a« o "^ o t^ <^ moo T Ti- CT oo CS rs. p< l>.00 fi tC ON ro q^ - in - oo_^ Tj- pj^ "* rT (nT rT T? rf re CS >- oo CT30 T?uRo*00*d; o reinr^-o. SIEJ^l^; snopajj = ** >o C-. 'S- CT u-l T30 •'I- in ON CTN 1- r^ ro ON ON r^ CT P) 30 t^ - P< - 00 N 'T CT> r| t^ T JO SAisnpxa -aspjv - § ro (S f^ t^ O « " " -o OO •T CT CS TJ-SO ^ 30_ -XJ_ - 0, in JO SHoduij JO SS33X3 o" o' o" t^ Ö -.* jnToo* CO 30* CT re inoo" cf in in pl in rC ^ — CS re re cs S[E»3I\[ SnOI33J(J _« lO CO Ov O 30 oo -O ro O re ?:^5^S- nS - T p< - JO aAisnpxa ''asip I o^ CT; =» ^ °. ^ ^OO CT- r^ On re 30 O O ?5^o ^ -UEi{DJ3i^ JO swodxg ►^ T? in cf^ rö in rC <> r-t o* -UEijoiaj^ JO sjioduij l/i oo" On «* r^^w:;«-^ rC re cs' cs" iC-»* T? CT C? u^O* Pf « « ~ " (S CN| N-- re oo On ct-ocj 30 3C3 q - - PJ 33UE43 »' o d -• d - 6 §.13 d -xg JO 3}EH aSEiaAv "" >-■».«_ -■ '^.^ »; " " " « O) CS CS Si cs " ~ " - ~ o ^ o m o «i^ l/^ nO 1 u 1 u 1 u o tc Ti- tc o^ be 4r SC CT 6C ■- NO t^OO ON O 30 ^• « cs re Ti-m » !r. t>.ao ON u >< _ ^ " > '"' > -, 5J mmmmNO - ti ^ ^ ^ ^ ,o - s; ONOoor.. 1 "* 1 "* 1 '^ 1 « ionO 1^00 On 1 "* o « cs re M- 1 •* "b 1 >, 1 J^ ^.o^^^ OOOnO in 2^ -£"30 30 30 oo 00 00 3O0O 00 oo 00 30 30 30 00 o 1^ o "^ nO h; « i: iZ T' S 7- fS "^ 2 " "" ~ " " ts 1^ >>i>> o ,x o >< in>. ■'1 00 ao oo 30 00 "■ " ii6 UOUEl INDIAN SILVER r^O-i-u^O 00 (NPlO-00 00 ^00 " ~ <^;0 tS I ~ 2 "^ TT ro CT- (S 00 00 d r^rn d nO CT CT rn tj-nO (S CS CO uo s ^ CS - On pj ^ - nO r^ nO NO (N - rocs 'S- 0' es' to 1^ t/. 10 CT - 10 tr, nO 33eU 10334 JO aAisnjDxa 'J3A|!s pauioo AjAvau jo ahjE^ ■""• 00 " I^ „- «- CO cf rf 0; « « r^ to t^OO ►-■ lO 10 CS « CS CS cs*no"o tC 0' CTn 00' 00 ro T VOOO nO t> cs_^ ~ too t^ 'T es' nO rö lö 'T nO t-.00 CN< - 00 - 00 00 i/-. CNi i^ CS 10 0' 'T ©■ tCoo' ro ►- uo tN. 00" rö tr. es' }0 sjjoduii JO ssaDxg 8 «> Ov u^ t^ ^0 0' rT -^ uooo no « to On t^ t^ I^ 0^ CO On to rö lö l-C 0" tC nO r^ vO CTN I-» oc to 10 CS 'S- <"<-; ro no^ - <^. fi «^ ^. "' rC ctI c^ d" CT tr, r, -r " I--' rl - 00 T CT (-r j3Ai!s JO s»iodxg 1 ON -a- rou-1 CT CS ro O; t--. « nO_ I~; 00_ TT I^OO CS 'T ^ 'S- 1- On - 1 t^ fill j3Ai!S JO sjjoduii 8 0" CS r^ Tf P) NO " rfio ~ 00 'S- CS i^ Tj-io ^§;f^s;Ng rö CT "^ IÖ C> nO 00' nO 00 CTn CS nO nO =c 00 CS ON CS cc rO CS 10 r-. CO cs'ocT d' d CS es ill psuioo PICO JO aniEA •i " ^)^^)::z nO ^1 ^ 1 ::> ro TT t^ 1 ro ^'1 \ ^- ;:• IT 1 to« 1 es PIOO JO sjiodiuj JO SS30X3 ..| 1 0) u-1 f'-, (^ rr 00 -^oo r^ <^. ": ":; ^'^. CS ro N -• w cs" LO CS 'S- 01-; to nO to Tt- -. ro - 10 'S- roo r^ 0_00__ CT; 'TO^ rÖ 'S- ':? to '^ ■«f ro t-- CS TT tr. ^, nO t-. ON " - I^ es' es' 10 TTOO^^ rooo_^ to CS ro rÖ CS es" CS to ro On ON ro 00' so' t/^ rC 'T (NJ CS N CS ro nO 1 es - 1 sjEioiM snopajj JO aAisnpxa 'asip -ucqDJaiv JO sjjodxg •1I r^< 1- CN) CT ro liR r^ i/i -rf o" U-lxO U-l LTi U1 q^ Sn2-^%2 °. <3 CS_^ CT; CS_ u-inO -0 nO nO i- CO iOnO ^ rf « röocT rfj t^OO 00 00 00 CO 00 " 'S- röoo' d" tCr^ 00 00 CTn On d yi d 000 JO »Aisnpxa 'asip -nei{3J3i^ JO sjioduij ■it ON CS u-iO CS On I^ CO CS ^q^oo_^oo_^ cs_^ ro ro ro ro on On r^ w Tj- « vO 00 TTO 00 -^ ^c» « 00' tC " rC « m (n Tj- m ■^ CS CO t^ rOvO CO ►-i ►- ON t^ " i-i CS t^ rö (> es' t/i lö to 'T 10 10 to t nO i^ 10 r^ to r^ 'S- ON "^ ^ °. t " ir, r^ IT) d d tO-ONO NO NO i to CT p3uEq3 -xg J0 31EH 3SEJ3AV Ö « 6 d d NO d 1000 « 'S- -• . ON On 06 06 t-i r^ CO CO tOiOvO 00 to CT (N rO CTX) lOlO ro r^ t-^ ri ri t4 nI 'S- !-■ 00 CTnO to 'T ONt^O CN) 'S-OCD (^ to c no TJ- pi > 1 i 1 Si I'' - (N| m T W-. t^ I^ 1^ 1^ t^ 00 00 00 30 00 1 '^ 00 t^OO On 1^ £^ I^ t^OO lOvO t^OO ON 00 00 00 00 00 Is, 1 1 00 " CS ro 'S- to 00 00 00 00 00 0000 00 ao 00 10 0?^ S.i?Sg5^§N ^^^O^An 00 00 00 00 00 to> - CS fO On On ill EXPORTS OF WHEAT FROM INDIA AND THE RATES OF EXCHANGE.' 1877 1878 18 ro 18 80 I8E 1 I8S 2 18a 3 188 4 188 5 18! C 188 7 IS£ 8 18 19 IBS 18 t 180 SO S9 88 j 97 1 m j ?s j j S3 1 M 1 21 , 1 20 ,/ / \ j 19 V / \ / \ j 13 \ / \. / \ 1 17 / S, / \, / \ 1 16 / s / \ / \ / \ I IS / N. / \ / s 14 / \ \ / s IS / ■ " 12 / 11 / 10 / 1 9 / I 8 7 6 / 6 -■^-^ V - / 4 \ / 3 / 2 \ ^ I V-"''''^ ie I 1B,2 1 Itil 1 / • — 1 lfi> y V IT 1 \ / 17,2 1 y \ / 17,4 / \ / 17,C \ / 17,8 / \ / 18 / \ / 18,-» 18,. / lb,e / 18,8 i / 19 ; / 19,1 1 / 19,4 19,. ! ^^ I'J.e / 1 SO- ' — 20,= 20,4 20, s 21 —/■ / -/- ^'^ /— 1 - 1 t 1 Wheat Exchange ' The figures in the scale represent millions of cwts. for wheat ; and, in the scale for the exchanges, the figures give the number of pence to the rupee. .. UNiVERsrry'oF California library, BERKELEY THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of . .- 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. .M J-« 7 925 :H^VV.^^ ^^^'57^ Wf REC D LD AUG 21 19b'/ NOV 41983 ric. cit -L f> •» 207nl,'2l2 ^^A^ YD 05650