88 



36. One further effect of the drawings of the Secretary of 



State requires to be noticed, viz., its influ- 



The effect of remit- g^^g qh ^hc rate of excbango as between 



tances to England on the ,. j •^ 01 i-t-Tj.' 



rates of exchange. gold and Silver. bo ioug as the Latin 



Union kept up the legal relation between 

 the value of gold and silver, the oscillations in the rate of 

 exchange, caused by the international trade balances, were con- 

 fined within the limits of the cost of transport of silver to 

 France for the purpose of being coined ; but when the Latin 

 Convention was broken up, and silver was demonetized in 

 Europe, the limits referred to were done away with. The 

 India Council bills compete with silver as a mode of remit- 

 tance, and in so far as they displace silver they lower its value, 

 and there is no longer any means of preventing the rate of 

 exchange falling below a fixed level as was the case when the 

 Latin Union was in force. There is no means of estimating 

 to what extent the increase in the Secretary of State's drawings 

 in recent years has contributed to the fall in the rate of ex- 

 change, but that it does exercise considerable influence there 

 seems to be little reason to doubt. But, at the same time, it 

 must be remembered that the portion of the Home charges 

 and private remittances which represents investments of capital 

 may, and in fact does, increase the exports of merchandise, so 

 as, pro tanto, to create a balance of trade in favour of India. 

 Sir David Barbour, in his minute, appended to the Eeport of 

 the Commissioners on the Value of the Precious Metals, puts 

 this matter in a clear light. He says : — 



insurance, &c., not earned by her, in respect of goods purchased by English merchants at 

 the Indian ports and carried to England by them at their own expense and risk, and sold 

 by them to English consimiers at prices sufficient to cover these additional charges, he was 

 willing to give up the claim as regards freight and insurance, but not as regards the 

 profits of trade. If his contention were correct, it would follow that India would be 

 entitled to the profits of retail trade in England and also to the profits of English cotton 

 manufactures, because Indian cotton is turned into cloth. There is no doubt that 

 Mr. Nowrojec did good service in 1872, in calling the attention of the Parliamentary 

 Committee on Indian Finance pointedly to the disadvantage resulting to India from 

 the constant increase in Home remittances, at a time when there was considerable 

 risk of Government wasting borrowed money on so-called productive works ; and the 

 position he took up was unassailable and reaffirmed bj' the Parliamentary Committees 

 on Public Works in 1879 and 1884. Mr. Nowrojee, however, has since made very exag- 

 gerated statemcDts regarding the evil effects of these remittances. Mr. M. G. Ranade 

 pointed this out very clearly and his remarks are worth-quoting. He said : " There are 

 people who think that so long as we have a heavy tribute to pay to England, which takes 

 away nearly 20 crores of our surplus exports, we are doomed and can do nothing to help 

 ourselves. This is, however, hardly a fair or a manly position to take up. A portion of 

 the burden represents interest on monc3'S advanced to, or invested in, our country, and so 

 far from complaining, we have reason to be thankful that we have a creditor who supplies 

 our needs at such a low rate of interest. Another portion represents the value of stores 

 supplied to us, the like of which we cannot produce here. The remainder is alleged to be 

 more or less necessary for the purposes of defence and payment of pensions and though 

 there is good cause for complaint that it is not all necessary, we should not forget the 

 fact that we are enabled by reason of this British connection to levy an equiv.alent tribute 

 from China by our opium monopoly." 



