do 



We thus see that if a certain quantity of English exports ex- 



ch' ngod for a certain quantity of imports in 1873, the same 

 quantity of exports would iu 1886 have failed to exchange for 

 the same quantity of imports in the proportion of 62 to 69. In 

 other words, goods for goods, England was making a worse 

 bargain internationally in 1886 than iu 1873 by 11 per cent. 



"It is true, that, in 1873 England was exchanging her 

 exports for foreign products on specially favorable terms, but 

 the figures just given show that the question of the relative 

 indebtedness of different nations is a comparatively minor 

 factor in determining the conditions of international trade. 



" There are no figures of equal authority which can be 

 used in determining on what terms India is now trading with 

 other countries as compared with former times, but all the 

 enquiries I have *^ made point in the same direction, viz., that 

 a certain quantity of Indian produce laid down at Calcutta or 

 Bombay will, at the present time, exchange for a larger quan- 

 tity of imported goods than it would have done in 1870 or 

 1 873. The theory that India is hampered in her foreign 

 trade by the drawings of the India Council appears, therefore, 

 to be without foundation. That India would be tvcalthier if 

 these draivings ceased^ while India retained the advantages arising 

 from the causes which have brought about the drawings, may cer- 

 tainlf/ be admitted. That India woulil now be importing more 

 goods of all kinds, including silver, if the causes which have led to 

 the draivings of the hvHa Council had never come into operation, is 

 not merely unproved, but is absolutely opposed to the facts so far as 

 they can be ascertained^ 1 have ventured to italicize the last 

 portion of the quotation as it contains the gist of the argument. 



*' I have assumed in other portions of this memorandum that the prices of food- 

 grains are now 1\ times what they were in 1850, or in other words, the purchasing 

 power of silver, as moasured by the quantity of food-grains silver would purchase, has 

 fallen GO per cent. The fall would hav« been greater but for the cheapening of tlie cost 

 of transport arid consequent lowering of prices nf commodities at tlio principal markets. 

 If the reduction in prices, due to saving in the cost of tiansport, be taken at 25 per cent., 

 the fall in the pur -hasing power of silver in India would be really 70 per cent. In 

 England, prices of commodities measured in geld rose dui-ing 1850 to 1873, when they 

 were "20 per cent. hi<;hef than thej were before the .Australian and ('alifornian gold dis- 

 coverifs. Since then they havef.lkn to about the level of 1850. One sovereign, 

 however, was equivalent in 1850 to 'I's. 10 ; now 1 sovereign is equivalent to J<s. 15. 

 Since 1S50, the purchasing power of silver in England has therefore fallen by one-third 

 or .\'6\ per cent. Taking account of the saving in the cost of production and trans- 

 port whir'h may be assumed to be 30 per cent., silver has reallv fallen in Viilue in 

 England 53i per cent, as a-jainst 70 per cent, in India, that is, silver has fallen in value 

 in Inlia in a higher ratio than in Eni>land, or in other words, the advantage d(Tivcd 

 by Engbind in the trade of India by almndance of money and consequent hiqjlier scale of 

 prices, is iliminishing notwithstanding the so-called '■'■tribute.''^ as foreign trade has 

 enabled Ind;a to riq^lenish her insulh :ient currency. Thus t:iking the higher ethcicncj' 

 of profluction in Englind iis conip:irel with India since 18''0 into account, the silver 

 value of a unit of ))roductivc pow( r in India a- comjiarcd with silver value of a unit of 

 power in England has risen in the ratio of '0 to 4Gf or as 9 to 14. These ca'icul itions 

 are very rough and some of the figures taken are hypothetical. They merely serve to 

 illustrate the principle. 



