850 REPORT — 1887. 



standard money, alongside the silver, now transformed into a regulating token 

 currency, on the basis of the legal ratio iv" of the value of gold to the value of 

 silver : it would he necessary, in order that the value of money should be the .same 

 in England and India, that the new quantities of standard money, and of token 

 money valued in gold, should be in the same ratio as the former quantities valued 

 in the same way ; that is to say, we must have 



Q9-2/ + — / -^ 77^— ■ ■ Qg ■ -' 



from which it follows that 



w 



It will be observed that iv', w", x, and y are not absolutely determined, and that 

 three of these quantities may be arbitrarily assumed. Let us suppose, then, merely 

 for the sake of giving defiuiteness to our ideas, that the quantity of gold standard 

 money at present in England, Q,,, is 750,000 kgr., and that we only wish to take 

 for transport to India a portion y, representing one-third of this total quantity, 

 say 250,000 kgr. ; and that the quantity of silver standard money at present in 

 India, Qj, is 25,000,000 kgr. Let iis suppose that the actual market ratio of gold 

 to silver is 1 to 20. And lastly, let us suppose that, in order not to disturb Indian 

 usage, it should be decided to constitute the regulating token currency in India of 

 the present rupee, at the rate of 10 rupees to the 1/., which would give lo" = about 

 14'60; and that similarly, for .some reason or other, it should bs decided to consti- 

 tute the regulating token currency in England of four shilling pieces, of exactly the 

 same weight, fineness, and remedy as the Latin Union crown of 5 francs, which 

 would give w' = about 15"36. In the conditions thus assumed, the quantity x 

 of silver to be taken up in India for transport to England would be about 

 6,378,500 kgr. 



This quantity must be decomposed into two portions : one of 2,728,500 kgr., to 

 be transported without equivalent, and one of 3,650,000 kgr., to be transported in 

 exchange for 250,000 kgr. of gold. The first operation might be eflFected by means 

 of a loan raised by the State in India, the produce of which should be employed in 

 the purchase of Consols in England. The second operation might be effected by 

 means of an issue of notes by the Bank of England, by which gold might be 

 obtained to exchange against silver in India. These two operations would result 

 in a considerable loss, in the conditions we have assumed, on account of the 

 superiority of the ratio w' = 15'30 over that of iv" = 14'60, since the State and the 

 Bank would give 1 of gold (or its equivalent) for 14'60 of silver in India, and 

 15"36 of silver against 1 of gold (or its equivalent) in England. This loss might be 

 covered in the following way. 



A fall in the value of gold would certainly bring about a transformation into 

 gold merchandise of part of the present amount of gold money, and the export 

 to foreign countries of another part. To supply the deficiency there would be 

 occasion for making a supplementary addition of regulating token currency to the 

 two quantities .(=6,378,500 kgr., and Q, - .r = 18,621,500 kgr., which are assigned 

 by our formula to England and India respectively. That is to say, the quantity of 

 silver to be taken up in India for transport to England would have to be reduced ; 

 and in order to meet this reduction, as well as in order to defray the deficit, we 

 should have occasion in England to transform silver merchandise into silver regu- 

 lating token currency. Let us suppose the deficit to be provided against were 

 75,000 kgr. of gold, of which 50,000 kgr. were for England and 25,000 kgr. for 

 India. We should be able to reduce the quantity of silver to be taken up in India 

 to 6,013,500 kgr., or, in other words, to raise the quantity of silver to be left in 

 India to 18,986,500 kgr.; and to coin in England 1,133,000 kgr. of regulating 

 token currency ; and this mintage would give a profit sufficiently large to cover 

 the loss which would arise in the other part of the operation. 



In this way the value of the rupee would be raised to two shillings. It is 



