9» The Rupee and Indian Prices. 

 By H. R. Perrott, B.A., LC.S. 



There are perhaps few subjects which have given rise to 

 more discussion than the subject of Indian prices and their 

 relations to changes in the Indian monetary system. It lias 

 often been gratuitously assumed that all secular changes ob- 

 servable in price levels are somehow necessarily determined by 

 the quantity of the metallic circulating medium in the country, 

 and that only the more temporary and transient changes are 

 attributable to the relations of supply and demand in respect 

 of commodities. There has also been not a little confusion in 

 language. Terms are sometimes used without a very clear 

 conception of the ideas they are intended to connote. Such 

 terms are "redundancy," ' • over-issue," "depreciation. 5 ' The 

 last is a particularly unfortunate term, for it appears to sug- 

 gest that something is wrong with the currency which is des- 

 cribed as "depreciated." This ethical colouring is probably 

 to be traced to the time when we were first told that a certain 

 autocratic Tudor Monarch had caused depreciation by tamper- 

 ing with the coinage. In its present-day use, however, the 

 term is ethically a colourless one. It merely connotes the idea 

 tliat, for some reason or another, about which nothing what- 

 ever is predicated, the currency has come to be regarded as of 

 less value in exchange for commodities in general. r< Redun- 

 dancy," on the other hand, has clear reference to " quantity/' 

 It immediately conveys the idea that there is too much of the 

 currency in circulation, while " over-issue " similarly conveys 

 the idea that too much has been issued. But too much is a 

 relative term : — too much in relation to what ? Let us imagine 

 for a moment a number of countries mutually engaged in trade 

 in which the same metal circulates as full value legal tender. 

 Let us further suppose that in one of these countries the 

 quantity of the metallic medium becomes increased : and let us 

 further assume that this increase results in a rise in the general 

 level of prices. We might then term the increase in the cur- 

 rency which is assumed to give rise to the higher prices a 

 redundancy of the circulating medium. When, however, we 

 come to token coinages, such as to all intents and purposes the 

 rupee coinage of India now is, it is the relation of the token 

 to the standard to which our attention is naturally drawn. If 

 we assume that an increase of the token has resulted in its 

 depreciation with regard to the standard, we should term that 

 redundancy. In this sense redundancy does not necessarily 

 imply depreciation with regard to commodities in general, 



