Vol. VI, No. 3.] The Rupee and Indian Prices. 121 



' [N.S.] 



in spite of the fact that the increase in the currency was, as we 

 have seen, very remarkable. So far as the rise in the general 

 level of food-grains is concerned, the increase in the currency 

 appears rather in the nature of a concomitant condition, or per- 

 haps we should liken it to a mode by which many complex 

 causes were working out their effects. 



There are no other vast movements in silver until 1872, 

 when the increased output of the American mines began to 

 make its effect felt on the European markets. The situation 

 only assumed a critical aspect when Germany, by way of fore- 

 stalling a further fall, bought gold heavily and sold silver, and 

 so threw a vast quantity of silver on the markets at a most 

 inopportune moment. France and the other countries forming 

 the Latin League were forced to protect themselves by placing 

 restrictions on the coinage of the depreciating metal. Thus 

 was the crisis precipitated which, after the most careful delibera- 

 tions of Lord Herschell's Committee, led the Government of 

 India, after ineffectual efforts, to enlist the sympathies of the 

 Home Government in favour of bimetallism, to adopt a definite 

 policy towards silver by closing the mints to the free coinage 

 of that metal. We shall presently endeavour to throw a little 

 light on the intricate questions that arise from this metamor- 

 phosis of the rupee. For the present we may content our- 

 selves with noticing that it was not the high level of prices, 

 nor the quantity of silver brought to the mints for coinage, 

 that induced the Government of India to enter on this memor- 

 able phase of monetary policy. 



The principal cause of alarm existed in the prospects 

 of trade disturbed by a highly fluctuating rupee, a rupee* the 

 fluctuations of which were clearly attributable to circum- 

 stances altogether beyond the control of the Government of 



India. 



We are now in a position to consider prices more in the 

 concrete and less in the abstract. The principal source of our 

 information on prices is the Government publication known as 

 M Prices and Wages. 5 ' There is also another most useful 

 Government publication compiled by Mr. J. A. Robertson 

 entitled c < Variations in Indian Price Levels since 1861 expressed 

 in Index Numbers." We have in the latter work various index 

 numbers mapped out on charts. These are— f 1) a special index 

 number for food-grains : (2) a special index number for imported 

 articles ; (3) a special index number for articles exported and 

 consumed; (4) a general index number for the whole of the se- 

 lected articles. The period is from 1861 to 1904. We have also an 

 index number prepared by Mr. F. J. Atkinson for 1861 to 1901. 

 The principal feature of this index number is the great prom- 

 inence it gives by weighting to the food-grains, and particularly 

 to rice. In fact a comparison of Mr. Atkinson's index number 

 with the special index number for food grains mapped on the 



