Vol. VI, No. 3.] The Rupee and Indian Prices. 125 



[N.S.] 



ards of any particular class or classes. All that can be claimed 

 for them is that they afford a rough and ready means of 

 exhibiting the upward or downward tendency of general 

 prices less obscured by the heavy fluctuations of the food- 

 grains. If we " damp " the extreme fluctuations upwards and 

 downwards we see that there is a turn in the general tendency 

 of the line at the year 1885. From 1866 to 1885 the general 

 tendency is a downward one, but from 1885 to 1904 it is a 

 rising one, though the rise is not nearly as strongly marked as 

 some would have us believe. The reason of the extreme 

 depression of the line in 1885 is to be found in the fact that 

 food-grains were very plentiful in that year, and the imports 

 fell to a low figure along with gold prices. Between 1885 and 

 1893 there is a certain degree of steadiness observable in gold 

 prices in Europe. It is not surprising, then, that with silver 

 falling heavily in those years, the tendency of rupee prices 

 should be upward. 



We are now in a position to expose the fallacy of the trite 

 argument that the fall in prices in 1898 is attributable to a 

 deficiency of the circulating medium brought about by the 

 closure of the mints, and that the rise in 1900 is due to the 

 influence of the large coinages of that year. As regards the 

 fall in 1898, we may note in the first place that though food- 

 grains were exceptionally plentiful in that year, still the price 

 was high above the level of '94 and '95, in fact 25 points higher 

 than in the former year and no less than 42 points higher than 

 the level of '82 and '83. It was not till 1904, after very heavy 

 coinages, that the price of food-grains came down to near 

 the level of '94. 



As regards the fall in the prices of imports in 1898 we have 

 only to reflect that in January, 1896, demand bills in Calcutta 



Id. y whereas in January, 1898, they stood at 15f£d. 

 It may of course be argued that the difference in exchange is 

 itself evidence of the scarcity of the circulation. It is probable, 

 indeed, that the volume of the circulation had become much 

 contracted in 1898, but to argue that the rise in exchange was 



onfound 



circulating 



circumstance with a 



cause. 



As regards the rise of prices in 1900, it seems highly improb- 

 able, on the face of it, that the new issues could have got into 

 general circulation so quickly as to affect prices in that year. 

 So far as food-grains are concerned, 1900 was an exceptionally 

 bad year, and the high prices call for no further explanation. 

 So far as imports are concerned, we have only to look at the 

 line of gold prices, and see what a rise took place in that year. 

 The fact is that there is nothing either in the fall of '98 or the 

 rise of 1900 which remains to be explained in terms of the 

 quantity of the rupee currency. 



