128 Journal of the Asiatic Society of Bengal. [March, 1910. 



rupee prices of food-grains, and trade interests have, in fact, 

 become so linked up that a scarcity of the wheat crop in 

 Canada will spell high rupee prices in India, whether India is 

 actually exporting wheat or not. It seems superfluous to 

 speculate about the return of rupee prices to the level of former 

 days. High prices have come to stay, and can only be relieved 

 by a fall in gold prices. 



We may now epitomize the reasons assigned in the preced- 

 ing analysis for the rise in the prices of food-grains. 



The factors, then, which have principally conduced to the 

 rise in the price of food- grains are — 



(a) The improvement in communications ; roads, railways, 

 post office, telegraphs: and the consequent addition to the 

 general level of prices since 1860 of something representing the 

 cost of transport. 



(b) The growth of the Mercantile Marine ; with which we 

 must mention the opening of the Suez Canal in 1870, and the 

 permanent lowering of sea freights since about 1884. 



(c) The increase in population. 



(d) The stationary character of the area and output of the 

 great staples. 



(e) The increase in effective demand owing to the interlink- 

 ing of markets. The intense local famines, in which people 

 literally died of starvation, are now warded off by the inter- 

 vention of Government in either feeding the people or in sup- 

 plying them with the wherewithal to feed themselves, 



(/) The rise in gold prices since 1902. 



(g) Closely interconnected with several of these factors — 

 the development of Indian trade both in its internal and exter- 

 nal aspects ; resulting in the closer adjustment of the propor- 

 tion of prices of food-stuffs and manufactures to the proportion 

 which obtains in the great gold-using manufacturing countries 

 with which India now trades. 



The period 1904-1907 was characterised by unprecedented 

 trade activity. Both exports and imports attained figures they 

 had not attained before. Along with this exceptional trade 

 activity we have a quite phenomenal period of rising prices ; in 

 fact between 1903 and 1907, the general index number rose 

 40 per cent. There is also a good deal of internal evidence to shew 

 that the rapid expansion of the export trade was financed by 

 large coinages of rupees issued to meet bills drawn on India by 

 the Secretary of State, beyond his own immediate requirements, 

 to satisfy a growing demand for private investments in India. 

 It was undoubtedly a period of great inflation , and many unusual 

 factors are observable. It was followed by the failure of the 

 monsoon of 1907 with the reversal of the favourable balance of 

 trade in the financial year 1908-09. The period is an exciting 

 one for Indian finance, as so many new factors are in evidence. 

 To attempt to enumerate ail these factors and trace their effects 



