io Flux, Costs of Sea Transport in proportion to Values. 



Turning now to the trade with India, we are met with 

 a difficulty which had indeed presented itself in the 

 consideration of the Colonial trade, but, as the argument 

 was not to rest entirely on the deductions from that 

 comparison, was passed unnoticed then. The question 

 is, what rate of exchange shall be used for comparing 

 the Indian with the British returns. I have adopted the 

 average rate realised by the Secretary of State by sales of 

 Council Bills. It is, I think, probable that this may be 

 rather too low, making the Indian values less than those 

 which would be obtained if we could know the average 

 rate obtained for all mercantile bills. Even if Council 

 Bills do not, as a rule, sell somewhat below the average 

 rate of first-class mercantile bills, there is a deduction 

 which should be made for the fact that we want the 

 average sight exchange, while the average of Council Bills 

 includes, especially in the earlier years, a large proportion 

 of paper dated forward, even though it have not long to 

 run. The effect of taking the exchange uniformly too low 

 would be to make the costs appear too small on the 

 outward trade, too large on the homeward trade; but, 

 taking both together, the result would not be appreciably 

 affected unless the error in exchange were considerable, 

 or the difference between the values of the two currents 

 of trade very considerable. Changes in Indian tariffs may 

 somewhat derange the comparison, as noted in other 

 cases. The difference in the dates at which the Indian 

 and English official years close causes a further slight 

 error, but, by comparing the records of the English 

 years beginning in January with those of the Indian 

 official years beginning on the following first of April, 

 not much error will affect quinquennial aggregates from 

 this cause. (The total yearly movement is shown in 

 Plate n). 



