Credit Money and the Precious Metals. 257 



price of silver in the London market and of the Eastern 

 exchanges is not due alone to the small supply of 

 American silver which finds its way to London, but is 

 also attributable to the potential offer for sale there of 

 ;£^50,ooo,ooo of silver, against which British goods are every 

 year sold in the East. The silver is really not offered for 

 sale ; but there is no limit to the decline in the Eastern 

 exchange, except the price at which the rupee could be 

 sold as demonetised metal if actually sent to London. 



It will, I know, be said that the influence of this 

 potential offer of Eastern silver money as a demonetised 

 commodity is off-set by the demand of the Mincing 

 Lane produce importers, who require the same silver 

 as money to pay for Indian produce. But a more searching 

 examination of the actual operations will show that this 

 is not fully so. Let us assume that last autumn the coined 

 rupees of India had become full and permanent international 

 legal tender at the exchange rate temporarily quoted — say 

 is. 9d., — the India mints remaining open. In that case the 

 Lancashire exporter, rather than accept a lower price — 

 allowance being made for the cost of shipping and insuring 

 the specie — for bills convertible into rupees, would bring 

 home the coin for deposit in the banks and for the pay- 

 ment of his liabilities, and it would be absorbed into the 

 general circulation, or rest as a cash balance in the banks ; 

 and the Indian Government would also pay the home 

 charges with rupees rather than sell Council drafts. On 

 the other hand, the Mincing Lane importer, so long as there 

 was any uncoined silver in the market to be had at a 

 sufficiently lower price than the drafts to off-set the cost of 

 shipping and insuring the metal to India, would buy such 

 silver to discharge his liabilities in India. Now the stock 

 of silver in London is always relatively insignificant ; even 

 the stock in New York, accumulated under quite exceptional 

 conditions by speculative operations prior to the passing 



