180 
THE TROPICAL AGRICULTURIST. 
L'Sbit. 1, 1898. 
rose considerably above the lowest point wliich 
it liiul readied when a bullion ;oin, and the 
fccaicity of Currency l)ecaine acute, every index 
of a jieople's pro.-|)(;rity unniislakealdy showed 
the advancing welfare of all classes in the Colony : 
since then tiie turn has taken ])lace, |jros))erity 
haw waned, and European;; ami natives alike feel 
the baneful ellects of the present (Currency posi- 
tion. I draw precisely the same deduclion from 
the Indian stalistich- — they sllo^ved a steady and 
great increase in the jirosperity of the people, 
in their ))urcliasii)g power aiid in their ac- 
cumulating capital. The later figures tell a <li(l'erent 
tale, but, distoi ted astheynuist have been by the 
influences of plague and famine, it is iinpo.ssible 
to attribute the decline solely to the state of 
the Cnrrency, although it must have been a jjoteut 
adverse factor. Not only <lo tiie statistics re- 
lating more particularly to the people tell of the 
steady advance under low exchange, but the 
facts and figures connected with the (iovern- 
ment's finances bear witness to the same con- 
clusion. In .spite of the great decline in the 
opium revenue, and the much increased rn])ee 
charge for sterling payments, tlie Finance Minister 
in his last statement w.is ;ible to show that 
during the 20 years (1S78-181IS) the revenue had 
exceeded the ordinary expenditure by Rx. 50,988, 294 
and he declared "The record of '20 years fin- 
ance which I have displayed in the above figures is 
a better one than can be shown i)y almost any 
country in the world but the Uniteil Kingdom. 
The jirosperity of the |)eople was reflected in the 
expansion of Kevenne, for there has practically 
been no increase in the rates of taxation except 
those imposed after 1880 to make up for the 
remissions of 1882. It is evident, too, from the 
above statement that the enibarr.assments of 
the (Tovernnicnt of India, due to low Ex- 
change had been greatly exaggerated. In 
this connection, it rnay be well to draw at- 
tention to the erroneous way in which the 
Government of India's loss by exoiiange is com- 
monly thought and talkcil of. The ))ai- value of a 
remittance is taken, and the difference between it 
and the rupee sum actually re(]uired is " loss by ex- 
change," or the rupee cost of India's sterling re- 
mittances in a given year is contrasted wiih the 
ru|)C3 cost in a subscc^ucnt year and the dillerence 
is "increased loss by exchange." India has of 
couise often increased its debt, and with increased 
debt, apart from exchange, larger payments have 
to be made. I notice that the permanent debt in 
England which was £73,000,00') in 1886, ha* gone 
up to £113,000,000 in 1896, and the ilid'erenoe has 
been raised at an average probably under 1/4 p'ir 
rupee. The gain on cajjital on such portions of 
the debt is quite equal to the proportionate loss on 
the annual interest, and enabled a smaller loan to 
construct a given raihvay or irrigation work. I 
notice that Sir J. Westland quotes the extra ex- 
cliange loss on the railway debt as it stood in 1878 
at only Rx 1,000,000, 
, Stability of exchange has had very great impor- 
tance attached to it, and the Secretary of State 
for India said lately. 
"If we could ever esta,blish a gold standard in 
Indi.^', fixin" the stable exchange of the riipae 
at 16'J., subject only to the fluotuatious of trade 
the advantage to India would hi enoroious. At the 
present moment the great industries of ten, and 
indigo, and jute, are carried on to a large extent by 
borrowed money, and in India money can only be 
borrowed at from 6 to 10 per cent. On the other 
hand, if you can secnce anything like a stable es- 
chang3, you would have all the hoarded capital in 
this country waiting for eraployment, ready to he 
used in developing the resources of Indii." 
Hut I hulnnic there is in tlui, utterance a great 
n)i~apprehensioii of what is the renl luagnel iliat 
attracts capital. It is the reanonable i>ru»i|)ect of 
nrofit which causes the How of capital, and sta- 
bility of exchange jur *r comes as a very minor 
factor. For instance, we have perfect stability 
of exchange with the West Indies, but do 
Ibitisli capital— other than the (ioveronient dulse 
—is going there ; nor has the utable exchange 
with Australia, Newfoundland, or Fiji, sent Uriti^U 
capital to these countries for Konie time pat^t ; 
on the other hand the unbtable exchange witll 
Ceylon has uot in the least checketl the flow of 
capital to ir. After cxaniining witnesses of all 
classes, theCej'lon Currency Coiiimission repoi ted: 
"Tlie evidence we have is coaclubive ibat that (ail 
has not prevented the introduction of ail neceas&ry 
English capital, and it is staled that iht-re is more 
capital offering for investuient on reasonable termi 
than has ever been the case before. Tliere is no 
practical or lesial diJJiculty in eecuring the repayiaeut 
of sterling loans in slerling value, and the loiUB of 
linfjlish capit.il almost entirely madp to Kiirupcana, 
are so secured (see appendix D 13). Native borruweri 
and lenders deal entirely in rupees, and have been 
in this respect unaffected by the fluctuatiocs of 
exchange." 
•Stable exchange, if other things remaiDe<i ei^uai, 
is an encouragement to the free movement of 
cipital, but it is not a condition that is worth 
acliieving at the cost of restricted currency and 
diminished prosperity. It would be a convenience 
to many, and tend to assure pro/it to those 
linaiu-ial houses — privatefirms and public companies 
— who can borrow money at low rates in England 
and lend it at high rates in theKiist. The increase 
of local capital, to which the mints were so 
favourable, and the maintenance of whate»-er ex 
change conditions are found to be best for the 
l)rodncers, would seem preferable to driving the 
people to borrow from foreign lenders. It must 
always be remembered that niany of tho.se whose 
voices are heard loudest in expatiating ou the 
advantages of a stable exchange, care, in reality, 
nothing for stable exchange per xe; but re- 
gard it solely as a hopeful means towaids 
securing their end, which is an artificial 
rate very much above the natural rate. 
Similarly, with those who, like m3'self, oppose 
it, it is not the aljstract stable rate which is 
opi)osed, but the knowledge that behind it cornea 
what at jiresent would probably be a 50 or 60 
|jer cent artilicial appreciation, and the possibi- 
lity that this crushing han<licap on Indian and 
Ceylon products in compttition with those of the 
far East might be further increa.sd. On the 
merits of the scheme, as a sound or unsound 
currency proposal, now before the Coninittee, 
I can only offer a mere amateur opinion, but it 
seems to be a reversal of the usually accepted 
duties of a Government to its p9o])le in currency 
matters ; and a denial of a sufficiency for local 
trade requirements of the only legal tender, in 
order that it may .acquire an outside scarcity 
value, is a sad come-down from the stand-point 
of the Indian Government as disclosed in a 
state paper liearin? date, October, 1876 in which 
it was laid dov.u that to evade the consequences 
o' lower exchange by raising the value of the 
standaid unit of v.ilue, would be "an especially 
vicious form of class taxation, ' and " an ex- 
pedient quite inadmissible." 
The present scheme is apparently that of Sir 
David Barbour, as laid down in his minute of 
