The Press.
London, England, 1857-11-21 00:00:00

INDIAN FINANCE-CURRENCY.

INDIAN finance is about to engage the imme-
diate attention of the Legislature, and there-
fore we think it is as well to bring a few points
regarding it to the notice of those in
both Houses who may not be deeply ac-
quainted with Indian affairs. To go into the
whole question in the brief period that will
elapse before the meeting of Parliament would
be obviously impmsible, considering the space
required for other matters equally pressing in
our Columns. But something may bo done—
enough, perhaps, to give a general idea of the
subject—within a very moderate compass;
and this we propose to do in the present and
in a second article. The present article we
shall devote to Currency, and next week pur
pose giving another on Credit. We shall
endeavour in these to put all that is most
essential regarding the matter before our
readers as clearly and succinctly as we can ;
and we trust that the result will bo to prove
to them that there is nothing very abstruse in
it after all. We shall show that the difficulties
that beset our Indian finances have been
caused solely by the violation of the most
ordinary principles ; and that the only way to
solve that, as well as every other Indian pro-
blem, is to recur to those known laws on mone-
tary subjects which are in every country the
same.

The Indian currency, as it existed under the
Mogul empire, and in our own days down to
the latter portion of Lord DALHOUSIE'S vice-
regal reign, consisted of gold, and silver, and
copper, all of which were a legal tender at the
established rates. Under AKBER the unit of
calculation was the copper darn, forty of which
went to the standard rupee. The rupee, as its
name denotes, was a silver coin, the word
being derived from the same root as the word
rouble, which signifies silver in the Russian
tongue. For general purposes the rupee may
be estimated at two shillings, though it has
sometimes exceeded, and now falls short, in
intrinsic value of that amount. Of the copper
dams there were halves and fourths. Under
our own system the division of the copper
currency is different; but that is immaterial

to the present question, which concerns the
precious metals alone. Of the rupee, worth
forty dams, there were various fractional pro-
portions coined ; but the half and quarter
rupee were the most current in AKBER'S day as
now. Of gold coins there were several sorts,
but the chief was the jilaly mohur, worth
four hundred dams, or ten rupees, with the
dchn and mun, which formed the half and
quarter of the lil 1 ~.a.y mohur. Thus, A.KBEIR'S
chief coins were gold pieces of about the
value of an English sovereign, half-sovereign,
and five-shilling piece respectively ; and silver
coins of the value of a whole, a half, and a
quarter florin. Both gold and siver were
equally a legal tender until the gold had fallen
three grains in weight and the silver six
grains, when they were only received at a
depreciated value at the Royal treasuries.
This was done to obviate the loss caused by
clipping and sweating, just as is now the case
in respect to sovereigns here. Under the
native dynasties there were no banks of issue;
but a very large business was done in hoondies,
or private bankers' bills, at a few days'
sight.

It would be difficult to conceive a more
convenient currency than this of MCBEE'S time.
But afterwards the standards of both gold
and silver coin were often changed; while the
effect of foreign commerce and of frequent
wars and revolutions was to raise gold to a
very high premium in reference to silver coin.
The consequence was that most of the gold
fell out of circulation, being used generally
for hoarding, or as the medium of remittances
to foreign States. In our own day the mohurs
coined by the East India Company were of
sixteen rupees value, and they were always
soon absorbed, till the Californian and Aus-
tralian gold discoveries totally altered the
relative value of the precious metals through-
out the world. Then, of course, gold began to
be largely sent into the Mint for coinage, and,
as in France, it became the most economical
and convenient form to pay in. It, therefore, as
in that country, would have greatly superseded
silver in all transactions, but for the interposi-
tion of Lord DALHOUSIE'S new currency law.
This nobleman, or his Indian advisers, seemed
to think if payments in gold were to be a gain
to the people they must be a loss to the
Company. So gold was declared to be no
longer a legal tender in India, it ceased to be
circulated, and a double drain on Europe for
silver on account of India at once set in. For
the gold which had begun to be brought forth
from its hiding-places in consequence of the
depreciation in its value, and sent into circu-
lation, had to be forwarded to other markets ;
while silver had to be imported largely to keep
up the entire currency in a single medium,
and to replace the private hoards which had
always previously been made in gold. What
effect this enormous drain has had on the
silver market in Europe the present state of
the currency on the Continent tells.
But this was not the only measure of Lord
DALHOUSIE'S which enhanced the comparative
scarcity of silver in India in an extraordinary
degree. Not only was it made by him the
only legal tender, but the requirements of it
were greatly extended by his introduction
everywhere of the system of paying the land
revenue in cash instead of in kind. Through-
out the whole of Scinde and the Punjaub, and
other native States lately annexed, the chief
part of the revenue had been always paid in
kind ; while grain assignments were given
upon different villages iu lieu of salaries to
most of the servants of the State. Lord DAL-
HOUSIE'S system was to require the revenue to
be paid everywhere in silver coin; and in
consequence a vast deal larger proportion of it
was required to carry on the business of

society than had been ever wanted before.
The enormous depreciation in the value of
agaicultural produce, and consequent discon-
tent of the rural population, was but one of
the evils thus occasioned. Another and more
widely felt effect was the vast difficulty found
in keeping up the supply of silver, so as to
meet, however inadequately, the immense
requirements that had there sprung up. An
obvious means of modifying the evil would
have been to authorise the Government
collectors to receive in payment of revenue
the notes of the three Indian Government
banks ; but for some reason, wholly incom•
prehensiblc to us, this expedient was rejected,
and the payment of the whole revenue through-
out India, as well as of the balances on com-
merce, had to be made in silver coin.
It must be quite clear that unless the silver
currency of India can be kept up to the full
wants which the increasing amount of cash
transactions there must necessarily create, the
only course by which the Money Market can
be brought into a wholesome condition is by
admitting (a new element of exchange,
or rather restoring the old one of AKBER'S
time. This would enable India to partake to
some extent in those advantages derived
everywhere else from the greatly increased
production of gold. It would, moreover, place
her commercial intercourse with the mother
country on an infinitely better footing, by
having henceforth a common medium of ex-
change. What should be done, therefore, is
to make gold again a legal tender in India as
well as silver, and to coin fin• the purpose ten-
rupee pieces, five-rupee pieces, and two-and-
a-hal f-rupee pieces, as in AKBER'S reign. These,
when found receivable at par as revenue,
would soon get very n idely into circula-
tion, and so relieve the bullion market both
there and in England of a large portion of the
pres3ure on it, occasioned by the necessity of
maintaining the circulation of a hundred and
fifty millions of people entirely in silver coin.
At the same time, the notes of the Govern-
ment banks, though still left optional of ac-
ceptance to the people generally, should every-
where be received as revenue too. This would
add greatly to their circulation ; and if means
were taken to insure under every circum-
stance their ready convertibility into specie, we
have no doubt that they would find accept-
ance everywhere, and thus entirely remove the
present diffi3ulty arising from the deficiency
of silver coin.

If the Govorrr.nent would only adopt
these measures they would find that one great
stumbling-block in the way of Indian finan-
ciers, the inadequacy of the circulation to the
performance of the duties that are required
from it, would be at once removed. And this
without force of any kind, in an honest, mer-
cantile, and statesmanlike way. At the same
time a very great source of disaffection among
the rural population of India would be re-
lieved. This is, that they are constantly
obliged to sell their produce at a ruinous
depreciation, not because the equitable rate
of grain has fallen, but because every culti-
vator in the country has to pay his rent at a
certain season in silver coin, and the scarcity
of silver coin renders it utterly impossible
that all should be supplied at once. To obtain
this silver coin then at the moment, everything
must be sacrificed, though a few months after-
wards, when all the revenue has been collected,
it returns, as a matter of course, to its natural
price. In short, at every turn in India,
whether land or mei chandise is the question,
the inadequacy of the circulating medium is
daily more and more apparent ; and that
scarcity arises solely from confining the legal
tender to silver coin alone. This it is which
cripples everybody, causes. an infinity of dis-
tress that might be obviated, and deranges
enormously the bullion market both on the
Continent and here. Until this evil is reme-

died any idea of re-establishing public credit in
India will be hopeless; and the only means of
remedying the evil is the adoption of the
measures which we have explained. By this
process the currency will be put on a sound
and sufficiently expansive basis, and the foun-
dation laid for the employment of a proper
amount of it in the shape of loans to the
State. But that is a point which we propose
discussing in our second article on this sub-