New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1898-02-28
AN INDIAN CRISIS.
THE SCARCITY RUPEE AND A CURRENCY
FAMINE--rHE TREND TOWARD A
SINGLE GOLD STANDARD
REFLECTIONS FOR
AMERICANS
London. February IA

difficulties are now nearly over and that VA
shall, in the near future, succeed In establish.
ing a stable exchange at IL pence the rupee nv
cor tinuing the policy initiated In 1893" An
abstract Of the opinion Of the Anglo Indian
press on the present financial conditions which
I find this week In The London Times" does
not confirm this optimistic declaration. II 10
one OF the goomIest revelations OF financial
strIngency and industrial exhaustion ever made.
Since the closure Of the Indian mnts the rupe.
has had an artificial value on an ntermediat.
level between goi and silver. II has been a
scarcity rupee. not representing the market
value Of silver. but the lack Of an adequate SUD.
ply Of currency. The Indian Government hav-
ing large gold payments 10 make In England
every year. has pronted by an artificial scarcity
OF money. II the rupee had been on par with
silver In its downward course the remittance,
would have been heavily increased. The Indian
Government. since The closing Of the minis 10
silver. has produced a money famine for the
sake of obtaining more favorable rates OF ex.
change In it's own transactions with London.
The results OF this policy as explained by
financial writers in India have been disastrous
to all classes. The average rate OF interest has
risen from AZ in 1895 and : % in 1896 %
Hip in 1897 How high IL will go in 1899
no expert ventures 10 forecast. In Calcutta
loans have been negotiated as high as IA per
cent while In Bombay. according 70 The Time,
of India" even ia per cent would not bring out
an advance upon the most solid Of all security.
namely gold bars" With bank rate OF 10 per
cent merchants have been embarrassed in SELL
ing their bills. and commercial enterprise has
been parayzed. This continuous money striu-
gency, while fatal TO economic progress. has slso
affected the capacity Of the masses for pur-
chasing food in famine times Mr.. B. W.
Malabar, In his pamphlet on india in 1897"
discusses the vital question whether the famine
results from the absence Of foodstuhs or from
the want Of means OF buying food The London
Times" makes this weighty summary Of hnan-
ca opinion in India:
III the conviction once possesses the Indian
mind that the artificial enhancement o, the
rupee Ia a contrib Itory cause Of famine II will
furnish common rallying cry for all classes
peasant and townsman, rich and poor-such as
the Congress has never yet raised. Put in eco
nomc terms the contention is that the Govern.
ment in order more easily to discharge It's own
gold obligations, has subjected India to an arti.
fetal currency that bears down the producing
Industries on which the present and the future
of the people depend Thus stated the question
is open to fair argument But II IL passes from
the Anglo Indian TO the vernacuar press, Il will
cease to be stated in economic terms. and become
a popular cry Of the spoliation Of the peasant
that cry for which it has hitherto been our en-
deavor TO avoid giving any just cause
Financial writer's in Calcutta and Bombay do
not hesitate to say that there is imminent dan
ger lest the idea that the famine in food Is
connected with the famine in money may take
hold of the Indian mind. But entirely apart
from this contingency they represent the exist
ing conditions OF monetary stringency as In
toerabe. and contend that Sir James Westland.
the Finance Minister. has been compelled 10 face
the possibility that merchants would be unable
TO sell their bills and that money for commercial
purposes would become unavailable in business
centres. His Gold Deposit bill as not regarded az
a remedy. but as a safeguard against evils which
may prove uncomfortable; and the necessity Is
dscerned for experimenting 1t with legislation
which will relieve the situation either by link
ing the scarcity rupee to the gold standard az
Is 4d., or by other means. The financial writers
in India agree that decisive action is unavoid-
able after the disastrous results OF closing the
minis and producing money famine during the
last five years. Without further action by the
Government all confidence in the future Viii
disappear. India ought not TO tolerate for
Times OF India" "a currency system under which
It is possible to have money at II per cent here.
and yet impossible TO attract capital from
country where the rate OF interest is 3 per cent
and under"
ACTION POSSIBLE IN ONLY ONE DIRECTION.
The sum of the whole matter is that the Indian
Government cannot stand still. II must go on
in direction or in the other. II cannot
keep the Indian rupee in an intermediate state
OF isolation between the gold currency Of Eng
land and the silver money OF China and other
Eastern countries. The tentative transition poll
Icy which has been in operation for I'VE years
will either have to be abandoned by the re-
opening OF the minis 10 the free coinage OF sill
yer. else supplemented by the establishment
OF q gold standard. The indefinite continuance
OF the monetary stringency. currency f~mine
and commercial uncertainty and depression AFTER
so prolonged a period OF financial tension Is
clearly out of the question There must os
action, either this year or the next. and the
single plea on which all financial experts uhNe
is that whatever decision may be reached SHALL
not be carried into execution without warning
and in the dark, like the policy OF closing the
minis to silver in 1893
What the Legislative Council in Calcutta has
already done this year has been 10 empower t"e
Government to issue currency not only agaih"
gold held in India, but also against gold held LOT
India in England. The professed object Of this
act was the avoidance Of delay in shipments OF
gold TO India; but since currency could be o.
tanned by Geographic transfers In exchange for
gold. the expedient was one OF doubtful utility
although during the last thirty days IT has tend
ed to stifYen slightly the exchange value OF the
runaa ana N case The money market In Calcut-
ia and Bombay Ii Is a makeshift which does
not involve a solution OF the main problem OF
Indian finance. This problem, as explained oy
Lord George Hamilton and Sir James Westand'
Ia that OF imparting stability to the exchange
az the rupee. This WIS once worth