STABILITY OF THE EXCHANGE STANDARD 509
Assuming, for the moment, the criterion laid down by the
Commission to be correct, can it be said from the data given above
that the rupee has maintained its gold value ? It would be over confident if not rash to say that the system, even from the narrow
point of view of the Commission, has been an unquestioned success.
Between June, 1893, and January, 1917, the rupee was rated
to gold at the rate of 1 rupee equal to 7.53344 troy grs. of fine
gold. At that rate the sovereign should be equal to 15 rupees, the
mint price of gold should be Rs. 23-14-4 per tola (i.e. 180 grs.) of
bar gold 100 touch, and the exchange on London should be 1s.
4d., and should have varied within 1s. 4.125 d., the import point,
and 1s. 3.906 d., the export point, for gold.
Taking a general survey of the stability of the rupee with
regard to its value in terms of gold, it will be noticed that from
the date of the Mint closure up to 1898 the rupee was far below
par. The depreciation of the rupee, measured in terms of exchange
or price of gold or sovereign, ranged somewhere between 25 to
30 per cent. So great was the depreciation that it redoubled the
difficulties confronting the Government when the rupee was not
fixed to gold. The financing the Home Treasury by the usual
means of selling Council Bills became well-nigh impossible.* The
Secretary of State found himself in an embarrassing position.
Offering to sell below par involved the obloquy of having led the
way to the defeat of the policy of stabilizing exchange. Refusing
to sell at market rates involved the danger of a dry Treasury.
The Government of India suggested that the Secretary should
lay down a minimum rate for or a maximum amount of the bills
that he put upon the market. The Secretary of State agreed to
neither, but consented to reduce his drawings so as not to unduly
depress the exchange rate. The drawings of the secretary of State
during the first fiscal year since the Mint closure have been the
smallest on record :—
TABLE XXIX
Council Drawings
| Date of drawing | Amount of Drawings £ 1,000 omitted | Rate at which drawn (Pence per Rupee) |
|---|---|---|
| 1893. June ... July ... August ... September ... October ... November ... December ... 1894. January ... February ... March ... April ... | 2,478 25 78 7 5 617 14 98 1,023 1,915 1,368 | 15.039 15.974 15.243 15.350 15.334 15.251 15.242 14.408 13.787 13.870 13.626 |
- See Commons Paper 7 of 1894, East India (Currency and Sale of Bills).