STABILITY OF THE EXCHANGE STANDARD 511
Between January, 1898, and January, 1917, twice did the rupee fall below its gold par. The year 1907-8 records the second occasion when the parity of the rupee under the exchange standard broke down. The actual rates of exchange prevailing in the market were as follows:—
TABLE XXXI
R ATES OF E XCHANGE, L ONDON ON I NDIA ( FROM “T HE T IMES ”)
| Col1 | Par R. = 1s. 4d. | Col3 | Col4 | Col5 |
|---|---|---|---|---|
| Date | On Calcutta | On Bombay | ||
| Highest | Lowest | Highest | Lowest | |
| 1907. September ... October ... November ... December ... 1908. January ... February ... March ... April ... May ... June ... July ... August ... September ... October ... November ... December ... | 1 41/ 32 1 41/ 32 1 4 1 315/ 16 1 315/ 16 1 331/ 32 1 329/ 32 1 37/ 8 1 37/ 8 1 329/ 32 1 37/ 8 1 329/ 32 1 331/ 32 1 315/ 16 1 329/ 32 1 315/ 16 | 1 331/ 32 1 331/ 32 1 325/ 32 1 327/ 32 1 329/ 32 1 37/ 8 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 329/ 32 1 37/ 8 1 37/ 8 1 329/ 32 | 1 41/ 32 1 41/ 32 1 331/ 32 1 315/ 16 1 315/ 16 1 331/ 32 1 329/ 32 1 327/ 32 1 315/ 16 1 37/ 8 1 37/ 8 1 329/ 32 1 331/ 32 1 329/ 32 1 37/ 8 1 331/ 32 | 1 331/ 32 1 331/ 32 1 323/ 32 1 327/ 32 1 37/ 8 1 37/ 8 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 327/ 32 1 37/ 8 1 315/ 16 1 37/ 8 1 37/ 8 |
After a crisis lasting over a year the rupee recovered to its old gold par and remained fixed at it, though by no means firmly, for another seven years, only to suffer another fall from its parity during the year 1914-15 (see table, p. XXXII).
After 1916 the stability of the exchange standard was threatened by a danger arising from quite unsuspected quarters. The Indian exchange standard was based upon the view that the gold value of silver was bound to fall or at least not likely to rise to a level at which the intrinsic value of the rupee became , higher than its nominal value. The price of silver at which the intrinsic value of the rupee equalled its nominal value was 43d. per ounce. So long as the intrinsic value of the rupee remained