STABILITY OF THE EXCHANGE STANDARD 513
rose to 37 5/8 d.; on February 8, 1918, to 43d.; and on the same date in 1919 to 48 7/16d., thereby quite overshooting the rupee melting-point. But the price of silver broke all record when on February 11, 1920, it reached the colossal figure of
89 ½d. per standard ounce.
The rise in the intrinsic value of the rupee above the nominal value at once raised a problem as to how the rupee could be preserved in circulation. Two ways seemed open for the solution of the problem. One was to scale down the fineness of the rupee, and the other to raise its gold parity. All other countries which had been confronted by a similar problem adopted the former method of dealing with their silver coinage—a method which was successfully tried in the Philippines and the Straits Settlements and Mexico in 1904-7, when a rise in those years in the price of silver had created a similar problem in those countries.* The Secretary of State for India adopted the second course of action and kept on altering the rupee par with every rise in the price of silver. The alterations of the rupee par following upon the variations in the price of silver are given below:—
| TABLE XXXIII | Col2 |
|---|---|
| Date of Alteration of the Rupee Par. | Pitch of the Par. |
| January 3, 1917 ... ... ... ... August 28, 1917 ... ... ... ... April 12, 1918 ... ... ... ... May 13, 1919 ... ... ... ... August 12, 1919 ... ... ... ... September 15, 1919 ... ... ... ... November 22, 1919 ... ... ... ... December 12, 1919 ... ... ... ... | s. d. 1 4¼ 1 5 1 6 1 8 1 10 2 0 2 2 2 4 |
After having played with the rupee par, for two years, in this manner, as though such alterations involved no social consequences, the Secretary of State, on May 30, 1919, appointed a new Currency Committee under the chairmanship of Babing-ton Smith, to recommend measures “to ensure a stable gold exchange standard.” The majority of the Committee, after half a year of cogitation, reported to the effect† that
- Cf. E. W. Kemmerer, Modem Currency Reforms, 1916, pp. 349-354, 445-49, and 535-47.
† See Report, P.P.Cd. 527 of 1920, par. 59.