STABILITY OF THE EXCHANGE STANDARD 517
TABLE XXXV
G OLD V ALUE OF THE R UPEE AND THE NEW P ARITY IN T ERMS OF
| Col1 | THE PRICE OF | Col3 | SOVEREIGNS AND G | Col5 | GOLD | Col7 |
|---|---|---|---|---|---|---|
| Months | 1920 | 1921 | 1922 | |||
| Price of British Sovereigns Par 10 Rs. = 1 Sov. | Price of Bar Gold per Tola 100 touch Par Rs. 15-14-10 = 1 Tola | Price of British Sovereigns Par 10 Rs. = 1 Sov. | Price of Bar Gold per Tola 100 Touch Par Rs. 15-14-10 =1 Tola | Price of British Sovereigns Par 10 Rs. = 1 Sov. | Price of Bar Gold per Tola 100 touch Par Rs. 15-14-10 =1 Tola | |
| January ... February ... March ... April ... May ... June ... July ... August ... September ... October ... November ... December ... | Rs. A. P. Nominal ” ” ” ” ” ” ” ” ” ” ” | Rs. A. P. 28 0 0 22 0 0 24 0 0 24 8 0 22 12 0 22 4 0 23 0 0 21 8 0 25 4 0 27 6 0 28 10 0 27 12 0 | Rs. A. p. Nominal ” ” 18 12 0 19 0 0 19 12 0 20 9 0 20 9 0 19 2 0 18 14 0 18 8 0 18 6 0 | Rs. A. P. yet not published Figures Official | Rs. A. p. 17 14 0 17 14 0 17 14 0 ... ... ... ... ... ... ... ... ... | Official Figures not yet published |
The only scientific explanation sufficient to account for
the fall of the rupee would be to say that the rupee had lost
its general purchasing power. It is an established proposition
that a currency or unit of account will be valued in terms of
another currency or unit of account for what it is worth, i.e.
for the goods which it will buy. To take a concrete example,
Englishmen and others value Indian rupees inasmuch and
in so far as those rupees will buy Indian goods. On the
other hand, Indians value English pounds (and other units
of account, for that matter) inasmuch and in so far as those
pounds will buy English goods. If rupees in India rise in
purchasing power (i.e. if the Indian prices level falls) while
pounds fall in purchasing power or remain stationery or rise
less rapidly (i.e. if the English price level rises relative to the
Indian price-level), fewer rupees would be worth as much as
pound, i.e. the exchange value of the rupee in terms of the
pound will rise. On the other hand, if rupees in India fall in
purchasing power (i.e. if the Indian price-level rises) while
pounds rise in purchasing power or remain stationary or fall
less rapidly (i.e. if the English price-level falls relative to the
Indian price-level), it will take more rupees to be worth as
much as a pound, i.e. the exchange value of the rupee in terms
of the pound will fall.