558 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
commodities continued for ten years to be higher than the price-level for gold.”
This shows that the test sought to be applied by the adherents of the exchange standard is a false one and gives an inaccurate reading of the value of a currency. There can be no doubt that people who have urged its application to that standard would not have pressed for it so much as they have done if they had taken proper care to distinguish between specific depreciation of a currency in terms of gold and its general depreciation in terms of commodities.* The experience of the Bank of England during the suspension period is a capital instance of the phenomenon where a currency is generally depreciated, although it showed no sign of specific depreciation :—
TABLE L
D EPRECIATION OF THE N OTES OF THE B ANK OF E NGLAND †
| Col1 | Percentage Values of Bank Notes in Terms of | Col3 |
|---|---|---|
| (1) Gold | (2) Commodities | |
| 1797 ... ... ... 1798 ... ... ... 1799 ... ... ... 1800 ... ... ... 1801 ... ... ... 1802 ... ... ... 1803 ... ... ... 1804 ... ... ... 1805 ... ... ... 1806 ... ... ... 1807 ... ... ... 1808 ... ... ... 1809 ... ... ... 1810 ... ... ... 1811 ... ... ... 1812 ... ... ... 1813 ... ... ... 1814 ... ... ... 1815 ... ... ... 1816 ... ... ... 1817 ... ... ... 1818 ... ... ... | 100.0 100.0 ... 107.0 109.0 ... ... 103.0 103.0 ... ... ... ... ... 123.9 130.2 136.4 124.4 118.7 102.9 102.2 104.6 | 110 118 130 141 153 119 128 122 136 133 132 149 161 164 147 148 149 153 132 109 120 135 |
- Cf, Prof. Nicholson’s Principles of Political Economy (1897), Vol. II, Chap. XV,
§4 ; and Walker, F. A., Money, 1878, pp. 387-91.
† From Hawtrey’s Credit and Currency, p. 269. On the values of the notes in terms
of gold Prof. Foxwell says :” It is admitted by the severest critics of the bank that
there is no substantial ground for complaint as to its conduct during the restriction
until 1808-9. There does not seem, indeed, to have been any real depreciation of its
paper until that date. The price of £ 4 per ounce, which figures monotonously for the
years 1803-9, was really an arbitrary price, fixed by the bank itself as one at which
it would purchase foreign gold.” Preface to Andreades, p. xvi. Some people seem to
doubt that there was no specific depreciation of the inconvertible notes of the Bank of
England till 1810. Unfortunately data are not available to give direct evidence of the
fact. But circumstantial evidence there is. It is to be remembered that the premium
on gold was the only method then known of measuring depreciation and that Horner,
Ricardo and others were open enemies of the Bank of England. That being the case,
it does not seem probable that Horner would have waited to introduce his Resolution
in the House of Commons till 1810 if the bank notes had shown signs of specific
depreciation before that time.