MINUTES OF EVIDENCE 649
about a rise in prices. For a change from 1s. 6d. gold to 1s
4d. gold means this and nothing else. Should the currency be inflated to reach back the pre-war parity ?” Then you point out that the restoration of the pre-war parity is not a restoration of the pre-war price level because there is a change in gold prices ?—Yes.
Further, you point out that : “Two things must be borne in mind in this connection. Existing contracts include those made at every stage of preceding depreciations and appreciations, and to deal fairly with all would demand that each one should be treated separately—a task impossible by reason of its complexity and enormity.” I understand that the opinion which you emphasise there is that we have been passing through a period of violent fluctuations in the value of the rupee, that at every stage contracts have been entered into, and that it is impossible, as it were, to fix upon any, definite ratio which will do justice as between all these contracts made at the varying levels ?—Yes.
Then you say that the great bulk of the contracts have been of recent date ?—Well, my information is really based upon a small note made by Professor Cannan in one of his articles in the “Statistical Journal.”
Are there any statistics available which would give us a correct estimate of the number of contracts ?—I think it is a guess for what it is worth ; a question of commonsense.
Then you say, “It may be said that the centre of gravity of the total contractual obligations is always near the present.” Those premises lead you to the following conclusion, that, given these two facts, the best solution would be to strike an average between 1s. 4d. and 1s. 6d. and say that it is nearer 1s. 6d. than 1s. 4d. I am not sure that I quite follow that. Your trend of reasoning would rather have led me to suppose that you would finally turn out to be a supporter of the 1s. 6d. rate ?—I say it may be nearer 1s. 6d. and away from 1s. 4d.
What ratio would you suggest ?—It is difficult. Of course, I think 1s. 6d. would be just as good. It could not inflict any very great hardship.