5
THE PRESENT PROBLEM IN INDIAN CURRENCY*
2 Shillings Versus 1s. 4 d . Ratio
So far for the first question. Now I turn to the another question arising out of this controversy, namely, at what rate should we stabilize our currency ? Interpreted in terms of purchasing power, the question reduces itself to this : Shall we bring about a fall in the existing price level, i.e. raise the purchasing power and thereby the exchange value of the rupee ? Now, changes in the value of money, if they affect all transactions and all classes equally, would be of no consequence and such questions as the above would not be worth any discussion. But as we all know, when the value of money changes it does not change in a uniform proportion for all purposes so as to affect a man’s incomes and outgoings to the same extent. Consequently before we fix upon the direction in which to move our price level we must make sure whether the incidence on the welfare of the different classes of our society would be such as would be just and proper.
In the present organisation of society a triple classification into the Investing Class, the Business Class and the Earning Class corresponds to a real social cleavage and an actual divergence of interest. As it is, the business class is the centre of all economic activity; on the one hand it borrows money from the investing class and on the other it employs the earning class. There are money contracts, agreements to pay so much money. If after these money contracts have been entered into, the value of money changes one way or the other, it is obvious that the contracts will be falsified. If the value of money decreases, i.e. if prices rise then the investing and the earning classes are injured and the business class is benefited. The investing class and the earning class, it is true, do get from the business class the amount
- The Servant of India, April 16, 1925.