INDIAN CURRENCY SINCE THE WORLD WAR

( i ) It is well known that from about I 8 73, when the fall of silver began, there was free coinage of the rupee in India, and that the value of the rupee compared with gold fell together with silver; consequently exchange on India, which was the price of the rupee in gold, fell. It took less gold to buy a rupee or more rupees to buy a pound sterling. (2) Then, in i893, when free coinage of rupees was taken away, the rupee became a token coin with a value, independent of the value of its silver content, maintained by an indirect redemption at i6d. As the rupee rose above the value of its bullion content, its relation to gold rose, and exchange on India, which followed the price of the rupee in gold, also rose to i 6d. (3) In the period to the World War, apart from the brief interval in 1907-8, when redemption of the rupee was not effective, the rupee remained at i6d., and bills on India sold at the same rate (within shipping points). (4) Then, with the outbreak of the war, a new and exceptional chapter opens up in the history of the Indian system connected with the phenomenal perturbations in the value of silver bullion. It throws new light on the principles of token money. The coming of war found India in a strong industrial and financial position. The years I9II, I9I2, and I9I3 had been prosperous years, in which there had been a steady demand for her raw materials, high prices, and increasing production. The cotton crop of I9I4 was exceptionally' good. The monsoon had