4 MARCH 1876, Page 7


WE fear there is little consolation in store for our Anglo- Indian friends. Their coinage is falling in value, and it will continue to fall, and as far as we can see, there is no remedy, except one too heroic to be tried. The evil has been suddenly exasperated by a cause which will be temporary, namely, the adoption of a gold currency in Germany ; but it is we fear, a very deep-seated one, and will continue for years to affect all who are interested in India, whether residing in the country itself or in Europe. There can be little doubt that long before the new silver discoveries, before 1852 in fact, the value of silver in India had begun to decline, the im- mense importation gradually glutting the demand both for coinage and for hoarding, till all prices began to rise and the rate of exchange with Europe to advance. The process was very gradual, but it was perceptible, and was between 1852 and 1860 repeatedly pointed out in the Friend of India. The fall was accelerated by the gold discoveries, and the consequent release of the silver coinages of the Continent and America, and finally, made rapid by the immense increase in the produc- eof the metal consequent on the working of new silver s, more especially in California and Nevada. While the gold supply of the world in the five years ending 1875 is one-third less than the gold supply of the five years ending 1856, the annual production of silver has increased from £8,000,000 in 1852, to £16,000,000 in 1875, and India and China, or rather, Asia at large, are required to absorb the larger portion of the increase. Europe may be said to have adopted gold and paper, and silver in a few years will, on this continent, be merely a token coinage, requiring only a million or two a year to keep it up. America is now using paper, and will by-and-by, when a return to specie payments has been decided on, use paper and gold—any silver wanted, moreover, being supplied by her own mines, and not counted in the export—and there is no reason to suppose that the de- mand for purposes other than coinage will greatly or rapidly increase. The increase of wealth creates a certain demand for silver furniture, spoons, forks, and the like, but this is restricted by the immense improvements in plating, by the use of gold instead of silver for many articles, and by the superior artistic usefulness of gilt-bronze and gilt-aluminium. The liability of silver to tarnish is a great drawback to its use in the arts, and so rich has the civilised world become, that few persons accu- mulate silver as treasure. A thousand pounds' worth of silver articles want a room to themselves, and of course the tendency to make great articles in silver—bathe, and fonts, and so on— diminishes with the perception of their declining value. -The bulk of the silver produced must go to Asia, and unless the need of internal currency extends there—which must be a slow process, as the tendency in India is to use cheques, hoondees, or native bills of exchange, and bank-notes—the aupply.must ultimately exceed the demand, till the price of silver is con- tinually forced down. The process may be very slow, but we confess we see no certain limit to it, except the expense, of producing silver from the mine, and this limit is very far away. A well-informed correspondent of the Times affirms that, half the present price will pay the Nevada miners well, and Nevada is only one of the silver-bearing territories which American enterprise will open up. They will have Sonora and Lower California, both argentiferous provinces, in a few years, while it is probable that the old argentiferous countries, like Peru, have never been scientifically exploittfs. 'Messrs. Mocatta and Co. report that they are already selling silver at 52-id. an ounce, or say, 12 per cent. under the old " normal " price of 5s. an ounce, which it attained so late as 1672, and quite 10 per cent, under prices known since 1860, and they expect a further and a heavy fall. What in- deed is to arrest it, except an unexpected development of the need for coinage in India and China ? If it goes on, the suffering among those interested will be most severe. Already incomes in India have lost one-third of their value from a rise in prices, due in part, though of course only in part, to the fall in silver. Already the losses of the Government of India in remitting the money needed at home for their expenses, for the interest on the Home Debt, and for the payment of railway dividends, exceed a million a year, till we suspect they will, before long, be obliged to reduce seriously the official rate at which pensions and so on are calculated ; and already Anglo- Indians who receive remittances from property or profits •on Indian Silver Consols feel as if their remittances were docked 12 per cent.,—that is, subjected to an income-tax of more, thahinm shillings in the pound. Part of this feeling is, of course, unreal, and due to the silly habit of calculating the rupee at the tenth of a pound, whereas, it has seldom been worth that amount for purposes of remittance since 1860. Still every fall of a halfpenny in.the exchange docks Indian remittances of a fraction over 2 percent., and the fall of 2 per cent. in one fortnight, recorded by Mame. Mocatta in their latest circular on the bullion trade, is ,e- duction on expected payments equal to an income-tan of Lour- pence-halfpenny in the pound. No wonder that the Rupee Debt stands at such a discount, or that investors fight shy of an investment liable to such fluctuations, till at this moment, the total difference between the Indian Gold Five per Cents, and the Indian Silver Five per Cents. is 11 per cent., more than a tenth of the whole value. Indeed, it would be much more, but for a fear lest the Gold Five per Cents. should be paid off. To show that we are not exaggerating, we will just quote the opinion—sensational as we think it—of a distinguished French economist, M. Cernuschi :— " Seduced by the gold monometalism,' the European Continent has ceased to coin silver, but it had long coined it, and colossal sums .are in circulation. All this silver is to be called in and melted down, the more so as it circulates as a forced currency for a value it no longer possesses. All this silver is to be sold, and it is to London it will be sent to get gold—to London, already glutted with Californian silver vainly asking to be coined. Floods of silver going up the Thames, floods of gold descending ; scarcity and increasing value of tbo yellow metal, which is the only English currency, glut and depreciation of the white metal, which is the only Indian currency—the two conflicting monometalisms ' are about to face each other—the one suffering from anemia, the other from plethora ; two crises instead of ono- 4.gold crisis and a silver crisis. Gold will not be worth 14, as before 1/171, nor 17, as at present ; but 20, perhaps 25, or more. The Indian rupee will no longer bo worth two shillings gold, but one only. What a kite for all holders of stock payable in rupees, Bourse securities, and civil and military pensions ! What irreparable losses for the Indian Railway Companies, which receive silver, but must pay in pounds sterling the interest of shares and loans issued in London ! On what terms, too, will the Government be able to draw on Calcutta, Bombay, and Madras? Every fortnight it puts up to auction Ave or six million rupees at Lon- don. At the last sale but one a loss of 10 per cent. for the Government, at the last no bidders, and the crisis is only at the beginning. From Chile to the Indus what a monetary shock, what arise of prices produced by the invasion of silver ! What increasing alterations in the value of all contracts and all engagements fixed in rupees ! The most terrible monetary storm ever known, breaking out in a conquered country, amid s population six times as large as that of the "United Kingdom. Can England fold her arms ? Can she say to trembling interests, ' Be patient; everything will end by finding its level?'" What is the remedy ? We will submit to experts who show us one, but to an ordinary judgment, it does not appear that any practicable remedy can be suggested, except the adop- tion in India of a gold instead of a silver coinage. Postponing the drawings on India may be a useful palliative for a moment, but as a cure it is the merest child's-play. The Government must draw at last, or increase the Gold Debt here, and so enlarge their drawings and their losses by exchange in future. A treaty among European Governments to throw silver slowly on the market—as has been suggested this week—will never be arranged merely to relieve Indo-British trade, and would not, if it were arranged, diminish the productiveness of Nevada, which is the permanent origin of the mischief. Confidence in ultimate readjustment, such as the Economist advises, is an excellent thing, but the ultimate readjustment will not relieve either the Government, or the holders of the Silver Debt, or the merchants, who now ask how they are to deal with a country whose payments may alter 2 per cent. in a fortnight without calculable reason. There is, it is true, one effective cure, the demonetisation of the rupee, as recommended by a correspondent of the Times on Wednesday, and the substitution of gold for silver as Indian currency, but that is a task from which the boldest administrators might recoil. Lord Salisbury's foible is not feebleness of will, but this might well be too much even for his daring. Not to speak of difficulties which we believe to be imaginary—such as the native fancy for pure gold, and the risk of a burst of Asiatic suspiciousness, an idea, for instance, that all the silver was to be taken away from the people—the transaction would be one of unprecedented bigness. No one can state accurately the amount of coin in circulation in India, but it is certain that it must be enormous. All daily transactions are in silver, the distances are very great, the population is seven times that of Great Britain, the movement caused by the demand for revenue as well as by ordinary business incessant. We do not believe that the usual estimate of £100,000,000 is near the truth, and even when we get at the truth, we have before us only a part of it. Are we to demonetise all the native hoards as well as all their currency There is not a peasant in India without his bag of buried rupees, which he means to remain buried for a quarter of a oentury. Are we to demonetise them, or are we to exchange them all ? and if the latter, whence are we to get the neces- sary gold? It is easy to speak of the disturbance in the silver market, but if India set herself to buy with silver £150,000,000 in gold, what would be the disturbance in both markets, or what the risk of sudden calls upon our small reserve of gold The Directors of the Bank of England would be stupefied by the mere proposal to effect an operation so gigantic as a quick conversion, and a slow conversion would expose India for years to evils as serious as those she escapes. Apart from the diffi- culty of getting any quantity of gold before France and Germany have completed their currency reforms, this proposal is one to establish a double currency, and its effect, in spite of what some French economists say, would infallibly be this :—Government would pay in gold, and receive in silver. That is, it would pay in the metal it wished to circulate, and receive in the metal people wished to get rid of. This would be the case in Europe if silver were cheaper than gold, but it would be the case in India if silver were even slightly dearer than gold, and for this obvious reason. The people prefer the gold to hoard, because it takes so little room, and is, value for value, comparatively so Light. Very great quantities of English and Australian sovereigns are even now imported into India, but nobody ever saw one in circulation. They disappear instantly, being bought or kept for hoarding, either in concealment or in ornaments for the person. A thousand rupees is a great and visible mass, but a hundred pounds can be hidden in a hole among the bricks of a well. No girl could carry 2,000 rupees round her neck, but she can and does carry a long necklace of 200 sovereigns, bound by a silver wire. The first effect of a double currency would be to release vast quantities of silver now looked up, and so exaggerate the existing difficulty. It would

be years before the gold became visible as currency, and all the while Government would be exporting silver to America, Australia, and Europe, where it is not wanted, to buy gold which Germany, France, and the Bank of England are straining every nerve to keep. The conversion of the German currency, which has nearly upset the bullion markets of the world two or three times, would be a joke to such an operation, which, unless effected so gradually as to do no good to this generation, would tax the whole strength alike of India_sisk,ic. England. We do not believe that it will be attempted by any' Indian Government, which would find it easier to raise addi- tional revenue to meet its losses, or stop off some branch of public works, than to avoid them by so adventurous an experiment. A financial genuis like Mr. Gladstone may see a remedy, but we confess we see none, except endurance.

If all the Governments of the world use gold, and the token currencies are full, and the mines more than supply the de- mand for the arts, what will the ultimate value of silver be ?