says, "Gold is being turned out in such enormous quantities that it is falling in value. But a fall in the value of gold, other things being equal, is tantamount to a rise in prices."

or permanent?

As for the question whether the rise is likely Rise to be temporary or permanent, it is safe to temporary conclude, as Mr. Dutt does, "that the rise of prices is likely to continue for some time to come. any rate, it is hardly likely to fall."

At

So far as international commerce is concerned, Effects. India has been a gainer by this rise in prices, for she has obtained a larger value from other countries for her exports. But within the But within the country the different sections of the community have been differently affected by it. As all members of society are consumers of food-grains, the rise of prices has affected all to some extent. In so far as the rise has been due to an increase of demand, the cultivators, especially those who hold land at fixed rentals, have reaped an advantage, though, owing to their want of education, their ignorance of market conditions, and their extreme need, a large part of their gain has been filched away from them by middlemen. On the whole, it has improved their economic condition and enabled them to increase their consumption of goods. The trading classes have also benefited by it to the extent that the advance has stimulated the growth of commerce. It has been beneficial to landlords only in those cases in which they have been able to demand higher rents from their tenants in consequence of this rise.

But the wage-earners in all occupations

have undoubtedly suffered a loss, as the rise in wages has not kept pace with the rise in prices. This loss has been serious in cases in which the wages have been more or less customary or where the incomes have been more or less fixed. The rise in prices has placed a heavy burden on the middle classes of society through the increased cost of living. It is interesting to note that as a consequence of this rise, the debtor has reaped an advantage, while the creditor has suffered a rather severe loss.

CHAPTER X

EXCHANGE (Continued)

1. CURRENCY

very

dawn

money in

India,

MONEY was in use in India in the very earliest Antiquity of times of which we have record. At the of history, we find the Indian people already well advanced in civilisation. They were at the time actually entering upon what is known as the manufacturing and commercial stage. Such a state of society implies exchange, and exchange implies the use of money.

various sources.

The great antiquity of Indian money is proved proved from from various sources, the chief amongst which are (a) the most ancient accounts of the population and condition of society in India; (b) the Vedic writings; (c) the code of Manu; (d) the Buddhistic works; (e) numismatic and other archaeological remains ; and (f) comparative philology.1 Various kinds of coins made of gold, silver 2 and copper were in use; and many other substances, such as clay, lacquer, and

1 Vide Del Mar, History of Money, p. 58.

2 Historians tell us that silver was in the earliest period more valuable than gold.

During
Mahomedan

rule.

Under the
East India
Company.

In the
Nineteenth
Century.

shells (cowries) were also used for exchange. The Sovereigns had the prerogative of coining gold or silver, though adequate measures were rarely taken to prevent coinage by private persons.

During the Mahomedan rule, a reform of the currency was undertaken, and several interesting monetary experiments were made. The rulers began to enforce the prohibition of coinage by private persons. Mahomed Tughlak entertained a new scheme of finance, in pursuance of which he at first debased the silver coins, and ultimately issued copper pieces, which were to circulate at the nominal value of silver coins. But this bold scheme, which was in reality a forerunner of the modern system of paper money, failed. The discovery of America and increased commercial relations with Europe led to an influx of silver into India in exchange for spices and gold; and Akbar the Great attempted to introduce a uniform standard, but his efforts did not fully succeed.

In the seventeenth century, the East India Company also began to issue coins for use in their factories. During the remaining years of Moghul rule, coins continued to be struck at various places, and they were of different weights.

At the beginning of the nineteenth century, some parts of India (e.g. Madras) maintained a gold standard and currency; elsewhere, as in Bengal, a silver standard obtained, with gold coins in concurrent circulation; throughout India the coins, whether of gold or silver, differed in denominations as well as in intrinsic value, even within the same

district. In 1806 the Directors of the East India Company gave their approbation to the demand for a uniform coinage, and the first step that was taken was to replace the old miscellaneous coinages by four denominations of rupees and fewer kinds of gold coins. In their Despatch to the Governments of Bengal and Madras, the Directors observed that, while fully satisfied of the silver rupee being the principal measure of value and the money of account, they by no means desired to drive gold out of circulation. Nevertheless, in 1818, the rupee was substituted for the gold pagoda in Madras; and, in 1835, the rupee, which weighed 180 grains, and contained 165 grains of pure silver, was made the standard coin for the whole of British India.

It was further enacted that " no gold coin shall henceforward be a legal tender of payment in any of the territories of the Company." The coining of gold mohurs (15-rupee pieces) was authorised by the Act of 1835, and in 1841 a Proclamation authorised officers in charge of public treasuries "freely to receive these coins." A few years later, however, the effect of the Proclamation was found embarrassing to the Government of India, on account of the extensive discoveries of gold in Australia, which resulted in diminishing its value in relation to silver. Consequently, in 1852, the Proclamation of 1841 was withdrawn. In 1864 the Government of India proposed that sovereigns and half-sovereigns coined at any Royal Mint in England, Australia and India, be made legal tender at the rate of one sovereign for 10 rupees, and that Government