that an abundance of the cheaper money brings about the same results as the employment, to the same value, of the dearer money; that silver may be substituted for gold, and trade go on with the same assistance from the currency as if the latter were in circulation in unrestricted quantities. Every merchant tries to get more value in the exchange than he gives. If he gets gold, and gold is rising in value, he succeeds; if he gets silver, and silver is falling, he fails. He will, therefore, only deal by the gold standard; and gold money being-on the hypothesis-more limited in supply than ever, no real enlargement of the standard of value will be effected, and the supply of money available for international purposes and for the internal transactions of the kingdom will be no more adequate to those purposes than that provided by gold monometallism. The system of the Latin Union cannot from the nature of the case secure the utmost quantity of either kind of money which commerce may demand; and silver monometallism is not what we want. cept under a fixed-ratio system which is commercially-not to say geographically-absolutely universal, both money-metals cannot be come available for bank reserves in an adequate supply of each: with less than this the country will not be satisfied, and bank reserves constituted on any other footing than this will not avail to prevent monetary panics.

altogether; and in this case there could be no maintenance of an unrestricted supply of both kinds of money to the currency, unrestricted as the coinage of both might be. A limit would be set to the supply of both kinds of money for actual exchange into one another by the amount of the more valuable of the two in circulation. If it were gold that became undervalued, then the limitation on its supply would be fixed by the point of value at which it might become unprofitable for those countries outside the convention to exchange their gold for the bimetallic silver at the rate fixed by the bimetallic law. No matter where the remainder of the gold-supply might go to, it would not run into the fixed-ratio currency, and the silver constituent would be proportionately increased, and the supply of silver would go forward continuously, while that of the gold money would remain stationary, if a supply came in at all. In this event prices might rise while the values would stand still, the efficiency of the currency as a medium of exchange would be lowered, and as a reserve in support of credit its value would be discounted by its abundance. Although the capital fund of the country might be larger in bulk, it would be no larger in value and of no more assistance to trade than the smaller but more valuable supply was before. Gold money, although partially or altogether out of circulation, would remain the standard of value, the gold price of commodities would remain the same, credits would be accorded to traders on the gold basis, and the premium on gold in silver money would rise in correspondence with the scarcity of the former in actual circulation. It is a mistake to suppose

Ex

In different ways our own currency system and that of the Latin Union act in restraint of the supply of both kinds of money to trade; but throughout the East it has been for thirty centuries, and still is, the practice to exchange gold and silver money at market values. Where this sys

tem prevails, it is not possible that any limit, except such as the requirements of commerce may prescribe, can be placed on the supply of both kinds of money, for each kind comes into use exactly to the extent to which it can be profitably employedthat is to say, in complete correspondence with the commercial demand for it. However greatly such a system may differ from and be unsuitable to European methods of exchanging money, it can, from the antiquity of its use in India, be revived in the Queen-Empress's dominions without difficulty, without prejudice to the interests of any class, and with general and unqualified advantage to the people. Indirectly, by incorporating India in our monetary system, we should obtain the means of widening the metallic basis of our commerce, in whatever part of the world it may be pursued. Were the use of legal-tender gold money revived. in British India, exchanging with silver money according to the immemorial custom of the country, at its intrinsic or market value, and a sovereign identical in weight and fineness with the £1 sterling of the realm coined, and established as the standard and unit of value, the supply of gold available for bank reserves in London would in two ways be enlarged-that is to say, by a check being put upon the annual increase which is now made to the accumulations of gold bullion in India, and by bringing into use in commerce a portion of the gold already held there. It has already been stated that the stock of gold which during fiftyfive years has been imported into, and never been re-exported from, India, is in value £135 millions sterling; and this is not more than half of all that the people of the country possess. The flow

of gold to the East is matter of historic record from a remote antiquity. It is noticed by Pliny, and there is good reason for believing that it prevailed during a thousand years preceding the Christian era. If even a small part of so immense a treasure were in use as money in India, it would immediately come under the influence of commerce, and be drawn into the currents of trade, and become available, when it could so be employed with profit, for the purposes of the London money-market.

Mr Goschen in his recent speech at Leeds expressed, not for the first time, his sense of the perilously narrow basis of metallic money upon which the superstructure of our commerce rests; and while in search of a means for broadening it, he is careful to safeguard himself against appearing to encourage inflation. Taking inflation to mean a rise in prices, unaccompanied by a corresponding rise in values, inflation can never be brought about by a mere increase in the volume of gold employed in commerce. Credits may be granted in excess-that is to say, accorded to men who possess neither goods nor gold in proportion. Paper money may be issued without the State making itself liable to take it in exchange for gold at its face value. A currency of silver money may be authorised as legal tender in payment of debts and taxes, in quantities which prohibit its exchange into gold at the legal-tender rate. In all these cases inflation follows. Prices rise, but values, when brought to the test of gold, remain the same. On the other hand, where gold is itself the subject of exchange with commodities, prices and values must always go together; and necessarily, as

long as gold continues to be the superior metal, and therefore the true standard of value, no increase to the supply can be attended with the evils of inflation. Any plan for increasing the bank reserves by taking metallic money out of circulation in order to hold it in reserve against an occasion when documentary substitutes for money become discredited, would have failed to meet the trade and agricultural depression of recent years, so far as that condition of things was attributable to a scarcity of the supply of metallic money; and for the purposes of international finance 20 millions of paper circulating in the place of 20 millions of gold would be of little or no use at all. Both the internal circulation of the country and its foreign business (so far as they may depend upon a conveniently abundant supply of gold) are, on the other hand, directly and immediately served by utilising in India, as legal-tender money, and thereby bringing within reach of England, a portion of the vast treasure of gold which India now holds. As a means towards securing in future the financial supremacy of London against a recurrence of the danger which it has lately escaped, we beg leave with some confidence to invite the attention of the mercantile public to the remonetising of gold in India, whereby no diminution in the capital capable of employment in commerce need occur; and at the same time the reserves of the London banks might, as Mr Goschen designs, be very much strengthened.

It is no answer to this proposal to assert that a demand for gold for an Indian currency would place an additional burden on the goldsupply of London. Such an objection is an entire mistake.

The

demand would arise in India, and on the store accumulated in that country. It would be unprofitable

under an exchange of gold and silver money at market values-to import gold for coinage when the country is full of it. For a similar

reason importations of gold into India would be reduced, because, exchanging as money at its market value with silver, it would cease to have an increasingly great command over the latter, as the balance of value which would be ascertained by the exchanges of goods for gold and silver money indifferently in a free market became less and less liable to variation.

as

Nor is another objection of greater weight-viz., that as gold is imported into India for consumption, it would not be available for money. The amount consumed in ornaments and in the arts is in comparison with the whole stock quite insignificant. Gold has been from the most ancient times largely used money in India; but having been under interdict in British territories for more than half a century, Englishmen never see it in circulation, and consequently rush to the conclusion that a treasure of 270 millions sterling in value is all used up in nose-rings and bangles for the adornment of native ladies. In fact, throughout British India, wherein by far the larger proportion of the stock of gold is held, its principal use is that of a representative of value, a reserve against which a vast amount of documentary money is launched on the numerous centres of trade scattered throughout the country. Upon this the domestic or interprovincial trade of the peninsula, the commerce of 300 millions of men, is mainly carried on. One ceases to wonder that so much gold should have been for cen

turies, notably for the last fiftyfive years, absorbed by India, when one reflects on the advantage which merchants, bankers, and many classes of producers derive from being able to hold in small bulk fifteen or twenty times the value that they could hold in silver money, as well as from the possession of a reserve which only varies in value by becoming more instead of less valuable, and from the issue against it of bills of exchange and promissory notes, by means of which the productions of distant parts of the empire are exchanged for one another without the expense of moving about the weighty silver money of the country being incurred. Were it not that gold bullion in this way took the place of silver money, the trade of India could never have undergone the marvellous expansion which the present generation has witnessed, for the currency of British India is not much more than £1 per head of the population in value, and is therefore insufficient even for the retail business of the markets. All that our Government need do is to legalise the use of gold full-value money in the form of sovereigns, to let the people exchange it with silver money at its market value, and leave the rest to them. They are sufficiently shrewd and capable as traders, and too well versed in the application of money to trade, to withhold from coinage at the mints any portion of the store of gold in their possession which they can profitably use as money.

It is also alleged that the propensity of the natives of India to hoard gold is so inveterate that, whether the gold stock of India were coined or uncoined, it would still be hoarded. Yet when gold was used as money in British India, the practice of hoarding

certainly did not interfere with its circulation. Gold was current freely enough until the Government fixed a legal rate for its exchange with silver, when it all disappeared. Half the revenue of Bengal in Warren Hastings' time was paid in gold: the troops received their pay, officials their salaries, goods were bought and sold, partly in gold partly in silver. Of the money coined in the mints of the East India Company one-seventeenth part was gold, and the circulation of gold was doubtless in a larger proportion, as a great deal of money coined by the native Powers was in use in the Company's territories. The people of India, in fact, have just as great a necessity for the use of gold money as any other trading nation. The immense value of this treasure is a reason for conceding, not for withholding, a gold currency. Such an accumulation as has taken place is a necessary preliminary to the use of gold as legal-tender money. Primitive peoples prefer silver money, as the low value of their trade dealings makes it the more convenient metal, and the legalising of gold money in India would not in the least interfere with the general and popular use of the rupee currency; but as a nation grows in wealth, its stock of gold grows also, until in response to a national requirement the gold bullion held by individuals is coined into the money of the people. In times now passing away silver was commonly hoarded, but the profit to be made by using it as money has reduced the practice to insignificant dimensions. A similar cause will produce a similar result. Gold bullion will be converted into money as soon as the law which forbids this being done gives place to wiser

legislation; and however much of the gold in the country may be put into circulation as money, the proportion which it would bear to the whole mass would for many years to come be but small, and still leave some £200,000,000 available for jewellery and hoarding. But it is objected, "All this may be true, but times are changed; it does not follow that traders would use gold money in these days because their grandfathers did so." Times are indeed changed, but they are changed for the better. The facilities for making larger profits in trade with gold than in trade with silver, whatever they may have been at the end of the last century, are now a hundredfold as great; while under the conditions which regulate the supply and use of money in India, not a single impediment to the employment of gold money arises which did not exist in past years in greater force, and of those which did exist the most material have disappeared.

But to turn from a priori argument to the evidence of facts. The replenishment of the bank reserves in London from the Indian source of supply must depend upon the people of that country recognising it to be their interest to use gold money concurrently with silver; and as it will not be possible within the limits of this article to notice more than cursorily the inducements they would be under to do so, the reader is referred to the work already mentioned, wherein he will find a great deal of evidence showing that from time immemorial gold has been in India the standard of value for public payments, and that commerce has been much inconvenienced by its disappearance from circulation; that there exists a predilection among the natives of India for gold money, and that

they have never acquiesced in its exclusion from their currency; that investigations made by a Currency Commission under the orders of the Government of India in 1866 showed that the demand for a gold currency was unanimous throughout the country, that the opinion was general that the currency should consist of gold, silver, and paper. It will be seen that in the Bengal and Madras, and more largely in the Bombay, Presidencies, bar gold circulates freely; that the country is full of gold coins of various descriptions; that sovereigns abound; that they are sold daily at prices quoted in the newspapers in the stock and share lists; and that, on the occasion of a stringency in the money market in 1865, as many as 70,000 sovereigns were offered by one bank alone to the Treasury in Bombay for the purchase of notes, this being the only way in which they could be put into use as moneybut the currency law forbade their acceptance. Such objections as have been made to the proposed reform are therein considered and disposed of, and its manifest advantages to all classes set forth and finally summarised under about twenty distinct heads.

As an illustration of the popularity which gold enjoys over silver as money-not a sentimental popularity, but resting on well-ascertained conditions of profit and loss

-the following comparison of the relative acceptability of gold and silver stock is not irrelevant to the argument. Taking the price of 4 per cent rupee paper at £83 for every 1000 rupees, and the exchange at 1s. 6d. (the prices of November 5th), the value in gold of 45 rupees-that is, of the interest on 1000 rupees-would be £3, 9s. 41d.; this, applied to £83, gives £4, 4s. 3d. per cent. The Indian sterling debt (3 per cent)