TECNICAS DE MANTENIMIENTO DEBIDO A LA CONTAMINACIÓN

and arbitary restriction" of the currency would be removed and would leave the contraction and expansion of the currency to the natural forces of the market.*

The Indian Government reacted very swiftly and rejected the

2

offer. In doing so the administration showed a far greater insight into the currency problems. The Indian Government rejected the

proposal on four counts. Firstly, the adoption of 15 i silver to £1 of gold would involve a sudden rise - say from present 15d a rupee to 23d a rupee. Such a sudden rise could have a very serious effect on the Indian trade and could "certainly throw some branches of the

3

export trade into the most depressed condition for a time."

Secondly, the Indian Government stated that no doubt the rise in exchange was to diminish their sterling liabilities and large

surplus could be derived from the revenue, but this could be earned at a very great cost. For instance the fall in the prices would adversely affect the agricultural classes. "It is no doubt pleasant to think of large surplus of revenue", argued Vestland, "which will arise from the enormous improvement in exchange; but that is an extremely narrow and extremely partial view of the result, for any surplus we so obtain

1 S.S. to Indian Govt., Despatch No. 129 (Fin.), Confidential,

5 August 1897, Paras 5-8, F.D.I., vol. 39 (original). 2 Telegram Viceroy to S.S., 21 July 1897, E.P., vol. 20.

3 Finlay*s Confidential Note on Currency, 22 July 1897 Z ”append ix_7, ibid,.vol. 7 1.

See also Indian Govt, to S.S., L.No. 261 (Fin.), Confidential, 16 September 1897, Para 5, F.L.I., vol. 188.

is obtained at the cost of a heavy burden to the country and of a disaster to its commerce.w* Elgin elucidated this point by giving another instance of the evil effect of bimetallism. He said that at present the shareholder of the East India Railways got return of

5i

2

he stated would be an "unearned increment"•

Thirdly, in case of the failure of the scheme, the whole burden, would fall on India alone, because France and the United States both

3

had sufficient gold reserves and India did not possess any. It

was affirmed that mere union of the two, France and the United States, with no participation of England, and India lending assistance, was far

4

from an International agreement. Over and above, Elgin personally 5

in the Gladstonian spirit felt very unsafe with bimetallism.

1 Westland's Confidential Note on Currency, 22 July 1897 £ appendix^ E.P*,vol. 71*

2 Elgin to Hamilton, 18 August 1897i ibid., vol. 15*

3 Indian Govt, to S.S., L.No. 261 (Fin.), Para 6, op. cit. 4 Elgin did not trust the political vitality of France and the

United States' system for a binding agreement. He said, nI am not quite sure that on a question of policy of this kind theobstinacy of the sick man at Constantinople, which can baffle the concert of Europe, would not be more reliable than the engagement of a French Ministry •••• Nor is the prospect more hopeful on the other side of the Atlantic.n Elgin to Hamilton, 16 September 1897* E.P., vol. 13*

1

5

Fourthly, it was claimed that the circumstances had materially changed from that of 1893* The exchange was stabilizing and Government was nearer to the achievement of their aim of Is* 4d. "If we are

let alone*1, said Elgin, **I do not despair of seeing gold tendered

1

at our treasuries before I leave India.w He also forcefully asserted

2

that the time for any more experiments was completely gone. The mercantile classes in India were no longer prepared to accept any

3

more of drastic changes. Elgin confessed that there was already a good deal of artificiality in the present position of the currency, but then there was ’’still more of it in Bimetallism and, on so gigantic a scale” that any risks the Indian Government were now running seemed

4 to him ”to sink into insignificance”.

Hamilton never expected such a fury of protest and antagonism and showed surprise and disgust at the rejection of the bimetallic

5

scheme. He tried hard to influence Elgin by enunciating the merits £

of bimetallism as well as its popularity in Ehgland ; by casting doubt

1 Elgin to Hamilton, 11 August 1897» ibid. 2 Elgin to Hamilton, 1 September 1897i ibid.

3 Telegrams Bengal Chamber of Commerce; Bombay Chamber of Commerce; Madras Chamber of Commerce; 14 October, 15 October and 16 October

1897 respectively to Indian Govt., Enc. to L.No. 290 of 18971

F.E.I., vol. 190.

4 Elgin to Hamilton, 14 October 1897» E.P., vol. 15* 5 Telegram S.S. to Viceroy, 23 July 1897<. ibid. , vol. 20. 6 Hamilton to Elgin, 19 August and 23 September 18971

5

on the Indian Government schemes, and by reiterating that in India, both prices and exchange had risen - a combination in recent years which was new.* Finally, he tried to lure Elgin by suggesting that

if exchange rose to 22d, it would pay for the frontier expeditions and for the military establishments. The rise in the rupee to 22d "would give us surplus that would not only meet additional expenditure, but enable large remissions of taxation and readjustment of land

revenue. I, therefore, do not want to cast away what might prove a 2

veritable sheet anchor in financial reform”• It must be laid to the credit of Elgin that such a dubious explanation was not accepted by him.

In this round of contest, the Indian Government under Elgin the

won and Hamilton confessed thaVobjections raised by the Government

3

against bimetallism were "unanswerable”• The cry of bimetallism as a currency system subsided and accordingly Lord Salisbury informed the Governments of France and the United States about the inability

4 of the Indian Government to accede to their proposals.

Out of this it may be inferred that any currency system having an unnatural basis was harmful to the general public. The contracting currency or imprisoned rupee or an artificial exchange ratio were all

1 Hamilton to Elgin, 1 September 1897» ibid. 2 Hamilton to Elgin, 9 September 1897i ibid.

Earlier, Hamilton had shown the same feelings when he wrote, "We corner rupees to the detriment of trade and commerce, but to the benefit of our expenditure”• Hamilton to Elgin, 19 August 1897i

ibid.

3 Hamilton to Elgin, 21 October 1897i ibid.

the ----

4 Salisbury to French and/United States Govts., 19 October 1897*

Enc. to S.S. to Indian Govt., Despatch No. 218 (Fin.) of 18971 F.D.I., vol. 44 (copy).

<•

f.

5