it is perfectly sound. involved in the nature of money; and when once established it would work with ease and with universal satisfaction to all classes. But the change would be one of great difficulty, and would create, during the state of transition, some' additional losses and sufferings of its own making. The demonetisation of silver-unless some plan could be devised which would retain the present silver rupee as small coin-would throw an immense quantity of silver on the markets of the world, and lead to a further considerable depreciation, as happened when Germany gave up its silver currency. During the process every trouble would be aggravated.

It obeys the necessary laws

Further, to supply India with the required stock of gold would be far from easy, and certainly would be an operation requiring much time. And thirdly, it can scarcely be doubted that the measure would, by increasing the demand for gold, be likely to lead to a serious increase of the value of that metal. Such an appreciation of gold would create an immense disturbance in every country of the world in which gold was the standard of value. The prices of all articles would sink, and, which is far worse, a false, unjust, and irritating payment of all debts would be established. The national debts in every land, which paid the interest in gold, would be heavily increased in practical severity. Every tax-payer would have to pay the sum which he owes to the national creditor with more property. This would be practically a proportionate increase of taxation, simply because gold had become more valuable. The opposite consequences would result in England from those which the depreciation of silver had generated in India. Every

debtor would be injured, every creditor would become the winner, by mere chance, of an unexpected and undesired gain, at the expense of another man. Such wrongs are the inevitable accompaniments of any important change in a national currency. They are

contained in the very nature of currency, in the very method by which the tool of exchange performs its work. It works by value, the value of the commodity of which it is composed; it gives value for value. A debt was contracted on the understanding that the money to be paid would replace the worth of the things sold. If the coin is worth less, the payment of the same quantity of it as was stipulated overthrows the justice of the payment.

committed.

A wrong, more or less severe, is

It is impossible, therefore, to consider a change in the standard of value to be desirable, unless it is forced on by overwhelming reason. But it must be clearly admitted that such reasons may exist. The German Government held that the substitution of a gold for a silver currency was called for by such motives, and carried out the measure. The movements in the value of silver produced such grievous effects on India, that it was very natural that a similar substitute should come under serious discussion. The recoil upwards in the value of silver to 54d. and more has adjourned, if it has not extinguished, the intention of adopting such a measure. But the future of silver is uncertain. No one can feel sure what the amount of its future production will be, what new mines may be discovered, how great will be the amount of their yield, and above all, its cost. Further, this very recoil upwards suggests the possibility that

other great and sudden fluctuations in its value may Should there be such movements, of wide range and great frequency, then I cannot feel any doubt whatever that a change to a gold currency will become necessary and inevitable. A tool false to its nature and the specific work it has to perform cannot be permanently retained in any department of human life. A currency of largely shifting value would render credit impossible, except for very brief terms. No Government or other loans could be contracted on such a basis; clauses virtually substituting a gold or other currency would always be inserted. Bequests, pensions, permanent gifts and settlements would all be expressed in gold. The practice, now so common in America, of selling for a gold price would become general. Society would thus be harassed by numberless injurious and mischievous vexations; the remedy, though a very painful one, would certainly be enforced. No civilised nation could endure to go on with a currency, measuring all property and the instrument for the acquisition of all necessaries and enjoyments, whose worth no man could pronounce upon, much less predict, with any certainty. It is not beyond the limit of possibility that the fluctuations in the value of silver might exceed in swiftness and magnitude any known to even inconvertible bank

notes.

It is a matter for some surprise that in the frequent discussions of a gold standard for India so little allusion has been made to the assistance which might be derived from the issue of bank-notes of very low denominations. Mr Wilson, when Financial Member of Council for India, advocated a ten shilling note. The Austrian

Government long employed notes of a value below threepence. The Minister of Finance of that day has been heard to declare that no really serious objection, founded on experience, could be urged against their use except the danger of forgery. Better protection on that side might be hoped for from modern science. A two shilling note works well in Austria at the present time, as also a one franc note in Italy. A rupee note, if successfully put into circulation, would immensely facilitate the introduction of a gold currency; but routine is slow to regard with favour such a diminutive instrument. It finds an enemy in every banker. He instinctively recoils from the trouble of counting and registering such small and, generally, such dirty paper. But that the small notes should be available at banks is not the vital condition of their existence in India; it is amply sufficient if they supply the small wants of a vast agricultural population.

CHAPTER XIII.

PAPER CURRENCY.

We have now reached the great auxiliary of metallic currency or coin, the bank-note.

In no civilised country can all the exchanges of property, all purchases in shops or warehouses, be carried on by the agency of coin alone. Other tools of exchange are needed. Property is bought and sold by instruments made of paper, by bills, cheques, and most of all by book credit, that is, items of debt entered in the books of traders. These are not actual payments, real exchanges of one commodity for another. They do not give value for value. They are mere promises to pay, pledges for payment, or rather evidence of debt, which the law will enforce against those who will not make the promise good. It is found that men are willing to give away their goods in return for such promises on paper. Experience establishes the fact, it is founded on experience alone. Some of these tools of exchange possess a certain amount of currency; they circulate to some small extent. Bills, by the help of endorsements, run from hand to hand; that is, like sovereigns, they are used for making a certain number of purchases or paying a certain number of debts in succession, before they are presented for final payment and extinction.

It is obvious that these instruments, in the aggregate,