§ SIR GEORGE CAMPBELLrose to call attention to the excessive loss in the Indian Exchanges, and to ask if, now that the United States have definitely made silver a legal tender, Her Majesty's Government will consider whether it may be possible to establish equivalent silver coinages in the great silver-using countries; and will also consider whether, by putting more silver in the rupee, the commercial and monetary disturbance 1206 caused by the depreciation of silver might at the same time be remedied; and, in the interests of India if not of England also, will send a delegate to the Conference proposed by the United States? The hon. Member said that he could not approach the question as an expert, and, indeed, there were very few experts on the subject of the currency not agreed about anything whatever; but the question was one on which common sense might be exercised. The question involved matters of enormous interest to this country, if not directly, at any rate, with reference to India, and he trusted that he should not be thought out of place in directing the attention of the House to it even at this late period of the Session. It was altogether beyond dispute that silver had of late been very greatly depreciated, and that the Indian silver rupee had deteriorated to the extent of 15 per cent at least. With the exception of ourselves, all the great silver-using countries of the world had taken special precautions against the enormous change in the value of that metal; while England, as mistress of India, holding what he might call excessive Free Trade doctrines, had simply allowed things to take their course. Germany had adopted the radical plan of changing her currency from silver to gold; the countries of the Latin union had strictly limited the coinage of silver. In America silver had been made a legal tender, but the quantity of silver to be coined was restricted and regulated so as to prevent a glut. We alone had taken no action in the matter, and the disturbance had, therefore, fallen with accumulated force on us. The present loss was certainly not loss than 15 per cent. and that on Government remittances alone was fully £3,000,000 per annum; while the Manchester trade with India suffered in the same way with all other private interests. The evil being evident, he came to the question of the remedy to be applied. In his opinion, the Secretary of State was quite right in not yielding to panic and suddenly changing the Indian coinage from silver to gold, which, he believed, would very much aggravate the evil; but he regretted that the Secretary of State had not taken the same precautions as had been taken in all other civilized countries, in regard to restricting the silver issue under 1207 special and peculiar circumstances, and that in India some measure had not been taken whereby a certain appreciation or increase of value might have been given to the rupee. The restrictions of the coinage could only be regarded as a temporary measure; but as a temporary measure, he believed it was one which would be found serviceable, and which might reasonably be recommended in view of the more permanent settlement to which he hoped the Government would contribute by accepting the invitation to the Conference proposed by the United States, and about to assemble at Paris. The measures adopted in France would be very suitable to the state of things existing in India. The adoption of a bi-metallic currency by the great silver-using countries, if it could be brought about at the forthcoming Silver Congress, would be of immense advantage in steadying monetary operations. As a layman, he was bound to say that there appeared to him to be a good deal of force in the arguments of those who supported the bimetallic theory of currency; and though he fully admitted that we could not adopt it in this country, yet he thought a bimetallic standard would work great good for India. What he wished the Government of India to do was to stop coining rupees till the value of the existing rupee was raised, and then, as soon as the market admitted of it, to coin rupees containing more silver than at present, so as to be of the value of the American half-dollar. The French might then be induced to assimilate the five-franc piece to the dollar. A uniform currency would thus be established over a large part of the world. As regarded gold, he thought America might meet us by putting a little less gold into the five-dollar piece, so as to make it equal to our sovereign. If these changes could be effected, the disturbance of values in India would be remedied by a simple and self-acting process, to which there would be no just objection.
§ MR. STEPHEN CAVEsaid, no one could doubt the importance of the subject introduced by the hon. Member for Kirkcaldy. That importance was, as he truly said, recognized by the House when it appointed, two years ago, a Committee to consider the depreciation in the value of silver—a Committee which was presided over, with more than ordinary 1208 ability, by the right hon. Gentleman the Member for the City of London (Mr. Goschen). That Committee, of which he (Mr. Cave) was a Member, was appointed in consequence of the unfavourable effect produced on Indian exchanges by the serious fall in the price of silver. They went carefully into the causes of this depreciation, and, after long inquiry, came to the conclusion that it was due chiefly to the enormous production of silver by the mines of Virginia County, in the State of California, and from the demonetization of silver, or, rather, the substitution of gold for silver as the standard of value, in Germany, in the Scandinavian Kingdoms, and in the four countries of the Latin Convention. That depreciation was checked by the absorption of large quantities of silver by various countries, and especially by France. If, however, as appeared probable, that absorption should be temporary, or become greatly diminished, and the yield of the American mines continued at anything like the same rate, it seemed imminent that the depreciation would be still more serious. So far, he was quite in accord with the hon. Member. He agreed, also, that this depreciation had affected, and must affect, the Indian exchanges. At the same time, these exchanges were affected still more by the large remittances made in bills from India, either sent home by the greatly enlarged European Army, or in payment of Home Charges, which had so seriously increased on account of the augmented quantity of stores sent to India from England. The hon. Member proposed to rectify that state of things, which was, doubtless, extremely embarrassing, by, as far as he could understand, coining a new rupee, which should contain a larger amount of silver than the present rupee. But surely that was a very curious prescription—to remedy a fall in the price of silver by lowering its value! Certainly that was so. He would put it in another way, which the hon. Member would acknowledge, at once, to be accurate. Here was the Indian Coinage Act of 1870. He found this enactment in Sections 4 and 7—"The gold mohur is to be worth 15 rupees, of 180 grains each." Supposing the hon. Member added 20 grains to each rupee, and left the gold mohur still worth 15 rupees, did he not debase the silver? He did not debase the coin, of course; but he 1209 debased the metal of which the coin was composed. By his plan, the same quantity of gold would purchase a larger quantity of silver. If he altered the gold coin in proportion, of course, he simply did nothing. He (Mr. Cave) made these remarks on the supposition that we had a double standard in India. Practically, we knew that there gold was merely bullion, and that, at the present moment, very much more than 15 rupees must be given for the gold mohur. In fact, it was impossible for legislation to alter the real value of bullion except to a very limited extent, and for a short time, and under very despotic Governments. No one knew better than the hon. Member that there were various rupees of the same nominal value in India at the present moment, and that sicca rupees, and especially the old sicca rupees, sold at a premium; that, in fact, they had practically ceased to be coin, they had become bullion; otherwise the least valuable must always drive out the more valuable which disappeared. When Sir Ralph Woodford was Governor of Trinidad, silver dollars were exported to an inconvenient extent. To remedy this evil he stamped a small bit out of each dollar, and made a decree that it should be of the same value as before. What happened? The price of all commodities rose in proportion, and then the dollar was exported as before. If they could call in all the present rupees, and recoin them, at an enormous expense, with a larger proportion of silver, they would make a present to the creditor and rob the taxpayer; and if they tried to remedy this untoward result by fractional compensation, they would cause immense trouble, and still greater knavery, discontent, and suspicion, of which there was an example in Bengal in 1835. They had something of the same kind in England, and, indeed, had it still in money of account, as it was still, in many instances, uncertain whether a guinea meant 20s. or 21s. The hon. Member proposed to limit the coinage, and instanced Trance. Doubtless France had managed well. The Bank of France had been admirably conducted. There was no limit to the issue of paper before the late war; but it was convertible, and always at par. It was at par still, because the people had faith in the Bank and in the enormous stock of bullion 1210 contained in it. But when the hon. Member talked of limiting the coinage of silver, it was rather inconsistent to propose at the same time to increase it, because there was no difference between adding 20 grains to the existing rupee and coining a rupee and one-ninth, where they now coined one rupee. Well, then, the hon. Member proposed to issue an international silver coin which should circulate all over the world, fly out like the dove from the Ark and never come back; which, when not wanted in one country as a medium of exchange, should not be melted down, but escape to another country where it was wanted. There had been many International Conferences on this subject. In London, in 1860, there was one under the late lamented Prince Consort, at which he (Mr. Cave) was present. There were also Conferences in Berlin and in Paris. In 1868, a Royal Commission was appointed under the Presidency of Lord Halifax, of which he had the honour of being a Member. It was a very strong Commission, and it had gone very carefully into all the points in question, many of which were those which the hon. Member had touched upon. After a protracted inquiry, they reported in favour of other nations adopting our system, an invitation to which none, not even Germany and the United States, with every advantage of a new point of departure, had responded. Two points, however, came out very clearly in the course of the investigations—namely, that it would be extremely difficult to secure the equal purity of all international coins. He understood, indeed, that a difficulty of this kind had occurred in consequence of the late Pope issuing francs of the same nominal value and appearance, but of less intrinsic value than the franc of the Latin Union. This was one difficulty. Another was that similar coins would be of little use without uniformity in monies of account and in weights and measures. There was an enormous difference between the countries in which silver was only a token and in which it was itself a standard of value. The Americans had lately coined two dollars of different values; but one was for a foreign trade for the special purpose of competing with foreign coins, and did not touch the question. Moreover, he believed the experiment had not suc- 1211 ceeded. In the Silver Committee they learnt that many parts of India were without silver, and hopes were held out that those districts might in time exchange their barbarous trade of barter for a more civilized system, which would extend the use of silver. It had also been mentioned that the depreciation of silver would naturally cause an increased export trade from India and other countries with a silver currency, and, at the same time, a diminished import to them, which would tend to cause a demand for silver to pay the balance, and so would check depreciation. It might, however, come to this—that the question of an altered standard might become urgent. It would be extremely inconvenient to alter a system long in existence, and deeply rooted in the feelings and habits of the people. Still, no doubt, the time might come when the question of an altered standard must be faced. But, whatever might happen, he trusted that a double standard might not be adopted as a compromise. The hon. Member hoped that we might accept the invitation of America to a bi-metallic Conference. He was happy to say that invitation had been accepted. There could be no harm in discussion, and he had every confidence in our own delegates; but he hoped that the Conference would not fail to remember that a double standard must be a variable standard, and that it was almost impossible to have the coins of two standards in circulation at once. In the reign of James I., there was a double standard in this country, and at one time gold rose in value and almost disappeared. Proclamations were made from time to time, with the hope of fixing the value of gold so as to avoid this extremely awkward result. Later in the same Reign, gold was over valued and silver disappeared in its turn, to the much greater inconvenience of the country. In spite of what had been said by the hon. Member, his humble opinion was that the Government of the country should, for obvious reasons, retain control over the currency of the country; that there could not be absolute free trade in currency; but that Government should confine itself, speaking generally, to the prevention of fraud and forgery; and that any attempt by ingenious contrivances to interfere with the ordinary operations of trade and with the laws of 1212 supply and demand, or to deal artificially and arbitrarily with matters of finance was sure, sooner or later, to end in error and disaster.
§ GENERAL SIR GEORGE BALFOURobserved, that as his hon. Friend the Member for Kirkcaldy (Sir George Campbell) had raised the silver question, and had suggested that he (General Sir George Balfour) might usefully say a few words on this subject, he readily assented, but with this warning—that it was such a difficult question to discuss, that even the ablest Members of the House had reluctantly taken up the subject. But he would try and mention some points which had hitherto failed to be set forth. The right hon. Member for the City of London (Mr. Goschen) had even overlooked the remarkable way in which coinage of silver currency in India had been diminished, and the necessity for importing silver into India lessened. He therefore remarked that only a few years ago the silver coin in circulation in India had been averaged at between £180,000,000 and £200,000,000 sterling. This was based on the experience of Sir Thomas Seccombe, the able Financial Secretary. Since then, the Under Secretary of State had announced in that House that the silver circulation had been reduced to £100,000,000 sterling, showing a falling off of £70,000,000 or £80,000,000 sterling. He had tried to get the data upon which that falling-off had been based, but was not able. There was some difficulty in the matter. It was to be regretted that such hindrances were raised. He would now explain one cause for such a diminution in the silver coin; and as he was in Calcutta when paper money was introduced by the late Mr. Wilson, and had since watched the experiment with great interest, he might be excused for stating that the note circulation was greatly limited by the restrictions then placed on the right to cash the notes. It was a failure for several years; but the change which his hon. Friend the Member for Orkney (Mr. Laing) introduced had a great effect, and the paper circulation sprang from £4,000,000 or £5,000,000 to £12,000,000, and sometimes £14,000,000 of a permanent issue— that was, the amount of notes usually in actual circulation on any given date. But that was not a true mode of look- 1213 ing at the effect which paper notes had caused. All acquainted with India well knew the former vast store of silver coin in existence, owing to the great difficulty of sending it from one place to another. From time immemorial the Military Forces were employed in a most harassing way to escort silver coin. Indeed, the Mutiny of the 3rd Regiment of Bengal Cavalry, which began the Mutiny at Meerut, was mainly caused by the exorbitant pressure for treasure escorts. The great tendency was for silver coin to get into out-of-the-way places—Dacca, for instance, was a place for accumulating coin—and those it was not easy to get it away from. But the note circulation had changed the conditions; debts were now easily adjusted by notes. More than that, Government had largely extended the facilities for cashing notes. Indeed, the Government had specially created notes of 10,000 rupees to facilitate those adjustments; and Government had also created a five-rupee note. Under these facilities, coin was no longer needed; so that, besides the paper money in circulation, an amount of between £40,000,000 and £50,000,000 sterling annually passed through the Government Offices. The noble Lord's calculation that the circulation of silver was about £100,000,000 was probably true; and, therefore, we had been economizing the use of silver coin. The money required for actual use having greatly diminished, the surplus of £70,000,000 or £100,000,000 of silver coin had been used up for silver ornaments. There were, probably, 180,000,000 of people — women and children—in the whole of India expected to have ornaments; and, as his hon. Friend the Member for Guildford (Mr. Onslow) could testify, not one of them ever went out without silver ornaments and bangles, and the lowest value of each would be £1, and lately more probably £2, as the wealth of the country had increased. The Paymaster General would allow that the wear and tear of that silver, worn as ornaments to the extent of only £300,000,000, would justify him in saying that £30,000,000 every year might be a fair estimate to make of the silver required to make up those values, and no doubt the silver needed had been mainly taken from the coin. It was, however, to be feared that the decrease of coin had been carried too far; 1214 because, in many parts of India, the people experienced a positive want of coin to exchange for produce, and they were obliged to carry on their business transactions by means of shells. This was a state of things most discreditable to the Government. The abolition of the Madras Mint, by stopping the production of small coins, such as two-anna and four-anna pieces, had led to a great deal of inconvenience among the people. With regard to the raising of the value of the rupee, which his hon. Friend the Member for Kirkcaldy proposed, that was a matter beyond him. The currency doctors who had meddled with these things had always been pronounced mad, and he did not wish to interfere with them. He recommended the Government to tax the Bengal landholders, who were now so greatly favoured, in contrast with the heavy pressure of the land tax in other parts of India, and they would fall upon a new mine of wealth. The proposition of the hon. Member for Kirkcaldy (Sir George Campbell), he frankly confessed, was beyond his ken, but he was satisfied that it demanded consideration at the hands of Government.
§ MR. J. G. HUBBARDsaid, that the subject was an extremely interesting one, and he was not surprised that the hon. Member (Sir George Campbell), who was so familiar with Indian affairs, should be much exercised by any evil which would detract from the prosperity of that great portion of the Empire, and anxious to suggest a practical remedy. The evil was easily explained. In India there was a silver standard and a silver coinage. The Revenue was payable in silver; but there were public obligations to be met—in connection with railways and other things—in gold; and, therefore, the country had to sacrifice a larger proportion of its silver revenue in order to discharge these golden obligations. The same difficulty had arisen in other countries; but there was no real remedy, because the moment they interfered with the standard of value they gave an advantage to either the debtor or the creditor. The hon. Member was not wrong in stating the difference at 15 per cent— it was fully that. There was a time within the last quarter of a century, when this country might have introduced in India a gold coinage in substitution for 1215 that of silver without the slightest injury to existing obligations, public or private, because the value of silver was then fully apreciated; but the opportunity was then lost, and has never recurred. The Committee which sat upon this subject after a most careful and exhaustive inquiry was unable to suggest a remedy; because, in fact, there was no remedy. With regard to the Paris Congress, to be held at the instance of the United States, he understood the right hon. Gentleman to say the Government proposed to send a Representative to that Congress. If so, he hoped that Representative would be instructed to listen and not to speak; for it would be deplorable if any representative of England were to countenance the idea that she could entertain the adoption of a double standard. An international system of currency was not necessary for the freedom of commerce. For perfect freedom of commerce we wanted nothing more than we had got—free exports, free imports, and the power of paying for whatever we had in gold and silver; and he could not admit as either practical or useful the proposition of the hon. Member to increase the size of the rupee, and call it a rupee still.