Vol. 6 · pages 356–360

341 FROM A DOUBLE STANDARD TO A SILVER STANDARD different species that an exchange against a particular species did not necessarily close the transaction ; the coin must, in certain circumstances, have been only an intermediate to be further bartered against another, and so on till the one of the requisite species was obtained. This is sufficient indication that society had sunk into a state of barter. If this alone was the flaw in the situation, it would have been only as bad as that of international trade under diversity of coinages. But it was further complicated by the fact that although the denomination of the coins was the same, their metalic contents differed considerably. Owing to this, one coin bore a discount or a premium in relation to another of the same name. In the absence of knowledge as to the amount of premium or discount, every one cared to receive a coin of the species known to him and current in his territory. On the whole, the obstacles to commerce arising from such a situation could not have been less than those emanating from the mandate of Lycurgus, who compelled the Lacedaemonians to use iron money in order that its weight might prevent them from overmuch trading. The situation, besides being irritating, was aggravated by the presence of an element of gall in it. Capital invested in providing a currency is a tax upon the productive resources of the community. Nevertheless, wrote James Wilson,* no one would question “that the time and labour which are saved by the interposition of coin, as compared with a system of barter, form an ample remuneration for the portion of capital withdrawn from productive sources, to act as a single circulator of commodities, by rendering the remainder of the capital of the country so much the more productive.” What is, then, to be said of a monetary system which did not obviate the evil consequences of barter, although enormous capital was widhdrawn from productive sources, to act as a single circulator of commodities ? Diseased money is worse than want of money. The latter at least saves the cost. But society must have money, and it must be good money, too. The task, therefore, of evolving good money out of bad money fell upon the shoulders, of the English East India Company, who had in the meanwhile succeeded to the Empire of the Moghuls in India. * Capital Currency and Banking, 1847, p. 15.

342 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES The lines of reform were first laid down by the Directors of the Company in their famous Despatch, dated April 25, 1806,* to the authorities administering their territories in India. In this historic document they observed :— “17. It is an opinion supported by the best authorities, and proved by experience, that coins of gold and silver cannot circulate as legal tenders of payment at fixed relative values...... without loss; this loss is occasioned by the fluctuating value of the metals of which the coins are formed. A proportion between the gold and silver coin is fixed by law, according to the value of the metals, and it may be on the justest principles, but owing to the change of circumstances gold may become of greater value in relation to silver than at the time the proportion was fixed, it therefore becomes profitable to exchange silver or gold, so the coin of that metal is withdrawn from circulation ; and if silver should increase in its value in relation to gold, the same circumstances would tend to reduce the quantity of silver coin in circulation. As it is impossible to prevent the fluctuation in the value of the metals, so it is also equally impracticable to prevent the consequences thereof on the coins made from these metals ............. To adjust the relative values of gold and silver coin according to the fluctuations in the values of the metals would create continual difficulties, and the establishment of such a principle would of itself tend to perpetuate inconvenience and loss.” They therefore declared themselves in favour of monometalism as the ideal for the Indian currency of the future, and prescribed :— “21......... that silver should be the universal money of account (in India), and that all .......... accounts should be kept in the same denominations of rupees, annas and pice ........... The rupee was not, however, to be the same as that of the Moghul Emperors in weight and fineness The proposal that “9 .... the new rupee........be of the gross weight of— Troy grains ... 180 Deduct one-twelfth alloy ... 15 And contain of fine silver troy grs. 165” *H. of C. Return 127 of 1898.

343 FROM A DOUBLE STANDARD TO A SILVER STANDARD Such were the proposals put forth by the Court of Directors for the reform of Indian currency. The choice of a rupee weighing 180 grs. troy and containing 165 grs. pure silver as the unit for the future currency system of India was a well-reasoned choice. The primary reason for selecting this particular weight for the rupee seems to have been the desire to make it as little of a departure as possible from the existing practice. In their attempts to reduce to some kind of order the disorderly currencies bequeathed to them by the Moghuls by placing them on a bimetallic basis, the Governments of the three Presidencies had already made a great advance by selecting out of the innumerable coins then circulating in the country a species of gold and silver coin as the exclusive media of exchange for their respective territories. The weights and fineness of the coins selected as the principal units of currency, with other particulars, may be noted from the summary table I. (Page 344) To reduce these principal units of the different Presidencies to a single principal unit, the nearest and the least inconvenient magnitude of weight which would at the same time be an integral number was obviously 180 grs., for in no case did it differ from the weights of any of the prevailing units in any marked degree. Besides, it was believed that 180, or rather 179.5511, grs. was the standard weight of the rupee coin originally issued from the Moghul Mints, so that the adoption of it was really a restoration of the old unit and not the introduction of a new one.* Another advantage claimed in favour of a unit of 180 grs. was that such a unit of currency would again become what it had ceased to be, the unit of weight also. It was agreed† that the unit of weight in India had at all times previously been linked up with that of the principal coin, so that the seer and the manual weights were simply multiples of the rupee, which originally weighed 179.6 grs. troy. Now, if the weight of the principal coin to be established was to be different from 180 grs. troy, it was believed there would be an unhappy deviation from the ancient practice which made the weight of the coin the basis of other weights and measures. Besides, a unit of 180 grs. weight was not only * Cf. The Despatch, op. cit., para. 8. † Cf. para. 26-28 of the letter from James Prinsep to the Calcutta Mint Committee, printed in the Appendix to the Indian Tables by John Muller, Calcutta, 1836.

344 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES TABLE I PRINCIPAL UNITS OF CURRENCY Issued by the Government of Territory in which it circulated. Date and Authority of Issue. Silver Coins. Gold Coins. Name. Gross Weight Troy Grs. Pure Contents Troy Grs. Name. Gross Weight Troy Grs. Pure Contents Troy Grs. Bombay Presidency Surat Rupee 179.0 164.740 Mohur 179 164.740 Madras ” Arcot ” 176.4 166.477 Star Pagoda 52.40 42.55 Bengal, Bihar and Orissa Cuttock R e g u l a t i o n s XXXV of 1793 XII of 1805 Sicca Rupee (19th Sun) 179.66 175.927 Mohur 190.804 189.40 Bengal Ceded Provinces Conquered Provinces XLV of 1803 Furrukabad Rupee (Lucknow Sicca of the 45th Sun) 173 166.135 — — — Benares Provinces III of 1806 Benares Rupee (Muchleedar) 175 168.875 — — —

345 FROM A DOUBLE STANDARD TO A SILVER STANDARD suitable from this point of view, but had also in its favour the added convenience of assimilating the Indian with the English units of weight.‡ While these were the reasons in favour§ of fixing the weight of the principal unit of currency at 180 grs. troy, the project of making it 165 grs. fine was not without its justification. The ruling consideration in selecting 165 grs. as the standard of fineness was, as in the matter of selecting the standard weight, to cause the least possible disturbance in existing arrangements. That this standard of fineness was not very different from those of the silver coins, recognized by the different Governments in India as the principal units of their currency, may be seen from the following comparative statement. TABLE II DEVIATIONS OF THE PROPOSED STANDARD OF FINENESS FROM THAT OF THE PRINCIPAL RECOGNIZED RUPEES Silver Coins recognized as Principal Units and their Fineness Standard Fineness of the Propose Silver Rupee Troy Grs. More valuable than the Proposed Rupee Less valuable than the Proposed Rupee Name of the Coin Its Pure Contents Troy Grs. In Grs. By p.c. In Grs. By p.c. Surat Rupee 164.74 165 … ... .26 .157 Arcot Rupee 166.477 165 1.477 .887 … … Sicca Rupee 175.927 165 10.927 6.211 … … Farrukabad R. 166.135 165 1.135 .683 … … Benares Rupee 169.251 165 4.251 2.511 … … ‡ Ibid. para. 28. How the English and the Indian systems of weights were made to correspond to each other may be seen from the following :— Indian English 8 ruttees = 1 massa = 15 troy grs. 12 massas = 1 tola (or sicca) = 180 troy grs. 80 tolas = 1 seer = 2½ troy pounds. 40 seers = 1 maund (or mun) = 100 troy pounds. § Attention may be drawn in this connection to the dissenting opinion of Captain Jervis on the project of 180 grs. troy as the unit of weight for the rupee. Cf. his most exhaustive treatise called The Expediency and Facility of establishing the Metrological and Monetary Systems throughout India on a Scientific and Permanent Basis, grounded on an Analytical Review of the Weights, Measures and Coins of India …… Bombay, 1836, pp. 49-64.