fixity of exchange under the new conditions; it took evidence in London during the year 1919 and reported towards the end of the year.  A majority of the Committee recommended that the rupee should be linked with the gold sovereign and not with the L1 sterling, which had become divorced from gold under the pressure of war finance, and that the legally established ratio of 1s. 4d. or fifteen rupees to the sovereign should be raised to 2s., i.e. ten rupees to the sovereign.  The Secretary of State accepted the recommendations of the majority of the Committee, and in February 1920 steps were taken to establish the new ratio regardless of the fact that signs were indubitably discerned in the previous month showing that the economic current had turned against India.  The rupee was to be “stabilised” at 2s. gold.  The only dissentient voice in the Currency Committee had been that of the one Indian member, a Bombay bullion broker, Mr. D. Merwanji Dalal, who probably had more practical knowledge and experience of the problem than all the ten signatories of the Majority Report, and he had pleaded in vain for the retention of the old ratio of fifteen rupees to the sovereign.  The event was soon to demonstrate his sagacity.  The Secretary of State in order to establish the new ratio sold “Reverse Councils” at rates from 2s. 11d. downwards.  The attempt failed egregiously, for the rupee fell steadily, and has now fallen to and under 1s. 4d.  The money represented by the Indian balances with the Secretary of State had been put down in London at 1s. 4d. upwards, and India had to pay at the rate of 2s. 11d. downwards to get it back.  The difference between the two rates represents, it is calculated, a loss to the Indian tax-payer of thirty-five crores of rupees, or L35,000,000 at the “stabilised” rate ordained by Government.

But the actual loss to India on these exchange transactions is not the worst outcome of these conjuring tricks, as they have been contemptuously called by Indian critics of Whitehall.  Faith both in the omnipotence and in the honesty of Government was by no means extinct in Indian business circles, and when Government undertook to “stabilise” the rupee at 2s. gold Indian merchants assumed that Government could and would do what it said it was going to do.  Their stocks of imported goods had been completely depleted during the war, and prosperity had bred, as usual, a spirit of excessive optimism.  Enormous orders for cotton piece-goods and other British manufactures were placed in England on the basis of a 2s. rupee just when prices there had soared to their dizziest heights.  By the time the British manufacturers had fulfilled their contracts and the goods were delivered in India, not only had the rupee fallen headlong but prices too had declined, and the Indian importer found that he had made both ways a terribly bad bargain, of which in many cases he could not possibly fulfil his share.  There was L15,000,000 worth of Manchester piece-goods