479
2
to China, exceed Tls. 50,000,000. Exact statistics of the return exports from China to India are difficult to obtain because they are, as a rule, exported first to Hongkong and merge in the general figures of the trade with that Colony. But it is notorious that they are trifling compared to the great value of the imports, and that they leave, consequently, a large adverse balance which has to be adjusted, practically, by the remittance of silver, how much soever the fact may be disguised by the intricacies of banking operations.
The same consideration applies to the trade between India and Japan; Japan being also a large importer of Indian raw cotton and yarn, for which she also has to pay in silver.
We should, in fact, be setting up between India and the Farther East the very barrier which is now embarrassing her financial relations with the West. Having made gold artificially scarce by demonetising silver in Europe, it is now proposed to make silver artificially scarce in India, with a view to redress the balance.
It is, however, beyond the province of this Association to dilate on objections that present themselves, from an Indian point of view, to a policy that would contract her currency at home and disturb her commercial relations abroad. Our purpose is rather to urge that the question is one which must not be looked at exclusively from an Indian standpoint; for England is vitally interested in the trade and financial systems not only of India but of the whole East.
It is not only the interests of India that are concerned: the manufacturing pre-eminence of Great Britain, already seriously shaken by the growing difficulties of commercial intercourse with silver-using countries, would be still more gravely prejudiced by the further disturbance of exchange that must inevitably result.
While the mills of Lancashire have been lately idle, mills in Japan have been working the fullest time and new machinery of varied character is being rapidly set up. The cotton industry of Japan is, in fact, advancing by leaps and bounds, and the purpose is evidently entertained of competing with Manchester in the production of the finest qualities of yarn. Possessing the same advantage as India in respect of cheap labour, Japan has the advantage over Bombay of possessing cheap coal close at hand; and though she has at present to import the greater part of her raw cotton, she is at a less disadvantage in this respect than England, and will obviously be favoured in her intercourse with China by every fresh variation of exchange between silver and gold-using countries.
At a moment when efforts are being made by our diplomacy to extend intercourse with China and Japan by obtaining freer intercourse with the inhabitants and removing fiscal obstructions—so as to extend the consumption of manufactures in the production of which our labouring population is so vitally interested—we should be neutralising these efforts by widening the gulf between the (gold) cost of producing our manufactures and the (silver) price for which they sell, to a point that would make our export trade to silver-using countries almost impossible.
The Committee conceive that there is not ground for any conflict of opinion as to the certainty of this result. They have, therefore, less hesitation in associating themselves with the protest of their correspondents in China, because they find themselves in sympathy with the known views of the Government of India as to the remedy that would best conciliate all the various interests affected.
3
Experience and enquiry have convinced merchants and manufacturers that the depression in our trade with the East has been brought about mainly through the appreciation of gold in Europe, and the consequent divergence in value between it and silver that has resulted from the dislocation of the tie between the two metals; and they are persuaded that a cure is to be found in the remonetisation, rather than in a further demonetisation, of silver.
It is held as a settled conviction, by the great majority of those concerned in Eastern trade, that the re-opening of the mints of the world to the coinage of both metals at a settled ratio would at once obviate the financial difficulties of India and remove commercial disabilities which threaten to assume disastrous proportions if the opposite policy is pushed to a further extreme.
The
But if it is held to be impossible to entertain, at present, the recognition, internationally, of both metals as money on a fixed basis of relative value, the Committee is convinced that a policy of non-interference would be less harmful than further partial and local legislation. Rather than such a policy, the Association would prefer a scrupulous non-interference with the natural laws of supply and demand. Operation of those laws would, in time, produce something like finality in the relative value of the precious metals; whereas local legislation would not only be non-conclusive, but would interfere seriously with the internal prosperity of India (which has been stimulated by an increasing and abundant currency), and would be deplorable in its effect on the manufacturing industry of Great Britain, which is largely dependent for an outlet on the Greater East, outside of India, with which an immense commerce has been built up under more favourable currency conditions.
The creation of that commerce has, as our Shanghai correspondents point out, involved the employment of a vast capital, in Banks, Docks, Industrial Companies, and all the various adjuncts of trade—capital which has been already seriously depreciated by the late currency disturbances in Europe, and which is still more gravely menaced by the further demonetisation of silver that would be the virtual outcome of exclusive currency legislation for the Indian Empire.
I have the honour to be,
Sir,
Your obedient servant,
(Signed)
To the Secretary to the Treasury,
R. S. GUNDRY,
Hon. Sec. China Association.
Treasury Chambers, Whitehall.
Page 480
+
479
2
to China, exceed Tls. 50,000,000. Exact statistics of the return exports from China to India are difficult to obtain because they are, as a rule, exported first to Hongkong and merge in the general figures of the trade with that Colony. But it is notorious that they are trifling compared to the great value of the imports, and that they leave, consequently, a large adverse balance which has to be adjusted, practically, by the remittance of silver, how much soever the fact may be disguised by the intricacies of banking operations.
The same consideration applies to the trade between India and Japan; Japan being also a large importer of Indian raw cotton and yarn, for which she also has to pay in silver.
We should, in fact, be setting up between India and the Farther East the very barrier which is now embarrassing her financial relations with the West. Having made gold artificially scarce by demonetising silver in Europe, it is now proposed to make silver artificially scarce in India, with a view to redress the balance.
It is, however, beyond the province of this Association to dilate on objectious that present themselves, from an Indian point of view, to a policy that would con- tract her currency at home and disturb her commercial relations abroad. Our purpose is rather to urge that the question is one which must not be looked at exclusively from an Indian standpoiut; for England is vitally interested in the trade It is not only the and financial systems not only of India but of the whole East. interests of India that are concerned: the manufacturing pre-eminence of Great Britain, already seriously shaken by the growing difficulties of commercial intercourse with silver-using countries, would be still more gravely prejudiced by the further disturbance of exchange that must inevitably result.
While the mills of Lancashire have been lately idle, mills in Japan have been working the fullest time and new machinery of varied character is being rapidly set up. The cotton industry of Japan is, in fact, advancing by leaps and bounds, and the purpose is evidently entertained of competing with Manchester in the production of the finest qualities of yarn. Possessing the same advantage as India in respect of cheap labour, Japan has the advantage over Bombay of possessing cheap coal close at hand; and though she has at present to import the greater part of her raw cotton, she is at a less disadvantage in this respect than England, and will obviously be favoured in her intercourse with China by every fresh variation of exchange between silver and gold-using countries.
At a moment when efforts are being made by our diplomacy to extend intercourse with China and Japan by obtaining freer intercourse with the inhabitants and remov- ing fiscal obstructions--so as to extend the consumption of manufactures in the production of which our labouring population is so vitally interested--we should be neutralising these efforts by widening the gulf between the (gold) cost of producing our manufactures and the (silver) price for which they sell, to a point that would make our export trade to silver-using countries almost impossible.
The Committee conceive that there is not ground for any conflict of opinion as to the certainty of this result. They have, therefore, less hesitation in associating themselves with the protest of their correspondents in China, because they find them- selves in sympathy with the known views of the Government of India as to the remedy that would best conciliate all the various interests allected.
Experience and enquiry have convinced merchants and manufacturers that the depression in our trade with the East has been brought about mainly through the
3
appreciation of gold in Europe, and the consequent divergence in value between it and silver that has resulted from the dislocation of the tie between the two metals; and they are persuaded that a cure is to be found in the remonetisation, rather than in a further demonetisation, of silver.
It is held as a settled conviction, by the great majority of those concerned in Eastern trade, that the re-opening of the mints of the world to the coinage of both metals at a settled ratio would at once obviate the financial difficulties of India and remove commercial disabilities which threaten to assume disastrous proportions if the opposite policy is pushed to a further extreme.
The
But if it is held to be impossible to entertain, at present, the recognition, inter- nationally, of both metals as money on a fixed basis of relative value, the Committee is convinced that a policy of non-interference would be less harmful than further partial and local legislation. Rather than such a policy, the Association would prefer a scrupulous non-interference with the natural laws of supply and demand. operation of those laws would, in time, produce something like finality in the relative value of the precious metals; whereas local legislation would not only be non-conclusive, but would interfere seriously with the internal prosperity of India (which has been stimulated by an increasing and abundant currency), and would be deplorable in its effect on the manufacturing industry of Great Britain, which is largely dependent for an outlet on the Greater East, outside of India, with which an immense commerce has been built up nuder more favourable currency conditions.
The creation of that commerce has, as our Shanghai correspondents point out, involved the employment of a vast capital, in Banks. Docks, Industrial Companies, and all the various adjuncts of trade-capital which has been already seriously depreciated by the late currency disturbances in Europe, and which is still more gravely menaced by the further demonetisation of silver that would be the virtual outcome of exclusive currency legislation for the Indian Empire.
I have the honour to be,
Sir,
Your obedient servant,
(Signed)
To the Secretary to the Treasury,
R. S. GUNDRY,
Hon. Sec. China Association.
Treasury Chambers, Whitehall.
!
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