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 £15,000,000 worth of Manchester piece-goods alone lying in India at one time last winter on board the ships that brought them out or in the docks. Of these the Indian importer simply refused to take delivery, because to do so would have meant ruin, as, what with the depreciation of the rupee and the fall in market prices, they seldom represented one-half, sometimes not a quarter, of the cost to him, if he took them up. It was useless to preach to him about the sanctity of contract, for had not Government itself, he declared, set the example of a gross breach of contract by undertaking and then failing to "stabilise" its own rupee currency? Government pleaded that it had given no undertaking that could be construed as a contract, but the Indian retorted that the Government's word had been hitherto held as good as its bond, and Indian Extremists found only too ready hearers when they imputed the exchange policy of Whitehall not so much to mere incompetence as to unholy influences behind Whitehall which robbed India in order to fill British pockets.
A wiser spirit ultimately prevailed, and merchants and buyers came together and agreed to compromise, and large stocks were gradually cleared. If this year's monsoon is followed by good harvests, and the European markets recover something of their former activity, Indian trade will be gradually restored to more normal conditions. But the ordeal which it has passed through will have taught some enduring lessons.