“The sudden depreciation of silver and the consequent enhancement of charge to the Government of India in laying down yearly the sum required in England of about fifteen millions sterling, without doubt cast a grave shadow on the future. In truth, it may be said that the danger, from whatever point of view considered, is the gravest which has yet threatened the finances of India. War, famine, and drought have often inflicted losses on the Exchequer far greater than the charge which threatens us in the present year. But such calamities pass away; the loss is limited; and when it has been provided for, the finances are again on sure and stable ground. This is not the case with the present cause of anxiety. Its immediate effects are serious enough. … But that which adds significance to it is that the end cannot be seen; the future is involved in uncertainty.”²⁰⁵
In the face of such a situation nothing would have been more natural than to expect the Government precipitating into some kind of action to save itself, if not others, from an impending calamity. On the contrary, the Government not only failed to take any initiative, but showed, when pressed by the Bengal Chamber of Commerce to act upon the foregoing resolution, a surprising degree of academic somnolence only to be expected from an uninterested spectator. No doubt the proposal of the Bengal Chamber was defective in that it did not suggest the opening of the Indian Mints to the coinage of gold. The Government of India was sharp [pg 124] enough to fasten upon this defect. It made plain to the Chamber that if it had proposed the free coinage of gold
“such a recommendation would not have been open to the objections that appear fatal, _in limine_, to the adoption of the resolution actually adopted … viz. to close the Mints temporarily to the free coinage of the one metal into legal-tender money, without simultaneously opening them to the free coinage of the other into legal-tender money.”
Did it, then, adopt the proposal of Colonel Smith, which contained such a recommendation? Not at all! Why did it not, then, adopt a remedy to which it saw no objections? The reason was that it had arrived at a different diagnosis of the causes of the monetary disturbances. To the Government the possibilities of explaining “the disturbance in the equilibrium of the precious metals” seemed to be many and varied.²⁰⁶ (1) The value of gold being unchanged, the value of silver had fallen; (2) the value of silver being unchanged, the value of gold had risen; (3) the value of gold had risen, and the value of silver had fallen; (4) the value of both metals had risen, but the value of gold more than that of silver; (5) the value of both metals had fallen, but the value of silver more than that of gold. In the midst of such possibilities, marked more by pedantry than logic, the Government warned the currency reformers that