ABSTRACT
The dispute about the most suitable metal or standard for money, about ‘die Währung', as the Germans call it, using a word which is untranslatable into Swedish, this dispute that has so occupied politicians, financiers and economists in past decades, has concluded with a virtually complete victory for one of the competing systems, gold monometallism. If Austria—Hungary, as expected, adopts the convertibility of its notes into gold, as of this current year, the pure gold standard, or monetary systems that in practical terms coincide with the gold standard in all essential respects, will prevail in all the major European countries, as in most modern societies outside our continent; and since the abundant production of gold continues to place large stocks of gold at the world's disposal every year, it can be taken for granted that Austria-Hungary's example will gradually be followed by all other countries, both those that still use a depreciated paper currency and the few remaining silver-standard countries, to the extent that their financial strength permits it. One of these silver countries, namely, British India, can already be said to be on the gold standard now, though still with gold reserves that would normally be regarded as far too limited, and the transition from silver to gold as the measure of value has been made there in a fashion so simple that it is bound to occasion surprise, not to say admiration. For since the Indian mints were closed to the free minting of rupees, about 10 years ago, with rupees now being coined only for the account of the State, and since the English gold sovereign was declared legal tender in India in 1899, at a fixed rate of £1 sterling to 15 rupees, there has actually existed in India, at least in principle, approximately the same monetary system as in the Latin Monetary Union or in the Netherlands, namely the ‘limping’ bimetallic standard, where because of the suspension of coinage, the silver coins, like our own petty coins, acquire a fictitious value independent of the value of the metal and at present far in excess of this value, while the value of the gold coins, which may still be freely minted, is strictly in proportion to the value of the unminted metal — and of course in fact, this is equivalent to being on the gold standard or having a gold ‘Währung'. To be sure, the Indian state has not yet undertaken to pay gold for rupees on demand (which, incidentally, the French state does not do with its five-franc pieces either) but by means of a cautious minting policy it has nevertheless succeeded in recent years in keeping the rupee to the maximum value provided for by the law, 16 pence in gold, without the continued fall in the value of silver bullion being able to hinder this. Here, therefore, as 20 years previously in the Netherlands, a couple of legislative measures are all that has been required in order to accomplish the transition from silver to gold currency — in the twinkling of an eye, almost — without any concurrent financial operations involving the buying up or borrowing of large reserves of gold. It would be no wonder if this example induced the remaining silver-using countries to follow suit; reportedly, they have already begun to take steps towards attempts to join the gold standard, probably in the same way; this is particularly true of Mexico and China, though in the latter country it will be necessary to this end first to establish an actual coinage, since in everyday business silver is still accepted there by weight, as in early antiquity or in the old giro banks. It should, however, be added that in India itself, this governmental conjuring trick has not met with unqualified enthusiasm, since when the value of the rupee was raised in just a few years from 13 pence (1894–5) to 16 (1898 onwards), by the suspension of free minting, in some degree this was of course equivalent to all taxes and interest payments rising by nearly 25 per cent. However, at most, this objection can be made to the ratio of gold to silver that was chosen, not to the actual measure in itself.
