much as to cure diseased bodies, needs a license and a diploma from some college competent to confer such.

In the Navy, and I believe in the Merchant service as well, it is the practice, as soon as a ship is ready for sea, or ordered on an expedition, to pass her through a preliminary ceremony, known technically as being swung.' It is absolutely indispensable: she is not held to be fit for duty till it has been performed. It consists in verifying her compasses-ascertaining by actual and minute comparison with compasses on shore that those instruments by which she is to direct her course throughout her voyage are perfect and accurate, point aright, are impeded in their operation by no fault of construction, and liable to no deviation from the influence of disturbing attractions. As a matter of fact the magnetic compasses of few ships are found to be thoroughly exact, or to point truly and precisely to the north-sometimes swerving from that direction as much as ten degrees, and owing this variation most commonly to the position and amount of iron of which the ship is partially constructed. Before the ship is suffered to sail, this variation must be either rectified, or, as is more commonly the practice, registered and allowed for. It is obvious that, unless this were done, not only would the vessel not know for certain whither she was steering, nor arrive except by accident at her intended port; but that ship, cargo, and the lives of the crew might every day be wrecked on any hidden rock or headland-in fact, that her course and fate would be at the mercy of chance.

In the case of ships setting forth upon voyages across the Atlantic Ocean all this anxious caution is observed lest the guiding instrument to which they trust should be imperfect or misleading. Yet men habitually set out upon the voyage of life-far longer in duration, beset with perils from rocks and hurricanes immeasurably greater, and fraught with issues incontestably more serious—with a compass as their guide, which they trust as blindly and obey as implicitly as any mariner who ever sailed the seas, yet which in countless instances they have never been at the pains to test before installing it in a position of command, and which they seldom, if ever, pause to question, verify, or adjust.

W. R. GREG.

THE DEPRECIATION OF SILVER AND

THE INDIAN FINANCES.

Ir is nearly three years ago that alarm was first caused among all persons connected with India and Indian trade by the sudden and rapid fall in the value of silver, the metal which furnishes the currency of that country. The price of silver had been undergoing a slow decline for some years, but in 1876 this suddenly culminated in a fall of price within a few months, from 564d. to 484d. an ounce, the whole fall in four years representing a depreciation of more than 20 per cent. in the value of the metal, measured in gold.

The most important interest affected, and in the largest degree, was that of the Indian Government itself, which found its revenues, already overweighted by the calls arising out of recent famines, suddenly burdened with a new and unexpected charge of some millions per annum, a charge which, when the inelastic nature of those revenues is considered, might well create dismay among all those responsible for our Indian administration.

The nature of this charge may be explained in a few words. The Indian Government has contracted various engagements to make payments in England in gold; for the interest on its public debt, and on the capital of its guaranteed railways; for the pensions of its retired civil and military servants; for its share of the home charges of the European troops serving in India; for the supply of military equipments; the purchase of stores; the cost of the establishment of the India Office; and so forth, to the amount of about seventeen millions sterling a year; and since the revenues of India are collected in silver, this engagement involves that its government must purchase gold to this amount out of the income which it receives in the former metal. The nature of the operation is to a certain extent disguised by the mode in which it is effected-through the agency of private trade. The commodities exported from India are largely in excess of the imports into that country a state of things, it may here be observed, which is partly the consequence of these home charges and the exporting merchants, instead of shipping silver bullion to India to pay for the excess, purchase the bills which the Indian Council sell for gold in the London market, and which are VOL. V.-No. 23.

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payable in silver at the treasuries in India. The amount of these bills to be sold in the current year is seventeen millions sterling; and the effect of the arrangement, so far as the revenues of India are concerned, is precisely the same as if the Government of that country were actually to remit the silver to England and exchange it here for its equivalent amount of gold. It follows that the charge on the revenues of India, in respect of these payments, will fluctuate with the price of silver as expressed in gold. So long as silver was worth about 61d. the ounce-its average price for many years-the rupee was worth almost exactly one-tenth of a pound, and to purchase seventeen millions sterling required the remittance of 170,000,000 rupees. But when silver fell to about 48d. the ounce, which happened in the summer of 1876, the value of the rupee expressed in gold was reduced to less than 18. 7d., and instead of 170,000,000 rupees being sufficient, 216,000,000 would be required; the difference, 46,000,000 rupees, representing an extra charge on the Indian revenues of more than three and a half millions sterling.

The total charge involved by this 'loss by exchange' has not indeed, up to the present time, amounted to so large a sum as this in any one year, because the value of the rupee has not remained constant at the point of greatest depreciation, and also because the Indian Government has had occasion to raise loans every year in London, the proceeds of which become directly applicable to meet the home charges, and to that extent reduce the amount of the bills to be drawn on the Indian treasury. And shortly after the publication of the report of the Select Committee, appointed in the Session of 1876 to inquire into the cause of the depreciation, the price of silver rose again considerably, and the alarm created by the previous sudden fall to a certain extent subsided. But now, after undergoing various fluctuations, the price of silver has again experienced a great decline. The latest quotation gives it at a trifle more than 49d. the ounce; the last of their bills sold by the Indian Council realised less than 1s. 74d. the rupee; and within the last few days the estimates of the Indian Government for the current year, which originally provided for an outlay of three millions under loss by exchange,' have been increased by half a million, making the total charge for the year under this head no less than three and a half millions sterling.

To appreciate fully the gravity of such a charge, which is more than one-half of the interest on the Indian public debt of all kinds, it must be borne in mind that the Indian revenues are extremely inelastic. The major part of them is derived from the rent of land, which for a large part of India is fixed in perpetuity, while everywhere else any possible increment could accrue but slowly. The return from the customs is insignificant; the income tax, whether wisely or not, has been definitively abandoned. It is no exaggeration to say that this additional charge on the Indian revenues is a more serious relative

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1879.

THE DEPRECIATION OF SILVER.

burden than would be a charge of ten times the amount on the es

of England. But, indeed, the two cases are not comparable. The taxable resources of England are practically indefinitely great, as witness the enormous revenues raised during the Napoleonic wars from a country manifoldly poorer than the England of to-day. But in India the financier very soon finds himself at the end of his expedients; in the opinion of many that point has been reached already. Apart, then, from the serious effect which this fall in the gold price of silver has had on the fortunes of all those who have to make remittances from India, to say nothing of the injury accruing from the same cause to the import trade of this country, as well from the absolute fall as from the uncertainty which these fluctuations in price throw over all the operations of trade, if we consider merely the effect on the Indian Government, the wonder is rather that so little than that so much attention should have been directed to the matter, which is in truth one of extraordinary importance. We have heard a great deal about the recent famines in India, which, besides the suffering arising from them, involved a tremendous burden on the revenues of that country. But while these catastrophes, it may be hoped, are at worst temporary and occasional, there is no reason why this loss by exchange should not continue; it is not unreasonable, indeed, to expect that, unless some remedy be applied, it may become heavier year by year. Even if the value of silver should rise again, the uncertainty thrown over all the financial operations of the Indian Government, in having to receive its revenues in one metal, and pay away a large part of them in another, while these metals are liable to undergo constant fluctuations in their relative value, is thoroughly demoralising in its tendency. For what is the use of keeping a careful watch over the public purse, and exercising that frugality in all branches of expenditure which is of the essence of sound administration, when this great charge of loss by exchange. is undergoing alteration almost from day to day, and all the small economies of careful financial supervision are liable to be swept away by a fall of a penny or twopence an ounce in the price of silver? All governments tend to be reckless about expenditure in time of war; when money is being scattered on every side, the virtue of frugality must needs be at a discount for the time, just as in private life if a man have a liability hanging over him to meet some great expenditure beyond his own control he is likely to become careless about his scale of living. This is a similar case. That the finances of the Indian Government should be liable to constant derangement from this cause is only one degree worse than the certainty of having to bear a new and permanent burden of this nature. Either way the prospect is sufficiently alarming.

Space does not permit of discussing the question here, whether the payment of these home charges-the tribute, as it is sometimes.

ways.

called, which India renders to England-is in itself a real burden, that is, whether India does not get an equivalent for it in various Of course if India could obtain the blessings of a strong and equable government without paying for it, and if it were sufficiently rich to execute its own railways and other public works without the aid of foreign capital, then it would be still better off than it is now. But it is clearly an advantage to a poor country like India to obtain the capital of a rich country like England on moderate terms, and the good government which makes India a safe field for investment must needs be costly. Whether it is unduly so is another matter, and whether the extension of its trade brought about by the expenditure of that capital does or does not compensate India for the drain caused to pay the interest on that expenditure is also a point on which a great deal might be said. But the interesting speculations opened out to view by these questions cannot be pursued here. The subject now to be dealt with is not the tribute itself, but the heavy and fluctuating addition which has recently accrued upon that tribute, from the fall in the price of silver, and which, unless a remedy can be found, threatens to become a source of permanent embarrassment and confusion to the finances of India.

The question now to be considered, therefore, is whether such a remedy is forthcoming. I venture to think that it is; nor is it one propounded only yesterday, although so far it has not received the attention it appears to deserve. For the past two years and morein fact, ever since the depreciation of silver set in-Colonel J. T. Smith, formerly mint master at Calcutta, and now Chairman of the Madras Railway Company, has been pressing a scheme for this purpose on the Indian Government and the public, replying point by point to the various objections which from time to time have been advanced against it, till the matter has reached a stage at which it is competent for any reasonable person to form a judgment upon it. Unfortunately the discussion has been carried on in detached pamphlets and disjointed newspaper articles, spread over a great many months, till it is not easy for any one coming fresh to it to lay hold of the case, overlaid as it has become with plea and counterplea. It is in the hope of making the subject clear in a short compass that the following pages have been written. Being until a few days ago personally unknown to Colonel Smith, I may claim to approach the subject without prejudice; but having followed the discussion which has been going on for nearly three years over his proposals, it seems to me that the weight of argument is all on his side, and that they deserve to be more widely known than they appear to be at present.

Colonel Smith's plan for rescuing the Indian finances from their present difficulty may be stated in a few words. He would establish a gold standard for India, but not necessarily accompanied by a gold