Fig. 7. Price Movements in England and India under Different Monetary Standards
The curves should be compared for three distinct periods: (1) 1861-1873, during which the English gold standard and the Indian silver standard were, to some extent, tied together (through bimetallism); (2) 1874-1893, during which there was no tie between the monetary standards of England and India; and (3) 1894-1912, during which the Indian rupee was again tied to the English pound (through the gold exchange standard).
It will be noted that, in the first and last of these three periods, there is some similarity between English and Indian price movements, but that in the middle period there is little similarity.
The chief exceptions to the above statements are the early years of the middle period (1871-1876) and the early years of the third period (1894-1899). In the former the two curves show similarity instead of the dissimilarity usual in the middle period; and in the latter the two curves show dissimilarity instead of the similarity usual in the third period.
It is interesting to observe that both exceptions are largely explainable—the former by the fact that, although bimetallic laws were abandoned in 1873. the ratio between gold and silver did not climate greatly until three to five years later; and the latter by the fact that, although the gold exchange standard (legally fixing the Indian rupee at 16d. in English money) was adopted in 1893. nevertheless (because of existing hoards of coined silver and the continued coinage by Indian petentates, etc.) it did not succeed in actually controlling Indian exchange until five years later.
