DISLOCATED EXCHANGES FURTHER CONSIDERED 371

largely as a money metal, for coinage into rupees. It was the
movement of silver to India and its connection with rupee exchange
 that constituted the main phenomenon and the conspicuous
 phenomenon.
I do not propose to undertake any detailed examination of this
much discussed episode. Its general character is well known.
The balance of payments was such that both silver and gold
moved to India. When they reached India, both were largely
hoarded. So far as hoarded, they did not enter the circulating
medium, did not affect prices, signified nothing further in regard
to international trade. The silver, however, was chiefly coined
into rupees; and tho even the rupees went freely into hoards,
the volume of the active money did increase, and domestic prices
did tend to rise. But the rise was slow, so slow as to be observable
 only over a series of years. The vast extent of the country,
its enormous and immobile population, the sluggish character
of its entire economic life, made it possible for marked changes to
take place in international transactions with much retarded
effects in domestic trade. Thru long periods foreign exchange,
imports and exports, and the prices of imported and exported
goods, could vary as if they were quite in a realm of their
own, separated by a wide gulf from the prices of Indian domestic
goods and from the money incomes of the great mass of
people.
Within the sphere of international trade, however, there was
close interdependence. Imported and exported goods were directly
and immediately affected. The gold price of an Indian commodity
in Great Britain, its silver price in India, the rate of rupee exchange,
and the price of silver bullion — all were tied together. And so as
regards the silver price of a British commodity in India. If rupee
exchange and the price of silver bullion became low — if many
rupees could be got for a pound sterling — the silver prices of
exported goods would rise in India and exports would be stimulated.
 Thereafter, with the increase of Indian exports, the gold
prices of those goods would begin to fall in Britain, and rupee
exchange would begin to be readjusted. And it is clear that a