RELATION TO MONEY AND PRICES

From this table it will be seen that the rates realizedto investors in bonds of the two standards differed butslightly until 1875, when the fall of Indian exchangebegan. The average difference from 1875 to 1892 inclu-sive was 0.7 per cent. Within this period, from 1884, ex-change fell much more rapidly than before, and thedifference in the two rates of interest rose accordingly,amounting in one year to 1.1 per cent. Inasmuch as thetwo bonds were issued by the same government, possessedthe same degree of security, were quoted side by sidein the same market, and were similar in all importantrespects except in the standard in which they are ex-pressed, the results afford evidence that the fall of ex-change (after it once began) was, to some extent, dis-counted in advance and affected the rates of interest inthose standards. Of course investors did not form per-fectly definite estimates of the future fall, but the fear

•The quotation from which the interest was computed for 1895 andsucceeding years is for 3 Ya per cent rupee paper. All previous quotationsare for 4 per cent’s. The 4 per cent’s were repayable on three monthsnotice; this notice was given in 1894, and the bonds redeemed or con-verted into 3t4 per cent’s before the close of the year. To obtain therate of interest realized, the London quotations in pounds sterling arefirst converted into rupees at the current rates of exchange, and thenthe bonds are treated as perpetual annuities. The results differ fromthose given in the Investor’s Monthly Manual, because the rupee isthere converted at a conventional value, not the market value.

b From 1865 to 1880 inclusive the figures refer to 4 per cent’s, repay-able October, 1888, or later; those of 1881 are for 3ti per cent’s maturingin 1931, and those for 1885 to 1906 are for 3 per cent’s maturing in 1948.

“This table is made from averages of (usually ten) quotations dis-tributed through each year, taken from the Economist, the Investor’sMonthly Manual, and the (London) Bankers’ Magazine. The fourthcolumn is founded on the table in the Report of the Indian CurrencyCommittee (1893), p. 27, but is corrected to apply to calendar instead ofofficial years.

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