Senator Key Pittman , who was responsible for creating silver legislation in Congress to help the British avoid crisis in India .
Treasury Secretary William Gibbs McAdoo , who advised Senator Pittman on developing his silver legislation .
for the resources of India , whose domestic manufacture of commodities was tremendously ramped up during the war . This was due to a British government war policy enacted in order to end shipments of raw materials to England for production and re-exportation to India . This resulted in India becoming self-sufficient in numerous industries . Therefore , as the manufacture of raw materials rapidly increased , the huge trade balance in India ’ s favor saw ever-increasing shipments of silver to its shores .
According to a report published in Economic World : “ This demand for silver as a medium of exchange , coupled with a world shortage of silver as a commodity ( due mainly to the conditions in Mexican mining districts , the diversion to war industries of labor in other mining regions , the increased use of silver money by soldiers in the field and the general rise in all commodities in terms of gold ), has brought about the … high price of silver .”
Late 1916 saw Lord Walter Cunliffe , governor of the Bank of England
( hereafter , “ the Bank ”), write to Mr . Bonar Law , chancellor of the exchequer , discussing silver shortages . Cunliffe suggested expanding the Royal Mint , which Law felt would lower its output . According to an unpublished report of the Bank , Law “ pointed out also that supplies [ of silver ] could not be substantially increased without ‘ directly enhancing the famine price ’ already reached : if the price of the ounce went up to 3s / 8-1 / 2d there would be serious trouble in connection with the currency of India .”
London Price of Silver per Ounce , 1.000 fine
Gold Value of Silver in Rupee
1914 $ 0.59797 $ 0.20555 1915 . 56099 . 19284 1916 . 74213 . 25511 1917 . 94627 . 32528 1918 1.12002 . 38707
Source : “ The Silver Situation in the Far East .” The Economic World , Vol . 105 . New York : Chronicle Company , April 17 , 1920 , p . 547 .
German Silver Propaganda
Among the nations that were purchasing large volumes of raw material and other goods from India was the United Kingdom . Most of the war materiel needed for the British campaign in Mesopotamia arrived via ships from Bombay . In order to cover these expenses , England issued what were called “ council bills .” They were employed in India as rupee currency and , in essence , were silver certificates redeemable on demand at their face value in silver
34 FINANCIAL HISTORY | Spring 2023 | www . MoAF . org