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Volume 2 - ElectricCanadian.com

Volume 2 - ElectricCanadian.com

Volume 2 - ElectricCanadian.com

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346 HISTORY OF THE BANKvalue of the rupee, as it would have be<strong>com</strong>e a profitableoperation to melt rupees and export the resulting bullion toLondon, thus increasing the demand for remittances to India.This was met by a restriction of general imports into India, butat the same time prices in that country were rising veryrapidly, and a demand was springing up abroad for Indianproducts, such as jute, for war purposes, which carried pricesfor such articles still higher. The shortage and high price ofthe imported goods which the Indian natives were accustomedto buy now led them to restrict their purchases in spite oftheir increased buying power, and to hoard silver instead.The high price and great demand for silver in India ledabout 1916 to large exports of silver from China to India,and it is estimated that during the years 1916 to 1918 inclusivenot less than 100,000,000 ounces of silver reached India fromthis source. There was a good market in China for exchangeon London, and the Chinese exchange bankers sold drafts onLondon and provided cover by shipping silver to India. InChina gold is considered only as a <strong>com</strong>modity and the rise inthe price of silver led the Chinaman to reason thus: "Gold isbe<strong>com</strong>ing very cheap, and now is the chance of a lifetime tobuy ornaments and jewellery." China's entry into the warin 1917 only aggravated the situation by creating an additionaldemand for silver there, and thus drawing attentionto the depletion which had occurred in her stocks of the metal.The collapse of Russia also led to a very great demand forsilver from the interior of Asia, in districts where formerly therouble note had served as currency. Hence in 1918 thereexisted an extraordinary and almost world-wide demand forsilver. Great Britain, herself, was forced to enact a Defenceof the Realm regulation making it illegal for anyonesilver coin in excess of a reasonable amount for his domesticand business requirements. Neutral countries were in greatto retainstraits for lack of sufficient silver for <strong>com</strong>mercial and currencypurposes. The demand from India, notwithstanding all shehad taken from China and elsewhere, was insatiable. China

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