Shift from Silver Standard to Gold Standard

Many historians state that India lost its glory and richness due to invasions, foreign culture diluting the traditions, British rule, territorial disputes among the princely states, etc. While all these were ingredients for Indians decline, the catalyst for Indias poverty and was the shift from Silver standard to Gold standard. In India, the currency was Rupee. Silver coins were noted to be used in different forms since Magadha kingdom and it was formalized during Sher Shah Suris regime of Economic development throughout India. Rupee was official currency of whole of south and south east Asia and was also adopted in Middle East (Duabi and Qatar till 1959). When it was said that India had glorious past and was a rich country, it didnt mean just rich kings or rulers, India as a whole was rich. Pre 1868 1898 (1898 being the date when India adopted Gold standard), silver and gold were of equal value, i.e., one silver coin you can get the same amount of gold. But this ratio sharply declined starting from 1872 till 1898, nearly loosing 1 3rd of its value, i.e., 1 rupee was now 30 paise along with this gold value increased tremendously. Another factor was India doesnt have gold mines to generate their gold and push its value.

In early 19th century, the valuation system updates were not that fast as in todays internet era, where people could have dumped silver much faster to reduce the loses. The strategy of devaluation of silver and making Gold as standard was devised by Issac Newton. The British had awareness of what impact this change in currency standard will have on Indian economy, but they still did it to gain control over India. Oscar Wilde in his play The Importance of being Earnest has a dialogue by Miss Prism to Cecily, Cecily, you will read your Political Economy in my absence. The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side.

In the paper by Prof.Matthias Morys, University of York and Paper on gold standard and Ottoman Empire by Dr. Cosun Tuncer , it is evidently pointed out that the Core and Peripheral system in the Classic gold standard era (1870 1914), where the Core (consisting of British, ?France, ?Germany and few other European countries) exploited the exchange rates, interest rates, discount rates, cover ratio and access to foreign reserves for their advantage against Peripheral countries (that included India). For example; England, ?Germany, ?France and ?Netherlands are the only countries whose exchange rate never deprecated more than 1% (i.e. they got more gold for same amount of money every time).