775

The colony suffered severely for many years under this miserable and scandalous condition

of the currency. At last the government became aware that measures of a most stringent character ought to be taken to resettle currency matters on a satisfactory basis. By the law of 1st May 1854 the monetary system of the mother country, as regulated by the law of 1847, was introduced in Dutch India, and since that time nothing has been left undone by the authorities to secure the colony the benefit of a thoroughly efficient currency. some consecutive years large shipments of silver coin from Holland to Java were made on government account, between 1854 and 1860, 90 millions of guilders (£7,500,000). where an opportunity was offered to exchange silver for the circulating copper money, and thus a long-wished-for reform was effected at a cost to the state of about 20 millions of guilders (£1,666,600).

For

Every

Ever since that date the condition of the currency in Dutch India has been as satisfactory, nay as perfect, as in the mother country itself; even the recent silver crisis leaving it altogether unaffected in consequence of the measures taken by the government to keep the currency at the standard value by closing the Utrecht mint, not only for the home, but also for the colonial coinage. Having no mint of its own, Dutch India has always been supplied with the money required for circulation by specie imports from Holland, the standard coin being exactly identical, and the stock of silver legal tender money available in Holland has till now been more than sufficient to meet the requirements of the circulation of the colony.

Thus a very close link exists between the currency of Dutch India and that of Holland. At first it was thought that silver might remain the standard in the eastern possessions of the kingdom, whatever reform might be introduced in the monetary system of the mother country; but gradually the conviction prevailed that, equally with the people of Holland, the Indian subjects were entitled to protection from the difficulties in which the action of a depreciating currency must necessarily involve them, and to remove all uncertainty as to the standard of value in the colony the law of 28th March 1877 decided that gold ten guilder pieces should from that date be legal tender in Dutch India, thus establishing the monetary system of the colony on exactly the same basis as in Holland.

Meanwhile no gold whatever is to be found in circulation in Dutch India; but the lack of gold has never caused any inconvenience, and is in fact of no consequence so long as the

of gold for payments in Holland. Recently Dutch India has repeatedly had to face an unfavourable balance of trade, making the export of specie unavoidable (Table A), but the Table A.

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In consequence rates of exchange at Batavia -the financial centre of Dutch India-have maintained a most remarkable steadiness during the last twenty years, as shown in table B, see page 775, to explain which it may be added that the way of quoting the rate of bills drawn on Amsterdam is exactly the reverse of the quotations for sterling paper. For the latter the Dutch Indian currency is the fluctuating term, the quotation consisting of a varying number of guilders and cents to be paid for the pound sterling. In the exchange between Batavia and Amsterdam, on the other hand, the latter place gives the " uncertain" a quotation of 101, meaning that g. 100 Dutch Indian currency gives claim to g. 101 Netherlands currency. Thus it is obvious that a rise in the quotation of bills on Amsterdam must correspond to a decline in sterling quotations. [See EXCHANGE, FOREIGN, practical working of.]

During the last twenty years in drawing from Java the extreme rates for Dutch bills have been 99 and 104, and for English bills g. 12.125 and g.11.375, thus showing a fluctuation of only 5 per cent for the former, and 6 per cent for the latter bills. Since 1875, when the great fall in the price of bar silver set in, rates have not fluctuated more than 2 or 3 per cent. Thus Dutch India has been spared the disturbance in money and exchange matters which is causing so much inconvenience and loss in British India.

[A good insight into the present working of the currency of Dutch India may be obtained from a note by Mr. A. Kensington, deputy secretary to the government of British India in the financial department, dated 21st September 1892, and published by order of the governor-general of India. The conclusion of Mr. Kensington's inquiry during his stay in Java, was that the nominal gold standard introduced into the colony works well as regards the trade and the people of the country, and that it has on the whole also proved beneficial to the planters. But the fact is not to be overlooked that the whole structure must collapse in case Holland is forced by circumstances to complete its monetary reform by the demonetisation of the silver actually circulating as full legal tender money. Then the colony would be obliged to follow, and it is therefore not at all impossible that at some future period even the Eastern Archipelago may appear in the market for the sale of silver, and the purchase of gold, unless it may still be practicable to arrive at an international understanding about the free coinage of silver as proposed originally in the report of the Dutch currency commission of 1872.] N. P. v. d. B.

[Ratio of silver to gold in Holland, taking mint charges into account, 15 625 to 1.]

EXCHANGE BETWEEN GREAT BRITAIN AND BRITISH INDIA. - As these pages are passing through the press (June 1893), it has been made public that the government of British India has made an arrangement for its remittances between India and London, similar

The

in many respects to that in existence between Holland and the Dutch Indies (see EXCHANGE BETWEEN HOLLAND AND DUTCH INDIA). The rate at which council bills are to be issued in London is to be separated from the price of silver. In order to effect this, the coinage of rupees in India on private account is to be suspended, with a view to the introduction of a gold standard. The Indian government had been anxious that this step should be taken; but the home government desired that a thorough examination into the whole matter should be previously made. A departmental committee was accordingly appointed, consisting of Lord Herschell, the present lord chancellor, as chairman, the other members being Mr. Leonard Courtney, Sir Thomas, now Lord, Farrer, Sir Reginald Welby of the treasury, Mr. Arthur Godley of the India office, Sir Richard Strachey, and Mr. B. W. Currie, who is a member of the council of India and of the firm of Glyn and Co. The committee considered the proposals of the Indian government, which aimed at fixing the exchange at the rate of 1s. 6d. per rupee. This rate the com mittee did not feel inclined to adopt; the market rate being at the time (June 1893) approximating to 1s. 2d. for the rupee. general conclusions of the committee, in their report to the secretary of state for India, Lord Kimberley, were that "while conscious of the gravity of the suggestion, we cannot, in view of the serious evils with which the government of India may at any time be confronted if matters are left as they are, advise your lordship to over-rule the proposal for the closing of the mints and the adoption of a goid standard, which that government, with their responsibility and deep interest in the success of the measures suggested, have submitted to you. But we consider that the following modification of these proposals are advisable :-The closing of the mints against the free coinage of silver should be accompanied by an announcement that though closed to the public, they will be used by the government for the coinage of rupees in exchange for gold, at a ratio to be then fixed, say 1s. 4d. per rupee; and that in the government treasuries gold will be received in satisfaction of public dues at the same ratio." The Indian government actei immediately on this recommendation, and an act was passed in the council at Calcutta (June 1893) carrying the report of the committee into effect, and fixing the rate at 1s. 4d.

We are still too close to the events to judge what the ultimate results of this measure may be. The action of the government was immediately followed by a rise in the selling rate of India council bills in London from about 1s. 2d. to 1s. 4d. for the rupee, and by a rather more than corresponding fall in the market price of silver. Suggestions have been made

to bring the rate for council bills upwards to 1s. 6d., and ultimately to about 2s. for the rupee. It remains to be seen whether the Indian government will have sufficient control over the market for bills to enable it to carry this into effect. Nor can the influence on the coinage legislation of other countries-as for example on the United States of America-or on the rate of exchange in the trade with other silver-using countries be stated at present, or the effect which may be produced on the trade of British India, or on the condition of the people. One result, if the measure continues to operate, will be the formation of the largest "token" circulation of coins that has been known in modern times, as the rupee will circulate at the rate which the government fixes it at relatively to gold, irrespective of the gold price of uncoined silver; while for the present, at all events, there will be no gold coin to represent the rupee. A further result will be the entire separation of the rate for the bills on India from the market value of the ordinary circulation of the country. The council bills would, it was hoped, be issued at the rate fixed for the time by the Indian government. The arrangements, in so far as they are based on an authoritative rate fixed by a government for monetary transactions, and a fixed ratio between gold and silver are similar in some points to those on which bi-metallic systems have been founded; but while this is the case, the leading principle of bi-metallism, namely, the power of the subject to have his bar silver or bar gold coined into money and to be able to pay his debts with either metal so coined, is entirely absent. The success of the plan depends solely on the power which the Indian Council may be able to exert over the London market and if other and cheaper methods of remittance can be obtained this will fail. Meanwhile from the point of view of the Indian government the rate for exchange should be fixed as high as possible, as in the example of Dutch India, because of the advantage hence resulting in the remittances to England.

No reference has been made in this statement to the other points, many of great weight, connected with this question, such as the possibility of the private coinage-in the vast region of India, much of which is not under the control of our government-of spurious silver rupees equally valuable with those issued by authority, an operation which would be very profitable to the coiner-of the effect on the Indian cultivator of the soil, who will now be deprived of the resource which silver, in the form of ornaments, has been to him in time of famine-or of the result on the trade on other silver-using countries.

The measure, as it stands, was stated to be designed to prevent the rate from dropping lower, but it will have the effect of stereotyping

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the loss entailed by the fall in exchange both on the government and on private individuals at the point at present fixed.

[See Report of the Committee appointed to inquire into the Indian Currency, 1893.-Correspondence between the Government of India and the Secretary of State, 1893. Comp. Econ. Journal, Sept. 1893.]

[Ratio of silver to gold in India, with rupee at 1s. 4d., taking mint charge into acct., 22:37 to 1.]

EXCHANGE, INTERNAL. One factor in the calculation of all exchanges is the cost of the transmission of bullion, including therein the cost of actual transport and the risk and trouble involved. In the foreign exchanges these charges are in a general way concealed by the fact that the two sides are in terms of different currencies; and they are modified by the competition of bills of exchange, according to the supply and demand of which will be the proportion of such charges which a remitter will have to bear. The same expenses attach to the settlement of transactions between different parts of the same country, but they are rendered more apparent by being expressed in the form of a commission or premium. They are also usually more uniform, as they are not affected by momentary competition, but are governed by the condition of the banking system, tending gradually to diminish in proportion to the completeness of its development.

In this country the facilities for internal exchange are considerable, and its cost has been brought to a low point. The post-office system of money orders, and of postal notes and orders, furnishes the means of remitting small sums to almost every village, at a cost that has continually decreased as the facilities offered have increased. In the first quarter of the present century remittances could only be made to a few towns, and at a cost of about 24 per cent. At the present time the number of points to, or from, which remittances may be made has risen to upwards of 10,000, whilst the cost may not much exceed onehalf per cent. For larger sums remittances were formerly made by bankers' drafts, or bank post bills, the charges on which were defrayed partly by a direct commission, and partly by deferred payment. At the present time, by means of the country cheque clearing (see CLEARING SYSTEM), remittance may be made throughout the whole of England and Wales absolutely without cost, whilst for the collection of drafts other than cheques, and for all collections in Scotland and Ireland, the cost has been brought generally to about of 1 per cent. This result is greatly due to the spread of branch banking (see BANKS, UNITED KINGDOM).

In the United States the development of the national banking system (see BANKS, NATIONAL, U.S.A.) has led to remarkable results in the same direction. This system was established in 1865, at which time the cost of southern and western exchange on New York was from 1 to

778

In

1 per cent, and even for different parts of the state of New York it was per cent. The difficulty of obtaining reliable remittances was even more serious than its cost, as the notes or drafts of banks in any state were frequently quite useless but a few miles beyond its borders. 1890 the rates of commission or premium, on internal exchange, had so far declined that they ranged from 1 cent per $100 (3 of 1 per cent) in some small states, as Rhode Island and New Hampshire, up to 21 cents per $100 (of 1 per cent), in Nevada, Texas, and some other states.

In France the Bank of France, through its numerous branches, has long afforded considerable facilities for internal exchange, which have been added to in recent years by the still more numerous branches of one or two other banking institutions.

R. W. B.

EXCHANGE OF NOTES (in reference to the note circulation in Scotland). All the banks now (1893) carrying on business in Scotland are banks of issue. They are ten in number, and there is a stringent system maintained of exchange of notes once a day in every town in which there are two or more banks. In the case of a bank holding the notes of another bank not represented in its town, these are remitted to the issuing banks at short intervals. On Saturdays there is an afternoon as well as a morning exchange, so that the returns of circulation made at the close of business on Saturdays, as required by the terms of the Bank Act of 1845, exhibit the amount of notes then in active circulation, i.e. in the pockets and tills of the people. No bank ever issues the notes of any one of the other banks.

The notes are, by the system described above, "cleared" to a great extent independently of the ordinary settlement of drafts and bills between the banks. The system is a very convenient one, and saves the banks concerned a great deal of labour.

All clearing-house balances, other than those arising at the Edinburgh clearing-house, are settled by drafts on Edinburgh, which pass through the clearing-house there, and the balances of the Edinburgh clearing-house are settled bi-weekly by transfers of cash made in London four days later. Interest at 3 per cent is paid by the debtor banks on balances until the date of final settlement in London.

EXCHANGE BROKER. Unlike the bill-broker (see BILL-BROKING), who in most cases is really a dealer in bills, which he buys and sells for his own account, the exchange or foreign bill broker is strictly what the title of his calling implies, namely, an intermediary or negotiator between the buyers and sellers of bills of exchange drawn on foreign countries.

Such bills fall into two classes; those drawn from the provinces, and those drawn from, or held in, London. As regards the former, all

practically pass through the country banker into the hands of his London agent for negotiation, and, as the latter does not attend 'Change, they are, without exception, sold through brokers. In the case, however, of London-drawn paper, or of such as is remitted to London houses, the seller is quite at liberty, if he so chooses, to go on 'Change and save the brokerage by offering the bill for sale himself; but he usually finds it to his advantage to employ a skilled agent.

The exchange broker must be sufficiently familiar with foreign law and custom to be able to point out and explain any irregularity of form, stamp, or endorsement, etc., in the bills that pass through his hands. He ought also to be competent, besides knowing the present state of the exchange, to form an opinion as to its probable course, in order to advise his client, if need be, when best to buy or sell. He is also expected, when executing a buying order, to protect his client's interest by exercising a due regard to the financial and moral standing of the parties to the bill.

On concluding a bargain, the broker makes it legally binding by passing a contract note to both parties, giving particulars of the bill and specifying the rate at which it has been sold. In the buyer's copy he also fills in the name of the party who has to deliver, and in the seller's that of the party who has to receive and pay. Payment, it may be added, is not effected through the broker, as in stock exchange transactions, but the principals settle direct on the following day. The charge for brokerage is nominally one per mille (2s. per cent), but is subject to modification. Brokerage accounts are rendered once a year.

The growing tendency to effect settlements by bill on London, instead of by bills drawn from England on abroad, is strikingly illustrated by the fact that, notwithstanding the enormous increase in our foreign trade in the last halfcentury, the number of exchange brokers has only risen, according to the Post-Office Directory, from 13 in 1841 to 16 in 1893, as against an increase during that period in the number of London stock brokers from 343 to upwards of 3000.

G. C.

as

EXCHANGER, ROYAL. The chief functions of the king's or royal exchanger were follows to buy bullion for coin save where private mints existed, to exchange current coin of one metal or denomination for that of others, and to exchange foreign and English coins.

In the reign of Henry I. we find this office and that of moneyer united and vested in one person. But this union did not continue. Succeeding kings separated the office of exchanger and developed its constitution. Thus Edward I. had tables of Exchange set up in various places, as York, Dover, Canterbury, etc. In addition to the other and more ordinary ser

vices which he performed, the exchanger and his subordinates were entrusted with the important duty of so discharging his office that the export of precious metals from the country might be prevented. He continued a royal functionary and in discharge of his duties till the reign of Henry VIII. Then the complaints of the goldsmiths and the advice of Sir Thomas Gresham were listened to, and in 1539 the office of the royal exchanger was abrogated on the ground that its charges and action impeded traffic. Despite a nominal restoration in 1546, the previous date may be regarded as marking the termination of this restraint on the exchange. Statesmen and theorists were, however, very much divided as to the expediency of this action, and the protests against the extinction of the office proceed from well-known men, as for instance, Sir Robert Cotton.

Its reconstitution was mooted at the very beginning of the reign of Charles I. (in 1626). The goldsmiths were heard in opposition in the privy council, but did not prevail. On 25th May 1627 the revival of the exchanger was announced, and the king appointed "Henry, Earl of Holland, and his deputies, to have the office of our changes, exchanges, and outchanges, whatsoever, in England, Wales, and Ireland," for a period of thirty-one years. The goldsmiths petitioned, and the House of Commons protested against this reconstituted office. The Earl of Holland offering to submit his office to the judgment of the latter body, a debate took place, and it was agreed that it was a "grievance." No steps seem to have been taken to exercise any jurisdiction, and no attempt was made subsequently to revive this ancient office.

[Ruding's Annals of the Coinage.-Macpherson, Annals of Commerce.-Rymer, Foedera; and MSS. authorities.]

EXCHEQUER.

E. C. K. G.

Exchequer, Early History of, p. 779; Exchequer, present constitution of, p. 781; Exchequer, Scotland, p. 784; Exchequer Bill, p. 784; Exchequer Bill, History of, p. 784; Exchequer Bond, p. 785; Exchequer Bond, History of, p. 785; Exchequer, Closing of, 1672, p. 786. EXCHEQUER, EARLY HISTORY OF. The Exchequer, .e. the department of government which superintended and managed the king's revenues, and into which all dues were paid, appears as an organised part of the state system in Norman times. In Early English times there seems to have been a treasury, sometimes at Winchester, sometimes at Westminster, while a hoard was kept in the king's chamber, and local treasuries were found in some provincial towns (Hall, Antiquities of the Exchequer, p. 3), but there are no traces of a court of account so early. Richard, Bishop of London, the treasurer, son of Bishop Nigel of Ely, and

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our chief authority for the early history of the exchequer, writing in 1178 (Liebermann, p. 11), states that it dates from the Norman Conquest, the arrangement being taken from the exchequer across the seas (Dialogus de Scaccario, i. iv.). Though this fact of a Norman origin for the English exchequer cannot be proved, it is probable that both came into existence about the same time; even if entirely independent, the English exchequer is certainly not much older than the Norman; while on the other hand, some of its peculiarities, such as the "blanch farm," show that the system was not borrowed in its entirety from Normandy.

In Henry I.'s time it is found as a distinctly organised department and as a court of law under the name 66 scaccarium," a name derived from the chequered cloth which covered the table at which the accounts were made up. All the financial business of the crown was carried on at the exchequer, and as in early times the regulation of finance and the administration of justice were intimately connected, much judicial work fell for a while under its control, until, with the elaboration of the judicial system, new courts arose, and until its authority was restrained by Magna Carta, by the statute of Rutland (12 Edw. I.) and by other statutes, to cases which directly affected the revenue. This close connection between justice and finance is indicated by the fact that the officials who sat as justitiarii in the curia regis, the supreme judicial court, sat also in the exchequer as barones scaccarii. These were the great officers of the household and others specially named by the king, presided over by the king or by his representative, the chief justiciar, until the final disappearance of that official in Henry III.'s reign, when the treasurer, always an important functionary, took the foremost place. The treasurer, who was assisted in the performance of his duties by the chamberlains, had indeed the superintendence of every department, and was responsible for the compilation of the great roll, the annual record of the crown dues, while he also gave directions for the execution of the royal writs. The chancellor, the representative of the equitable jurisdiction, acted as nominal guardian of the great seal, and also as a check upon the treasurer, whose roll was copied by one of the chancellor's clerks. The constable, with clerical assistance, made payments to the royal officers and others upon receipt of the king's writ, for without such a warrant the issue of money was strictly forbidden. To cut the tallies (see TALLY), used as receipts, a cutter of the tallies was employed. Under these more important dignitaries were a large body of officials, sitting in the lower chamber, who prepared the summonses and other business, and acted as fiscal experts. Some of these offices were held in fee, and mention is found of a woman hold