3. An examination of the chart shows that the Indian Money Market enjoys years of high and low average rates respectively, just as other markets do. But these annual variations, while perfectly noticeable, are relatively small in comparison with the seasonal changes, which are very great and very regular, and which afford the most clear ground of differentiation between the Indian Market and those with which we are familiar in Europe. Let us examine the annual fluctuations of the rate in recent years in more detail:— ┌───–┬────────────––───────────┬────┬─────────────────────────┐ │ │ Bengal Rate per Cent. │ │ Bengal Rate per Cent. │ │ ├────────────┬────────────┤ ├────────────┬────────────┤ │ │Max. rate in│Min. rate in│ │Max. rate in│Min. rate in│ │ │ February. │ August. │ │ February. │ August. │ │1900│ 8 │ 3 │1907│ 9 │ 3 │ │1901│ 8 │ 3 │1908│ 9 │ 3 │ │1902│ 8 │ 3 │1909│ 8 │ 3 │ │1903│ 8 │ 3 │1910│ 6 │ 3 │ │1904│ 7 │ 3 │1911│ 8 │ 3 │ │1905│ 7 │ 3 │1912│ 8 │ 3 │ │1906│ 9 │ 3 │1913│ 8 │ │ └────┴────────────┴────────────┴────┴────────────┴────────────┘ From this table and the chart it is safe to make the generalisation that the Indian Rate may be expected to reach 8 per cent in the winter or early spring, and to fall to 3 per cent in summer. Years differ from one another chiefly in the length of time for which the high and low rates prevail respectively. From 8 to 3 per cent is an enormous range for the normal seasonal fluctuation. What is the explanation of it? The Bank of England rate seldom exceeds 5 per cent, and in many years falls short of this, even in the winter. If there is so regular an expectation of obtaining 7 or 8 per cent in India on excellent security, why is it not worth some one’s while to transfer funds to India in the busy season on an ampler scale than is the case at present, and thus secure the advantage of so wide a discrepancy between the English and the Indian rates? 4. The facts are to be explained, I think, as follows. High rates of 7 or 8 per cent are not obtainable in India all the year round. In normal years they cannot be relied on to prevail for more than about three months. The banker who raises funds in London in order to lend them for short periods in India has to choose between leaving them in India all the year round, waiting after one busy season for the next, and bringing them back again to London after a comparatively short period. He must either accept, that is to say, the rate obtainable in India on the average of the whole year, or he must earn a high enough rate in the brief busy season to compensate him for bearing the expense of remittance _both ways_.