[pg 93] depends upon turning to best account the resources which the country possesses. But the people have had very little of the necessary spirit of enterprise in them. The task, therefore, has fallen upon the Government of India to provide the country with the two prime requisites of a sustained economic life, namely a system of transport and a network of irrigation. With this object in view the Government had inaugurated a policy of developing what were called “Extraordinary Public Works,” financed by capital borrowings. For such borrowings India, as was to be expected, hardly offered any market, the people being too poor and their savings too scanty to furnish a modicum of the required capital outlay. Like all Governments of poor peoples, the Government of India had therefore to turn to wealthier countries who had surplus capital to lend. All these countries unfortunately happened to be on the gold standard. As long as it was possible to say that so much gold was equal to so much silver the English investor was indifferent whether the securities of the Government of India were rupee securities or sterling securities. But the fall in the gold value of silver was also a fall in the gold value of the rupee securities, and what was once a secure investment ceased to be so any more. This placed the Government in a difficult position in the matter of financing its extraordinary public works. The English investor would not invest in the rupee securities. An important customer for the Indian rupee securities was thus lost. The response of the Indian money market was inadequate. To issue sterling securities was the only alternative to enable the Government to tap a bigger and a more constant reservoir for the drawing of capital to India; but as it was bound to increase the burden of the gold payments, which it was the strongest interest of the Government to reduce, the resort to the London money market, unavoidable as it became, was somewhat restrained,¹⁷⁰ [pg 94] ¹⁷⁰ During the period of falling exchange the distribution of the debt of India was as follows:— ────────────────────────────────────────────────────────────────── _Sterling Debt._ _Rupee Debt._ End of 1873–74 41,117,617 66,41,72,900 End of 1898–99 124,268,605 1,12,65,04,340 _Indian Currency Committee_ (1898), Appendix II, p. 179. ────────────────────────────────────────────────────────────────── TABLE XIII _Price Movements of the Rupee and Sterling Securities of the Government of India_¹⁷¹