³⁸⁹ What follows is condensed from Mayo-Smith’s “Price Movements and Individual Welfare,” in the _Political Science Quarterly_, Vol. XV, No. 1 (March, 1900), pp. 14–17. ³⁹⁰ Cf. “Remedies for Fluctuations of General Prices,” in _The Contemporary Review_, March, 1887, _passim_. In the light of this it is strange that Prof. Keynes, in his treatise on _Indian Currency and Finance_, should have maintained that the exchange standard contained an essential element in the ideal standard of the future³⁹¹—a view subsequently endorsed by the Chamberlain Commission. If stability of purchasing power in terms of commodities in general is the criterion for judging a system of currency, then few students of economies will be found to agree with Prof. Keynes. Perhaps it is not too sanguine to say that even the Prof. Keynes of 1920 will prefer a gold standard to a gold-exchange standard, for under the former prices have varied much less than has been the case under the latter. ³⁹¹ Op. cit., p. 36. In this connection attention may be drawn to the prevalent misconception that India is a gold-standard country. It will be admitted that the best practical test whether any two countries have the same standard of value is to be found in the character of the movements in their price-levels. So sure is the test that Prof. Mitchell, after a very careful and wide survey of the price-level of different countries and the American price-level during the greenback period, was led to observe³⁹² that “when two countries have a similar monetary system and important business relations with each other, the movements of their price-levels as represented by index-numbers are found to agree rather closely. This agreement is so strong that similarity of movement is usually found even when comparisons are made with materials so crude as index-numbers compiled from unlike lists of commodities and computed on the basis of actual prices in different years.” ³⁹² _Gold, Prices, and Wages under the Greenback Standard_, 1908, p. 27. Now, we know that before the war England was a gold-standard country, and we also know that there was no close correspondence between the contemporary movements of the price-levels of India and England. In view of this, it is only a delusion to maintain that India has been a gold-standard country. On the other hand, it is better to [pg 257] recognize that India has yet to become a gold-standard country unless we are to fall into the same error that Prof. Fischer³⁹³ must be said to have committed in attributing the extraordinary rise of prices in India to the existence of a gold standard, when, as a matter of fact, it should have been attributed to the want of a gold standard. ³⁹³ _Purchasing Power_, etc., 1911, p. 340.