The last denominator, the coinage of all dates, divided by the figure specified (2-3) is the Jevonian formula for the circulation as deduced from the coinage of the biennial period selected (1889-90).

M. de Foville in his computation based on the 1891 enquête (L'Economiste Français, Sept. 19, 1891) uses in effect, as I understand, the datum corresponding to 1889-90. But was it not at least equally proper to include the datum for 1891; in which case his result would have been increased by some thirty per cent.? Again, as the terminal figures for the enquête of 1878 are so much smaller than those for 1891, while the total coinage up to the date of the enquête is not materially different— that of 1891 being larger than that of 1878 by only about 2 per cent. we must suppose the circulation (of French 20-franc pieces within France) in 1878 to have been larger than in 1891. That is not paradoxical, considering that there has been little influx to compensate the evaporation, not to say drainage, of thirteen years. There is here nothing improbable, yet nothing probative. One misses the consilience of results to which the Indian statistics have accustomed us.

I am aware, of course, that M. de Foville has otherwise obtained the probative force of consilience. In particular, the correspondence between his computations of the gold and silver circulation is very reassuring. He first estimates the stock of silver at about 2,500,000,000 francs,1 of which 1,200,000,000 are 5-franc pieces in active circulation. From the latter figure he passes to the existence of gold to the amount of 2,700,000,000 francs in virtue of the remarkably constant proportion, 31: 69, between the gold and silver circulation attested by the enquêtes. And this estimate-taking account of the coins "immobilised " in the Bank and other circumstances-exactly squares with the application of the Jevonian method to the data of 1889-90, in such wise as to confirm the estimate of the gold circulation at 4,000,000,000 francs. Where several such coincidences concur, it seems as improbable that the computation should fail, as that a party of men roped together should all fall into a crevasse. I only say that there does appear to be a chink in the data to which Jevons's method is applied.

IV. Doubts would be removed and conjecture would be merged in certainty, if we had but one more datum, the net efflux (or influx) of coin in recent times, if only the statistics of the export of money could be relied upon. M. Ottomar Haupt

1 Nominal value.

indeed does not hesitate to work with those materials; and (in the London Economist for October 3, 1891, and January 16, 1892) obtains an estimate for the French silver currency and English gold currency by a method setting the monetary exports against the imports, like that which Newmarch employed to determine the currency in years subsequent to 1844 (History of Prices, vol. vi. p. 703). But there are many who think that these statistical materials are too unsound to give support to any inference. As pointed out by Dr. Soetbeer (Materials, Taussig's translation, p. 352), there is a total failure of consilience between the recorded imports of precious metal into England from France and exports from France to England and vice versa. Not even when an average over many years is taken does an appearance of regularity arise. And it may be added that, if the difference between the efflux from and influx into England be deduced from the English and French statistics respectively, the results are still found to be totally disparate. Messrs. Martin and Palgrave, in an important letter to the Economist, January 23, 1892, add instances which have come under their personal experience showing the worthlessness of the declared values of monetary export. "Proved unsoundness" is the qualification applied to these statistics by the Committee of the British Association on the data available for determining the use of precious metals in a country.1

In the absence of this desideratum, it is to be feared that the Jevonian method is calculated to afford at best a higher limit to the circulation. Hence the peculiar worth of the Martin-Palgrave method, if affording a lower limit.

1 See Report of the British Association for 1888.

(P)

DEFENCE OF MR. HARRISON'S CALCULATION OF THE

RUPEE CIRCULATION

[THIS article, published in the ECONOMIC JOURNAL, 1900, forms a supplement to O; defending Mr. Harrison's method against certain criticisms contained in the Report from the Head Commissioner of Paper Currency, Calcutta, to the Secretary to the Government of India, Finance and Commerce Department. (No. 146.) 1899.]

:

This document deserves notice here on account of the criticism which the Head Commissioner has bestowed on Mr. F. C. Harrison's method of evaluating the rupee circulation in India.1 Mr. Harrison may comfort himself with the reflection which one of the older moralists offers to a person suffering under detraction consider that you, as you really are, are not blamed, it is an imaginary character with attributes not yours that is held up to condemnation. The misrepresentation of Mr. Harrison's system has been effected by presenting only a part of it. The Head Commissioner describes it as an adaptation of Jevons's method; which he illustrates happily enough. This description does not comply with the schoolmen's rule of defining by genus and differentia; what is most characteristic and distinctive is omitted. True, Mr. Harrison's method belongs, as we may say, to the genus Jevons: but it is a very peculiar species, a highly composite variety of that genus. Jevons computed the amount of the circulation from the percentage of the total circulation formed by the coins of a particular recent date, together with the absolute number of those coins in circulation as given by the statistics of the mint. Mr. Harrison has based analogous estimates not only on recent coinages, of which the amount in circulation may be supposed to be approximately given, but

1 For Mr. Harrison's explanation of his method, see ECONOMIC JOURNAL, Vol. I. p. 721, and Vol. II. p. 256; also Vol. VI. p. 122; and for some appreciation of the work, Vol. II. p. 162, and Vol. VII. p. 644.

also on older coinages, of which the amount in circulation is calculated from the yearly rate of waste. The peculiar cogency which the consilience of diversified computations imparts to the results has not been noticed by the critic. He tests the strength of the rope by detaching a single strand and subjecting it separately to a severe strain.

The sort of certainty which the physicist obtains by averaging numerous independent observations, attaches more particularly to that part of Mr. Harrison's reasoning by which it is concluded that the rupee circulation remained approximately constant for several years after 1876. His conclusion as to the absolute amount of the circulation does not appear to rest on quite the same foundation. For, as pointed out in a former number of the ECONOMIC JOURNAL,1 if each coinage soon after leaving the mint were docked of a certain proportion, e.g., by emigration or hoarding (in excess of that which Mr. Harrison estimates to be lost during the two or three years which a coinage may take in getting into circulation), the beautiful consilience of the results would not be affected, provided that the proportion abstracted were the same for each coinage; the constancy of the circulation in the years after 1876 would still be manifested, though for the absolute amount we should have only a superior limit. To make certain of the absolute amount we require another datum, which Mr. Harrison obtains by tracing the history of the coinage after it has left the mint, estimating how much is hoarded or melted or sent abroad in specie. If we likened the prime argument with its mutually supporting parts to a magnificent arch, this supplementary datum performs the part of an external buttress which secures the arch against a certain subsidence to which it may be liable. But all the strength and beauty of this architecture is lost on the undiscerning eye of the official inspector; he sees nothing but the foundation stone which was laid by Jevons.

Having failed to appreciate the cogency of the premises, it is no wonder that our critic should be sceptical about the conclusions. But it may excite surprise that he should suppose his case to be strengthened by the following remark :—

"Mr. Harrison's general conclusion drawn in 1894 from the above rather divergent results was that the circulation had from 1876 to 1886 been approximately constant at 115 crores, that it then gradually expanded to 120 crores in 1889-90, and had risen to about 125 crores in 1892-93. It may be reasonably 1 Vol. II. p. 166. Above, p. 411.

VOL. I.

EE

doubted whether, with a population increasing at the rate of one per cent. a year, and with the issue between the years 1876 and 1886 of upwards of 70 crores of new rupees, the circulation can have remained during eleven years even approximately constant."

But according to Mr. Harrison's estimate of the waste of the coinage, about 6.77 per cent. per annum, the loss on a circulation kept constantly at 115 crores ought to be about 11 × 6-77 crores, that is, upwards of 70 crores. What wonder then that the addition of upwards of 70 crores of new rupees per annum should be just sufficient to keep the volume of the circulation constant! The observation which was meant as an objection proves to be a verification.

It sometimes happens that an advocate opening a strong case does not urge every tittle of evidence, whether through mere inadvertence or exercising a discreet reserve. If under these circumstances the counsel on the other side insists on crossquestioning he is apt to elicit some point damaging to his own case. The Head Commissioner has put himself in the unpleasant position of that cross-questioning counsel in the passage above quoted, and also in the following:

"Mr. Harrison's examination was made in nine cases in the year immediately following the year of coinage, in six cases in the second year, and in one case in the third year. It seems very unlikely that equal diffusion can have taken place within one or even two years.'

It will be remembered by our readers that Mr. Harrison selects for the date at which the coinage of any particular year (e.g., 1874) may be assumed to have made its full contribution to the circulation, that year in which the proportion of the particular (e.g., the 1874) coinage constitutes a maximum percentage of the circulation (in the case instanced the year 1877). This procedure is countenanced by the probability that the circulation was constant during the years under consideration. Still, as above admitted, the main argument in its bearing on the absolute quantity-as distinguished from the constancy— of the circulation is open to the suspicion that a uniform proportion of each coinage might, without any warning given, have been withdrawn from the amount assumed to have entered into circulation. The probability of this uniform subtraction becomes less the greater the variety of the circumstances under which the different coinages entered the circulation. Accordingly some additional probability is imparted to the whole argument when it is pointed out that there is a certain diversity in the data on which the different estimates are based.