Indian Journal of Economics April 1942

The rate of exchange is given by the ratio of the offers of one currency against the offers of the other. [...] In the evidence before the Herschell and Fowler Comittees Marshall takes for granted the conception of the Indian balance of payments and its constitution; his description of the balance is scattered in the answer as are his explanations of how the rupee-sterling rate of exchange is determined. [...] Concerning the influence of the forces from the side of goods on the exchange Marshall in reply to a question from the commission instances the case of an increased demand for imports on the part of India. [...] In the sixties of the last century the discovery of certain silver mines in California and some of the Southern States of the United States of America led to a lowering in the exchange value of silver in relation to other commodities. [...] We call the ratio of the indices of gold to silver prices in 1873 the "parity rate of exchange." We have made botl the parity rate and the actual exchange index in this veal"MARSHALL'S CONTRIBUTION TO INDIAN ECONOMICS 891 equal to unity so that the index of the actual exchange is at par with the parity rate: Index-of wholesale prices_ =- Index of export prices 100 Index of rate of exchange =1 in