COMMITTEE. (Hansard, 21 June 1886)

HC Deb 21 June 1886 vol 307 cc70-155 70

§ Considered in Committee.

§ (In the Committee.)

§ THE UNDER SECRETARY OF STATE FOR INDIA (MR. STAFFORD HOWARD) (Gloucester, Thornbury),
in rising to move the following Resolution:— 71 That it appears, by the Accounts laid before this House, that the Total Revenue of India for the year ending the 31st day of March 1885 was £70,690,681; that the Total Expenditure in India and in England charged to Revenue was £71,077,127; that there was an excess of Expenditure over Revenue of £386,446; and that the Capital Outlay on Railways and Irrigation Works was £4,226,613, besides a Capital Charge of £1,314,746 in connection with the Purchase of the Eastern Bengal Railway and in the Redemption of Liabilities, said: Mr. Courtney, if we had been called upon to discuss the Statement I am about to make at this time of the year under ordinary circumstances, I think we might have taken it as a proper recognition of the importance of the subject; but I am afraid an outsider, oven if he were not aware of the political aspect, must, under present circumstances, from the state of these Benches, be aware that there must be some attraction outside the House as great as the 12th of August is supposed to be upon ordinary occasions. But, though it was not to be expected, under the peculiar circumstances of the case, that a very large number of Members would come to listen to this Statement, and to take part in this discussion, I have thought it my duty, with the assistance of the able gentlemen at the Office which I represent in this House, and for whose attention and assistance I beg to express my obligations, to prepare a Statement of explanation which may be intelligible, not only to those Members of the Committee who may in time past have taken a special interest in the question of India, but also to any hon. Members who may be in the position in which I was myself a couple of months ago—namely, that of not having any great acquaintance with the subject. As has happened on more than one occasion, I believe, when the Indian Financial Statement has been submitted to the House, it will be my duty, before plunging into figures, to give an explanation of an alteration in the form in which the Accounts are presented. There must necessarily be considerable difficulty in combining in one account the transactions of the Government of India, which take place in silver, with those in England, which take place in gold. As hon. Members are aware, it has been the practice for many years to treat the rupee, in the Accounts, as the equivalent of 2s., so that £1 equals 10 rupees. But, for a considerable period, 72 the exchange value of the rupee has been much below 2s. To meet payments made on their behalf in England in gold, the Government of India, while the rupee was at 2s., had to remit 10 rupees for every £1 so paid in this country; but, as the rupee fell below 2s. in value, they had in proportion to remit more than 10 rupees for each £1. That excess has increased year by year as the exchange value of the rupee has become lower and lower, and it is described as charge for exchange. Hitherto the Accounts have shown the Indian transactions in one column, nominally in pounds sterling, but really in tens of rupees—that is, supposing the figure of £1,000,000 in the column headed "Expenditure in India," it would represent 10,000,000 rupees expended in India. The transactions in England have been shown in pounds sterling in another column. Had the rupee remained at the exchange value of 2s., by applying the same process of multiplying by 10 to this figure we should arrive at the exact number of rupees necessary to meet that sum; and, consequently, the statement would be accurate as the sum actually paid by India. But the moment the rupee fell below 2s. in value, it was necessary for India to remit more than 10 rupees for every £1 spent in England in proportion to the fall in exchange. The additional number of rupees thus necessary to make up the sum required to defray the net disbursements in England has always been entered in a single line in the Accounts under the head of "Exchange," and for convenience sake has been divided by 10, so as to appear nominally as pounds sterling in the same way as the other figures. But this system of lumping together in one figure the charge under the head of exchange was inaccurate and misleading. The exchange not being apportioned to the several heads under which it arose, the sterling charges for interest on Debt—for Army, Railways, or any other head—did not show the full rupee charge incurred in meeting it. Hon. Members who sat on the Railway Committee in 1884 may remember that some difficulty arose then in ascertaining the real charge incurred in connection with the railways, as the expenditure shown against them omitted exchange. For the sake of greater accuracy, therefore, it has been decided to eliminate 73 the item of exchange from the general account at pages 40 and 41 of the Blue Book, and to introduce into the detailed statements A and B at pages 42 to 47 a new column showing the exchange incurred under each head; and it will be seen that in the present form of the Accounts every item of receipt or expenditure carries with it its own exchange adjustment wherever such adjustment is involved. Consequently, it is now possible, in the case of every item of expenditure, by adding together the figures in the three columns, to arrive at the exact cost of each item to the Revenues of India (e.g. page 46, head 39. Interest), only it must always be borne in mind that the figures (excepting where the words "England" or "true sterling" are found with them) are practically index figures representing tens of rupees. In fact, this is really a statement in rupees, dressed in an English garb for the sake of our convenience. To illustrate this—by a concrete example. Let us suppose a payment of £500 has to be made in England, and a payment of Rs.10,000 in India under the same head. The payment in India would appear in the Accounts translated into pounds at the conventional rate of 2s. as £1,000. The payment in England is shown as £500; which, at the conventional rate of 2s., is equal to Rs.5,000. But at the actual rate of exchange of 1s. 6d. the rupee, Rs.5,000 would only meet a payment of £375 in this country; and, therefore, when exchange is at 1s. 6d., it is necessary to send 25 per cent, or ¼th more rupees, to meet gold payments than when exchange is at 2s.; consequently, to meet the payment of £500 in this country, it will require Rs.5,000 plus ⅓rd of Rs.5,000—that is, plus Rs.1,666: and these additional Rs.1,666 have to be brought to account. This is done by translating it into pounds at the conventional rate of 2s., in the same way as the payment in India, so that it will stand as £166. This £166 would, under the old form of the Accounts, have been merged under the head "Exchange" in the General Statement; and there was nothing to show how the total cost of the exchange was distributed between the several items of expenditure. By the new system the £166 is shown by itself in the Detailed Statement, against the item to which it belongs. The first column, "Payments in India," shows 74 the Rs.10,000 spent in India as £1,000 of Rs.10 each. The second column, "Payments in England," shows the £500 true sterling paid in this country. The third column, "Exchange," shows, as £166 of Rs.10 each, the Rs.1,666 required in excess of Rs.5,000 to make the payment of £500 true sterling in this country. In this way, by multiplying by 10 the total of the three columns, we get the amount of rupees actually charged upon the Revenues of India, and the figures in the General Statement include the cost of exchange incurred under each item. But I have to explain further if the alteration were limited to distributing the amount of exchange over the several items involving it, instead of giving it in one lump sum, the surplus or deficit at the end of the year would not have been affected; but a further change of importance has been made. By the former plan of calculating the exchange on the remittances from India effected during the year, it might happen that if there was a largo loan in England, and a consequent reduction of the drawings, the charge for remittance would be considerably reduced, or, if the drawings were enhanced to pay off a debt of previous years, the exchange would be increased. This is now avoided by the charge for exchange being calculated on the expenditure of the year in England, instead of on the amount remitted from India; and by this change an alteration of the surplus or deficit is effected, not large in most years, but occasionally of importance, as will be seen by the Table contained in the foot-notes on pages 66 and 67. The circumstances of the year 1885–6 illustrate the importance of this change. The necessity for large military preparations in India, after the Budget had been published, caused a drain on the balances in that country, which compelled the Secretary of State to reduce his drawings very considerably; and the remittances from India fell short by upwards of £3,250,000 of the expenditure in England chargeable against Revenue; and, but for the change of system, the deficit now shown for the year 1885–6 would, after allowing for a set-off in India on railway transactions, have been reduced by £850,000, owing to the inability of the Government of India to make the necessary remittances. I may mention, before leaving 75 this part of the subject, that, to facilitate a comparison of the present Estimates with past years, the Accounts from 1875–6 to 1884–5 have been recast, and are given at pages 64 to 85 of the Blue Book. There is one other small point, in connection with the new method of recording exchange, to which I should call attention. This is, that there is still a small item of exchange shown in the Accounts, in the Detailed Statements of Revenue and Expenditure, though in the General Statement it is merged under "Miscellaneous." This is rather a technical point, I am sorry to say. The item now represents the actual loss or gain to the Government, due to a transaction being carried out under contract at a fixed rate of exchange, which differs from the actual rate of the year, and the sums involved are of comparatively minor importance. In 1884–5 there is a gain of £12,000, and in 1885–6 of £260,000. In 1886–7 the Budget Estimate shows a loss of £138,000. To come to the figures, which will be given throughout in the new form, hon. Members who have the Statement in their hand will see that the Accounts of 1884–5 show a Revenue of £70,691,000, and an Expenditure of £71,077,000, giving a deficit on the year of £386,000. This is an improvement of £324,000 on the Revised Estimate, which showed a deficit of £710,000. The improvement, however, is really more than £324,000, the change in the form of Accounts having operated this year to increase the Expenditure in a greater proportion than the Revenue. Increases in the receipts from land revenue, salt, and railways, yielded a net improvement on the year of £560,000; and the deficit under the old form of Accounts would only have been £150,000, as against £710,000 as previously estimated. In speaking of this deficit, it should be remembered that during the year there were provided, from Revenue, sums of £263,000 for railway construction, and of £1,548,000 (page 41, General Statement of Expenditure) for famine relief and insurance. As, practically, there was no famine to relieve, the whole of this latter sum was spent on (page 44, Statement B, Items 33, 34, 35, 36) protective railways and irrigation works, and on reduction of debt. According to usual practice, in conformity with the principles laid down when the 76 Famine Fund was commenced, the capital outlay on railways and irrigation works not charged to Revenue was £4,227,000, beside a capital charge of £1,315,000 in connection with the purchase of the Eastern Bengal Railway and Redemption of Liabilities. The net amount of debt incurred during the year was £1,194,000—so that, but for the capital charge, the debt would have been reduced by £121,000—the outlay on public works having been provided from savings bank and other deposits, and by a reduction of the balances to the extent of rather more than £2,500,000. That completes the Statement for 1884–5. I now come to the Budget and Revised Estimate of 1885–6. The Budget provided a surplus of £647,000; but anticipations of the Budget, as is well known, were demolished, or, to use the classical language of the noble Lord the Member for Paddington (Lord Randolph Churchill), last year, were "knocked on the head and smashed," by the unforeseen expenditure caused by the Afghan Frontier dispute and by the Burmese War. The results for 1885–6 now show that the Revenue estimated at £72,328,000 will probably be increased by £1,273,000, and will amount to a total of £73,601,000, while the Expenditure, estimated at £71,681,000, will probably be increased by £4,772,000, and will amount to a total of £76,453,000. The deficit is thus £2,852,000, and the Revised Estimate is altogether worse than the Budget, which contemplated a surplus of £647,000, by £3,499,000. Now I come to the capital outlay on railways and irrigation works not charged to Revenue, which is now put at £5,516,000, giving a total Expenditure in excess of Revenue of £8,368,000, which was met by borrowing to the extent of £2,924,000, the remainder being provided from the deposits of the Railway Companies, savings bank balances, &c. A telegram received from the Viceroy last Friday states that the latest information shows that the deficit is likely to be reduced by another £500,000. The extraordinary expenditure forced upon the Government of India during the year caused restrictions to be placed on the expenditure of the Provincial Governments, which spent altogether less than the amount of Revenues allotted to them by £114,000; though, as this amount was paid over 77 to them from the Imperial balances, just as if it had actually been spent, it has to be included in the Expenditure of the Imperial Government. The result of the cutting down of the expenditure of the Provincial Governments was to increase their balances by £838,000, as it had been anticipated at the beginning of the year that they would spend the whole of their allotments as well. Before proceeding with the details of the Revised Estimate for 1885–6, I must call attention to another minor change which has been made in the form of the Accounts, in regard to the discount on loans. The Public Works Loan of £3,500,000 Three per Cent Stock, raised during the year, was issued at a little over 85¼, producing just under £3,000,000, the discount being just over £500,000. Under the old system of Accounts, the whole of the discount would have been charged as Expenditure against the year; and the entry under Debt Receipts would have been the full £3,500,000 for which the Government became liable. It has now been determined not to include in the Expenditure of the year the whole of the discount, but to spread it over a term of years, by charging in each year, up to the date when the loan first becomes redeemable, such a sum as, if invested at 3 per cent, will repay the full amount of the discount. I think that no fault can be found with the Government of India for adopting this course, and departing from a rather rigorous financial virtue by spreading the payment of this amount over a series of years, instead of making it a charge on the Revenue of the year in which the loan was raised. Accordingly, in 1885–6, the entry under Debt is reduced to £2,984,986, the money actually received, while the only charge against the year for discount is £2,721 entered under "Interest," that being the sum which, invested with accumulated interest each year, will have produced £515,014, the total amount of the discount, by 1948, when the Government will have the option of redeeming the Three Per Cent Stock. The chief items responsible for the variations between the Budget and Revised Estimates for 1885–6 are printed in the Explanatory Statement which I have caused to be prepared for the use of hon. Members who are following me in my Statement. An explanation of the causes of increase 78 and decrease will be found in the Parliamentary Paper, No. 197, which was circulated a few days ago. This latter Paper gives the necessary information about details so clearly, that I do not think I need now go into any figures except those relating to "Army" and "Political Charges," under which head the extraordinary expenditure, due to the Afghan Frontier dispute and to the Burmese War, was incurred. The increase under these two heads amounts to a little more than £3,500,000, which sum, by a coincidence, is almost the amount of the total difference between the Budget and Revised Estimates of the year. Under "Political Charges" there is an increase of £464,000, duo to the extra subsidies to the Ameer, to the expenses of the Rawal Pindi Durbar, where the Earl of Dufferin received the visit of the Ameer, and to the cost of the delimitation of the Afghan Frontier. Under "Army" there is a net increase of £3,054,000; and this in spite of reductions, amounting to £514,000, under the heads of Non-Effective Charges in England and of Commissariat and Transport. And here, again, the Government of India have departed from what I described just now as a financial virtue, not of their own accord, but at the request of the Treasury. The diminution of Non-Effective Charges in this country is £371,000, duo to a change in the manner in which the Indian share of the pensions of the British troops is paid to the Treasury. Formerly the Indian Government paid annually the capital value of their share of these pensions. But now, at the request of the Treasury, we have agreed to pay in each year the proportion only of these pensions payable during the year, and to continue to pay such proportion for a series of years. The effect is to cause an immediate large reduction, owing to the fact that the system of capital payments has cleared us from all liabilities for pensions granted during previous years; but the amount payable under the new system will gradually increase for some 10 or 12 years, when it may be expected to attain its maximum of about £1,000,000. This diminution of £514,000 has to be set against a gross increase of £3,568,000. The following items to which the increase is mainly clue deserve notice—First, military preparations—including £240,000 for the 79 temporary railway up the Bolan, and £457,000 for stores from England—£2,514,000. Secondly, Camp of Exercise at Delhi, £100,000; this was the outcome of the military preparations, and was considered, I believe, to be very successful in its result. Thirdly, the Rawal Pindi Durbar—in addition to "Political Charges"—£50,000. Fourthly, Burmah War—including a gratuity of £30,000 to the troops—£390,000. Fifthly, Remounts—on account of re-organization of Artillery and augmentation of British and Native Forces—£91,000. Sixthly, Exchange—this item, as has been explained, appears under "Army" for the first time this year; under the old system it would have been included in the total of the item "Exchange"—£222,000. And, seventhly, other heads, £201,000, making a total of £3,508,000. Before dismissing the Revised Estimates, I must point out that although, under financial stress, less Revenue was spent on railway construction than in 1884–5, the deficit still includes a Revenue charge of £1,500,000 on Famine Relief and Insurance. I must also notice the very satisfactory increase of £899,000 in the Railway Receipts. But of this increase, more than £400,000 were earned by the North Western Railway—the name under which the lines hitherto known separately as the Scinde, the Punjab Northern, and the Indus Valley Railways have been amalgamated. The receipts of this line were swollen by the carriage of war materials and stores, required on the frontier in consequence of the military preparations. I ought also, perhaps, to refer to the decrease of £110,000 under Opium, and of £90,000 under the Salt Revenue. The falling-off under opium is due to a diminished export from the Native States. The decrease under salt is not considered of sufficient importance to justify any alteration in the Budget for this year. I now come to the current year 1886–7. The increase in the Expenditure last year was mainly due to the extraordinary causes which have been mentioned, and which, it is to be hoped, will not recur to the same extent. But, at the same time, the result of the events of last year has been to compel the Government of India to render the line of the Indus River, the natural frontier of the country, impregnable, and to place the Army on a stronger 80 footing. The noble Lord the Member for South Paddington (Lord Randolph Churchill), when making this Statement last year, took occasion, in explaining the necessity of these works, to enter into what was regarded at the time as a violent attack upon the policy of a former Viceroy of India. I do not wish to enter upon recriminatory arguments, though to do so might have made this Statement more interesting. We all know that the noble Lord is obliged at times to give vent to his feelings by making an attack of some kind or other upon somebody, and of that we have a very fair instance before us in the newspapers this morning. Therefore, I think I may put this attack as a necessity coming from the noble Lord, and I shall not endeavour to make my Statement more interesting by going into it. I will confine myself strictly to the Statement I have to lay before the Committee. I shall revert presently to what is being done to carry out these necessary measures. Their financial effect is to add some £2,000,000 as a permanent annual charge on the Indian Revenues, and the Expenditure of 1886–7 does not fall again to the level it had reached in 1884–5. The Expenditure, which in 1884–5 was £71,000,000, leapt to £76,500,000 last year, which, however, was an extraordinary year, with a deficit of nearly £3,000,000. Nevertheless, in comparison with last year, the Expenditure of the present year only shows a reduction of less than £900,000. And the present year must be regarded as a normal one, the first of a new régime. 1884–5, the last year of the old régime, showed a total Expenditure of £71,000,000. The Expenditure of the present year is £76,500,000. Part, however, of this increase, I may explain again, is only apparent; both sides of the Account, Revenue and Expenditure, being proportionately swollen by the development of the railways, and by the addition to our territories of Upper Burmah. The actual increase of Expenditure is, perhaps, better shown by taking the net figures. The net Expenditure in 1884–5 was £42,000,000. In 1886–7 it is estimated at £44,000,000. The growth of Expenditure in India demands most serious attention; and, from the form of the Amendment which my hon. Friend the Member for Flintshire (Mr. S. Smith) proposes to move, 81 I imagine that be takes up that line. Charges of extravagance are made against the Government of India, and I wish to show by the figures that those charges ought not, legitimately, to be made. I think that the Government of India have, on the whole, a very good answer to make. I have, therefore, analyzed the Expenditure of 1885–6, taking as the basis of my comparison the year 1881–2, which was the first year of recovery from the disturbance of the finances caused by the Afghan War and the Famines, and which showed a surplus of more than £3,500,000. To make the comparison fair, we must deduct from the gross Expenditure of those two years the cost of the working expenses of the railways and irrigation works (Revenue Account). It is obvious that, as each mile of railway or canal is opened, there is an increase of working expenses, balanced by an increase of receipts on the Revenue side; and it is, therefore, misleading to treat as increase of Expenditure the development of our public works. For the same reason, I shall deduct the cost of the collection of the Opium Revenue; and, finally, I shall deduct the cost of the remittances to this country to meet payments chargeable against Revenue, because that is an item over which the Government has no control. The following is the result of the comparison:—The gross Expenditure in 1881–2 was £72,090,000, from which must be deducted all payments on account of the Afghan War—£1,648,000— which puts the Expenditure of 1881–2 at £70,442,000. I have done that because I think it might be objected by hon. Members that it is unfair to include payments on account of that war. The gross Expenditure in 1885–6 was £76,453,000. So that the gross increase last year was, therefore, £6,011,000, which undoubtedly, at first sight, seems to be a very large figure. But under Railway Revenue Account the Expenditure has risen from £11,171,000 in 1881–2 to £14,225,000 in 1885–6, being an increase of £3,054,000. Under Irrigation it has risen from £2,048,000 to £2,306,000, an increase of £258,000. Under Opium it has risen from £2,058,000 to £3,110,000, an increase of £1,052,000. Under Exchange—on other expenditure chargeable to Revenue—it has risen from £2,048,000 to £2,817,000, an increase of £769,000. The net in- 82 crease, under the heads which have to be omitted from our comparisons, is thus £5,133,000, which, deducted from the gross increase of £6,011,000, leaves a net increase of Expenditure in 1885–6, as compared with 1881–2, of £878,000. The actual increase in the last four years is, therefore, less than £1,000,000, notwithstanding that we eliminated all extraordinary charges from 1881–2, while there has been included in 1885–6 more than £3,000,000 on account of extraordinary charges—namely, £2,514,000 for military preparations; £390,000 for the Burmah operations; and £233,000 for an increase in the pay of British troops, rendered necessary by the fall in the value of silver. If we had eliminated the extraordinary charges from the latter years as we did from the former, so far from having an increase of Expenditure to the extent of £878,000, we should have had a diminution of more than £2,000,000. Well, Sir, on the whole, bearing these facts in mind, I think the Government of India has a fair answer to accusations on the score of extravagance, and I commend the fact to my hon. Friend the Member for Flintshire (Mr. S. Smith). Of course, there has been this extraordinary expenditure; but, as I said before, that expenditure is not to be expected to occur to the same extent again. And, if hon. Members will refer to the Blue Book (No. 195 of last year) on Reduction of Expenditure, they will see that the Secretary of State in Council has gone thoroughly into the subject, and lost no opportunity of bringing its importance homo to the Government of India. And I must also remind hon. Members that a Committee on Reduction of Expenditure is now sitting at Simla. Well, Sir, turning to the comparison of the Budget Estimates for the current year with last year's Revised Estimate, the Budget Estimate for 1886–7 is altogether better than the Revised Estimate. The Revenue, which in the Revised Estimate for 1885–6 was put at £73,601,000, is estimated to increase by £2,198,000, and to amount to £75,799,000. The Expenditure, which in the Revised Estimate for 1885–6 was put at£76,453,000, is estimated to be diminished by £836,000, and to amount to £73,617,000, giving a surplus of £182,000; and the Budget for 1886–7 is altogether better than the Revised Estimate of 1885–6, which con- 83 templated a deficit of £2,852,000, by £3,034,000. The total capital outlay on railways and irrigation works not charged to Revenue is estimated at at £5,427,000, and on Special Defence works at £442,000, making a total capital expenditure of £5,869,000, of which it is calculated that £4,571,000 will be provided by borrowing, the rest being supplied by the balances. And now I come to an explanation in regard to the Provincial balances. The Provincial balances, which had been expected to close in 1885–6 with a balance improved to the extent of £114,000, are to be reduced during the year by £975,000, the amount spent from them by the Provincial Governments; and these balances show, therefore, a total diminution of £1,089,000 in comparison with 1885–6, The pressure of the Army charges on the Imperial Revenues made it necessary to withhold from the Provincial Governments £400,000 of their allotments, the result being to reduce the charges against the Imperial Revenue by that amount, and to compel the Provincial Governments to provide from their balances the £400,000 by which their revenues will be reduced, in addition to the expenditure of £575,000 they themselves contemplated out of their balances. The year, as I have said, closes with a surplus of £182,000. This is very small; but I am glad to say that the Government of India telegraphed on Friday that, in spite of the difficulties in Upper Burmah, they had no reason to doubt that the anticipations of the Budget would be fulfilled, unless, indeed, there should be any fall in the Exchange below 1s. 6d., the rate on which the cost of our remittances for the year is based. On this point I am bound to admit that we have no feeling of security. No great sale of Council Bills has been effected since the 31st of March; but those sold have only realized an average price of 1s. 5¾d. I am quite alive to the fact that the fall in the price of silver, and in commodities also in this country which has accompanied it, is not without compensations in more than one direction to India as a whole. But the seriousness of this question of the exchange to the Government can be realized without difficulty, when we remember that every fall of 1d. in the value of the rupee represents to India an increased expenditure of over £1,000,000, 84 and that it is altogether beyond the power of the Government of India, single-handed, to arrest the causes of this fall. I understand that the Royal Commission on the Depression of Trade has taken account of the subject to some extent, and I believe the result of its investigations will be looked forward to with interest by the Government of India. Apart, however, from any considerations of a silver policy in the future, I think, as regards the present year, that, if it becomes clear that the anticipated surplus will not be realized, the Government will be bound in duty to take steps to prevent a deficit, which can only be done by reducing expenditure. There is, I believe, hardly any branch of expenditure in which, a reduction will not be an evil, or, at least, a grave inconvenience. The question is one of a choice of evils. To return to our comparison of this year with last, the Revenue of 1886–7, as I have said, is estimated at an increase of £2,198,000 over the Revenue of 1885–6. But of this great increase £1,615,000 is due to the fact that the Revenues of Upper Burmah are included in the Estimates for the first time this year, and that, owing to the purchase of the Scinde Railway by the State, the gross receipts and working expenses of the line are also shown for the first time on both sides of the Account, as is the practice with the State lines, and not only the net receipts. As regards Upper Burmah, the result of the extension of the Indian Empire is a net charge on the year of £110,000, the Revenue being taken at £665,000, and the Expenditure at £775,000. Almost the whole of the Revenue from Upper Burmah is derived from Land Revenue, which is estimated at £515,000. Forests are expected to yield £90,000, and only £60,000 is expected to be received from all other sources. On the Expenditure side the Military Charges are put at £300,000; Police at £154,000; Public Works at £100,000; Law and Justice will cost £58,000; and the Administration of the Land Revenue £92,000. These items account for £704,000 of expenditure, out of £775,000. Upper Burmah is, therefore, responsible for the increases in the Revenue from Forests and Land Revenue, and for the increase in Expenditure under Land Revenue, Law and Justice, and Police. For the infor- 85 mation of the Committee, I may, perhaps, be allowed to give the latest Reports we have received in regard to the state of Upper Burmah, Although not exactly germane to a Financial Statement, they may be a matter of interest to hon. Members. The telegram is as follows:— Late Reports regarding the pacification of the country are more favourable. In Lower Burmah there is still some disturbance in the Prome and Tharrawaddy districts; but the dacoit bands have broken up, and the country generally is quiet. In Upper Burmah disturbances continue, but here, also, there is decided improvement. Kendat, on Upper Chindwin, was occupied on the 10th June. The districts round Mandalay are quiet. New police from Northern India are being distributed over districts in Irrawaddy Valley, and are doing well. During a recent periodical tour through Southern districts, Mr. Bernard found that convoys of carts are able to go without armed escorts on the roads, and preparations for agriculture are everywhere going on. The rainy season has begun favourably. Some insurgent leaders were treating for submission. Villagers and headmen friendly and anxious for the protection of troops. It is doubted whether so much revenue will be collected this year as had been hoped; but it is not anticipated that there will be any extraordinary deficit. That is shortly the information I have to give in regard to the prospects in Upper Burmah. I now come to the increase under assessed taxes of £943,000 due to the conversion of the Licence Tax into an Income Tax. Part of this gain is nominal, as Government has to pay Income Tax on their share of surplus profits on railways, so that it is only a transfer from railway receipts to the head of assessed taxes, and the net gain is estimated at £765,000. I had intended to say something as to the nature of this tax; but, as time is passing, I will only point out that it is not a new tax; it has been in intermittent operation, with varying incidence, and sometimes in the shape of a Licence Tax, ever since 1860. In 1878 complaints wore made that the professional and official classes wore exempt from it. But, owing to the then favourable finances and remissions of taxation which took place, no attempt to include them was made. In 1880 the minimum taxable income was raised to Rs.500, which exempted from the tax in Bengal alone 580,000 out of the 740,000 previously assessed, and reduced the estimated number throughout India of those who paid it to 250,000 persons. The new tax which has been imposed this year gets rid of 86 the complaint that the professional and official classes were exempt from Income Tax. The tax falls at the rate of 2 per cent on incomes between Rs.500 and Rs.2,000, 2½ percent at or above Rs.2,000. A great many incomes already taxed are not affected by it. Altogether about 300,000 persons will pay the tax. Under opium there is an improvement on the Revenue side of £313,000. It is expected that, in consequence of the large crops in recent years, there will be sold 4,500 more chests this year than last. On the Expenditure side there is a decrease of £460,000, owing to the crop being smaller this year than last, when it was unusually large. The total improvement under this head is, therefore, £773,000. I now come to the Expenditure. The two most important items on this side of the Account are Army and Railways, about which I shall speak in some detail. I must first, however, notice that the increase of nearly £600,000 under Civil works is mainly incurred on roads which are being constructed in Upper Burmah, and on the North-Western Frontier in connection with the military schemes for the fortification of the frontier. With regard to the Army, the charge for the Army during 1886–7 shows a decrease of £1,500,000, in comparison with the Revised Estimate of 1885–6. But the military charges were abnormally swollen last year, as I have already explained; and, for a fair comparison, it is necessary to go back to the Budget Estimate of last year. The Budget Estimate of Army charges for last year was £16,675,000; for this year it is £18,266,000; a net increase of £1,591,000. The total increase is made up thus—in India £1,127,000, England £464,000, making altogether £1,591,000. The chief items responsible for the increase in India are—Regimental Pay and Allowances—due to increase of strength—£683,000. Commissariat—due to operations in Burmah and increase of strength—£317,000. Remounts—due to increase of Cavalry—£91,000. In England the Homo charges were increased by £125,000 for expenses on account of the increased strength of the British troops in India, by £120,000 on account of deferred pay, and by £134,000, mainly due to the supply of 25,000 Martini-Enfield rifles, and of new guns for the mountain batteries. The preceding figures have shown the 87 cost incurred during the year in strengthening our Army in India. I have now to say a few words about the progress which is being made. The permanent increase to the British Force during the trooping season of last year was 6,500 men. It is not necessary that I should go into details. I think the leading figures will be sufficient; but if the noble Lord opposite (Lord Randolph Churchill) requires more figures I shall be ready to give them to him. The increase of 6,500 was composed of Infantry 5,400, Artillery 650, and Cavalry 450. During the trooping season in the winter of this year there will be despatched about 3,300 more—namely, Infantry 2,500 men, and Cavalry 800. During 1887–8 it is intended to send out garrison batteries of 690 men in all, bringing the total Establishment of British troops in India to 69,764 men of all ranks, excluding officers. The total cost of the maintenance of the additional British troops will be in all about £675,000; while the extra Home charges will be £150,000 during the current year, and £50,000 during 1887–8. These troops will, for the most part, be quartered in the existing barracks, with the exception of the garrison batteries, who will occupy the defensive works which it is intended to construct on our North-West Frontier. As regards the Native Army, 4,582 men of all ranks have been added to the Cavalry, bringing the total numbers to 22,000 men; and three additional regiments of Ghoorkhas have been raised, amounting to 2,736 of all ranks. It is hoped that, during the ensuing season, two other battalions of Ghoorkhas may be equipped, giving an additional 1,824 men. The cost of this increase of strength will be £360,000. The total authorized increase to the Native Infantry is 1,198 of all ranks. But it has not yet been decided how to recruit the whole of the additional men. For the present, the increase is comprised of the 4,560 Ghoorkhas whom I have mentioned. A certain amount of expenditure is also being incurred on the defences of Aden, Bombay, and Kurrachee, for which 10-inch guns have been ordered; and also Hotchkiss and machine guns for the coast and inland defences, at a cost, in all, of some £244,000. The re-arming of the Forces, both British and Native, with improved rifles, is being carried out at a total 88 estimated cost of over £350,000. There is also a prospective charge for floating coast defences. This includes interest on an initial outlay of over £250,000 on gun-vessels and torpedo-boats. It will also be necessary, in the course of the next three years, to arm the whole of the Field Artillery with the new breech-loading rifle 12 pound field piece, at a cost, roughly stated, of £500,000. It is not yet possible to say in what proportion the cost of these improvements will fall on each of the next few years; but it is an expenditure which the Government have made preparations to face. This is a detailed statement of the addition to the Army which it was found necessary to make last year, in view of the emergency which arose. I now come to the important subject of public works. Before giving a short account of the financial position of public works, I have to explain an alteration in the method of exhibiting the Accounts under this head. There has always been a sort of controversy as to how far borrowed money should be spent upon public works; and for some time it has been the rule that borrowed money should only be spent on works that were expected to be productive to the extent of not less than 4 per cent on the outlay; and the cost of constructing other works was charged against Revenue, either under the head of protective works—that is, works calculated to afford protection against famine—or else under that of public works not classed as productive. The whole question of railway policy was investigated by a Committee in 1884, and in accordance with their recommendation it was determined to borrow more freely for the construction of such works, and not to restrict the outlay of borrowed money to lines technically termed productive. Consequently, the method of stating the financial results of public works, distinguishing between productive and non-productive works, which was adopted in the time of the noble Lord the Member for Middlesex (Lord George Hamilton), has ceased to be satisfactory. It has now been decided to show under one head the financial results of all railways of whatever character, the receipts of the State being shown on one side, and the working expenses and interest borne by the State upon the other side. No outlay on construction is included in this 89 head. The portion supplied by borrowed money is shown outside the Revenue Account; that charged against Revenue is shown under the head of Famine Relief and Insurance, if within the limit of expenditure authorized on works calculated to protect the country against famine, or else under a now head (No. 37) called "Construction of Railways (charged against Revenue in addition to that under Famine Insurance)." Irrigation works are treated in a similar way. The not charge for Railways during 1886–7 is estimated at £1,722,000 (shown under the heading of Railway Revenue Account in the now form of the Accounts). The charge for 1885–6 is put at £782,000; so that the cost is £940,000 greater than last year. Of this increase of £940,000, £159,000 is due to the increased cost of making payments in this country in consequence of the fall in the value of the rupee; but it is mainly caused by an increase of the interest on debt raised for the construction of State lines, and of the interest on the deposits of the Southern Mahratta and Indian Midland Railways. Before leaving the figures of the railways for 1886–7, I must point out that the total not charge of £1,722,000 almost corresponds with the cost of exchange. The total outlay on the construction of railways estimated for 1886–7 is £5,336,000, of which of 3,719,000 is for Frontier Railways. Last year the total outlay was £6,134,000, of which £2,975,000 was for Frontier Railways; so that for the present year, whilst the total expenditure on all railways is less, that on the Frontier Railways is greater than last year, showing that expenditure on protective and other railways has had to be reduced. The amount, too, provided out of Revenue for railway construction shows a diminution of about £600,000, as compared with last year, there being a reduction of Expenditure from Revenue, apart from the Famine Insurance Fund, of over £500,000, and of £89,000 in the amount usually apportioned from that fund. In consequence of the anxiety of the Government of India to have the Indian Midland Railway constructed on account of its usefulness in protecting the country from famine—[Lord RANDOLPH CHURCHILL: For military purposes.]—the noble Lord the late Secretary of State sanctioned the payment of the necessary amount 90 of interest to that Company from the Famine Insurance Fund. The sum, therefore, of £138,700 is deducted from the expenditure on account of that Fund, and is merged in the general statement of Railway expenditure, so that the full burden of the Government in connection with the railways may be accurately shown. The total amount to be expended from borrowed money for railways and irrigation works during the year is estimated at £5,427,000. The Railway Committee of 1884 recommended in their Report that the sum of £2,500,000, which was fixed by the Select Committee of 1878–9 as the limit of borrowing, should be enlarged at the discretion of the Secretary of State in Council; and since then the limit has been £3,500,000. This rule has had to be suspended in consequence of the necessity for the construction of the frontier works. About £440,000 is also charged this year to loan funds on account of coast and land defences. But this is an exceptional occurrence. Now, Sir, having dealt with the most important items of Expenditure during the coining year, I come to a question which will specially interest my hon. Friend the Member for Flintshire (Mr. S. Smith), and that is the question of debt. It is a subject upon which many people seem to have the vaguest ideas, and, like most vague ideas, I think they are exaggerated. The subject of the Debt of India is so much mixed up with that of public works that I shall, to a great extent, have to take them together. To estimate the real indebtedness of a country, to discover the actual burden, the dead-weight of debt, which presses upon the taxpayers, it is surely necessary to distinguish between debt against which you have nothing remunerative to show, and debt which provides its own support. It seems to me that there is all the difference between them that there is between a pauper and a profitable servant. The one lives a burden upon the taxpayers, while the other is not only self-supporting, but contributes by his work to add to the general wealth and prosperity of all. The hon. Member for Flintshire, in an article which he recently published in The Contemporary Review, gives some figures on the Debt of India which require correction. They were about right in regard to 1884, but not up to date. The hon. Member, in 91 an article called, I think, India Revisited, said— The Indian Government has also contracted a large National Debt (say £161,000,000), part of it covered by public works, but the greater part (say about £100,000,000) of the nature of our own and other National Debts. The Accounts of 1884 (April) show that, while the total debt of India was rather more than £161,000,000, about £68,000,000 were covered by public works, railways, and irrigation works, about £93,000,000 being for other purposes. The Budget for the year which will end March 31, 1887, gives the total Debt at rather less than £176,000,000, showing an increase of £14,500,000 in three years. But the amount incurred for railways and irrigation works during that period will have been increased by over £22,000,000, so that practically the Debt not covered by the public works has decreased by £7,500,000, which is due to that amount being devoted to the construction of such works out of Revenue. Let me now give, further, a statement of the assets and liabilities on the 31st of March, 1886, and this time I include the liabilities of the Government in respect of Guaranteed as well as of State Rail-

	1875–6	1885–6
Net Charge for Interest on Debt, other than that charged to Railways and Irrigation Works	4,247,000	3,628,000
Net Charge for Railways: Companies' Lines	1,175,000	1,347,000
Net Charge for State Railways (including Purchased Lines)	384,000	—564,000
Net Charge for Irrigation	1,147,000	777,000
Total Net Charge	6,953,000	5,188,000

§ The result is a reduction of £1,765,000 in 10 years, notwithstanding an increase of £1,616,000 in the charge for exchange included under these heads. I may now mention the percentage of earnings of public works in 1885–6. State Railways—gross receipts £9,805,000; working expenses, £4,740,000; net receipts, £5,065,000; Guaranteed Railways, net receipts, £3,644,000; total net receipts from Railways, £8,709,000. On £150,346,000 of capital spent up to March 31, 1885, in railway construction, £8,709,000 is equal to are turn of 5–79 per cent; and, assuming that the whole of the capital had been supplied from England, and that the receipts had to be remitted at 1s. 6d. the rupee to defray the charge for interest, the return would be equal to £4 6s. 10d. per cent. Similarly, the

§ ways. On the 31st of March, 1886, the liabilities of the Government of India were—Debt in India, £93,124,000; Debt in England, £73,807,000, Railway Companies' Subscribed Capital, £77,474,000; and other obligations, £15,151,000. The total liabilities were £259,556,000; but, deducting assets £208,179,000, the un-covered liabilities were £51,377,000, or about one and a quarter years' income from taxation. The assets were, State Railways, £50,214,000;Purchased Lines, East Indian Railway, £32,610,000; Eastern Bengal Railway, £3,691,000; and Railway Companies' lines, £73,131,000; total for Railways, £159,646,000; Irrigation Works, £23,938,000; Loans to Municipalities, £7,469,000; Cash Balances, £17,126,000, making a total of £208,179,000. I have one further statement to make, comparing the net charge for interest on debt for railways and irrigation 10 years ago with the Revised Estimate of it for last year; and I do not think that on a review of these figures we should be justified in taking a gloomy view of the position of India as regards her Debt. The following figures show the not charge for interest, railways, and irrigation works.

§ capital spent on irrigation works up to March 31, 1835, was £23,122,090, and the net receipts from these works were £791,600, giving a return of 3.42 per cent. But in this case there is no allowance to be made for remittances to England on account of interest, the capital having been practically provided by borrowing in India. I have now, Sir, completed the figures which it has been necessary for me to lay before the Committee; and it seems to me that, reviewing the whole situation, apart from this question of silver, which, no doubt, is severely exercising the mind of the Government of India and of other persons at the present time—apart from that question, over which they have no control—I do not see that the finances of India are in so bad a state as one would 93 be led to infer from the Amendment of which my hon. Friend the Member for Flintshire (Mr. S. Smith) has given Notice. I hope that in the coming year the Estimate of Receipts will not fail, and that it may not be necessary to diminish the expenditure, especially upon useful works. The Government of India have been obliged to postpone many works which they would have liked to have carried out, on account of the construction of the Frontier Railways; but, when those have been completed, it is hoped that they may be able to resume the expenditure on those productive works which add so much to the resources of India, and do so much to improve the condition of the people of India. I feel that I have trespassed at very great length upon the time of the Committee, and I thank them for the attention they have paid to my Statement. I hope that my explanation has been clear, and I beg, in conclusion, to move the formal Resolution.

§ Motion made, and Question proposed, That it appears, by the Accounts laid before this House, that the Total Revenue of India for the year ending the 31st day of March 1885 was £70,690,681; that the Total Expenditure in India and in England charged to Revenue was £71,077,127; that there was an excess of Expenditure over Revenue of £386,446, and that the Capital Outlay on Railways and Irrigation Works was £4,226,613, besides a Capital Charge of £1,314,746 in connection with the Purchase of the Eastern Bengal Railway, and in the Redemption of Liabilities."—(Mr. Stafford Howard.)

§ LORD RANDOLPH CHURCHILL (Paddington, S.)
I quite agree with the hon, Gentleman who has just sat down that there is nothing whatever in the financial condition of India, so far as it has been explained to-night, or so far as he has been able to learn it, which would in any degree warrant the Amendment which the hon. Member for Flintshire (Mr. S. Smith) has placed on the Paper. There is certainly nothing in the financial condition of India to cause grave anxiety, nor can it be argued with any amount of force that the expenditure is excessive, or that it necessitates a resort to taxes repugnant to Native opinion. These are propositions which I do not imagine for a moment the hon. Member would be able to persuade the Committee are in any degree accurate. At the same time, I am sure that the Under Secretary of State for 94 India is not anxious that the House of Commons should take a very rosy view as to the financial state of India. I imagine that the financial state of India is one which requires careful consideration and careful management. With careful consideration and careful management the financial state of India is one that will bear favourable comparison with the financial state of any other county. The hon. Gentleman, in alluding to the Debt of India, has quoted figures which go to show that the Debt of India is in reality much smaller than it appears on paper, and I think he brought the actual uncovered Debt down to £60,000,000. That is true to a certain extent. But to arrive at this figure the assets have been calculated at their full value, and that value can only be maintained while our position in India is secured as a strong one. If you allow your political position to be weakened or demoralized your assets will undoubtedly suffer very greatly in value, and your Debt will soon mount up. The hon. Gentleman has kept very closely to figures; and whether from a wish to spare the time of the Committee, or from some other cause, he has not given the Committee any general information as to the condition of Indian affairs generally. The only disadvantage of the kind of statement which the hon. Gentleman has made is that it is very difficult to follow him at all in immediate debate into the numerous and complicated figures that he has quoted. At the same time, although numerous and complicated, I have no doubt of their accuracy. The officials at the India Office are not accustomed to make errors in accounts; but, at the same time, in order to comment and argue upon the figures, it is necessary first of all to see them in print before being able to criticize them. In addition to this fact, it is obvious that this is not a very favourable opportunity for any exhaustive consideration of Indian affairs. Other matters are occupying the mind of the House of Commons, and the attendance of Members is exceedingly slender. Therefore, I cannot but think that Parliament would have a better opportunity of going into these matters later in the year. If, however, the Committee will allow me to occupy its attention for a few minutes, I should like to make two or three remarks rather in the nature of 95 inquiry than criticism. The hon. Gentleman commenced by announcing a change in the form of Account. I imagine that I am—at any rate in recent years—the only Minister responsible for the India Office who has brought forward a Budget which did not announce a change in the form of Account. These changes are made nearly every year, and are exceedingly inconvenient, for they prevent anyone but an experienced financier being able to compare one year's Statement with another. The English form of Accounts is scarcely ever changed. The Chancellor of the Exchequer will correct me if I am wrong; but I think the same form of account is presented year after year. Constant changes in the form of Account are only calculated to lead to confusion. Not only have changes been made in the form of Accounts, but they have been made in such a way as to be extremely inconvenient. However, I content myself with that remark, and I hope that the hon. Gentleman will be of opinion that the time has now arrived when no further changes should be made, and that there will be an undertaking that, at any rate for the next 10 years, the Accounts will remain as they are. Sir, the hon. Gentleman has alluded to the increase in the Indian Expenditure—an increase amounting to rather more than £2,000,000 over the Expenditure of the year 1884–5—an increase entirely owing to military expenditure; and the hon. Gentleman said that the increase was mainly due to extraordinary charges. There I must take issue with the hon. Gentleman altogether. It is one of the peculiar features of Liberal Ministers, when addressing the House of Commons on questions of finance, to represent to the House of Commons that any expenditure incurred by them is extraordinary expenditure due to causes over which they can exercise no control—causes which will rapidly pass away if the administration of affairs remain in their hands. Now, the Committee would be altogether in error if they were to imagine for a moment that any of this increase is of an extraordinary nature. I hold that it is strictly normal, and that it will have to be kept up for an indefinite time; that you will not be able to reduce your Army in India, and, consequently, that you will not be able to reduce the cost of your 96 Army, but that you will, in all probability, have to increase your Army in India as time goes on. The Committee may not receive that statement with pleasure; but that it is a true statement I defy anybody to contradict. The total change which last year came over the Indian Empire, owing to the Russian advance, made itself felt to the extent of £2,000,000 of your Expenditure. Therefore, I altogether differ from the hon. Gentleman when he describes to the Committee the increase in Indian Expenditure as being due to extraordinary causes.

§ LORD STAFFORD HOWARD
I said that the £2,000,000 were to be considered as a permanent increase.

§ LORD RANDOLPH CHURCHILL
I did not hear the word "permanent." I was very much struck by that portion of the hon. Gentleman's speech; but if he says now that it will be a permanent increase of Expenditure, then I withdraw my remarks on that subject. Then the hon. Gentleman alluded to the whole of the £8,000,000 and over deficit which is put down upon this Paper under the head of Revised Estimate [Mr. STAFFORD HOWARD: Extraordinary.] Exactly; £5,000,000 of which is capital outlay on railways and irrigation works not charged to Revenue, and is due to extraordinary causes; but then that might, to some extent, mislead the Committee. I do not doubt that it will be necessary for the Indian Government to go on spending money at the Indian Frontier for some time, and I am also of opinion that the more you continue to fortify that Frontier the more you will have to expend, and that the Committee will not be wise to look on it as likely to arrive at anything like a perfect state under a period of, say, 10 years. I do not say that you will have to expend £5,000,000 a-year on Frontier Railways; but I say that the whole of your Expenditure must not be put down as altogether extraordinary, and that the expenditure on fortifications will add to the sum which the hon. Gentleman says is a permanent charge some further considerable sums of money. Now, the hon. Gentleman alluded to some charges of extravagance brought by persons acquainted with Indian affairs against the Government of India in respect of the Expenditure; and the hon. Gentleman quoted figures, which he 97 seemed to think constituted a good answer to anything in the way of charges of extravagance brought against the Indian Government. I know that it is easy to take the figures of the Government of India, and to say that it is a very economical Government; but the hon. Gentleman did not tell the Committee what I think he might have told them—that when the Budget for this year was brought before the India Office and Council, and sanctioned by them, a very strong separate despatch was written by the Secretary of State in Council to the Government in India, directing attention to economies which were absolutely necessary in the opinion of the Secretary of State to be made, and that the economies which the Secretary of State had in view at the time were economies under the head of Public Works, and particularly under the head of Civil Buildings and Roads. These represented an expenditure which, in the Government of the Marquess of Ripon, amounted, I think, to £1,000,000 over what it was in 1880, and that was certainly an expenditure which I had in my mind when I inculcated economy on the Government of India in a separate despatch. If, then, we can get the Government of India to economize under that head, I do not think that any great charge of extravagance would lie against them; and I only bring the matter to mind in order to hear from the hon. Gentleman whether the views I expressed still continue to influence the Indian Government in the matter of public works. With regard to the surplus, a point occurs to me on which, perhaps, the hon. Gentleman will be able to enlighten the Committee. It will be observed that the surplus, which is stated at £182,000, is extremely small and narrow. I do not think it was ever so small before. The hon. Gentleman also said that the rupee was taken at 1s. 6d., whereas since the beginning of the financial year the value of the rupee had been only 1s. 5¾d.; and, therefore, the value of the rupee has fallen by ¼d. from the Budget Estimate. Well, Sir, the fall of ¼d. is equal to £250,000, and if you take that sum from £182,000 I am of opinion that you will arrive at a minus quantity; and, therefore, if the hon. Gentleman wishes to place the whole situation candidly and frankly before 98 the Committee, I think it would be better to tell the Committee that the Government of India has a deficit. The hon. Gentleman alluded to Upper Burmah and its annexation. I was agreeably surprised—as was, no doubt, every Member of the Committee—to hear from the hon. Gentleman that the cost of the annexation of Upper Burmah would not place a further charge than £100,000 upon the Revenues of India. That, I think, is extremely satisfactory and creditable to the Indian Government. It was 10 years before Lower Burmah was able to pay its way, and I think that the deficit incurred by the annexation of Lower Burmah was considerably greater than the deficit now estimated in 1875. The hon. Gentleman (Sir George Campbell) says it is only an estimate, and, of course, he is just as good a judge of the matter as I am; but, however it may be with Civil Estimates, I have never known the Viceroy estimate wrong with regard to military matters; and, therefore, I am disposed to attach credit to the statement that £100,000 will cover the cost, and I think the House of Commons may look forward to a time not far distant when Upper Burmah will make way as Lower Burmah does now. There are one or two questions I should like to ask the hon. Gentleman. First of all, I should be glad if he would inform the Committee what has been done by the Viceroy in Upper Burmah to develop the resources of that country. Upper Burmah possesses great sources of wealth, one of which may prove to be hereafter very considerable indeed—I allude to the petroleum springs there. I want to know whether the Government have taken that resource in hand, and in what manner they have determined to proceed with regard to it; because I think that if the petroleum springs come out as it is expected they will, the deficit will soon be changed into a surplus. Again, I ask what has been done in the matter of the ruby mines in Upper Burmah; because I saw it stated the other day that the Viceroy and the Government had entered into a sort of a contract with a jeweller who is the representative of a syndicate to make over the ruby mines. I hope there is no truth in that report. I am strongly of opinion that the Viceroy ought, under no circum- 99 stances whatever, to allow either the petroleum springs or the ruby mines of Upper Burmah to pass out of the hands of the Government of India. There is another report which I also see in the Press about which I will take this opportunity of inquiring. It has been stated, with regard to the seat of Government, that the Committee appointed to inquire into the State Expenditure of India have recommended that the Government should be permanently established at Simla. Well, Sir, I hope the hon. Member will contradict this statement, or, if not, that he will be able to inform the Committee that nothing will induce the Secretary of State to entertain that idea, because I cannot imagine anything more fatal to the efficiency of the Government than that it should be for the whole year in Simla. The question raised by the Finance Committee is a very grave one; and, so far from recommending the establishment of the Government at Simla all the year round, I am of opinion that it would be much better if the Government never went to Simla at all. In rearranging your system, as it may be you will have to do before long, the question will arise as to whether Calcutta is the proper place for the seat of Government; and when that time does arrive I am certain that if it should be decided to change the location of the Government in India at all it will not be to Simla, but much more probably to a place like Poonah, surrounded by the most splendid and salubrious Hill Stations that can be found in India, and where the whole administration could be economically conducted. Finally, I have to thank the Committee for allowing me to make these comments, and to congratulate the hon. Gentleman on the clear statement which he has made.

SIR GEORGE CAMPBELL&c) (Kirkcaldy,
The noble Lord, in the sentence in which he referred to the Motion of my hon. Friend the Member for Flintshire (Mr. S. Smith), said that my hon. Friend was not right in his view of Indian finance; and he then at once proceeded to say that a very great expenditure was coming upon us; but I do not remember that he suggested any mode by which that expenditure could be met. Therefore, I shall be glad to have an opportunity of hearing my hon. Friend the Member for Flintshire on this occasion. I sympathize with the 100 Motion which he has placed on the Paper; but I do not intend specially to refer to it, further than to say that I think there is good cause to believe that the financial position of India may reasonably be considered a subject for grave anxiety. In listening to the statement of the Under Secretary I could not help feeling much of that anxiety. I confess that I have always been somewhat of a pessimist in regard to Indian finance, because I looked forward to a bad time coming when we should be landed in a heavy deficit, which I am afraid is now upon us. With regard to the Budget of the present year, it appears that with the utmost endeavours all that the Government of India can obtain is a bare equilibrium between Revenue and Expenditure. In the first place, a considerable sum of money is to be got by disturbing the arrangements of the Local Governments, and mulcting them in large sums; secondly, by imposing a considerable amount of new taxation; and next, I observe that no provision is made for contingencies likely to arise, and which may necessitate further expenditure. I have always found that some such contingencies do happen in India; but no provision is made for them. Therefore I agree with my hon. Friend the Member for Flintshire that there is grave cause for anxiety, an anxiety which is not relieved by the statement of the hon. Gentleman with regard to this deficit. I have always observed that it has been the function of the Secretary for India to put a couleur de rose statement of Debt before the Committee; and I think that on this occasion the hon. Gentleman has given to his statement something of that tint. It is impossible to follow out here the many changes that have been made in the Accounts, especially in respect of debts. I am slow to think that they are in such a position as my hon. Friend supposes. I have followed the Accounts year after year, and it seems to me that, as a matter of reality, they have largely increased. With regard to the Estimates of the value of the works, they are the Estimates of engineers, which, according to my experience, are very apt to be too favourable, and I cannot believe that the statement with regard to the works is not somewhat too favourable. I cannot follow the figures; but this I do know—that engineers are sanguine people, and 101 very much given to estimating incorrectly in respect of public works, and therefore I think the hon. Gentleman will do well to take the view of the noble Lord the late Secretary of State for India (Lord Randolph Churchill). I think that the present unfortunate state of Indian finance has been brought about by three causes. First, by the advance of Russia on our Indian Frontier. I am one of those who, nearly 40 years ago, advanced the opinion that we should not go beyond the line of the Indus; but we have done so, and I think, so far from expecting in future any reduction of Expenditure, or that we shall be able to keep it within its present limits, we must accept the view which is put by the noble Lord the late Secretary of State for India, that, in addition to the present increase, a very large expenditure must be incurred in years to come, and one which will constitute a heavy burden indeed upon Indian finance. I believe that such expenditure cannot be avoided in the present circumstances. I am afraid the noble Lord takes rather too favourable a view of the finances of Burmah. I very much doubt whether the estimated Revenue will be realized in the present year; and I absolutely doubt that the cost of occupation, both civil and military, of Upper Burmah will in the end be found to be anything like £100,000. I believe it will be greatly in excess of that amount. Looking at the circumstances, I feel that those Members of the House of Commons who resisted the annexation of Upper Burmah are not liable to very great blame for the course they took in that respect; and those who failed actively to do so are not altogether debarred from criticism. As originally I was opposed to going beyond the Indus, so I was opposed to our going beyond the natural limit of India on the East, and, therefore, opposed to our going into Burmah at all. Still, I was also willing to admit that being there we might go beyond our first limits if we had a just and expedient cause for annexation; but it seemed to me that the Government annexed Upper Burmah at their own risk, and that, having annexed it, it was their duty to show justification. When the Blue Book was published I found that it disclosed wholly insufficient reasons for the course that had been 102 taken. It seems that the Government at last yielded to the pressure of what I may call the French "scare." Now, I admit that there was something in that "scare;" but I say that we had given the French some reason for jealousy in Egypt and elsewhere, and that we ought not to be too ready to take offence when anything is done in Madagascar, in the New Hebrides, and in other parts. It was very necessary, no doubt, that something should be done; but it would seem that the administration might have been left in the hands of the Native Rulers. But, Sir, we have annexed the country, and if it proves to be a good annexation, and if the Burmese turn out to be quiet and peaceable subjects, I, for one, shall not further blame the Government; on the other hand, if the annexation should prove to be an unfortunate one, then I think those who made it will have to answer for it. I do not readily accept the sanguine views given of the Revenue of Upper Burmah, as I have already stated; and one reason why I doubt that the same profitable result will take place from the annexation of Upper Burmah which followed upon that of Lower Burmah is because in the latter case the result is duo to the enormous produce of rice, from which the supplies of the world are principally taken, whereas there is little rice produced in Upper Burmah—on the contrary, it largely imports rice for the purpose of consumption. I sincerely hope that the disturbances which are now taking place there will quiet down. Before I go from the subject of Upper Burmah, I wish to say Sir Charles Bernard, who has been much attacked, is one of the most able and energetic, and, at the same time, self-denying men in the service of the Government, and I have the greatest confidence that he will do justice to the people—I am satisfied that he will do justice without any selfish object, and solely for the benefit of the people. But Sir Charles Bernard was always against the annexation of Upper Burmah; he resisted it for years; he has only been pushed into it at the last moment; he has now to administer the country, and when it was annexed I do not think that he was given sufficient control over the Military Authorities. I feel confident that it is not to him personally that blame is to be attached. What man can do he will do. The greatest difficulty as to our Indian 103 finance is that upon which the Under Secretary of State for India has so much dwelt—that is, the loss by exchange. I am one of those who think that there is nothing to show that the value of silver has been depreciated. On the contrary, it seems to me that the figures which come from India tend to a contrary view. They rather go to show that silver has not depreciated at all; that it has the same value as ever; and that the only difference is that gold has appreciated. This appreciation of gold makes a great difference; no doubt the effect is enormously great on the finances of India; and if we can mitigate that appreciation, going on now for some time in this and other countries, it will have the effect of diminishing the strain on Indian finance. I am only afraid that if you bring about an opposite effect in India the consequence will be very disastrous to all Indian debtors. India is a very poor country, and regard must be had to the position of debtors if we again very largely change the value of silver. I confess that the Revenue prospects of India are not such as to lead me to the hope that the financial difficulties of the Empire will be met by a growing Revenue. The Accounts submitted to us from year to year show a large increase. I am inclined to think that the greater portion of that increase is a paper increase, which is apparent simply through the mode of keeping accounts. The net result is less and less favourable. If hon. Members will look over the Accounts they will find that the only item of the Indian Revenue that is elastic is the Excise. I am sorry to see that is growing, for it is a revenue which formerly scarcely was known in that country. I do not think the fact that it is growing is a subject for congratulation, because it means an increase of drunkenness, which is a thing we ought to seek means of checking. No doubt, very encouraging results have been shown by our railways. Their working has tended to relieve our finances, and, no doubt, would continue to do so, were it not for the fact that there is a tendency to launch out upon the construction of railways that do not pay and never will pay. The question of opium has been mentioned again. From that we derive a very precarious revenue, and as time goes on we have more and more reason 104 to fear that it will develop in precariousness. A great change has taken place in the prospects of the production of opium during the past few weeks. The crop has not been at all what it was expected to be. It is much less than in the previous year; so that the Opium Revenue does not appear at all as elastic a revenue as it did some years ago. We know that the Chinese have been able to put an increased tax upon imported opium at the same time that their own production of opium is increasing; therefore, from that source we cannot entertain a very sanguine view of the increase of our Indian Revenue. Then, when we come to the question of remedying the condition of our finances by a process other than an increase in our Revenue, I must protest against the expedient which the Government of India seem to resort to—namely, mulcting the Local Governments. If we are to give these Local Governments a fair chance, and to give a fair chance to the principle of local responsibility, we ought to let these Governments feel that if they are economical and save money the results of their economy will go to the benefit of their own taxpayers, and that the Supreme Government will not be always waiting to sweep away their surpluses when they have accumulated them. I have felt this very much. It pains me to have to say it; but I do say that that system should not be followed, and that if decentralization of finance is to succeed you must make firm arrangements with the Local Governments, and not sweep away the results of their economy from time to time into the Imperial Exchequer. If the project that is before the country of Home Rule for Ireland should succeed, what would you think of the financial arrangements—what would the hon. Member for Cavan (Mr. Biggar), who, I think, last night showed the responsibilities of approaching Office, say if you swept down on the Irish Exchequer, in the course of two or three years, and took away the whole result of its economy? Why, I do not think Irishmen would be likely to consider themselves at all fairly treated. If the system of decentralization is to continue and to succeed we should let these Provincial Governments feel that they reap the reward of their own economy. Then, as to the Income Tax, that has been 105 alluded to, and has been described as repugnant to Native opinion. This question of Income Tax is one very difficult to deal with. It is a question whether the small results of the tax are worth the trouble it takes to levy it. We should always remember that the mass of the people of India are not taxed in this way at all; therefore, it is not likely that their opinion is against it. But there are a certain class with whom it is unpopular because they have to pay it. No doubt, it is necessary to impose some kind of taxation—either that or enhance the Customs Duties. You must do one or the other. I am afraid Lancashire will not allow us to enhance the Import Duties, and I am sorry for it. It was, however, a breach of faith to abolish these duties before the financial condition of the country would properly allow it. The Natives of India have a right to complain of the course taken in this respect. Still, you must have money, and the Government of India must judge whether it is best to impose this direct taxation on the people of India, orre-impose the Customs Duties which have been abolished. Can you effect your object by saving? The question is whether you can carry out the reduction pointed to in the Resolution on the Paper dealing with this subject, and referring to a more economical Administration. The Government of India and all of us are agreed that it is above all things necessary, under present circumstances, that the Administration of India should be made as economical as possible. But I have grave doubts whether all hon. Gentlemen wish to effect can be effected. The Government of India is at present, I believe, doing the best it can. There are many quarters in which considerable reductions can be effected. No doubt, much may be gained by reducing the extravagant cost of the Madras and Bombay Governments, which are maintained on the present scale to give patronage to those in power. I think reductions could be made in some of the higher military appointments and civil appointments. We hear a great deal about the enormous amount of the Home Charges. I admit that these are, for the most part, inevitable; but there are, nevertheless, little bits here and there where you can save small sums. I believe these Homo Charges are not altogether free 106 from occasional jobs and extravagances. I will take one which struck me on going over the Accounts. I know that this case is not peculiar to the India Office; perhaps they are not worse than other Departments. This Office is not as well looked after as other Offices. What I wish to draw attention to is the matter of the re-arrangement of offices, in reference particularly to the case of a gentleman, Mr. Moore, whose services were dispensed with from the list of those employed in the India Office, and who became Private Secretary to the noble Lord the late Secretary of State for India (Lord Randolph Churchill). I was curious to know how he could have retired and then filled this other appointment, and I could not understand how it was that under the Rules of Superannuation he could get a pension. I found that he did not get a pension under the Superannuation Rules. I discovered that he was pensioned off on account of a "re-arrangement of office." Well, I say that this was nothing more nor less than a very great job. I do not know who did it; but I must say that Her Majesty lost a most capable servant in the prime of life, who was sent about his business on a retiring allowance of about £800 a-year. This gentleman receives this pension, as I say, under the plea of "re-arrangement of office." These are jobs to which a stop ought to be put. But only small savings can be effected in these matters; and as the point is not of very great importance I will not go to the root of the business. Proper administration in these respects would only, perhaps, end in saving thousands, whereas we desire to save millions. Your greater charges are more difficult to deal with. The great and most growing charge is that of the Army; and I am told that it is true, as the noble Lord (Lord Randolph Churchill) has said, that under present circumstances you cannot diminish the charge for your Army—that, on the contrary, you must be prepared to submit to an increase. All the events that have been happening of late on the North-Western Frontier on the one hand, and on the Burmese Frontier on the other, have necessitated a great increase in the Army. I have never been one of those who say—"Oh! you must reduce your Army." I have always been alive to the fact that ours is the smallest Army, 107 having regard to the extent of territory that it has to defend, in the world; and I know that when you come into contact with an European Power on the one side and an Asiatic Power on the other you find it necessary to increase your Army. No doubt, our Army is the most expensive in the world; but it is one of those things which England must expect to pay for. You cannot send Englishmen out to India under the voluntary system without expecting to pay heavily for it; and you cannot get rid of the fact that your Army in India is not only an expensive one, but one that must increase. When you come to the Native Army, far from being able to decrease its cost, you must in the near future be prepared to increase the pay of the men. It has not been increased since the time of Lord Olive. At one time the Natives were proud of a position in the Service, and felt it one of the highest penalties that could be inflicted on them to be dismissed. That feeling was our safety and guarantee for the security of our Army; but now we can scarcely get recruits, and when we obtain them we have no hold on them. I am sure we shall not have that hold on them which is essential until we pay them fairly and honestly—increasing the pay of the soldiers until it is proportioned to what we give in all branches of the Service. Then the non-effective charges are always growing. The Under Secretary of State for India tells us honestly enough that there is an apparent decrease in the non-effective charges, but only an apparent decrease, not a real one. You have by the action of this Parliament, and not by the Indian Government, saddled upon you a most extravagant and disastrous charge for non-effective service; and in that connection I would like to say that I, for one, protest against the idea that some people hold that you could improve the administration of India by making India subject to the direct control of this Parliament. If ever India is lost it will be lost in the House of Commons, so it was said; and, certainly, I feel that many of the heavy burdens that India has to bear are due to pressure brought to bear in this House. It seems to me the best thing we can do will be to establish some sort of Home Rule in India as well as in another country near at hand. By all means 108 let every possible economy be tried in India. The real question in connection with the Government of that country, however, is this—are you going to govern it according to European standards, or according to Native standards? No doubt if you go back to Native standards you can govern much more economically. If you rid yourselves of all European improvements and system, no doubt you will be able to save a great deal of money; but we are going every day in a precisely contrary direction. We are governing according to European ideas, and that costs money. We are spending in that country a large amount on education, and the expenditure is growing; and on this and other matters, in spite of all the regulations you can possibly enforce, the expenditure will go on growing so long as you govern according to European standards. The noble Lord the late Secretary of State for India (Lord Randolph Churchill) has somewhat forestalled me in the observations I had intended to make in regard to the intentions of the Government of Calcutta as to Simla. It appears, the noble Lord says, that a Committee composed of Government officers have submitted a first recommendation with the object of saving the Government expense by establishing a permanent Government at Simla. I quite admit that there are many reasons which can be urged why the Government of India should not be established permanently in Calcutta. Calcutta is a peculiar, isolated place, among a Bengalese population. I quite admit that there are various reasons to be urged why the Government of India should be in a fixed and permanent position; but after all that has been said as to public opinion in India, it seems to me that it would be most disastrous to leave the Government too much under the influence of European residents. They take a partial view of matters, being, naturally enough, guided by their own interests and views. I doubt if it would be expedient to permanently establish a Government in India on a narrow ridge of mountain, in a mere European settlement, and to some extent isolated from the mass of the Native population whom it is sought to govern. Besides, there would be great difficulties to be faced in regard to water supply and other kindred matters. 109 This I think is certain—that if you were to make your permanent head-quarters at Simla you would save in the matter of travelling expenses, and in some other ways; but you would have to embark in great expense in regard to all the apparatus of government. I think we ought to take great care before embarking on a large expenditure at Simla, lest it be afterwards found that this was not the right place after all. For my own part, I entertain a strong belief in the principle of decentralization and local responsibility, and I should concur in any course which would have the effect of extending local self-government and throwing greater responsibility upon the localities in the matter of finance, and other matters. We ought to encourage the people to develop the system of local responsibility, although I do not think that we should go the length of giving India a Parliament. If we treat the people of India fairly much good will come of it, and we certainly ought to give to the localities greater and greater responsibility. I do believe that by establishing a system of local responsibility a great deal may be done to disencumber the Government of these local affairs, and induce the people to take up and do for themselves what they are perfectly capable of doing—namely, the question of local improvements, and the imposition of taxation for their own purposes. In regard to the question of public works I desire now to say a few words, the more especially because there is a Motion upon the subject standing in my name upon the Paper. I am somewhat afraid, from what has been said to-night by the Under Secretary of State and by the noble Lord the Member for Paddington (Lord Randolph Churchill), that the recommendations of the late Committee of this House in regard to public works have been somewhat misunderstood. It is impossible to maintain an exact line between productive and nonproductive works. The recommendation of the Committee was that public works should not be undertaken which, upon the whole, were calculated to impose a burden upon the taxpayers of India. I am very much afraid that that recommendation has not been sufficiently kept in view, and that there are a great many works which are not of a paying character now being carried out which can scarcely be expected to repay 110 the cost. The Notice which I have placed upon the Paper attributes a certain amount of extravagance in this matter to those who are responsible for the Government of India, and it suggests that they have been too squeezable, and too liable to have pressure put upon them by financiers in London. I have no wish to impute anything like jobbery to the Council; on the contrary, I think the Council have done the best they could to resist jobbery, and the financiers of London are certainly not encouraged by the Council. But what I do suggest is that the Secretary of State for India has not been strong enough to resist the pressure of financiers, often supported as it has been by Parliament, and the consequence has been that bad bargains have often been made for India. Let me take the latest case—that of the Indian Midland Railway. I believe that that railway is not a necessary railway, although it might be desirable to make it in prosperous times. Nor have the Home Government been convinced of the necessity of that line. For many years Secretaries of State have strongly resisted the swallowing up of the Famine Fund for such purposes. I understand that the guarantee for the Indian Midland Railway is to be paid out of the Famine Fund. It is called a Famine railway; but I deny that it is a Famine railway in any sense whatever. The only part of that country which wanted protection was protected already, by the railways which were previously in existence or sanctioned, and this was a line that was promoted for the mere purpose of competition, and got up by promoters and Directors of Companies. The people who insist on making these railways are not people with money at their back. Having obtained the consent of the Government to make the railway, they go into the market and are able to get better terms. My view in regard to the matter is this—I see a great financial authority opposite—the hon. Member for North Paddington (Mr. Lionel Cohen), and I should like to hear what his view is. Mine is that if private enterprize wants to make a railway let it do so; but let it do it at its own risk. If the financiers of the City of London are to select a railway, and decide on the making of it, let them do so; but let it be at their Own risk. In that case no one can com- 111 plain; but if, on the other hand, these private gentlemen, who are always crying out for the encouragement of private enterprize, are not willing to carry out the undertaking at their own risk, and throw the responsibility upon the Government, let the Government and not the promoters of railways decide which are the railways that ought to be made. The money ought to be raised in the cheapest way in which it can be obtained. When the first experiment was to be made I do not doubt Lord Dalhousie was right in giving guarantees; but I see no reason why the Government of India should go further in this direction, and pay more dearly than would be the result of direct borrowing. There is, however, something which, to my mind, is even more important than the additional cost of making railways. It came out in the investigation before the late Committee that not only are concessions dearer, but that the rates charged are much higher than in other countries, and especially in America. And the result is that the Indian producer—the ryot—is placed at a great disadvantage. If the Government have to give a guarantee, and to pay interest, the control of the rates ought, undoubtedly, to be in the hands of the Government. There is another case which, I think, is the worst case of all. I refer to the Bengal Central Railway. When it was evident that a loss was inevitable owing to the damage inflicted by floods in September last, the Government were required to pay the cost of the works of restoration. The Bengal Central Railway was promoted with a great flourish of trumpets, and I think the Rothschilds—than which there could be no higher financial name—were induced to take it up. It was supposed to be a very good thing; but after a little time it turned out that there had been miscalculations and mistakes. I do not question the honesty of the motives with which the work was undertaken; but in the end, instead of paying magnificent dividends, the speculation has not been found to pay at all. I have here the last Report of the Directors of this Company, and I find that, so far from making any profit from this railway, they say that their working expenses for the half-year to December 31 considerably exceeded the gross traffic receipts. Instead of making 112 a profit the railway was realizing a heavy loss, and there can be no doubt whatever that this Company was in a very bad way. But it was a case of "heads I win; tails you lose." The shares went down, and when it was a case of losing the loss was thrown upon the Government, and a permanent guarantee was given. I should very much like to know who brought the pressure to bear upon the Government. At present I do not know who it was; but the noble Lord the Member for Paddington (Lord Randolph Churchill) was at the India Office at the time, and, being inexperienced, he does not appear to have resisted the pressure, and a permanent guarantee was given to the railway. It is not an extravagant guarantee; but the result is that the shares of the railway, which were going to zero before, are about par, because the Company have been able to obtain a guarantee from the Indian Government, and have been allowed to place their loss upon the Government. What I maintain is that in entering into transactions of this kind the Government of India are not treating the ryots fairly, and that they are taking a course which would not be pursued in any other country. The fact is that a much firmer Government is needed to resist the pressure put upon them by speculators and promoters, and even by Members of Parliament. The Secretary of State and the Indian Council are not strong enough to resist the pressure brought to bear upon them. One curious thing about this Bengal Central Railway is this. They went to the Secretary of State and said—"You must release us from loss, because the Government engineers gave us a glowing account of the magnificent results which were to attend the construction of this railway;" but now it turns out that when they want a guarantee from the Government the same engineers are found urging the claim in the capacity of Directors, and saying that because the advisers of the Government took a sanguine view of the undertaking the Directors are entitled to go to the Government and call upon them to pay the loss they have sustained! I am afraid there have been a good many other instances of the same kind. The blot in the matter is the want of a firmer Government to resist the pressure 113 brought to bear upon them by the financiers of the City of London on the one side, and Members of Parliament on the other. We want a stronger and a firmer Government before we can secure that the interests of the unrepresented taxpayers of India will be better guarded and better preserved. The Indian Council ought to be greatly strengthened, so as to render it more capable of resisting pressure. This should be one of the main objects of the Committee which has been announced. Whether I may happen to be in the new Parliament, or whether I may be out of it, I hope I shall see some step taken by which the Government of India may be strengthened and invigorated in the interests of the Natives of India.

§ MR. J. M. MACLEAN (Oldham)
Mr. Chairman, the Indian Budget generally produces lengthy speeches; but I think the attendance in the House at the present moment is not such as to be favourable to anyone wishing to address the Committee at length on such a great subject. And, even if it were not the case that the sands of life of this Parliament are running very fast through the glass, I think there would be an additional obstacle presented to the discussion of this question just now by the changes which have been made in the form of the Indian Accounts. I entirely agree with the noble Lord the Member for Paddington (Lord Randolph Churchill) in the remarks which he made earlier in the evening on this subject, I dare say that the minds of many ingenious and able men in India have been exercised in devising this new form of Accounts which has been presented to Parliament; but I must say, speaking with a rather long experience—for it has been my fate during many years to examine carefully the Accounts of the Government of India—that I never saw a more complicated and forbidding document than that which is now presented to the House of Commons. I think it would be of great advantage to the Government of India if someone could invent a much simpler form of issuing the Accounts, so that they might be brought down to the level of the understanding of the average Member of Parliament. We know that it is somewhat difficult to interest this House in Indian discussions; and it must, I 114 think, become exceedingly so if we are to have so many changes made in the Accounts. Hardly a year passes without some alterations being made, and I cannot help suggesting that it would be of great advantage if such a form were adopted as that used by the Board of Trade and published at Calcutta every month. All those Accounts are stated in rupees, and I cannot see why the Indian Finance Accounts are not presented in rupees, just as all the Accounts presented to Congress in the United States of America are in dollars. Let me say that I hardly share the apprehensions of the hon. Member for Kirkcaldy (Sir George Campbell) as to the insufficiency of the Estimate made in the Budget for the charge for Burmah on the India Revenue. The hon. Gentleman went into the question of the annexation of Burmah, and was apparently inclined to reopen the whole subject of the policy of that annexation. I shall not be tempted into following him upon that line of discussion; but I may, perhaps, be allowed to point out to the Committee a remarkable coincidence. We know that when the late Government was in Office the annexation of Upper Burmah was carried out; we also know that the work of annexation was performed with a precision and success that gained great applause throughout the country. The work was done summarily and well, and Upper Burmah was annexed almost before we knew that the country had been invaded—a fact that was extremely creditable to the General who had the management of the military enterprise. Well, just at that time a change of Government took place. I do not say that the fact which followed was the result entirely of the change of Government; but it is most remarkable that, while the operation of annexing Upper Burmah was so thoroughly successful, since the country has been annexed we have had nothing but reports of mismanagement, and reports of a state of disorder in the country. No doubt public opinion is disappointed, and I may say exasperated, at the results which have followed the annexation of Upper Burmah; for instead of its being made a valuable Province of the British Empire, instead of through trade routes being opened up, we get nothing but melancholy stories day after day of an English officer being shot, of Dacoits being in 115 all parts of the country, of people being shot down, and of nothing being done to improve the state of the country. Now, it is certain that unless something is done public opinion will hold the Government responsible for not turning to account the excellent service done by the late Government in annexing the country to Lower Burmah. Another matter that has been touched upon during this discussion is the introduction of fresh taxation, which is said to be repugnant to the feelings of the Native population of India; but I think we should do a great injustice to the Government of India if we failed to recognize the fact that they had to meet an extraordinary crisis, and that a large expenditure was forced upon them for frontier defences and for increasing the Army in India. This has not been the policy of one Party only—it is the policy agreed upon between the two great Parties in England, and it is a policy which was admitted to be just and necessary by the Earl of Kimberley as well as by the noble Lord the Member for Paddington (Lord Randolph Churchill). The truth is that it is an easy thing for critics to lay upon any Government that happens to be in Office the blame of having to spend large sums of money upon the Army, or for carrying out necessary works to protect India against invasion; but it is the case that that expenditure was rendered necessary because for a long series of years those who ruled India had refused to open their eyes to the facts—they expected the arrival of a sort of moral Millennium, and could not think it possible that Russia could advance so closely to India as to make it essential to increase the defences of that country. Now, it has been admitted on all hands that the near approach of Russia has compelled us to take special measures for the defence of the frontier, and it is the special charges on that account which cause a deficit of £2,800,000 in the Accounts just presented. For my part, when I hear attacks made on the Government of India—when I hear it said that it does not carry out the economy that is necessary, I cannot help saying that it is extremely creditable to that Government that in the face of such a state of things it has been able to provide £2,000,000 by economies towards meeting the military charges, 116 and that it has only proposed taxation in order to produce £800,000. The only tax imposed by the Government of India on the people has been an amended Licence Tax or Income Tax, the produce of which is estimated to be £750,000. I doubt if any Government could have been found in the world to meet such a case, with revenues said to be extremely inelastic, in a more satisfactory way. What is the tax imposed on India? My experience ranges over a considerable number of years, and I have always thought that the Income Tax ought to be a permanent part of the financial machinery of that country, because that tax is just that which falls on the wealthy Natives and Europeans who are making largo fortunes in India, and others who profit most by British rule. Now, we have been accustomed to raise the bulk of the taxation in India from the tillers of the soil and from the consumption of salt, from which those who are making large fortunes practically escaped altogether; and it is for that reason that I and many others have always maintained that the Income Tax was a necessary and just part of the financial system of India. Some years ago the Government, in trying experiments with the Income Tax on different models, decided at last to impose a Licence Tax. This was most unfair, inasmuch as it was only levied on certain classes, and it wont down very low indeed, while it was a mere bagatelle to the wealthy Natives, and, above all, exempted official incomes altogether. Now, the imposition of that tax produced the greatest amount of excitement in India; I remember the most extraordinary demonstration of public opinion that, perhaps, ever took place in that country was when the Licence Tax was first imposed. We had a public meeting in Bombay which was attended by Europeans and Natives, and a very strong protest was made against the imposition of a tax from which the official class was exempt. I had the honour of being asked to draw up a Memorial to this House to be presented to Parliament; but no action was taken on it. But now a new tax has been introduced which will be just and equitable in its incidence. No doubt, as the hon. Member for Kirkcaldy says, the tax is disagreeable to those who have to pay it. I never heard of a tax that was agreeable 117 in this sense. But it is not a fact that the Natives generally have protested against the imposition of this tax; on the contrary, it has been received with a gratifying amount of acquiescence by the whole Native population in India. If anyone will read the debate on the Income Tax which took place in the Legislative Council, he will find that the Earl of Dufferin expressed his thanks to all the Native Members of the Council for the ready way in which they said they would support the imposition of this tax. Now, on what ground does opposition to the levying of taxation of this kind rest? I quite admit that, during the debate in the Legislative Council, one of the most distinguished Native Members in the Assembly, and one or two other Members, urged that it would have been better to have kept the Import Duties on cotton goods instead of raising revenue by this form of direct taxation; but it will be obvious to hon. Members that the re-imposition of duties of that kind is out of the question. I say nothing of the opinion of Manchester on this subject; although that is an element which will always have great influence in this House. But the time has gone by when you can impose duties on Manchester goods introduced into India, because, were you to do so, the possibility is that you would kill the whole trade in Lancashire goods. How ever important and valuable it is at the present day, it has been carried on for some years with difficulty in the face of declining prices and constantly increasing competition with Native manufactures. Now, if you were to impose this protective duty, no doubt it would have a most disastrous effect on the trade of this country. And what right have we to do so? We give India free access to all the markets of the world, and there is nothing which India produces that is not carried, under British protection, to every country over every sea; and have; we not, then, the right to expect that India shall give us Free Trade in return? Therefore, I contend it would be a great mistake to impose these duties on goods imported into India. But I would also point out that the Natives of India are induced to acquiesce in the taxes imposed on them by the consciousness that many causes have contributed to improve their material position of late years in a very 118 marked degree. While all other nations of the world have been suffering from great depression in trade, we have seen that India has enjoyed a constantly increasing state of prosperity. I have a long series of figures which, at this hour, I will not inflict on the, perhaps, exhausted patience of the Committee; but I may give the gist of those figures by saying that, on comparison for the last six years, I find that the export and import trade of England has been almost in a state of absolute stagnation, while there has been a steady advance, in the main, both of the import and export trade of India. And not only is that the case, but what shows still more clearly how advantageous Free Trade is to India is that there has been a much larger increase of imports into India than of exports of raw produce from that country. We often hear it made a matter of complaint against the Indian Administration that the excess of exports is so large; but it is an instructive fact that of late years the increase in imports has been larger than the increase in exports. The exports have increased during five years at the rate of 51 per cent, while the imports have in the same period increased by as much as 68 percent. Now, that is a very satisfactory increase, because it shows that India has got a larger return for her export of raw produce, and that she is carrying on a profitable trade with this and other countries. It is customary to speak of the remittances of the Secretary of State for the payment chiefly on interest on the public and railway debt as a heavy burden on India; but this burden becomes lighter every year with the great development of trade. The Indian imports, along with the Council Bills, are now fully equal in value to the exports. But, in addition to the Government remittances, India owes a large debt for private capital invested there; it is absurd to speak of that as tribute paid by India; it is no more a tribute than the interest paid in the United States of America on money invested there. Look at the amount of English capital in all the great Shipping Companies which carry on the trade of India; look at the English capital invested in banks, in mercantile concerns of all kinds, and in the industrial enter-prizes of the country—the tea plantations, the indigo, and the other main un- 119 dertakings of the country, I repeat that there is an enormous amount of capital so invested which ought to bring to this country a certain profit. If you deduct the amount of such profit from the exports, you will find that the imports which India receives constitutes a very valuable remuneration to the people of that country for the trade they carry on; and it is further proved that the trade is remunerative by the large quantity of gold imported into India year after year, which represents a value of £3,000,000 sterling. There was a small decrease last year, and I was struck by it because, looking over the Accounts for some years past, it seemed to me possible that this large importation of gold which was going on might be owing to the depreciation of silver in India, as well as elsewhere. But that only shows how wrong it is to dogmatize on any currency question. I was under the impression that the people were getting a distrust for silver, and were importing gold in its place, because we know that in India there is a good deal of gold which circulates in exchange for merchandize by weight, although there is no gold coinage there. But I find that in the year 1885–6 there has been again a very remarkable increase in the importation of silver, while the import of gold has a little fallen off. This is a most satisfactory proof that the prices of produce in India measured in silver have not fallen off, and that the rupee is still as valuable as ever it was. That being so, it is a fact which shows that Sir Auckland Colvin, Finance Minister in India, takes far too gloomy a view of the financial position of the country when he tells us of the immense losses caused to the Indian Government by the depreciation of silver. Although it is true that there is a direct loss on remittances to England, we see that the depreciation of silver gives a bonus on the exportation of produce from India. The fall in silver has in this way far more than compensated the people of India for the abolition of the 10 per cent import duties on English goods; it has been more than equivalent to it. We see that that is the case by the fact that the exports of cotton manufactures from India have doubled within the last five years, while the exports from England have remained practically stationary. We have another evidence of 120 the advantages arising to India from the fall in the rate of exchange in the fact that the imports of Indian wheat into this country during the last five months, as shown by the Tables of the Board of Trade, are largely in excess of the imports during the corresponding period of last year—in fact, they amount to half the total imports from America. This stimulus given to the importation of wheat is entirely due to the recent heavy fall in the exchange, because it has been made profitable to the Indian grower of wheat to send us that which he would not have been able to send us if it had not been for this fall. All this large movement of produce tends to the advantage of the Indian Government, because the Indian Government is a large owner of railways, and it is largely dependent on revenue from railways for a satisfactory Budget. The income from Indian railways steadily increases year by year. If anyone will refer to the Accounts they will find that from 1884 to 1886 the income from railways has increased as much as £2,000,000—I am, of course, speaking of the gross earnings of the railways. That is altogether in consequence of the very large increase in the foreign commerce of India. Immense quantities of produce are carried down to port; and, no doubt as the result of the sale of that produce in England, we have increasingly large quantities of merchandize sent out to be distributed in that country again. This state of things naturally creates a condition of contentment and comfort amongst the people which reconciles them to the increase which has taken place in taxation; and now you have the extraordinary fact, which is unexampled in all the experience I have had of India, that the people at this moment are not remonstrating against the increase of taxation which has been rendered necessary. Then we are told by the noble Lord (Lord Randolph Churchill) this evening—who spoke with great authority on the question, because I think he faced the problem of defending the North-Western Frontier with a sincerity and boldness that did him the highest honour—we are told by him that the expenditure which is now going on on the North-Western Frontier, and this permanent addition of £2,000,000 to the cost of our administration which is a result of the increase 121 of the Army, will not be at all sufficient for the purpose of defending India against the Russian advance. He tells us that millions more may be wanted for frontier railways, and to put India in a proper state of defence. No doubt this lays open a very disagreeable prospect to the Indian taxpayer; but I would respectfully suggest to the Committee that, when works of that kind are rendered necessary, it is a great mistake for the Indian Government to do as it has done during the last year, and as it proposes to do in the financial year which has just begun—namely, to stop the construction of productive railways in India, in order to devote the money so saved to the construction of a complete scheme of frontier defences. If work of that kind is to be undertaken, a special loan ought to be raised for the purpose, and the works ought to be gradually carried out and spread over a series of years. What is the use of the House of Commons' Committee sitting here and discussing the question of railway construction in India and coming to the conclusion that a certain sum of money, from £28,000,000 to £30,000,000, should be spent in the course of six years upon productive railways to increase the resources of the country and to protect it against famine, if, the moment a military emergency arises, these works are to be suddenly stopped and the whole of the money is to be taken and spent on unproductive railways? It would have been as reasonable, it seems to me, for Viscount Palmerston, when he wished to fortify Portsmouth and our other large arsenals in England, to have called upon us to stop the construction of the Midland Railway, or the Great Trunk line connecting London with York, or the great railways connecting Manchester with London. With regard to the Nagpore Railway, which will give the shortest route from Bombay to Calcutta, that work was declared by the Government of India years ago to be absolutely necessary. They said that it would not only be of advantage in saving districts from famine, but that it would also be a productive work, and the Committee of the House of Commons recommended it very strongly. [An hon. MEMBER: No, no!] Well, it was recommended by the Government of India in its railway programme to the Committee who accepted and en- 122 dorsed that programme. I am giving my opinion on the Report of the Committee. They did not dissent from this proposal, at all events; and it was put in the schedule of works that were to be undertaken and carried out within a certain period of time. That line has never been undertaken up to the present day. If it be the case, as we are told, that only £2,000,000 are to be spent in future on productive works out of £5,000,000, I do not know when the railways of this kind will be constructed; but if the considerations that I have advanced to the Committee are sound, it will be seen that the increase of the prosperity of India and the capacity of the people to bear increased expenditure depends greatly on the extension of productive railways in that country. It is from these railways that you get a large revenue. There is no more elastic branch of the Revenue than these productive railways. I sincerely hope that the Government of India will alter its policy in this respect. I listened with great attention to what the hon. Member opposite (Sir George Campbell) said with regard to the Government of India borrowing money for the construction of railways itself, instead of granting concessions to private promoters to construct lines. Well, I do not care anything about the promoters of private Companies. I shall be very glad if they can be done without altogether; and I quite believe that the time has come when the Government of India itself should raise the money at a fair rate of interest and carry on the great system of productive lines throughout the country. But what I contend for is this—that we ought not to have a spasmodic and intermittent system of constructing these lines. That is the most wasteful and extravagant system possible. What we want is a steady and comprehensive policy as to the construction of these railways. The great misfortune of employing purely Government agencies is this—or, at all events, it has been this in the past—that whenever any emergency arose the Government, wanting money, wherever it could lay its hands upon it would stop some great work; so that, after great preliminary expenses had been incurred, a work of great importance might be discontinued at a moment's notice and the money spent upon it entirely wasted, and so much capital completely thrown 123 away. Then, perhaps, some few years afterwards everything would be begun afresh. I have seen several instances of this cruel and wicked waste of public money, and I believe it is one of the causes of that increase in the non-effective charges that the hon. Gentleman opposite so much deplores, at least so far as the Civil Service in India is concerned. These are all the remarks I think I need make on the question before the Committee. I could not let this opportunity pass without trying to impress upon the House of Commons that a little boldness, and a little energy, and, at the same time, a little consistency in the construction of these productive railways in India would be of the greatest possible benefit to the people of that country. The hon. Gentleman who preceded me referred to the fact that a Committee was to have been appointed this Session to inquire into the Administration of India. I do not know that I am altogether sorry that that Committee has collapsed. I am not one of those, like the hon. Gentleman, who is an old Anglo-Indian official, and I know their sentiments in this matter—I am not one of those who would thrust the criticism of the British House of Commons from the Administration of India. I think, on the contrary, that the criticism of the British House of Commons has a wholesome and purifying effect on Indian, affairs. What we have established in India is a despotism—a benevolent despotism, no doubt—but a Government of a bureaucracy; and wherever a Government of a bureaucracy exists the tendency is to become hard and mechanical in the Administration of the country. It is an advantage, therefore, to have the sweetening influence of English criticism to inspire the Government in India with sympathy with the millions over whom they rule. Though a Parliamentary Committee might have done some good, and though discussion in this House may do some good, I should have been sorry if the step had been adopted, which is advocated in many quarters, of sending out a Roving Commission to hold an inquest, as it were, on the Government of India. I believe that would have had a most disastrous effect upon India, as it would have encouraged agitators in every form to bring forth their grievances, 124 and would have lowered the Government of India in the opinion of the people. Whatever fault may be found with the Administration of India I am sure we have in that country as fair and as just a Government as exists anywhere in the world, and we ought to remember Tennyson's words— The gods are hard to reconcile, 'Tis hard to settle order once again. India is one of the remaining portions of Her Majesty's Dominions in which the Queen's writ runs throughout the length and breadth of the land, in which security for the protection of life, liberty, and property, is given to all without distinction, and in which every man knows that he can have justice impartially administered by the Courts of Law. We have also given to that country advantages of modern civilization such as it never experienced before it came under our rule. I do not take the criticisms of English gentlemen who travel in India for a month or two, and who are prone to indulge in a morbid habit of self-depreciation, as any fair estimate of the merits of our Administration out there. A man goes to India for a few weeks, travels through the country, staying with one civilian or military man after another, and great efforts are made to entertain him well, for what may be called the barbarous virtue of hospitality still survives in India. The civilians and military men receive their guests with every honour, and even go the length of spending two or three months' salary in surrounding him for a week or so with all the social delights that the country affords. Then the guest comes home and immediately writes a book, in which he says that the Indian Civil servant or military man has little to do and plenty to get, and in which he expresses the greatest sympathy with the poor Natives who are ruled over by these gentlemen. These are not the sort of critics whose opinions one cares very much about. I would rather take the opinion of intelligent and altogether impartial observers—of such men as Baron Hubner, whose recent praises of our management of India are familiar to all hon. Members, and of the late General Grant, who, when I had the honour of meeting and talking with him in Bombay, spoke in language of unusual warmth of the wisdom, generosity and firmness with 125 which our Indian Government was administered. I may be allowed to express a hope that that Government may long remain undisturbed in its main features. The Empire of British India is the noblest monument that has ever been reared to the political and military genius of the English race; and it would be an unfortunate day for this country and for India itself if that great Empire were ever given up as a new field to be operated upon by mischievous and irresponsible agitators.

§ MR. S. SMITH (Flintshire)
I have had the advantage of hearing a great deal of friendly criticism passed upon the Notice which appears in my name on the Paper. I must say that personal inquiry in India has convinced me that a deep feeling of discontent with British rule prevails amongst the Natives of a vast portion of our Indian Empire, and I think it will be very much to the advantage of the Government that it should be made aware of the feeling so widely prevalent in India. The people of that country have great confidence in the fairness of the British public; but they bitterly complain of having no spokesman in this House to advocate their rights and make known their grievances. They complain that their opinions are not fairly represented by the official classes of this country; and it is my intention, with the indulgence of the Committee, to lay before it on the present occasion some of the grievances that weigh so heavily upon the Indian population. The first great complaint which we meet with all over India—and I am speaking with regard to British India—is the costliness of the Administration. It is only by measuring the Expenditure of India by the poverty and small resources of the country that you can arrive at anything like an adequate impression of the expensiveness of that Administration. I will just refer to one or two figures bearing upon this branch of the subject. I go back 10 years, to the year 1876, and I find that the Expenditure in that year was nearly £57,000,000. Well, as we have heard to-night, in 1886 the Expenditure has risen to £75,600,000. In other words, the Expenditure in 10 years has run up £18,000,000, or 31 per cent. Now, I am aware that there are considerable deductions to be made in that, and that, to a large extent, it is a matter of Ac- 126 counts. I am aware that a large portion of the Expenditure is reproductive; but still, making every allowance for that, we see an increase of Expenditure which is alarming in its proportions. Every branch of the Public Service shows a large increase during these 10 years. Another serious element is that there have been recurrent deficits, which have exceeded the surpluses by no less than £5,000,000 or £6,000,000 during that time. This year we have the alarming deficit of £2,800,000 staring us in the face. It has been observed that this is based on the calculation of the rupee being worth 1s. 6d., or, at any rate, on that being the rate of exchange. Everyone knows that the rate of exchange has touched as low as 1s. 5d. within the last month. It has recovered slightly, but it is not impossible that it may fall much lower, and it seems to me probable that the average for the year will not exceed 1s. 5d. In this way another £1,000,000 will have to be added to the deficit, thus bringing it up to close upon £4,000,000. We cannot regard this with any spirit of lightness, and I do not think there is any ground for the sanguine view of matters which has been taken by the hon. Gentleman opposite who has just sat down and by others. We do not comprehend this fully until we take into consideration the extreme poverty of the people of India. I have been engaged in trading with India for a large part of my life. I have travelled through much of the country, and in my last visit I was brought face to face with masses of the people, and I hope the Committee will give me its attention while I give some of the grounds upon which I venture to make some of my statements to-night. Sir Evelyn Baring, when Chancellor of the Exchequer for India, made a calculation as to the average income of the people of India, and he put it at 27 rupees per head, which, at the present rate of exchange, would be about £2 per head. But I am bound to say that, from the information I possess on the subject, that calculation appears to be an over-estimate. I am rather inclined to take the view of some leading Native authorities that the average income of the people of India does not exceed 20 rupees per head, which, at the present rate of exchange, would be about £1 10s. per head. This, I think, is nearer the mark. 127 If we take even the estimate of £2, that, with the population of 200,000,000 of people who inhabit British India, would give us an aggregate income for the whole country of £400,000,000. The best statisticians put the income of the United Kingdom at £1,250,000,000. The total income of the 36,000,000 inhabitants of the United Kingdom is thus fully three times as large as that of our 200,000,000 fellow-subjects in India. Now, I will give another reason for the view I take as to the extremely small resources of India, and that is the yield of the Income Tax. In this country, roundly speaking, 1d. on the Income Tax produces £2,000,000 sterling. In India it only yields £200,000. The incomes in India are taxed from £50 and upwards, whilst in this country they are taxed from £150 and upwards. It is true that there are certain classes of exemptions in India. Incomes drawn from land are not taxed, and thus the wealthy Zemindars—who, it seems to me, of all others should be taxed—escape. Putting it broadly, however, we find that an income of £50 in India corresponds with £150 in this country. The amount the tax produces, however, is only a tenth of what it does in this country. There is, for equal numbers of population, 60 times as much taxable wealth in England as in India. These figures ought to convince everyone of the excessive poverty of India, and of the extraordinary absence of a wealthy class; and if anything further requires to be said, I think it will be sufficient to remark that the entire number of persons subject to Income Tax in India is only reckoned at 300,000—that is to say, only one in 700 reach the point of having £50 a-year. Then, the wages earned in India are very low. The peasantry live at a permanent dead level of extreme poverty; they are scarcely half-clad; they eat very little food, and that of only the coarsest kind; and they are nearly all deeply in debt to the money lender—perhaps 90 per cent of them. It is difficult to conceive human life going on under more distressing conditions than it does over a great part of India. In a year of failure of crops you have almost the whole of the people of large Provinces precipitated into a state of famine, and but for Government intervention they would assuredly die almost wholesale. In re- 128 sponse to my inquiries it has been stated, as I say, that 90 per cent of the peasantry are in debt. Probably that is an exaggeration; but no one can doubt that the great majority of the peasantry in India are deeply, hopelessly in debt to the money-lenders. A calculation has been put out on good authority in India that at least 50,000,000 people in that country only eat, on an average, one meal a-day, and that of the coarsest food. And what has struck me as being one of the most singular signs of the times is that India is believed by the Natives to be getting poorer instead of richer, and that the condition of the people now is no better than it was 100 years ago, in spite of British rule. There is also a widespread feeling that the soil is becoming impoverished by over-cropping, and is yielding less. There is a general belief on the part of the Natives that there are far less stocks of food in the country than formerly, and more danger of famine. That is the opinion of Sir James Caird. That is a matter which is not to be looked at with a light heart, nor is it to be treated as a matter of very little moment, for it is a matter of the gravest importance. I have further to state that a vast amount of the money collected in India is levied as black mail, and that it never reaches the Government. There can be no doubt whatever that this is the main objection in India to direct taxation, and that there is great loss on all direct taxes, owing to the bribery and corruption of the under officials. Let me deal now with the arguments of official optimists. Their chief argument is the great increase in the foreign trade of India, and the vast importation of bullion. Forty years ago the foreign trade amounted to £18,000,000; it has increased to £140,000,000—a rate quite unexampled in any other country. The British public are very much mistaken as to the enriching influence of this foreign trade. The conclusions drawn from the enormous increase of the foreign trade of India are, to a large extent, delusive. The Indian foreign trade has been developed, to a large extent, by processes which have been destructive of most branches of Native industry. The large amount of goods imported represents the decay of Native industries, and the surplus of export is regarded by the Natives as a 129 tribute to England to pay Home charges and European profits. Industries which formerly gave a large amount of employment to the people of the villages are rapidly disappearing, and the result is that the ryots are driven to over-cultivate land which is already more than sufficiently cropped. Another result is that they are compelled to bring into cultivation very poor and badly irrigated soil. I do not imagine that the people of this country really realize what the decay of Native industries means, or have any conception of the misery brought upon the people by the destruction of their handicrafts. It really involves the loss of a livelihood to many millions of the people who have been driven on to the land already over-cropped. I believe, if the figures could be ascertained, it would be found that handicrafts by which 10,000,000 or 15,000,000 people gained their living have been destroyed by the substitution of foreign for home manufactures. The vast export of produce has been pointed to as another proof of the great prosperity of India; it is viewed in a very different sense by the Native population. The general view taken by the Hindoos is that these vast exports are, in reality, impoverishing the country. The people themselves are only half-fed, and they see the food which ought to maintain them more generously going abroad, and they cannot help regarding this as a drain upon the very vitals of the country. There is this curious phenomenon—that India stands almost alone among the nations of the world in exporting habitually a much larger amount than she imports. The hon. Gentleman who last addressed the House (Mr. J. M. Maclean) said that of late years that discrepancy has been removed to some extent, and that the difference between the exports and imports is gradually diminishing. I do not find that this is the case. Only a few years ago the surplus of exports amounted to £17,000,000; they were subsequently £16,000,000; then £24,000,000; and in 1884 £23,000,000. The average surplus of exports over imports in India is now from £20,000,000 to £25,000,000 a-year. But all the imports which come into India are loaded with freight and other charges, which ought to be deducted if the comparison is to be made fairly. As far as I am able to make out, the proper 130 surplus of exports over imports into India amounts to about £30,000,000 sterling a-year when this rectification is made. I look upon this as a remarkable proof of the poverty of the country. All European countries have a large surplus of imports—the United Kingdom fully £100,000,000 a-year. The view taken by the Natives is that this £30,000,000 is a tribute paid to England. I do not admit that that view is by any means correct; but it is a very plausible one, and we may depend upon it that the more information spreads in India the more will the opinion be entertained that India is losing instead of gaining by its foreign trade. The only explanation of this deficit of £30,000,000 is that the Home charges amount to about £15,000,000, while the other £15,000,000 represent the profits upon British trade. It is quite true that for much of this India has received an equivalent in the shape of railways, canals, and other public works; but for other portions of it the Indian people have difficulty in seeing that they get any real equivalent. The second argument of the official optimists is that we must look to the imports of bullion. It is a fact that for many years India has taken an average of £10,000,000 chiefly in silver, and latterly a considerable portion of it in gold; but it is a certain fact that it has not enriched the people to any appreciable extent. No doubt, it is absorbed in some strange manner; it disappears among the population, one can scarcely say how, and leaves but little trace. Probably much of it goes in the manufacture of bangles and other articles of jewellery, and supplies in this way the chief form of hoarding to be found in India. The chief currency of the country is silver; so that a large amount is absorbed for purposes of circulation. I think I have now proved the first thesis in my Resolution—"that the financial condition of India is such as to cause grave anxiety." I now ask the Committee to go a little further, and to pass on with me to the next head— That the expenditure is excessive, and necessitates a resort to taxes which are repugnant to native opinion. Some remarks have already been made on this head, and I wish to show what 131 the nature of the taxation and expenditure is. It is the general belief of the people of India that the fiscal system of that country has been adapted to suit British commerce, and not for the benefit of India. There is no conviction more widely spread than that England has arranged the fiscal system of India purely in her own interests. If you would allow the people of India to declare to-morrow how they would raise the Revenue of the country I know what the reply would be. If you gave India an effective voice in her fiscal system I know very well how that voice would decide. Her people would say with one accord that much of the Revenue must be raised by Customs Duties, India would undoubtedly derive a considerable portion of Revenue from the £100,000,000 of foreign trade which is at present untaxed. By imposing a tax, say, of 10 per cent upon £100,000,000 of untaxed trade India would readily raise £10,000,000 a-year from Customs with scarcely any pressure upon the country. Indirect taxation suits a country like India far better than direct taxation; and one great advantage it possesses is that it does not open the door to the great amount of peculation, fraud, and oppression that disgrace all Eastern countries. By direct taxation in taking the money out of the pockets of extremely poor people, opportunities for peculation are multiplied, and thus you extract from the people a great deal more than finds its way into the Exchequer of the Government. The Cotton Duties in India were abolished against the judgment of India; I speak as one largely interested in the trade of Lancashire. My interests lie in the direction of the abolition of these duties; but, as a matter of justice, I am compelled to admit that the policy adopted was indefensible. I repeat that all Manchester had a right to ask was that a corresponding Excise Duty should be laid on the Indian factories to avoid Protection. The result of the present policy is that we are forced to put on a hateful Income Tax. From some points of view an Income Tax may be a righteous tax—for it reaches a limited class of wealthy Natives who escape taxation. Then, again, the European official classes ought justly to be taxed; but I cannot ignore the fact that a multitude 132 of Native collectors have to be employed in the collection of the tax; and is currently believed that when they come to assess incomes they put the amounts higher or lower, according to the amount of black mail they receive. Europeans in India frankly admit that it is impossible to levy Income Tax on a large scale in that country without a vast amount of black mail being levied; and, as a rule, quite as much finds its way into the pockets of the collectors as into the coffers of the Treasury. Then, again, our system of land revenue in India has led to a serious increase of land assessment. The practice in some Provinces is to squeeze the unfortunate peasantry by periodical revisions and increases of land revenue. But, although 25 per cent has been put upon the assessment in some districts, there is this remarkable fact—that the result of the collection is the same, and the amount realized is no greater than by the former assessment. Thus the increases of assessment which take place bring in no addition to Revenue, but simply add to the poverty of the peasantry. These Revenue exactions sometimes drive the peasantry into debt, and in bad years into famine. A large number have been sold up and turned out of house and home and have lost their farms through inability to pay. Consequently, large remissions of taxation are necessary in bad years if we are to avoid inflicting the most cruel suffering. Instances have been named to me where, in consequence of enforcing collections in bad years, hundreds and thousands of Natives have been swept away by famine. I am afraid that the Chancellor of the Indian Exchequer is not enabled to remit taxation in the way he ought to do in a country like India in order to meet recurring cycles of famine. The third and main objection which I have to the present system of taxation is, that we are demoralizing the people by multiplying the facilities for drinking. Nothing has struck me more painfully in India than the reproaches of the people against the Government for forcing liquor shops upon them against their will. In Bengal we have, in many instances, been forming groups of drunkards in places where drinking was formerly unknown. It ought to be known 133 to the House of Commons and the country that the Hindoo population is probably the most temperate in the world; they regard the drink shops which have been established among them with horror; and it is highly objectionable that we should go to India with our modern notions of Free Trade, and plant these temptations in the midst of the community for the corruption and demoralization of her people. Surely no one can say that it is right for the State to multiply these sources of temptation to the largest extent, and derive the utmost revenue it can from them. If we wore to allow the Municipalities of India to control the liquor trade, and to exercise what in this country is called local option, they would almost extirpate it. At present, however, they are powerless in the matter. The Government have in their hands the sole power of remedying the evil; and, knowing that the traffic is condemned by the Hindoo religion, I fail to see why they should not take steps for reducing it. It is true that a revenue of £4,000,000 sterling is derived from this source. But surely, when all the evils of this hateful system of farming out the Excise Revenue are taken into consideration, hon. Members will agree with me that if it is necessary to impose taxation in India, it should be imposed in such a way as to meet the wishes and desires of the people of the country. They ought to have a fair voice in the arrangement of their fiscal system; it ought to correspond with the strong beliefs, habits, traditions, and religious convictions of the people. The fact is, that to the Indian mind the British Administration of India presents far too much the appearance of a huge car of Juggernaut, the wheels of which are remorselessly grinding down the people, and screwing the uttermost farthing out of them. The last part of the Resolution which I placed upon the Paper says— That, in the judgment of this House, a readjustment of taxation and a more economical administration is urgently called for. I may be asked how I would propose to re-adjust the taxation of India? I have already indicated that I would re-establish Customs Duties on a moderate scale. But, whatever Customs Duties are imposed in India, they should be accom- 134 panied by corresponding Excise Duties on Indian factories, so as to equalize the pressure of the burden. Further, we should limit the sale of alcohol and remit excessive land assessments. It is also indispensably necessary that something should be done to stop the terrible waste upon the exchange account which now takes place. It is estimated in the Budget of this year that the loss on the exchange will be £4,800,000; but I am of opinion that the loss will be much greater, and that it may possibly reach £5,500,000. In fact, this matter of exchange, or what is called the depreciation of silver, has brought the finances of India to a hopeless state of confusion. Anyone who will read the despatches of the Government will see the desperate straits into which the Government of India have been driven by this question of the exchange and depreciation of silver. I do not see any reason why there should not be a still further fall in the value of the rupee. It has fallen steadily from 2s. to 1s. 5½d. Year after year it continues to fall, and I see no reason why, if matters continue as they are, in the course of a very few years the value of the rupee should not fall to 1s. And what would that mean? It would mean that £5,000,000 more would be added to the loss on exchange. I altogether differ from those who say that the Government of India receives full compensation from other sources of Revenue. It receives a certain amount of compensation, no doubt. The fall of the rupee stimulates exports, and so adds to the traffic of the railways, which are virtually Government property; but, on the other hand, it also puts a serious barrier in the way of railway extension. It renders it very difficult to raise the capital required, and I very much doubt whether the loss on the one side is not equal to the gain on the other. I had the opportunity, when in India, of meeting some of the ablest authorities on this question, and of conferring with them upon it. I found only one opinion—namely, that there is nothing before India, but something approaching to bankruptcy, unless the Government of this country will join with the other Governments of Europe in taking measures for restoring the old bi-metallic system, which existed for centuries, and was found to answer very 135 well. During a period of nearly 200 years prior to 1873, when the metallic system was broken, the rupee was worth about 2s., and we had virtually identical money in England and India. The authorities in India are perfectly familiar with these facts, and the fault rests, I believe, with the Government at home. The Government of this country is very much to blame for bestowing so little attention on the representations which come from the responsible Government of India, whose able officers have carefully studied the subject. The argument of our opponents is, that the people of India gain, and the debtor class, and that burdens are lightened; but, on the other hand, a stop is put to railway development; and the final result will be, if this system goes on unchecked, that India must have a gold standard. If I am not mistaken, the conviction is rapidly spreading throughout England that a large portion of the distress in this country arises in consequence of the depreciation of silver and the rise in the value of gold. In the interests of India and of England alike it is urgently required that this silver question should be brought to an issue, and that this country should not stand alone in refusing to join the other nations of Europe, who are quite ready to join with us, in re-establishing the old bi-metallic system. I remark, in conclusion, that the whole Administration of India is too costly for the Natives, and that Administration, however well adapted to European habits, is not so to Asiatics. I say, further, that we unjustly exclude the Natives of India from holding the higher posts in the Government; because a pledge has been given that there shall be no disqualification either of race or religion for holding Office in India. How does this matter stand today? I should like to have a Return of the posts held by Natives of the value of £1,000 per annum and upwards. My impression is that not 5 per cent of the higher posts in India, with salaries of from £1,000 a-year and upwards, are held by Natives. There is on this ground a deep feeling of discontent among the Natives, who think that faith is broken with them—they demand that they should receive fair play, and be allowed to compete more fairly with 136 Europeans for the higher posts under Government. At one time a fair number of Natives were entering the Indian Civil Service, when the age of admission was 22; but that age has been unwisely lowered to 19, very much to the exclusion of the Natives. I do not know why that was done. It was a fair thing that the young men of India should compete here for posts in the Civil Service; but the reduction of the age to 19 stopped it, and the reform which is needed is that WG should either raise the standard of age, or that we should open the door to Natives by examination in India—that at least half the admissions to the Service should be in the country whose people are to be governed. I am convinced that if we adopted the principle of allowing Natives more freely to enter the Service we should greatly lessen the expense of governing India, and the number and amount of pensions which English officials received would in time be largely reduced—we should lessen that drain, which is always getting heavier and heavier. The Natives complain of the drain of Indian wealth which is caused by our enormous pension list, and I think that their complaint is not without reason. Much has already been said as to military expenditure; but I must say that the military element in India has too often tended to war and annexation; the policy of India, dictated mainly by the official class, has a bias in that direction, and I think that unless this country holds a tight hand on the rein that tendency is sure to go on. These annexations are hateful in the eyes of the people of India. I did not meet a single Native who did not contend that the annexation of Upper Burmah was a gross breach of faith; the people of India think it unjust that they should bear the expense of increasing the Army for subduing a people alien from themselves. The people of India also resented having to bear a portion of the cost of the War in Egypt. How are we to avoid going on with this policy in India, which is sowing the seeds of future trouble as certainly as anything can happen in this world? I can see that within the next 20 or 30 years we shall have in India a second Ireland, unless we make a change and Parliament takes this matter in hand. Now, how are we to govern with the 137 requisite economy and the requisite desire to meet the wishes of the people of India? Absolutely, I can see only one way, and that is to give effective expression to the opinions of the people, who are at present ruled as if they were children, and have no such expression of opinion accorded to them, or anything like representative government in the most elementary form. But the people are getting educated; you will find many of them just as intelligent as we are ourselves, and as education spreads discontent becomes more and more dangerous. How are we to meet the demands of the people? Their demands are reasonable, and such as I think we may grant at the present time. They demand the right of electing Native Members to the Legislative Councils of India. Those who are there now are selected because they are known to be favourable to the Government policy, whereas the people think they ought to be selected from those who are favourable to Native wishes. Then another most important reform is demanded, and it is that either the Council of India should be abolished, or that it should contain a substantial number of Natives. For my part, I lean to the latter view, because I do not believe that the Government can be carried on without the Council; but I think that a certain number of seats should be allotted to Natives, and there would be then more touch between the Council and the feelings of the people. Finally, I say that there is great discontent in India. Nevertheless, I believe the people are loyal to their connection with this country; they are aware that if that connection were to cease anarchy would soon override their country; that then they would not long be left independent; and I believe there is no desire to connect themselves with any other nation. The officials who now govern India are able men—no bettor men, I am convinced, can be found; but, at the same time, I cannot lose sight of the fact that it is essential that the form of Government in India should be made suitable to the habits and conformable to the wishes of the people. The present system, I am convinced, is conducted in a way which takes it more and more out of touch with the feelings of the Natives, and I hope it will be the work of a Royal Commission thoroughly 138 to search into the whole subject of Indian Government, because nothing less than a Royal Commission will satisfy their aspirations, and it, too, must consist partly of Natives. For my own part, I believe that such a Commission would bring to light many grievances which few persons in this country are at all aware of. Finally, I have to thank the Committee for permitting me to make these remarks, and to say that they are uttered in the interest of England as well as of India; that I have endeavoured to follow the pole star of justice, and with the sole object of uniting the two countries by the indissoluble bonds of affection.

§ SIR JAMES FERGUSSON (Manchester, N.E.)
I did not intend to address the Committee to-night; but, my recent service having made me conversant with the system of administration in India, I feel that I cannot allow some remarks of the hon. Member who has just sat down to pass by without comment. The hon. Gentleman has brought a long bill of indictment against the Government of India. But, Sir, a little knowledge is a dangerous thing, and knowledge obtained during a short tour in India is extremely dangerous to generalize upon. I think that those sitting below the hon. Member must be surprised at the fiscal doctrines he has picked up, and feel that in this case, at any rate, wisdom has not come from the East. The hon. Member thinks that a great injustice has been done to the people of India by ceasing to tax their foreign trade. Now, one doctrine of the Liberal Party was that a tax upon import trade falls on the consumer; and therefore, if he holds the principles of the Party with which he acts, he should perceive that taxes on imported goods were a burden on the people of India. Now, I am ready to admit that the taking off of the duties on imported goods, especially cotton, which formed the staple manufacture sent to India, was unpopular. There is no doubt about that; but I think the hon. Member's friends will tell him that that only shows the not very high degree of fiscal science at which the Natives of India had arrived, because if they knew as much of that as we do ourselves they would know that a great stimulus has been given to the commercial prosperity 139 of the country by the abolition of the duties in question. The hon. Gentleman has given us a chapter on the poverty of India, a frequent topic, which will be discussed to the end. No doubt, the people of India are poor; their incomes are small in comparison with others, but so are their necessary expenses. In stating that there were cases of Natives having 20 rupees to live upon for a year, I think the hon. Member would have been more correct if he had said 20 rupees a month. Again, he allowed himself to fall into the extraordinary mistake of measuring the value of the rupee to the Natives by the rate of exchange; the Native's income is not to be measured by that, because the value of his rupee is just the same as it was to him before. It is only when they come to purchase foreign articles that the difference is felt. The rate of exchange has nothing to do with the people in India in the sense in which the hon. Member uses it when he complains of the depreciation of silver being a tax on the people. I think he is in error; he should not regard it as an evil to them, because in reality it is a benefit, and enables them to export goods at an enhanced profit to their country. I touch now on the silver question, into which the hon. Gentleman rushed with such confidence, although it has puzzled many, and I do not think it is quite so easily disposed of as is imagined. Although it is quite true that money remitted from India is subject to loss in exchange, yet the manufactures in India have gained by it. Were the loss by exchange relieved by the institution of a double currency, on the other hand taxation must be increased on account of the artificially enhanced value of the rupee. So that it is a moot point whether India would gain or lose by the institution of bi-metallism; and the hon. Gentleman would have us believe, even in the face of the admirable statement of the Under Secretary of State, that the deficits which have so far predominated, have had a crushing effect in India. I was struck last year, and am now, with the fallacies on this subject of hon. Gentlemen who have very little acquaintance with India. I find that for the last 12 years the Debt of India has been increased by £49,000,000, but while it has so increased taxation has been reduced by £20,000,000; and India has had to 140 bear an exceptional expenditure, such as charges, for famine relief and war charges to the extent of £56,000,000, while it has invested in public works £106,000,000. There is no getting over these figures. The hon. Gentleman has talked of the poverty of the Natives as compared with that of other people. He spoke of them as being half-clad, and appeared to forget that the climate required them to be thinly clothed. I will only remark on that subject that if you were to tell a Native of India that he was a miserable, half-starved wretch, because he had only a loin cloth on when he went to till his land, he would laugh at you. Then the hon. Member said that nearly all the people were in debt. That is a very general statement. It was calculated 35 years ago that one-third of the tenantry in the Deccan, which is the poorest part of India, were in this position; but we have had occasion to make careful inquiry into this matter with regard to the working of the Agricultural Relief Actin the Deccan, and with the result that not more than one-fifth of the tenantry were found to be in debt. The Committee will recollect that the worst famine year was 1876–7, when, in spite of all the Government could do, there was a large loss of life; but even then there was only 10 per cent. of the Land Revenue not paid up. Then, it is altogether untrue that the land assessment has increased to the extent of anything like 25 or 30 percent. The whole increase of assessment in the Deccan has been 17 per cent in 20 years, and when I left India in 1885 there was only ½ per cent of the whole Land Revenue of India in arrear. Therefore, I think the hon. Gentleman has greatly exaggerated the position of the people with regard to land assessment. As to the allegation that money is intercepted between the taxpayers and the Government, I do not believe it. The hon. Gentleman has heard of black-mail being got; so have I, and I have done something to put it down; but black-mail is not in connection with Revenue collection, but with land assessment. In arranging the assessment subordinates are apt to tell people that they will report the land as being of such-and-such value unless they are given a certain sum of money, and, no doubt, something of that kind has gone on. It is the Natives, however, who are concerned in it, for al- 141 though I have received hundreds of charges of injustice by Natives, I have never had one before me by a European official. The hon. Member says that increase of trade is no proof of the increase of prosperity in the country. Well, then, I do not know what is. He says it is proved that the country is suffering from British rule, because the exports are greater than the imports. Why, Sir, that is the very reverse of what is said by a large section of persons in this country. I say that an excess of exports over imports is, according to their ideas, a proof of prosperity. I am aware that even this rests on a fallacy; but, however that may be, the increase of prosperity is beyond all doubt. In the first 30 years of the settlement, in eight selected sub-divisions, we find that cultivation had increased from 915,000 acres to 950,000 acres, and that land was found to be selling at a price very largely exceeding the assessment. The hon. Member says that the money which comes to England is a drain upon the country; but, I ask, has not India received the value of that money in capital invested, in articles purchased, or in services rendered? Then, with regard to the sale of spirits being stimulated by the Government, the hon. Member has fallen into a great fallacy. These things are read in Native newspapers; but I deny their truth. It was my business in India to see that this was not done in my Province—that the people were not tempted to drink spirits by the agency of the Government. The people will drink spirits; it has been the fashion in some localities to do so from time immemorial, and they say they must drink them to keep off fever. They distil spirits from grain and other materials in their own houses; but the Excise is regulated as highly as the article will bear, as in England, and the number of public-houses is kept down to the lowest point. As to European officials, if you want to govern the people upon English principles, you must have a considerable number of English officials; but you must remember that no man can be appointed to a post of more than 200 rupees a-month unless he is a Native of India, or unless he enters through the open door of Civil Service examination. The object of the Government now is that one out of every six Civil servants should be a Native. 142 You must introduce great changes gradually. The hon. Member speaks of men being admitted to the Civil Service by examination in India. Why, Sir, that is exactly what is done; and every year a number of Natives are so admitted. I say it is surprising that hon. Gentlemen will make these statements to the House. Then the hon. Member speaks of a policy of annexation; but there has been no annexation to India since 1838. There have been many temptations to annexations; but some annexations the Government have actually resigned, though they had been previously determined upon, as in the case of Mysore, and some they have resisted, as in the case of Baroda. These things are well known in India, and it is only attempting to resuscitate an old buried grievance to say that the Government of India offends the Natives by annexations. We are stimulating the Princes to educate themselves up to European standards, and to deserve the confidence that the Government of India reposes in them. I must say that if there is nothing more to be said against the Government than we have been told to-night, the Government of India may rest content, and rely upon the approval of the people of this country.

§ MR. LIONEL COHEN (Paddington, N.)
The Committee has listened to eloquent speeches from hon. and right hon. Gentlemen who have been connected with India by ties of service in India itself, or in the India Office at home. I can make no such claim to the attention of the Committee; but I can assure the Committee that the I length of the observations with which I shall trouble it will be measured by the same proportion as my experience bears to that which these Gentlemen have been able to bring to bear on the question. I shall deal with a few points connected with the finance of the country; and in a financial debate I may claim, I think, a little attention to the observations I shall offer in refutation of the statement that the finances of India are in a condition to cause grave anxiety. I am, of course, unable to speak with the authority of the right hon. Gentleman below me (Sir James Fergusson) as to the general position of affairs in India itself; but I do feel myself qualified to use, in reply I to the hon. Gentleman the Member for Flintshire (Mr. S. Smith), the same ob- 143 servation, as wag used by the right hon. Gentleman—namely, that there is nothing in the financial condition of India, so far as we can see it in Europe, which should inspire us not only with grave anxiety, but with any anxiety at all. It seems astonishing to me that, in the consideration of this question to-night, there should have been one important and vital factor connected with the finances of India utterly lost sight of. I believe that India is the only country in the world which can borrow without increasing taxation. At this time, when the interest on Debt is falling throughout the world, when Governments are able to reduce the interest on their Debts—one State after another, and year by year—the Government of India is in the fortunate position of owing five-sixths of its foreign Debt in a Stock speedily maturing—namely, £53,400,000 out of £65,000,000 to this country at 4 per cent. and which falls due in 1888, or within two years of the present time. At the end of two years, then, it would be in the power of the Government of India, assuming that, financially speaking, circumstances remain as they are now, and if, as a prudent Government, they take advantage of the condition of things prevailing, and of the existing price of money, I say the Government of India will be actually in a position to reduce the interest on its Debt, and to effect an economy which will enable it to borrow £9,000,000, and yet the charge on the Indian taxpayer will remain just the same as it is at the present moment. In spite of this circumstance, hon. Gentlemen opposite say the finances of India are in a condition to cause grave anxiety. I should like them to point out any other country in the world which is so well situated as to be able to borrow £9,000,000 without adding to the burdens of the country. There is another question on which economy is practicable, and which I may be permitted to look at with some degree of paternal fondness, inasmuch as I endeavoured, before I had the honour of a seat in this House, to press it upon the country. I did so last year; it was the manner in which the Government of India has borrowed money for the purpose of constructing Indian railways. In all their undertakings, if possible—certainly in the future—I do not desire that they should abolish 144 the system of leasing railways to different private Companies. I hold that for the Government of India to centralize in its own hands the administration of all railways in India would be a great mistake, as it would have the effect of taking away the incentive to private enterprize in India. I endeavoured, before I had a seat in this House, by favour of successive Under Secretaries, to enforce upon the Government of India the lesson that they should borrow money in the cheapest market and provide the Railway Companies with it themselves. They have been exonerated in this debate from the charge of paying more than the market rate; but they have not been exonerated from the charge of going about the market in a clumsy manner. If in these transactions they had gone about the borrowing of money in a proper way, and as the Under Secretary of State seemed inclined to go about it recently, they would have saved a large sum during the past 12 months on railways, not a very enormous sum, but a sum which should have amounted to £30,000 or £40,000 a-year. Notwithstanding the difficulties that have been before us during the last fortnight since the Dissolution loomed in view, the Bill on this question might have been introduced and passed. It could have been claimed for it that it was non-contentious; for, wherever the credit of the Government was to be used, it would have enabled that credit to be used in the cheapest possible manner. I very much regret that the Bill has not been passed on the subject, following the Resolution which authorized its introduction, because I believe it could have been carried very easily before the Dissolution, and that it would have been found to work very satisfactorily. There is another point in which I cannot help thinking that previous Secretaries are not free from blame. It appears to me that there is not sufficient of that rigour and vigour in apportioning the expenditure between the Mother Country and India that there ought to be; and that there is a disposition to put upon India certain charges which, in other Departments, are borne by this country. I think it unfair, because the Indian people have not a direct voice in this House, that their interests should not be 145 looked after as well as if they were able to look after them themselves. There is not sufficient of that Spartan rigour in apportioning the expenditure between the Home and Indian Governments which I should like to see. It seems to me an anomaly that India should be taxed to pay the expenses of the staff of the Secretary of State and Under Secretary of State, when we do not require a single Colony to bear the charge for the Secretary and Under Secretary for the Colonies, or of any other Departments. If we look at the Estimates before us we shall find an item of £137,000 for the India Office. We charge India with the whole of the Red Sea telegraph expenses, and a certain arbitrary proportion of the expenses of Her Majesty's ships in Eastern waters—ships which would be just as much in existence, and used in just the same manner for the defence of our Colonies in these seas, if India did not belong to us. We charge India a certain proportion of the cost of the Missions in Persia and China, and various parts of the world from which India, as a part of the Imperial State, would have to be defended, if necessary, without a subvention from any country. We charge her a paltry sum as part of the expenses of the Indian Collection at South Kensington—a collection which I daresay is never inspected by a single Hindoo in the course of the year. This financial system of carrying on the Indian Government is altogether a paltry and unfair one to the Indian people; and I think we should have some reason assigned why there is this divergence in the course pursued with regard to India—especially in regard to the salaries of the high officials who from England administer the country—from the course pursued in connection with the Colonies. The next question I come to is one on which I shall only briefly touch, though it is an important one—namely, the so-called silver question. I have not felt, up to the present time, that it would be consistent to give my opinion on this subject, seeing that I am a Member of the Royal Commission which has sat to investigate the matter, and that the Report of that Commission has not been published. The Report has, however, now been noticed in the Public Press, though not yet published. There has been a large amount of evidence taken, which will, no doubt, in the course of a few days be 146 laid upon the Table of the House; and it certainly bears out the statement that the right hon. Gentleman below me (Sir James Fergusson) has made, that the purchasing power of silver in India has remained unaffected by the changes that have taken place. Nevertheless, I look on this question, as far as the finances of India are concerned, with the greatest possible apprehension. It is possible, and until last year I thought it certain, believing as I do that this enormous depreciation in the value of silver is the result more of sentiment than of actual glut, that the depreciation and the consequent apprehension would pass away, as similar but less important fluctuations that have taken place in the price of silver have passed away before. But the feeling of uneasiness has grown to a much greater extent than one would have thought possible; and just as you have seen in former periods of monetary crises in this country it may be necessary for the Government to step in and even—I was going to say break a fundamental law, but that is a term proscribed in this House—interfere with an important measure for the preservation of the commerce of the country. What I fear is that the Natives of India, who can read just as well as we can the different discussions that take place in this House as to the prospects of silver, may feel that the danger they are running is very great—that those who have been led to produce in increasing quantities, and to bring their produce to market, may, in a moment of fright, feeling that the exchange that they receive for their commodities is diminishing in value, at first, perhaps, hoard their produce, and then endeavour to find an outlet for the silver they have in the markets of the world, that they will not only cease to absorb silver, but will try to sell it. In this way you might produce such a convulsion as would compel the countries of the world, for the preservation of their own business life, to step in and interfere. A danger of this kind prudent statesmen would deal with before it arises, instead of endeavouring to do so after the worst has happened. We know perfectly well that the consumption of the metal in the East has been absolutely larger than the production during the last decade, and that the evils we are suffering from now are those that arise from Stocks that are 147 thrown upon India from the demonetizing countries, and there may be no end to these evils without some precautionary legislation. I trust that the subject will be immediately and specially inquired into, with a view to seeing how far foreign countries will join us in an attempt to deal with the question of silver depreciation. If something is not done I fear that India will continue to absorb, as she has commenced to do, an ever-increasing quantity of gold, to the serious detriment of Western Europe. It is, however, too large a question to go into at this hour of the night, and to exhaust now in all its bearings. Leaving that subject there are several matters of detail upon which the Under Secretary may be congratulated on this fitting opportunity—changes which have been made in the Accounts. I join in the hope that it may be possible to make in the future fewer changes in the circumstances under which the Indian Accounts are presented to us; still, I do hope that where such financial blots as are here discernible do occur that the hon. Gentleman opposite (Mr. Stafford Howard), or his Successor, will have the courage not to be deterred from carrying out useful changes. During this debate I heard an hon. Gentleman opposite (Sir George Campbell) make what I felt to be an undeserved attack upon a valued friend of mine—Mr. Moore—whose acquaintance I only made in the course of my last year's experience, but whom I have known long enough to appreciate as an able and honourable man.

GEORGE CAMPBELL&c.) (Kirkcaldy,
I did not make an attack upon that gentleman.

§ MR. LIONEL COHEN
Yes; it was an attack.

§ SIR GEORGE CAMPBELL
I only inquired as to the circumstances under which he had received the appointment of Secretary to the noble Lord (Lord Randolph Churchill), and under which he was allowed a pension of £800 a-year on retiring from the India Office.

§ MR. LIONEL COHEN
I am not aware of all the circumstances; but I know it was with great reluctance that Mr. Moore left the service of the Indian Council, and that he had nothing to do with the institution of the changes which preceded his resignation. I say that none of these circumstances reflect against him in the smallest degree. 148 Finally, I am quite sure that the finances of India do not deserve the imputations that have been cast upon them in the course of this debate, and that it is utterly unfair to suppose that the Indian Government is administered, as has been stated, like a gigantic Juggernaut squeezing the life out of the people of the country.

§ SIR ROBERT FOWLER (London)
The hon. Gentleman who has just sat down has made one remark to which I wish to draw the attention of hon. Gentlemen opposite and the Committee. He has alluded to a point that I often heard argued by one whose loss we all deplore—I mean the late Mr. Fawcett. He has alluded to the fact that a large number of charges that ought to be borne by the Imperial Revenue are borne by the Seventies of India. There is a great temptation—and I do not refer to the present but to all Governments—on the part of the Government to put charges on the Indian Exchequer which ought to be borne by us; because it is known that whatever is shoved on to the Indian Budget will only be discussed in a desultory conversation. The late Mr. Fawcett, whose authority was very great, not only with those who take an interest in these questions, but in the House generally, always argued that there were a large number of items which ought justly to be put on the Imperial Revenues which were charged to the Indian Revenues. I do hope that that subject will attract the attention of the hon. Gentleman opposite (Mr. Stafford Howard). I know this is not a popular thing to urge on an Indian Minister; but I think that where there are charges which should be borne by our own Revenues we should put them on them. The hon. Gentleman opposite (Mr. S. Smith) alluded to a good many of the grievances of India. He has paid great attention to them, and has travelled through the country itself. I know he is liable to the charge of the hon. Gentleman near me (Mr. Maclean) of having only paid a wandering visit to India. I am in the same position myself. I know that when one has only paid a rapid visit to a country one ought not to bring one's knowledge forward as worthy of particular attention, except when one has come into contact with gentlemen who are capable of imparting valuable information and instruction. Now, we 149 have in this House, I am glad to say, many hon. Gentlemen who can give us information as to India. There are my right hon. Friend near me (Sir James Fergusson); the hon. Gentleman the Member for Worcestershire (Sir Richard Temple); the hon. Gentleman the Member for Oldham (Mr. Maclean); the hon. Gentleman the Member for Hackney (Sir Lewis Pelly); and others. From these we can probably learn as much about India in London as we could in Calcutta; but their conversation does not leave the same impression upon us as does conversation with the authorities we meet out in India, when one's whole attention is concentrated upon Indian subjects. I cannot, to the full extent, agree with hon. Gentlemen as to the poverty of the people of India. We know they are very poor; but compare them with the Japanese. You find the Japanese grouped in the same way as you find the people of India. They are a very poor people; but we know that in the history of the world nothing has been more remarkable than the way in which the Japanese have developed within the last quarter of a century. No part of the history of the world has been more remarkable than that affecting the Japanese. Some of the evidences of poverty that one meets with are not such real evidences of poverty as hon. Gentlemen seem to think. As for the question of taxation in India, I always feel that this is a subject which ought to attract the deepest attention here. We cannot but feel that the people of India are not represented here, and that, therefore, every Indian grievance ought to be most attentively considered—whether it be a real grievance from our point of view or not. There is this to be considered—and I am glad we know that the feeling of the people of Bengal is very much the feeling of the whole of the people of India. They are a people who, before we went to India, were much more oppressed than they have been since. I think it will be admitted that these people have been much better governed by England than they were by the Mahommedan dynasties which formerly existed. If we lost India, either one of two things would happen—either another Mahommedan Power would swoop down upon the country, or it would be annexed by an 150 European Power, probably Russia. In either case the Natives would look back with great regret to the days when England ruled over them. They have never been as well ruled as they have been; by England. The argument of the hon. Member (Mr. S. Smith) is that the poverty of the people constitutes a charge against the Government of India; but, Sir, it seems to me that it is entirely the reverse. India has enjoyed a long period of peace, and peace is the source of prosperity in all countries. Under the oppression of the Mahrattas, when there was no safety for life or property, the population of India decreased; but that condition of things has been swept away; we have given them peace, and the population has increased. At the same time, I cannot but feel that the Revenues of India are not altogether in a satisfactory position. I refer to the three main sources of Eevenue—Opium, Land Tax, and Salt. I will not discuss opium, because we had earlier in the Session a debate on the subject, the result of which showed that the House did not wish to make any change. Looking at the fact that 40 Members were not willing to listen to the debate, I think we had a clear indication of the feeling of the House on that occasion. I think we must feel that the Land Revenue is as high as it ought to be. My hon. Friend (Mr. S. Smith) seems to think that the changes in the assessment were a great grievance; but, on the other hand, I cannot but feel that the population after the permanent settlement was less heavily taxed in Bengal than in the parts of India to which that settlement does not apply—the population of Bengal has nothing like the taxation that is borne in Madras. With regard to the Salt Tax, I think that if we were able to see our way to make a reduction in this, it would be satisfactory to every Member of the House. I am convinced of one thing, and that is that we all feel that it is undesirable to raise taxation, so to speak, from the life-blood of the country on articles of necessity used by the bulk of the people; and it seems to me that the arguments which Cobden used 40 years ago against the Corn Laws apply with great force against the Salt Tax. If, then, any change is possible, I say that anything which the Government can do in that direction will be a great source of satisfaction to Members of this House 151 The hon. Member opposite(Mr. S. Smith) seems to think there would be an advantage in having a bi-metallic coinage. But it seems to me that, gold and silver being articles of commerce of varying value, you cannot make any connection between them, and that, therefore, it would be useless to legislate in that direction.

§ MR. EVERETT (Suffolk, Woodbridge)
I have listened with interest to the debate which has taken place, and wish to say a few words on a subject of which we have heard a good deal to-night—namely, the fall in the value of silver. My mind, while I have been listening to what has been said as to the effect of that fall on the prosperity of India, has been exercised in considering what has been its effect on the prosperity of England. I belong to the agricultural class. In the present Parliament I have heard the subject of agricultural depression discussed again and again; and when we remember what has been so forcibly brought before us to-night, as to the effect which the depreciation of silver has on everything exported from India to England, I think we may find in that the key to what has brought depression upon the people of this country. It appears that upon every £1 worth of goods sent from India the producer receives a bonus of 20 per cent, and to this extent English producers are handicapped. In the Eastern Counties, from which I come, it is heartrending to see the state into which agriculture has fallen. Land is going out of cultivation; it is producing nothing to the owner; farmers are drifting into bankruptcy; and if it be true, as we have heard to-night, that silver is likely to undergo further depreciation, the consequences will be serious indeed to the agricultural population of these Islands. Although I speak of agricultural depression, with which, as a farmer, I am best acquainted, I presume that depression in other branches of trade may be traced partly to the same source. I understood the hon. Gentleman opposite to say that every fall in the value of silver meant a fall in the price of commodities; and, that being so, the explanation of the depression in this country is perfectly clear. It would seem to follow that one way of restoring the prosperity we enjoyed formerly is equally simple and plain, and that is that we should restore the right of the free 152 minting of silver that used to be enjoyed in European countries down to a recent date.

§ THE CHAIRMAN
I am afraid the hon. Gentleman is now travelling from the Question before the Committee.

§ UNDER SECRETARY OF STATE FOR INDIA (Mr. STAFFORD HOWARD) (Gloucester, Thornbury)
I shall now endeavour to answer as shortly as possible some of the questions put in the course of this debate. The noble Lord (Lord Randolph Churchill) commenced his speech by expressing his strong hope that the changes caused by an alteration of the system of Accounts will not occur again; but, if the noble Lord were in his place, I should have reminded him that the alteration is one which he himself authorized when in Office by a despatch sent to the Indian Government. The noble Lord referred to another despatch on the subject of reduction of Provincial expenditure, and asked if there had been any reply to it. I do not know whether any reply has been received; but I may point out that the time for arranging with the Provincial Governments will be in the spring of next year; and, consequently, the Government will abstain from any action in the matter until the time arrives. The hon. Member for Kirkcaldy (Sir George Campbell) complained of the practice or the power often exercised of taking a portion of the balances in the hands of the Provincial Governments; and he mentioned the fact that he had been very economical in his government, and that the balances he had saved were taken by the Indian Government; and he went on to say that he hoped that the extravagant Establishments of Madras and Bombay would be put a stop to. Well, Sir, I hope, if those Governments are extravagant, that when the time comes the question will be formally raised, and that steps will betaken to put them on a better basis. With regard to the taking of the balances of the Provincial Governments, I think it only fair that, when a crisis arrives, they should be called upon to contribute a small sum to the Imperial Expenditure of the country. Then the noble Lord asks whether the small surplus of £182,000 has not already been swallowed up by the fall in exchange for the rupee? I stated that, apart from that fall, the Government 153 expected that their Budget Estimates would be realized; but it is stated, in a despatch from the Viceroy, that if the fall continued the deficit would have to be made good by the Indian Government. As to the location of the Government at Simla, I believe that what has appeared in the newspapers on this subject is an entire mistake. There is no official communication on the subject; but I understand that the suggestion is that some Departments of the Government Offices which were taken up there shall be allowed to remain during the year. The question, however, has not come before the Secretary of State; and, therefore, I am unable to say anything further upon it. The noble Lord asks about the ruby mines and petroleum springs in Upper Burmah. I regret that I have no information at present on the subject of the latter, and I am not aware if it has been particularly mentioned in the despatches we have received; but, with regard to the ruby mines, it is an error to say that any reference has been made to a French Syndicate. I believe that some arrangement is under consideration to place the matter in the hands of Mr. Streeter; but he does not intend to hand the management over to a French Syndicate, whatever arrangement may be arrived at. With regard to the criticisms on the terms granted to the Indian Midland Railway Company, the hon. Member for North Paddington (Mr. Lionel Cohen), who is undoubtedly a financial authority, has explained that it would have been impossible for the Government to obtain better terms than they did. Let me here refer to the Bill of which the hon. Gentleman spoke, and, at the same time, give him credit for the origination of the measure which was drafted to carry out his views. I regret that the Bill was not proceeded with, because I think there was time to have passed it. But, as it is, I believe it will be taken up again, and that the result will be that in future we shall be able to raise money on better terms to supply the requirements of Guaranteed Railways. The hon. Member also pointed out that the Government of India would be in a position by the means indicated to borrow in a short time, if they chose to do so, £9,000,000, without, in reality, adding to the burdens of the country. The other point to which he referred 154 was taken up by the hon. Baronet on the opposite Bench (Sir Robert Fowler), who dealt with the proportion of Indian Expenditure which ought to be borne by this country. I think those remarks would be better addressed to the Finance Minister of this country, because I am sure that the Government of India would never object to expense being taken off their shoulders and put upon the people of this country. The hon. Member for Flintshire (Mr. S. Smith), in an exhaustive speech, described to us the condition of India as it presented itself to him after one visit. In the first place, he dealt largely with what he called the very serious increase of expenditure that was going on. But I am bound to say, both with regard to the article he wrote and his speech, that the hon. Member seems to me to have himself satisfactorily explained the larger proportion of the increased expenditure on which he dwells. I must remind the hon. Member that in every growing and improving country there must be growth of expenditure. But, although expenditure on those conditions is bound to increase, it does not, of course, follow that the Government has a right to be extravagant, or that in this instance the Government of India ought not to exercise the greatest discretion. But I wish to remind my hon. Friend that a sum larger than£1,500,000 is every year invested from the Revenues of India in public works, and in that way you will find that £5,000,000 more have been invested than the sum he mentioned as the net deficit in the Accounts of recent years. With regard to the value of silver, the right hon. Member for North-East Manchester (Sir James Fergusson) called the attention of the hon. Member for Flintshire to the information he had, which, as far as my knowledge goes, I am able to confirm, that the value of the rupee in India is the same as it was before the fall in exchange took place; and, therefore, the income of some of the Natives, which the hon. Member stated to be as low as 40 rupees, is represented by more than 30s. as he supposed. But I cannot go further into that subject now. I will only say in conclusion that, whilst many interesting questions have been raised upon which I should like to have said something, I feel that the patience of the Committee 155 is exhausted. While I do not wish to appear as a great optimist, I do not, on the other hand, desire to run into the opposite extreme; and, looking at the great remissions of taxation the Indian Government made about the years 1881 and 1882, looking to the steady progress of the Revenue of the country, to the great reduction that has been made in the uncovered Debt, to the steady in-crease in the return from public works, and to the way in which the Indian Government has met the recent crisis, I think the position of Indian finance is not nearly so bad as my hon. Friend would have you believe, and with that statement I ask the Committee to agree to the Resolution. Resolved, That it appears, by the Accounts laid before this House, that the Total Revenue of India for the year ending the 31st day of March 1885 was £70,690,681; that the Total Expenditure in India and in England charged to Revenue was £71,077,127; that there was an excess of Expenditure over Revenue of £386,446, and that the Capital Outlay on Railways and Irrigation Works was £4,226,613, besides a Capital Charge of £1,314,746 in connection with the Purchase of the Eastern Bengal Railway, and in the Redemption of Liabilities.

§ Resolution agreed to; to be reported upon Thursday.