§ COLONEL SYKESsaid, he rose to ask the Secretary of State for India, Whether he has taken Shares in the Steam Flotilla on the Indus, connected with the Scinde and Punjab Railway Companies on account of the Indian Government, in part payment of the price of Vessels proposed to be sold to the Steam Company by the Government, and whether he has guaranteed 5 per cent upon £167,000 to be raised as additional capital to complete the payments to the Government, and for other purposes? He had put his question on 1260 the paper in consequence of his attention having been drawn to an official notice issued by the directors of the Indus Steam Flotilla Company in which the facts were so stated. The steam flotilla belonged to two railway companies, the Scinde Railway Company and the Punjab Railway Company, and it completed the line of communication between the termini of those two companies. Although the Government of India had guaranteed 5 per cent on £250,000 to enable them to put their flotilla upon the Indus, they had not been able to do so, and had therefore been obliged to ask for an additional guarantee on £83,000, at 5 per cent. Notwithstanding that, the undertaking was not complete. The Government had hitherto had vessels on the Indus; but, feeling that they were interfering with private enterprise, they had offered those vessels for sale. The Punjab Company had offered to buy, but had not the money to pay for them; so that an arrangement was made with the Secretary of State that he should receive the price of them in shares of the company. But even that acceptance of shares was insufficient. More money was required, and £167,000 was about to be raised on debentures, with a guarantee of 5 per cent by the Secretary of State; so that the company will have had no less than £500,000 guaranteed, at 5 per cent. by the Secretary of State. On the other hand, another body of capitalists, called the Oriental Steam Navigation Company, was formed in 1856 for the navigation of the inland waters of India. They resolved to begin with the Godavery, and they applied to the East India Company for a guarantee. The Court of Directors refused to comply with their request, but ultimately agreed to give them a subsidy of £5,000 per annum for ten years, provided they fulfilled certain specified conditions. They could not for a time carry out the conditions of their contract, but, by dint of persevering efforts, they were enabled last year to obtain their first subsidy. They had now several steamers on the Indus, and were placing others on the Ganges. They had also offered to buy the steamers and barges belonging to the Government for £45,000; but the Government refused to let them have the barges, in which it was usual on the rivers of India to carry freight in tow of the steamers. The Oriental Steam Navigation Company complained—and appa- 1261 rently not without reason—that the advantages which had been denied to them had been granted to their rivals, to the prejudice of competitive enterprise. He therefore desired to put this question to the right hon. Gentleman, who, he hoped, would be able to state that the whole transaction was a myth; for it seemed to him incredible that the Indian Government should take shares in a commercial speculation, in opposition to the principles of free trade.
§ SIR CHARLES WOODsaid, he was not about to follow his hon. and gallant Friend into the general question of guarantees. He quite admitted that, in the abstract, they were not in accordance with Free Trade principles; but there were peculiar circumstances connected with railway companies in India. The object in giving a guarantee in the case of the Steam Flotilla Company was really to complete a great line of railway, of which the navigation of that portion of the Indus formed a connecting link. Besides that, he found the guarantees referred to by his hon. and gallant Friend in existence at the time he had the honour of entering on the duties of the office which he now filled, and he had had no option in the matter. Coming to his hon. and gallant Friend's questions, and taking the last first, he had to reply, that the Government had not guaranteed 5 per cent upon £167,000 to be raised as additional capital for the purposes stated. No such proposition had been made to the India Office. With regard to the first question, the Government were bound to see those companies through some way or other; because as they had guaranteed 5 per cent to the shareholders, it was their interest to forward the undertaking, as the only mode of saving themselves from the payment of interest. If the companies could not pay interest out of revenue, the Government would be called on to pay it. In the particular case, the Government of Bombay arranged to sell certain vessels to the company, not having any further occasion for them themselves. Before he had sanctioned the agreement for the sale, another company had been communicated with, but they declined to say whether they would purchase the boats unless they had a previous loan of them for six months. Under those circumstances the sale to the Steam Flotilla and Punjab Railway Company took place. In this, as in the case of another railway company to whom ad- 1262 vances had been made, by the Government, the Government thought that the best security they could obtain were shares, by accepting which they had put themselves in the position of shareholders of the company, and were entitled to any advantages that might accrue to them.