OBSERVATIONS. (Hansard, 24 April 1868)

§ MR. STANSFELD
said, he rose to call attention to the circumstances under which the sum of £600,000 was agreed to be advanced on loan, in May, 1866, to the Madras Irrigation Company, by the then Secretary of State for India (Earl De Grey), and to make an explanatory statement. He would have been in his place on the evening when the hon. Member 1299 for Dumbartonshire (Mr. Smollett) brought forward this subject had not the terms of the Notice which the hon. Member had put on the Paper been such as to convey to his mind the impression that the hon. Gentleman excepted from that Motion the period during which Earl Do Grey filled the office of Secretary of State for India. He found that there existed in the minds of some persons an idea that, under the original agreement made with the Company by Lord Stanley in 1858, the Company were, in the first instance, to take a profit of 25 per cent, and that not until that profit had been earned were the Government to share in the returns. That was an entire misconception. The profits were to be divided equally between the Company and the Government, after the payment of the guaranteed interest of 5 per cent. Next, as to what had been said about Lord Halifax having allowed interest to be paid from the moment the capital was paid into the Indian Treasury, he must observe that, under the agreement made by Lord Stanley with the Company, the payment of interest was to commence from that moment. Coming to the charge that when the £600,000 was agreed to be advanced in 1866 the Company had collapsed, and the Secretary of State bolstered them up with that loan, he had to say that undoubtedly no profits had been made by the Company up to that time, and for this reason—that their works were not completed. But the only way in which the Company had collapsed was, that the rough estimate for the works had been exceeded; that the £1,000,000 — the amount at which they had been estimated—had been spent; and that money was required to finish the undertaking. He denied that Earl Do Grey had yielded to the demands of the Company. On the contrary, he made a counter-proposition, based on a true conception of the interests of the Government and the people of India. It was well known that Lord Halifax had always been opposed to the undertaking of works of irrigation by private companies, and the same view of the subject was taken by Earl De Grey. The Company came to Lord Halifax in 1863, and requested assistance or facilities for raising further capital, By the terms of the contract made in 1863, the Company were to be at liberty to raise more capital, though without guarantee; but, under such circumstances, they failed in their attempt to raise additional capital, whereupon they 1300 applied again to Lord Halifax in October, 1865, and asked that the obligation they were under to re-pay out of the profits the advances of guaranteed interest to the Indian Government should be postponed to the right of the guaranteed and unguaranteed shareholders to earn 12 instead of 5 per cent. This proposal was left by Lord Halifax to be considered by Lord De Grey, who declined to accede to it. But it was obviously the policy of the Secretary of State to secure the completion of the works by this Company for a limited sum and within a reasonable period, or else to acquire the right of paying off the Company, and taking the works into the hands of the Government of India. That policy was carried out in the proposal which was made to the Company and accepted by them, and by which the Government acquired the rights and advantages they at present possessed. By the contract under the seal of the Secretary of State, he undertook to advance to the Company sums of not less than £5,000 on demand on their debenture notes payable five years after date—on the whole, to an extent not exceeding £600,000; these amounts to be applied to the completion of of the irrigation canal between two specified points—on the understanding that, in case of the non-completion of that section of the works in five years, and for the sum to be advanced, the Secretary of State for India should have the right to enter upon these works and oust the Company, paying them in Indian stock at market price for the capital invested in the works in question; but, if the Company succeed in completing the works in the time specified, the whole profits accruing to it, from whatever source, would be liable, in the first instance, to payment of the interest due to the Secretary of State on the debenture debt; and, secondly, falling back on the contract of 1863, the irrigation profits would be liable for the guaranteed interest of 5 per cent, and next to pay the Secretary of State the long standing and very considerable arrears of guaranteed interest which he had been compelled to advance; and then, and not till then, would the Company be entitled to earn more than 5 per cent. He believed he had demonstrated that the proposal which had been made by Earl De Grey was a wise and prudent arrangement for the Government and the people of India. The word "swindle" had been applied to the Madras Irrigation Company, and it had been said that the India Office was surrounded 1301 with jobbers. He protested against the application of such reckless and unfounded expressions to honourable men engaged in a work of great public utility. The directors were bound to look to the interests of the shareholders; but they had met the Secretary of State frankly, and should not be grudged the assistance necessary to enable them to complete the work. In conclusion, the hon. Gentleman deprecated the harsh remarks applied on Monday evening to the directors of the Madras Irrigation Company.

§ MR. SMOLLETT
said, that the Resolution which he had moved on Monday last was not precisely the same in terms as the one which he had placed upon the Notice Paper some time previously, inasmuch as it implied the adoption of a certain course of policy by Lord Halifax instead of by Earl Do Grey, and that was perhaps the reason why the hon. Member for Halifax (Mr. Stansfeld) had not on that occasion come down to the House to answer him. The House had, however, now heard the explanation of the hon. Member, and so far as it went it was satisfactory. He (Mr. Smollett) would take a future opportunity of moving that the proposals first made to the Irrigation Company by the noble Lord the Member for King's Lynn (the Secretary of State for Foreign Affairs) should be laid upon the table of the House. His (Mr. Smollett's) statement was that in 1859 a deputation of adventurers proposed to the Secretary of State for India to relieve the Government of India from making large irrigation works out of the Government Treasury, and solicited permission to make the works by means of a company which should simply reap the profits of the undertaking. Nine years elapsed, and it appeared that not a shilling had been advanced bonâ fide by the Company, but that these irrigation works had been paid for out of the public treasury, and not a sixpence of interest on the Government advances had been received.

§ MR. STANSFELD
said, that the money had been advanced by the Company.

§ MR. SMOLLETT
Yes; advanced by the Company on a guarantee that the Government would pay 5 per cent interest. This was, in reality, a Government loan. He contended that at the end of 1871 the Government will have made themselves answerable for £2,000,000 sterling and upwards, while these private adventurers would not have made themselves answerable for a single shilling. No profits had up to this 1302 time been derived from these works, and no one who knew anything of India would be deluded by the statement that if we would wait a while, profits would come. Irrigation works yielded profit immediately on their completion, if they were well-constructed and well conducted. But these works never would yield any profit, because they were ill-devised, ill-engineered, and conducted by men who could not realize profits.

§ MR. KINNAIRD
said, he had never heard a speech—to use the mildest term—so full of inaccuracies as that made the other night by the hon. Member who had just spoken. They could not be sustained before a Select Committee.

§ MR. SPEAKER
intimated that the hon. Member was out of order in referring to a speech in a previous debate.

§ MR. KINNAIRD
said, he would add nothing to what had been stated by the hon. Gentleman the Member for Halifax (Mr. Stansfeld), except with regard to what the Company asked for from Earl De Grey and Lord Halifax. All that they had asked of the Government was a slight relaxation of the contract, in order that they might raise unguaranteed capital to enable them to complete works that had proved to be of enormous difficulty. The Government had guaranteed £100,000,000 for the construction of railways in India, and could it grudge to guarantee £600,000 for the construction of works which would save the lives of millions of our fellow-subjects? The works were now progressing rapidly, and the result would be most beneficial to India.