HC Deb 13 February 1877 vol 232 cc264-332

, in moving that a Select Committee be appointed to inquire into the Finance and Financial Administration of India, said, he rejoiced that he was able, through the courtesy of the hon. Member for Peterborough (Mr. Whalley), and the hon. Member for Cork (Mr. M'Carthy Downing) to bring forward thus early in the Session a Motion which would afford the House an opportunity of showing that, whatever might be their opinions on the Eastern Question, they were not indifferent to subjects deeply affecting the welfare of India. Any one who had the most cursory acquaintance with Indian finance knew that every question connected with the administration of that great dependency, every measure that might be adopted to promote the wellbeing of her people was inextricably bound up with the present condition of her finances. A great statesman some years ago said that finance was the key of our position in India, and however true that might have been a few years ago it was doubly so now, for events were each year happening which more conclusively showed that no service that could be rendered to India was of such prossing importance as to place her finances in a more satisfactory position. But apart from that general consideration, there were special reasons that induced him to ask for inquiry just now. It would be in the recollection of many that in the Session of 1871 a Committee to inquire into the finances of India was appointed on the Motion of his right hon. Friend the Member for Greenwich (Mr. Gladstone). That Motion was identical in terms with the one he intended now to move, for he thought he might safely follow in the footsteps of his distinguished Friend. His right hon. Friend then thought the inquiry was of such unusual importance that, in the first instance, he proposed that the Committee should be a joint one of both Houses; but the suggestion not meeting with general favour in the House was abandoned, although in the very significant debate to which it gave rise the present Prime Minister, remarking that Indian finance was a subject which directly affected English taxpayers, said— The ill-management of Indian finance must recoil ultimately upon the financial resources of this country."—[3 Hansard, cciv. 774.] He also endorsed the doctrine held by almost all the preceding speakers, that it was inadvisable to ask for a joint Committee, because it was a subject that ought to be dealt with by that House alone, and in consequence the idea was abandoned. A Committee of that House, therefore, was nominated, consisting of 32 Members, including some of those holding the most important positions in the present as well as the late Government. It commenced its labours in 1871, and they were continued through the Sessions of 1872 and 1873; but the subject which had to be inquired into extended over so wide a field, and such a great amount of evidence had to be taken, that at the close of 1873, the last Session of the late Parliament, the inquiry was not completed, and the Committee unanimously recommended that they should be re-appointed. Among those who joined in that recommendation were the present Chancellor of the Exchequer and the present Home Secretary, and that being the case, he would ask those right hon. Gentlemen if it was true, as rumour informed him, that they were going to refuse the Committee of Inquiry which he was about to ask for? He would call upon them to say, in explicit language, why, having concurred in the strong recommendation that was made, on the ground that the evidence had not been completed in 1873, they were of opinion in 1877 that further scrutiny was unnecessary? He was curious to hear from the Chancellor of the Exchequer, one who could speak with the knowledge of a former Indian Secretary, what had happened in India during the last six years to make him think that Indian finances, which in 1873 required a most scrutinizing examination from a Committee of that House, now no longer needed the same close investigation. Did he think that the occurrence of two terrible Famines within that brief period, Famines which had, and would, he feared, put a severe strain upon the finances of India, could be pleaded as a reason why the House of Commons should concern itself less with Indian finance? Did he think that what was brought to light last year by a Committee of that House on the depreciation of silver over which his right hon. Friend the Member for the City of London (Mr. Goschen) presided should make them less solicitous about India's present financial condition? Was not the grave inconvenience then, with a striking reality, shown of having permitted the Home Charges to so constantly increase that now nearly one-third of the entire Revenue of India was spent in this country? Surely one who had, like the right hon. Gentleman opposite, made the reduction of the English Debt occupy the foremost position in his own financial policy could not view with complacency the constant additions which were made to the Debt of India, and could not think it a subject which needed no inquiry, that India's financial position was one of such extreme tension, that all her resources seemed to be so entirely exhausted, that any item of exceptional expenditure could only be met by a fresh loan? It was particularly to be noted that the Committee joined in recommending its re-appointment in 1873, not simply because the inquiry had not been completed, but especially because only two Natives of India had been examined, and the Committee— had received a communication from Her Majesty's Government that steps would be taken to provide for the expenses of Natives of India who might be selected by the Government and approved by the Committee to attend before them for the purpose of giving evidence, in accordance with the recommendation contained in their former Report; and arrangements were being made for the attendance of these witnesses before the Committee at the commencement of the next Session. Under these circumstances, if the accidental occurrence of a General Election and a change of Government were used to bar further inquiry, what was the interpretation which would be put on the proceeding by the people of India? The inquiry, it would be said, was allowed to go on until some of the people themselves were about to be called upon to give evidence, and then the whole thing was got rid of by a side wind, which he was afraid would be regarded as a somewhat unworthy and ungenerous device. But what occurred after the General Election? On the 20th of April, 1874, the noble Lord the present Under Secretary for India (Lord George Hamilton) moved for the appointment of a Select Committee to investigate the Home Charges. At that time he (Mr. Fawcett) was not a Member of the House, but so far as he could discover from Hansard the Committee was moved for without a word of explanation, and the Motion agreed to without a word of debate. The Government, he understood, thought it was better to divide the inquiry, as it were, into separate departments; but the fact remained that the present Government and the present Parliament unanimously agreed to an inquiry in 1874. The Committee, consisting of 21 Members, was nominated on March the 30th, a Member of the Government—the right hon. Gentleman the Member for Shoreham (Mr. Stephen Cave)—being elected Chairman. It began taking evidence on the 12th of May, and on the 28th of July a Report was agreed to, the concluding paragraph of which was as follows:— In conclusion, your Committee would suggest that, as they have not had time to investigate the various Home Charges which are not connected with military expenditure, they should be re-appointed next Session. As much evidence was taken in reference to these Charges by the India Finance Committee, which sat during the three previous Sessions, it is probable that the inquiry might be completed within a reasonable period, He would not say that that recommendation had been treated with contempt, but it had certainly been as completely ignored as if it had never been made. The following Session, so far from the inquiry being continued, a Committee was appointed to inquire into certain officers' grievances, an investigation which could not diminish, but might and did add to, the Charges on the Revenues of India. If the Government intended to resist his present Motion, he could not divine to what excuse they would resort; they were absolutely precluded by their own words and acts from saying that no further inquiry was needed. Happily, it was unnecessary for him to bring forward any opinion of his own to support a demand for renewed inquiry. In 1873 the right hon. Gentleman the Chancellor of the Exchequer, the Home Secretary, and two other Members of the Government united in asking the House to grant further inquiry. At the close of the Session of 1874 the same demand was renewed by the official Representative of India in that House, and by every other Member of the Committee. There was nothing he should more deeply regret than to say a single word which would add to the difficulties of those who were responsible for the government of India at a time of no little anxiety, but he felt constrained to say that a refusal to grant further inquiry and a determination to arrest it just at the point when some of the people themselves would have an opportunity of being heard, would inevitably suggest many suspicious, and undoubtedly produce a most unfavourable impression throughout the length and breadth of that country. He had heard it said, but he could not vouch for the truth of the assertion, that the Government would not re-appoint the Committee because it would prove embarrassing to the Indian officials, who were already burdened with the troubles attendant on the Famine. Well, if that was to be the excuse of the Government, they would have to give valid reasons for upholding it, for it was particularly to be noted that the Famine of 1873-4 was at its height when the Government appointed the Committee of 1874. Lord Northbrook was not embarrassed by investigation at a time when he had a Famine to deal with, but, on the contrary, his hands were strengthened and the cause of good government in India was promoted. So far as he had been able to judge, those who had had most experience of official life in India were those who were most anxious for the fullest and freest investigation; but apart from that, he believed he should be able to show that the events of the last three years had given renewed force to every consideration which prompted the late Government in 1871 to propose a Committee of Inquiry. Within a very brief period different parts of India had been visited by two widespread famines, the consequence of which had been that millions of people had been reduced to the verge of starvation. To alleviate their distress, the Government had to provide for their subsistence, a proceeding that involved an expenditure which it had been altogether beyond the power of the ordinary revenue to meet. An addition of, probably, not less than £12,000,000 would consequently have to be made to the Debt of India. To a country as wealthy as England such an expenditure would be serious; to a country as poor as India it was disastrous and perilous. So severely had all the sources of new and increased taxation in India been strained, so completely had all the sources of revenue been used up, that when any emergency occurred it had to be solely met by increased borrowing. Now, a pay day must come at last, and increased borrowing could in the end lead to no other result than increased taxation, and increased taxation, as they had been told by one whose warning the present Government should at least heed, the late Lord Mayo, would be, in the present condition of India, a "political danger the magnitude of which could not be over-estimated." Again, Sir William Muir, a statesman whose judgment they had reason to respect, had stated that the depreciation in the value of silver, "from whatever point of view considered, was the gravest danger which had yet threatened the finances of India." No doubt there had been a recovery in the value of silver, but he would be a bold man who would say that its value was certain to be maintained. As a depreciation in the value of silver would be a misfortune of incalculable consequence to India, he wished to direct particular attention to the fact that it was nnanimously admitted by the Committee of last Session, that of all the causes which contributed to bring about a depreciation in the value of silver, not one was more potent in its influence than that increase in the Indian Home Charges which was constantly going on. If it was objected that the terms of his Motion were too general and wide in their scope, he could only say that, being anxious to follow the precedent set by one of the greatest authorities of that House, he had taken the exact words of the Motion of the right hon. Member for Greenwich. He thought, moreover, he should be showing greater deference to the House if, instead of indicating in the Motion the subjects which most urgently needed inquiry, he left this to be decided by the Committee, should it be appointed. The Government had been of opinion that a Committee ought to be appointed to inquire into the increase in the Home Charges when their effect had not been recognized; but now that they had discovered that these Home Charges affected the value of silver, they said that any one who proposed an inquiry into Indian finance was proposing that which was superfluous and unnecessary. It was not, however, difficult to indicate some of the subjects upon which an authoritative expression of opinion from a Committee would be most desirable. Any one who turned to the Report of the Committee of 1873 would find that the Chancellor of the Exchequer and the Home Secretary felt a keen anxiety to ascertain how it had come to pass that there had been a large increase in military expenditure in India, accompanied by a considerable diminution in the numerical strength in the Army. Could they think it unreasonable if others in 1877 shared their anxiety, and felt the same desire to throw some light upon this important and interesting fact? Again, he believed there was not a financier of authority who did not think that the finances of India could never be placed on an intelligible and satisfactory basis so long as the present distinction between Ordinary and Extraordinary expenditure was maintained. Experience derived from the Continent should warn them that a resort to Extraordinary Budgets had not unfrequently been the last desperate resource of embarrassed Governments. Then, the Public Works expenditure in India was in a maze of inextricable confusion. No one could tell what was the exact financial result of any work that had been executed; and when money was wasted through blundering and mismanagement it generally seemed impossible to discover who was responsible. Those hon. Members on the other side of the House who were so solicitous about local taxation in England would find that there were in India questions connected with local taxation which would afford an inexhaustible field for the employment of their reforming zeal. The subject of pensions most urgently needed careful investigation and revision. Pensions were granted and held in India on conditions which would not for a moment be allowed in our own country. It was, he believed, the invariable rule of our own Civil Service that when any one who was in receipt of a pension again accepted office under the Crown, and received a salary, his pension was suspended; and though that was the custom in a rich country like England, yet in a poor country such as India both salary and pension continued to be paid. He would not incur the risk of wearying the House by the enumeration of a long list of not less important subjects which earnestly needed investigation. Any one might discover them for himself who turned to the evidence given before the two former Committees. Beyond that, the House would be stultifying itself if it appointed a Committee on two occasions and refused to re-appoint it a third time to complete its work. Wide as was the field of inquiry, the work of the new Committee would not be so great as might be supposed, because the whole of the evidence which had been taken before the previous Committees might be referred to it, and there would be an unusual opportunity of readily using this evidence, because it had been, with the greatest industry, most admirably indexed by Mr. Ayrton, who for three years presided with so much ability over the Committee appointed by the late Government. With regard to the Amendment of which the hon. Member for Cambridge (Mr. Smollett) had given Notice, he thought it was a very strange one, and he could not understand how the hon. Gentleman brought it forward as an Amendment. He believed it was brought forward in no spirit of opposition—[Mr. SMOLLETT: Hear, hear!]—because the only difference between them was that the hon. Member thought the House was in a position at once to decide on some of the most important points connected with the financial position of India. In a previous Session he (Mr. Fawcett) proposed a Resolution almost identical in terms with that of the hon. Member. It was on that occasion said from the Treasury Bench, in reply to that Resolution, that as the Committee had been appointed, and as it had not completed its inquiry, until that inquiry was completed and it had had an opportunity of expressing its opinion, he would be treating the House with contempt if he pressed his Motion. They could not use that argument now. If the Government resisted further inquiry they were reduced to a pitiable, do-nothing position. Let one thing or the other be done. Let the Government either facilitate further inquiry, or let them at once say—"We disregard the opinion of two Committees who decided that further inquiry was needed; the House is in possession of ample information to enable it to express its opinion on any point connected with the financial position of India." And now, before he resumed his seat, he should like, if the House would allow him, to make one appeal to hon. Members opposite. In the protracted debates which occurred when the Government of India was transferred from the East India Company to the Crown, leading Members of the House vied with each other in the expression of an earnest hope that India would never be made in that House the battle-field of Party conflicts. So far as he had taken any share in Indian debates, he thought the House would bear him out when he said he had never been actuated by Party motives. When the Party to which he (Mr. Fawcett) belonged was in power, and when his hon. Friend the Member for Elgin (Mr. Grant Duff) was the official Representative of India in that House, he believed his hon. Friend would acknowledge that they on Indian questions were not always in the same Lobby, that he did not give an undeviating support to everything his hon. Friend proposed, and that he did not express an unhesitating approval of everything he said. If he wore now sitting on the Govern- ment side of the House, he should certainly not less earnestly press for an inquiry. He should do so because, fully and cordially endorsing the words of Lord Salisbury, he believed that the most effectual way of securing financial justice for India was for the House of Commons to be constantly watchful of her interests. If they were prepared to exercise that watchfulness, no labour which they could bestow on any work would ever yield a richer harvest of results. Whatever might be their difference of opinion on some subjects, they must alike desire to unite the people of India to this country by the bends of a stronger loyalty and of an increasing contentment. The most costly ceremonial, the most glittering pageant, would soon be forgotten. But a desire shown by that House to lighten the burden of taxation which might oppress the people of India, and to promote every measure which might add to their happiness and increase their welfare, would every day link together in a closer union the rulers and the ruled, and would place our Empire in the East on a firmer and securer basis. The hon. Member concluded by moving for the Select Committee of which he had given Notice.


, in seconding the Motion, said, that while declining to pledge himself to entire concurrence in all the views which the hon. Mover had expressed on the subject of Indian finance, he was decidedly of opinion that it was most desirable that the Government should grant some inquiry of the nature which his hon. Friend had asked for. He would not express any confident opinion as to what body the inquiry should be entrusted to; and he was rather inclined to think that a Joint Committee of both Houses of Parliament, so as to obtain the benefit of the large experience of Members in the other House, would be preferable. The matter might, perhaps, be entrusted to a Royal Commission, including Members of both Houses of Parliament; but in any case he trusted that an inquiry in some form would be granted. Whatever shape the inquiry might assume, there were few, he imagined, who would deny the necessity which existed for a periodical review of Indian affairs generally, and especially in connection with the finances of that country, with respect to which, under the rule of the East India Company, there had been a continuity of policy, which during the last 20 years had given place to a system of oscillation from one extreme to the other. He had served under both the East India Company and the Crown, and he thought that the Government of the former had some advantages over the present. There was not, for one thing, the same see-saw in policy. Under the East India Company's regime, the administration of India was solemnly and carefully reviewed every 20 years by inquiry at the instance of the Houses of Parliament, and great benefit resulted from that practice. Now that the Government of India had passed to the Crown, no such periodical review had taken place. Another result of the change in the government of India was that the affairs of the country were dealt with in a very desultory and unsatisfactory manner in that House, where it was very rare, and he hoped an omen for good, to see so large an attendance as on that evening when Indian subjects were under discussion. As things now stood, all those men who were most remarkable for their knowledge of India were put, as it were, into a cellar, for the Council deliberated in secret, and the world was deprived of all public expression of their views. This, he thought, was all the more to be regretted, because the Government of India had become a matter of greater difficulty than it was before; they had now a larger territory to administer than formerly, as well as to deal with internal questions of greater magnitude and intricacy. Of late there had been manifested a disposition to say—"You must not attempt to deal with these things in this country, but you must trust your Government in India." It was rather too much the practice also to think that the Government of India was the Viceroy. People were rather apt to overlook the Council of the Viceroy, and to lay upon him the whole strain and stress of the Government. What he believed to be the situation was, that they did not get men of the same political eminence to accept the position of Viceroy as they did in the old days to accept the position of Governor General. They did not send men who had had the rank of Cabinet Minister, and who had reached the highest rank in this country. They sent men, good, no doubt, but men who had been in no high position. The same difficulty arose with regard to the Finance Ministers whom they sent out. For a time they did send out several distinguished men to deal with the finances of India, but he understood that of late years it had been difficult to get such men to leave this country. The consequence was that on several recent occasions it had almost become the practice that the Finance Minister should not be sent from this country but should be one of the Civil servants selected on the spot. They were very good men, but their training was local; the man who was selected by the Viceroy himself ceased to be an independent controller of Indian finance, and in some respects was a dependant of the Viceroy, selected from his own servants. The Viceroy, too, was assisted by the other Members of his Council, but instead of advising him as a body, several of the Members were specialists who were unprepared to advise the Government on matters unconnected with their respective Departments. Consequently, in these modern days, especially in regard to finance, the Viceroy individually had acquired an inexpedient degree of power, and the result was that the oscillations of policy to which he had alluded were now extreme, whereas formerly they were moderate. Now, he thought it an unsatisfactory state of things when a Viceroy of India was able of himself to control the whole policy of Indian finance, and in his opinion this was shown when Lord Northbrook did away with direct taxation in the country. The abolition of the income tax involved not only a question whether it should be imposed for any definite period, but whether some direct taxation on the richer classes in India should or should not be made a part of our system, and Lord Northbrook and his Council took different views on the question. He desired to speak of that noble Lord with all respect; but he was one of those Governors General who had not held high political position before going to India; when the financial question came before him he had not been long in that country, and he went out with certain preconceived ideas with regard to Indian finance. That noble Lord had confidence in his own opinions; he was accustomed to bureaucratic ways, and he was not inclined to take the advice of his Council, but to follow his own in a somewhat decided manner. There was at the time a great division of opinion both outside and inside the Council on the question of direct taxation. In the Council there was a great majority of Indian opinion in favour of maintaining a system of direct taxation, the Finance Minister also being of that opinion; but the Governor General was enabled to carry his views in favour of abandoning it by a small majority composed of what he (Sir George Campbell) called specialists, not having strong views of their own, and who did not oppose opinions to the Governor General. Under these circumstances, it was to be expected that the final decision would have to rest on the Home Government. He was very much astonished last Session to hear the Duke of Argyll state in the other House that he knew that Lord Northbrook was going to take a course in which he (the Duke of Argyll) did not concur, but he thought it was a matter which it was fair to leave to the decision of the Government of India. The result was that the great question with regard to direct taxation in India was decided by Lord Northbrook in favour of abandoning it, contrary to the view of the Secretary of State and the Home Government and the most experienced Members of his own Council. In his judgment, the responsibility of a change of that kind ought not to be left to the decision of a single man, however able and experienced; and this was one of the points which might be investigated by a strong Committee, such as his hon. Friend the Member for Hackney asked for. The late Mr. James Wilson, a man of great weight and experience, having examined into Indian finance, came to a conclusion which took the form of a new system of taxation, and a certain alteration of the financial system of India; but since his death all the improvements and changes which he introduced had been abandoned and swept away, until not a vestige remained. After Mr. Wilson's death came a period of reaction, of apparent prosperity, and the doctrine was advanced that India was to become prosperous and rich for ever by a system of public works, by means of extraordinary loans; but from personal experience he was able to say that it had resulted in great waste. The administration was very much localized, whilst the system of finance was centralized in a most extreme degree, and the consequence was that every local government had but a comparatively small incentive to increase and husband its resources, whilst it had the greatest possible interest to get as much as possible out of the central chest for its own local works. That was the second oscillation which occurred. Well, following this period of comparative prosperity, of high hopes and lavish expenditure, there came a sudden reaction. Lord Mayo and his Advisers, when they took charge of Indian finances, became possessed with the idea that those finances were being spent a great deal too fast, and that the Revenue was not in the satisfactory state which had been supposed. They were justified in that opinion, and they proceeded to adopt measures which would insure retrenchment and increase the Revenue, and those measures operated beneficially. Among other things, they gave to local governments limited powers of taxation. That was the third oscillation. But Lord Mayo was unhappily cut off by the hand of an assassin, and there came another distinguished man, Lord Northbrook, to whom he had already referred. That noble Lord, as he had said, went out with preconceived ideas as to Indian finance, and he put into practice those ideas which were directly opposed to those which had been entertained and put in force by Lord Mayo. Lord Northbrook withdrew the power of taxation from local governments, he abolished the system of direct taxation, and in many respects reversed the policy of Lord Mayo. That was the fourth oscillation, and then another change came about. Another Governor General—Lord Lytton—was appointed, and he was apparently inclined to adopt a financial policy extremely different from that of Lord Northbrook and very like that of Lord Mayo; this was the fifth oscillation. What he contended for was that the present system of change was undesirable and dangerous, and that it would be most beneficial not only to India, but also to this country, if the whole system were thoroughly sifted and examined by a body of gentlemen strong enough to test it and to lay down some general principles on which the finances of India and the administration of India might in future be conducted. What was to be feared was not so much excess of taxation—in that point he differed from his hon. Friend the Member for Hackney—as constant and violent changes in the system of taxation. He was inclined to think that the charge necessarily laid upon India might be borne by India; but if they wished to avoid constant complaints, discontent, and irritation, they must have a fixed and continuous system. They must introduce taxes deliberately and keep them on, not put them on one day to take them off the next, and then re-impose them. He wished to point out to the House that in India, when once a direct tax was taken off it was a most difficult thing to impose it again, and what he wanted was that in times of peace we should husband our resources. He could not but think the most important principles might be settled by a well-constituted Committee, as, for instance, the financial relations between the local governments and the Government of India; as to whether the latter were justified in spending up to the limit of income, or, whether in time of peace and prosperity there should not be a margin for the purpose of preparing for pressure caused by famine, the depreciation of silver, war, or any other cause.

One other subject of great importance might be considered by the Committee. Under the Native Government of India and down to the time of the East India Company, by far the greater part of the Revenues of the Indian Government was derived from the rent of land. That state of things had been greatly changed of late years. The Government had surrendered to individuals nearly half the rent of the land, and the consequence was that strong interests among landowners, great and small, had been created, and it became necessary to supply the deficit of Revenue by means of taxation in the modern European form. Some were of opinion that the right course had been adopted, others that it had not; and, in fact, there were two schools striving against each other in India, and it would be very desirable that some fixed principle was laid down on that subject also by able men, who would consider it without prejudice or passion. He thought that the whole question of land tenure and taxation in India could be dealt with by some authority such as that asked for.

There was another question he wished to touch upon—namely, as to the expenditure on Famine relief in India. This was a subject on which he might venture to speak with considerable experience, because he had felt the inconvenience of being subjected to public opinion without any rules being laid down for his guidance as to how he should act on such occasions. There had been great oscillation with regard to this question, and it was one as to which some settled principles should be arrived at by competent authorities, by which those who had to carry them out should not only be guided, but protected. At the time of the Famine in Orissa, all the circumstances were minutely examined by a Commission, of which he was a Member, and when the Bengal Famine occurred he was much assisted as the responsible administrator to deal with it by the experience he had acquired during the inquiries of the Orissa Commission. The Commission on the Orissa Famine, of which he was at the head, had not, however, weight and position sufficient to carry the adoption of their recommendations. He was overruled, and another system was followed which led in some degree to excessive relief being granted. In doing so, no doubt a mistake was committed, and some distinguished men after thus having had experience of the two extremes were desirous that some general principles should be laid down for guidance on similar occasions. These principles were not, however, laid down at the time, and now another famine found us equally unprepared. The consequence was that the authorities had to give sailing directions while the ship was in the midst of the storm, and it was much to be regretted, although it was by no means matter of surprise, that differences occurred between the Government of India and the local governments that had to deal with the famine, each attributing blame to the other. If, however, the whole question of Indian finance was submitted to a body fully competent to deal with it, principles might be laid down which would be of the greatest use in future famines. He believed that the Government of India were now dealing with the famine, on the whole, in a discreet manner, and that they were not going too far either in one direction or the other. It would be, however, far easier and more satisfactory if the principles upon which the Government of India were acting had been decided upon before and not during the famine.

He believed that inquiry into Indian finance was necessary, not only because great oscillations of policy had occurred, but because the present state of Indian finance was, as his hon. Friend had pointed out, extremely unsatisfactory. Of late years, from one cause and another, there had been no margin to meet unexpected demands, and his hon. Friend was perfectly right in saying that whether it was that they had exhausted the capacity of India for taxation, or for any other cause, it was very unwise that the Government should run their expenditure so close to their Revenue. From the time that Lord Mayo's plans had been reversed there had been a continual deficit. It had been necessary to contract great loans. Loans were found to be necessary every year for unproductive works. And now the Famine necessitated further loans. The depreciation of silver was another cause of financial disturbance, and while Indian loans were thus increasing from year to year, it could not be said that a prudent course was being followed in regard to Indian finance. It was, therefore, most important that the question should be considered and dealt with by a proper body, which should decide whether it was necessary to add increased taxation or reduce the expenditure of India. His own impression was that if we were to modernize our system of Indian finance it might be necessary to introduce some additional taxation. This, however, should only be done after the fullest inquiry, and it should no longer be left to any individuals, however high, to put on and take off taxes, and alter the system at their own will and pleasure. If the Government would tell the House that after 20 years of Imperial Government the time had come—say in 1878 —when a general review of Indian finance might fairly be intrusted to some high and competent body, he would recommend that the matter should be left in the hands of the Government. If, however, the Government intended to resist all inquiry as unnecessary, he should support his hon. Friend the Member for Hackney, and hoped he would divide the House on his Motion. He ventured, however, to hope that the Government would not take such an extreme course, but that they would promise an overhauling of the Indian finances which should be effected within a moderate space of time. The hon. Member concluded by seconding the Resolution. Motion made, and Question proposed, "That a Select Committee be appointed to inquire into the Finance and Financial Administration of India."—(Mr Fawcett.)


in rising to oppose the Motion, and to move as an Amendment, to leave out from the word "That" to the end of the Question, in order to add the words—> This House, viewing with alarm the financial deficits in our Indian Administration during the last ten years, and the constant additions made to the debt of India during that period, is of opinion that no new public work should be undertaken which would necessitate the raising of fresh Loans either in India or in England; and that, in order to place the finances of India on a satisfactory basis, the distinction which is now made between Ordinary and Extraordinary Expenditure should be discontinued, said, he regretted that he was under the necessity of following this course, because in the main he agreed with the views of the hon. Member for Hackney on Indian finance. He could not, however, bring himself to believe that by any Committee of the present House of Commons any proper inquiry could be made, or that any improvement would follow from investigations into Indian expenditure conducted by Members of Parliament in London. He very much feared that even amongst old Indians in the House there were not more than one or two, including himself, who had the smallest wish to introduce any diminution in the expenditure of our Indian Empire. He believed that the scope of such an inquiry as that proposed would be, moreover, too wide; the Committee would probably occupy more than one Session in their researches; they would accumulate a vast amount of untrustworthy evidence; and he believed that no useful result whatever would come from their labours. Probably at the end of two or three Sessions we should have a Dissolution of Parliament, and then the inquiry would come to an end.

Abundant information already existed which would enable the House to put its hand on the blots of our Indian Administration and put an end to them, and this might be done by way of Resolution and without the incumbrance of a Select Committee. The question of Indian finance was a matter of very grave importance, which was often criticised with much ability by the organs of public opinion out-of-doors, but which in that House never attracted the smallest attention. The cause of the disinclination felt in that House to listen to Indian debates was that Secretaries and Under Secretaries for India were selected, not because they knew anything of India, but because they knew nothing about it. These Gentlemen, through knowing nothing about India, contrived to make their statements as intricate, as unattractive, and as incomprehensible as they possibly could. They usually had a natural inaptitude for making their statements on Indian affairs emotional, and as if this were not sufficient to repel men from Indian finance, they manœuvred, with great success, to delay to the latest possible working day of the Session the discussion of subjects connected with India. For the last two years—namely, in 1875 and 1876—the day for discussing the Indian Budget was deferred until the 10th or 11th of August, and, of course, at that period of the Session, on the eve of the great and inviolate festival of British sportsmen, the 12th of August, to bring on any debate on Indian subjects was a farce. If a Bulgarian atrocity debate were fixed for the 12th of August, with the right hon. Gentleman the junior Member for Greenwich (Mr. Gladstone) to lead it, it was probable he would have no audience to address. The conduct of the Indian debate on the 10th of August last year was most objectionable. For some weeks the hon. Member for Hackney had had on the Paper Notice of a Resolution he meant to move as an Amendment to the Motion that the Speaker leave the Chair, in order that the Indian Budget should be considered in Committee as it ought to be; but in moving that the Speaker do leave the Chair the noble Lord the Under Secretary of State for India (Lord George Hamilton) dragged the Indian Budget in by the head and shoulders. That, in his (Mr. Smollett's) opinion, was a very unusual if not an irregular proceeding; and although the hon. Member for Hackney brought forward his Resolution, the result of the irregularity was that the whole debate was a perfect muddle. Amendments were moved, and speeches were made on the taxation of cotton goods, and sermons were preached upon the depreciation of silver, the moral of which was that masterly inactivity was the best cure for that great grief. In this way the whole evening was wasted, and at 2 o'clock in the morning, when the reporters had gone to roost, and the benches were empty, the Amendment which had never been discussed was withdrawn, and the House recorded in Committee without debate or observation a Resolution showing that in the year 1874 India was in a state of insolvency. That was a great farce, the management of a debate in that way was, he thought, insulting to the people of India; and he rejoiced to find an early opportunity this Session of putting this Amendment on the Paper, and of compelling its discussion. The Resolution which he was about to move was identical with the Resolution introduced last Session by the hon. Member for Hackney. He had omitted a few words only in reference to the depreciation of the silver currency. The omission was made advisedly, because the precepts of finance enunciated in the Resolution were principles that ought to be enforced in India at all times, whether the rupee should yield 1s. 6d. or whether it should produce 2s. 6d. sterling in exchange. The Amendment, now submitted to the House, applied itself to two distinct points of policy. It condemned, unequivocally, the practice of borrowing large sums of money in each year without reference to income, for the purposes, as the Government stated, of local improvement, the power of borrowing being only limited, so far as he could see, by the power which the Government had of mis-spending the money. He should endeavour to show that enormous sums had been wasted. He should also show that the practice of drawing a distinction between Ordinary and Extraordinary Expenditure had been most mischievous. He believed it was made for the purpose of delusion, and was now continued for the purpose of confusion. If his Amendment were adopted and honestly acted upon he believed that the Viceroy and his Council would be enabled, within two years, to reduce the expenditure by £5,000,000 sterling annually, and if this object was accomplished, then a large surplus income would arise, by means of which the impost levied on cotton piece goods might be at once repealed, a tax which vexed the Lancashire manufacturers, and which the Secretary of State admitted was at variance with the principles of that divine but dismal science, political economy. [Laughter.] Hon. Gentlemen might smile, and officials and ex-officials on either side of the House might be set up to deride the idea that the expenses of the Indian Empire could be reduced £5,000,000 sterling annually, but he knew something about the subject of which he was talking, and that was a great deal more than many officials knew. He should contend that this reduction of £5,000,000 was perfectly feasible, and he should shortly state the reasons why. In 1876 the financial position of India was very much like what it was in 1868, which was the last year of the thriftless administration of Lord Lawrence. He spoke of the administration as being thriftless because the noble Lord during the two last years of his Viceroyalty seemed to be entirely sat upon by the Public Works establishments in India. In that year the expenditure had risen to £53,400,000, and the income was £49,262,000, showing an excess of expenditure over income of £4,100,000. Happily for India, the Conservative Government of that day—the Government of Mr. Disraeli—selected, as the successor of Lord Lawrence, an Irish Nobleman, who, though he did not stand in the first class of statesmen in Great Britain, proved upon trial to be the very best administrator that ever set foot in India. That Nobleman was the late Lord Mayo, who, on taking his seat at the Council in 1869, was astonished to find the entanglement and confusion into which the finances had fallen under the management of his predecessor. The new Viceroy saw the absolute necessity of immediate reform, he set about it with a will, by slightly increasing taxation and enforcing rigid economy in all Indian establishments. At the end of 1869 he intimated to the subordinate Governments of India his fixed determination not to allow another year to exhibit a deficit, and he kept his word. In the season of 1870-1 there was a surplus of £350,000, and next year one of £1,500,000. In 1871-2 the income of India was £50,100,000, and the expenditure £48,600,000, and there was a real surplus, not a sham one, of £1,500,000, after the payment of every charge in India and in England. Of the £48,600,000, £47,000,000 was spent on Ordinary establishments and £1,600,000 on Extraordinary Works. He mentioned these figures to show that Lord Mayo did not altogether stint the Public Works Department in that year. Comparing the expenditure of 1868-9 with that of 1871-2, it was found that Lord Mayo had reduced it by the sum of £4,800,000 in two years, and what he had done might be accomplished by any of his successors, provided that the officer charged with the administration of our Indian Empire was equal in ability, energy, and intrepidity to Lord Mayo. If the present Governor General — of whom he know nothing whatever—had not that character, the sooner he was removed, bag and baggage, the better it would be for British India. For what was the position of affairs as shown in the Budget Statement produced by Sir William Muir in Calcutta on the 31st of March last? Sir William Muir estimated the Ordinary Expenditure at £50,300,000. That was exactly £3,300,000 more than Lord Mayo found necessary in 1872. Sir William Muir estimated the Extraordinary Expenditure at £3,800,000; £2,000,000 more than Lord Mayo permitted to be spent in 1872. Sir William Muir estimated the deficit at £3,000,000, but Lord Salisbury thought it would be £4,000,000, and money to that amount was actually borrowed in London in June last for the purpose of meeting that estimated defalcation in the year 1876-7. This position of affairs in 1876 was, he thought, very disastrous, and it was very discreditable to those who had brought it about. He did not know who was responsible for it unless it were the Secretary of State for India and the Indian Council. The present situation of finance in India was injurious to the good government of India by Great Britain, for all the advantages which India derived from our rule were marred and discredited in native estimation in India by the extreme expensiveness of our Government; and this expenditure would go on increasing unless that House adopted the Resolution with which he should conclude, and compel the Government of India to retrace its steps. He might be told there was no necessity for any pressure to be put on Lord Lytton and the present Government of India, because on the 1st of July last Lord Lytton had issued a proclamation stopping the expenditure on some of the Extraordinary Works recommended by Sir William Muir; but he placed no reliance whatever on that Proclamation. Those works were stopped because the rupee only yielded 1s. 6d. at that time; and he could not understand why works of this kind should be stopped; if they were really reproductive, they should rather be hastened to a conclusion. He placed no reliance on that Proclamation for another reason. Lord Lytton issued another Proclamation on the 1st of October, in which he admitted the responsibility of the Government to use State resources to develop the country. The Viceroy declared it to be his determination to borrow money to carry on Extraordinary Works, provided loans could be raised in India and made payable in Indian currency. Those two Proclamations were inconsistent with each other. They proved the necessity that existed for Parliament to insist that loans for this purpose should not be made either in England or in India. At starting, he (Mr. Smollett) had stated he was prepared to show that much of the money borrowed for making reproductive works was wasted. He would now proceed to do so. Members now present who attended at a discussion on Indian finance upon the 9th August, 1875, would recollect the arguments then used. He stated that the impecuniosity of the Government in 1874 and 1875 was not caused by the necessity of borrowing money for the Famine. When the Famine was threatened in Bengal there was £19,000,000 or £20,000,000 sterling in the treasuries of India in the shape of cash balances. That was £6,000,000 at least in excess of what was thought necessary in time of peace in India. At the present moment Sir William Muir estimated the probable cash balances in 1876 at £13,000,000; £6,000,000 was therefore available from those balances in 1874 and 1875 for Famine relief. The reason why loans were made to a great extent in 1874 and 1875 was that it was necessary to supply means to carry on the Extraordinary Public Works which were only extraordinary because they never yielded anything. He stated in 1875 that it was the great waste of the Public Works Department that required the borrowing of £7,000,000 in that year. He described that Department as the curse of India. The salaries and emoluments of the officers and servants amounted to £1,500,000 a-year, and for many years they required to be supplied with £10,000,000 sterling from the ways and means of the State to keep the establishment in full employment and out of idleness. That sum was £5,000,000 in excess of what he thought necessary for any useful purpose. One-half of the present permanent Public Works expenditure ought to be at once dispensed with, and until one-half of that establishment was dismissed there would be no good government in India. Referring to the manner in which the public money had been wasted, he called particular attention in 1875 to the Orissa Canal, an undertaking made for the purposes of irrigation and navigation. That work was purchased from an insolvent company in 1869 for a sum of £1,048,000, although, in his belief, if the Government had waited, they could have had it for nothing in one or two years. He spoke of the company as insolvent because all its subscribed capital had been spent, and because it had in hand a work which did not yield the smallest return. That purchase was a great mistake, an enormous job. Now, what had been the upshot of that purchase. Since 1869 the Government of India had spent £1,250,000 in improvements and extensions, and at the end of 1874 the total capital stood at £2,283,000, not including the interest on the original purchase-money nor on the advances made of £200,000 a-year. If an account was brought to the year 1877 the expenditure would be nearly £3,000,000 sterling. The canal, in 1873, was worked at a loss of £23,000. Another great work was the Madras Irrigation scheme, and he called attention to the scandalous manner in which enormous advances had been made to that company by three successive Secretaries of State. That work never yielded one single shilling. He moved in the course of the last Session for an official Return of the liabili- ties of that company, and found them to amount last July to £2,760,000. Upon these two works £6,000,000 of public money had been mischievously wasted. In 1875 he pointed out, on the authority of The Calcutta Government Gazette, works of irrigation which had cost £3,000,000, and which up to that time yielded no return. One of those works was the Agra Canal, which was opened in 1874 at a cost of £900,000, and he stated on that occasion, and repeated now, that the engineers in charge of the works had reported that, so far from yielding any surplus, the Government would probably lose £200,000 in working expenses in two or three years. No answer was given to these statements; none could be given. The noble Lord the Under Secretary of State stated in 1875 that he had received a despatch which showed that on an expenditure of £8,000,000 or £9,000,000 on irrigation works the profit was 5 or 6 per cent. Now, he disbelieved that statement, though it came from the Governor General. He disbelieved it because it met with a direct contradiction from the Secretary of State himself. Lord Salisbury went down to Manchester in 1875 to have a palaver with the gentlemen of that modern city, gentlemen who thought they knew a great deal about India, and probably knew as much as the Secretary of State. A deputation from the Manchester Chamber of Commerce represented to his Lordship that all the evils that India laboured under and all the deficits might be removed if he would spend £50,000,000 or £60,000,000 at once on irrigation works. What did Lord Salisbury say, in reply? He (Mr. Smollett) had The Times report in his hand. The noble Marquess said— That the Indian Government had had much experience in the matter of irrigation works, and they could scarcely yet be said to have had one genuine instance of financial success. The noble Lord added— Irrigation projects which had for their basis the former works of Native Rulers had in many instances been a financial success; but then, of course, that favourable appearance had been obtained by not charging the expenditure of the Native Rulers, and by calculating that all the receipts had accrued from repairs and extensions. Now, what was that but a circuitous mode of declaring that Indian officials cooked the accounts? Lord Salisbury went on in these words— In all these cases where we have begun the projects of irrigation for ourselves, we have not reached, I believe, in any one instance the desired result of a clear balance-sheet. And then the Secretary of State for India adverted to the Madras irrigation and to the Orissa irrigation schemes, to which he had already called attention, describing them as awful failures. Now, he (Mr. Smollett) contended that these were strange admissions coming from the lips of a statesman who candidly confessed that for some eight years he had lived under the delusion that all irrigation projects in the East yielded immense returns in cash. He accepted them as genuine and truthful confessions, because during a long experience of public life in India he (Mr. Smollett) had never found a single official who, having spent large sums of money, ever admitted that he had been at fault, but these men went on spending and spending, blundering and blundering, to the bitter end. He would now proceed to speak on the second point of his Resolution—the way in which the public accounts were manufactured. The two separate accounts of ordinary and extraordinary expenditure were practically very mischievous, and he would show why. He had a seat in the House some years ago—in point of fact, he had sat in the House of Commons continuously from 1859 to 1869. During that period he listened with great attention to the debates on Indian Budgets, and he never remembered to have heard a suggestion made, or a hint given, that it was a desirable thing to carry a large sum of the expenditure in each year to capital account until the year 1866. The year 1866 was a remarkable year in political life. The Session of 1866 was the first Session of a new Parliament elected in 1865. Parliament was led in the Upper House by Lord Russell, and in the Lower by the right hon. Gentleman the Member for Greenwich. They had a majority of 70 or 80; but the Cabinet fell to pieces in the first year of their management through the intrigues of a set of banditti who had a rendezvous in the Cave of Adullam. A new Administration was formed in the middle of the Session—the month of May; it was a makeshift Administration, for the Conservative Party had no majority in the House of Commons. At the head of it was the late Earl of Derby, and the management of Indian finance was confided to a noble Lord who sat in the House of Commons by the courtesy title of Cranborne, which had since blossomed into a Marquessate. Lord Cranborne was now the illustrious Marquess of Salisbury. Lord Cranborne, called upon at very short notice to bring forward the Indian financial statement in 1866, performed his task with great ability. In a remarkably lucid speech he described the sources from which the Indian revenue was derived, and which amounted at that time to about £47,000,000 or £48,000,000. The noble Viscount showed in an equally clear manner how the sum of £48,000,000 was spent. The amount spent on irrigation and other ordinary and extraordinary public works was then about £5,250,000. Now, Indian finance in 1866 was in a much more satisfactory position than it was in 1876; for although there was not in 1866 an assured surplus, there was at least an apparent equilibrium of income and expenditure. At that time, too, every outlay was charged to the current revenue —nothing was hidden, no large disbursements were carried to capital account. Lord Cranborne, however, did not think that this condition of affairs was satisfactory. He yearned for a great surplus, and blamed the Finance Minister in Calcutta, Mr. Massey, for sailing too near the wind in his Estimates. Lord Cranborne painted the finances of India as under a cloud, but the cloud had a silver lining, for his Lordship said he saw his way to a large surplus, not by putting on any further taxation, or enforcing a rigid economy. Setting aside these ordinary expedients for restoring the finances of a kingdom, a happy thought had struck his Lordship. To obtain a handsome surplus Lord Cranborne said it was only necessary to carry to a suspense account £1,000,000 or £2,000,000 of the annual expenditure of £5,250,000 sterling charged to the Head of Public Works. Assuming this sum to be surplus income everything would have a look of prosperity. Present and future Indian Secretaries of State would no longer be required to parade a beggarly account of empty boxes before a Committee of the House of Commons. They should have money in both pockets applicable to the repeal of taxation or the reduction of the public debt. This was a very curious proposal; it was the germ of the system of Finance now in active operation in our Eastern Empire. Lord Cranborne, however, did not remain in office long enough to carry out this new method of putting an end to financial deficits; the noble Lord resigned his appointment in the month of February, 1867. He had no differences with his Colleagues upon Indian matters, but he would not be a party to the leap in the dark which the Cabinet had resolved to take in regard to Reform. The right hon. Baronet the present Chancellor of the Exchequer succeeded to the office of Secretary of State for India. They all knew that the present Chancellor of the Exchequer was a man of great moderation of opinion, an excellent financier, the incarnation of common sense in the matter of finance, without a spark of genius, and genius was a very perilous gift to a Finance Minister. The right hon. Gentleman, possessing these qualities, was the last person likely to adopt the random suggestions of his Predecessor—in point of fact, he put them quietly aside. In introducing the Indian Budgets of 1867-8 he said he could easily have made a prosperity speech, showing wonderful surplus balances, but to do so in 1867 he must have carried to capital account huge sums spent upon barracks, many of which fortunately tumbled down before they were occupied by the troops; while in 1868, to make a prosperity speech, lie said he must have carried to capital account £5,000,000 or £6,000,000 spent upon irrigation or other works from which he did not see his way to any immediate return. The right hon. Gentleman said that, under these circumstances, he would tell the truth and shame the devil; and accordingly he was compelled to admit that large deficits of revenue had accrued in each of these years. He (Mr. Smollett) had already shown that in 1868 there was an excess of expenditure over income of more than £4,000,000. On turning to the veracious pages of Hansard he found that on the 27th July the right hon. Gentleman stated in reference to the suggestion which had been made to carry large sums in each year to capital account that he looked upon that proposal with the greatest possible jealousy. He said— And I am bound to say that this distinction between public works ordinary and extraor- dinary is one which I view with extreme jealousy. I assent to the principle, as it was enforced by my noble Predecessor (the Marquess of Salisbury), and I have adopted it in my Budget Estimate. I entirely agree with the principle that it is a fair and right thing to provide for that class of public works which are of a reproductive character by raising money on loan. I think it may fairly be compared to the conduct of a landed proprietor who keeps his household expenditure properly within his income, but for real improvements on his estate calls in aid his credit and borrows the money which, in the course of time, the improvement itself will repay. That is a perfectly legitimate operation but he will be open to the great temptation of transferring to this land account a portion of his ordinary expenditure, which ought to be met out of the year's income. He will be inclined to add a new wing to his house, or to put a new conservatory in his garden, and thus he may go on borrowing to a greater extent than he is aware, and yet all the while he may appear to be keeping a pleasant account at his bankers."—[3 Hansard, cxciii. 1844.] Those were words of wisdom to which the successors of the right hon. Gentleman ought to have attended; they had been wasted upon the men who had recently swayed the financial destinies of India. That Empire had been going rapidly down on the road to ruin. The Government had expended and carried to capital account large sums which ought to have been charged to ordinary expenditure. Take, for example, the Orissa works. Since 1868, £2,500,000 had been spent upon this work, which had never yielded any return. Indeed, in one year there was a deficit of £23,000 upon working expenses. Every shilling of this £2,500,000 ought to have been charged to the ordinary expenditure of the years in which the outlays were made, for not one shilling of the capital spent would ever be recovered by the Indian Exchequer. The right hon. Gentleman (Sir Stafford Northcote) resigned office two or three months after he had made the speech to which he (Mr. Smollett) had referred, and he was succeeded by the Duke of Argyll. It was not his intention to criticize in detail the administration of this Statesman. It was sufficient for his purpose to say that His Grace the Duke of Argyll was apparently a sincere believer in the doctrine that surplus receipts could be got by borrowing money, carrying large sums in each year to capital account, and by taking good care not to account for the loans. Under the Duke of Argyll the downward progress of India financially was retarded, because in 1869-71 Lord Mayo was at the head of affairs, a man who would not be dictated to, who adhered to an honest policy, and who would not sanction the construction of any work if he had not surplus receipts in hand. When, however, Lord Mayo was struck down by the hand of an assassin on the Andaman Island, his policy was reversed, and during Lord Northbrook's administration India went rapidly down the road to ruin. He had in his hand a statement compiled from the Indian Revenue accounts, which showed that from the year 1867 to 1876 inclusive there had been carried to capital account the sum of £25,000,000, which must, to a very great extent, have been borrowed. During the same period the deficits amounted to £24,800,000, and deducting £1,800,000 of surplus when Lord Mayo was Viceroy, in the years 1870 and 1871, the excess of expenditure over revenue amounted to £23,000,000. That was a discreditable result in a time of profound peace, and who were responsible for it? Why, the Duke of Argyll, Lord Northbrook, and Lord Salisbury. But the most laughable thing remained to be told. During the whole of that period, while the administration was adding millions to the funded debt, India had been cajoled and this country deluded into the belief that there had been enormous surplus receipts, and that we had a glorious capital account fructifying at our bankers. That beast of a splendid balance was the topic of the day with official men. It served to bolster up a great delusion. Last year, when Lord Northbrook returned from India, he received great ovations from his political allies. At festive meetings in the Provinces much praise was given to him for the way in which he had administered the affairs of India, and his financial policy was lauded to the heavens. Now, it was that financial policy which he (Mr. Smollett) objected to and condemned, although he approved heartily of Lord Northbrook's general administration. The great merit, however, in popular belief of his Lordship's Viceroyalty was its financial successes. His friends declared these successes to be marvellous. In four years, they said, Lord Northbrook had placed £8,000,000 sterling of surplus revenue in the Indian Exchequer, a feat never before accomplished by any previous Viceroy. This, too, was the official belief. In his (Mr. Smollett's) opinion these statements were pure fudge. The surplus receipts were imaginary—some £14,000,000 sterling had been borrowed in the course of the last four years. Year after year the Under Secretary of State had told the House that the finances of India were in a most prosperous condition, for they were borrowing money at 4 per cent and getting 7 or 8 per cent for it. [Lord GEORGE HAMILTON: When did I say that?] Well, he would withdraw that statement so far as it concerned the noble Lord; but assertions of that nature were made out-of-doors by gentlemen closely connected with the Indian Office. At a meeting held in the Hall of the Society of Arts, on the 5th of May, 1876, Mr. Cassells, a member of the Indian Council, took the chair, and a paper was read by Mr. Thornton, by which it was endeavoured to be shown that from an expenditure of £17,000,000 during the last 20 years upon irrigation works, the Government of India now realized a return of from 7 to 8 per cent annually. In 1875 the noble Lord the Under Secretary stated that the idea that the Government of India was unable to pay its way was an utter delusion—the very reverse was the truth. The noble Lord said that there had been a continuous surplus Revenue amounting to £4, 695,000 in the aggregate during the last seven years, and that but for the Famine the surplus would have been £11,000,000. Lord Salisbury used the same rosy tone. In fact, his Lordship took a more sanguine view of the receipts than the Under Secretary of State, for on the 14th of March last, in "another place," Lord Salisbury insisted that from the year 1871 to 1874 inclusive, there was a positive surplus of £8,571,500. Now, assuming these statements to be true—assuming that 7 per cent was received from the irrigation works, and that there had been a surplus of £2,225,000 for four years—he asked how it was possible to reconcile assertions like these with the official replies given from the India Office to the Lancashire manufacturers. Gentlemen from Manchester asked for a repeal of duties yielding £800,000 a-year. The answer was, the impost could not be given up at present, because there was an excess of expenditure over income in each year. Yet in both Houses of Parliament the beast was made of large annual surplus receipts. Both of these statements could not be true. He (Mr. Smollett) contended that the reply given to the petitioners for relief from taxation was the true one. It was clear that for the last four years there had been an excess of expenditure over income of about £4,000,000 sterling annually, and if the duty on cotton goods had been remitted, the deficit of Revenue would have been nearly £5,000,000 sterling per annum. He trusted that the House would no longer submit to be deluded by accounts framed as they now were, and would support the Resolution condemning the distinction made between ordinary and extraordinary expenditure. He trusted that there were men on his side of the House who had courage enough to do so. He desired to compel the rulers of India to return at once to the honest policy of Lord Mayo, which had been wholly departed from; and he hoped that the friends of that Nobleman who supported his administration while he lived and who lamented his sad death would unite to carry this Resolution. The late Earl of Mayo was the only Viceroy during the last 20 years who had had a real surplus Revenue, and he believed there never would be a legitimate surplus again unless the principles of policy which that Statesman had espoused during his life were rigidly adhered to by future Viceroys. In conclusion, the hon. Gentleman begged to move his Amendment.


seconded the Amendment.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "this House, viewing with alarm the financial deficits in our Indian Administration during the last ten years and the constant additions made to the debt of India during that period, is of opinion that no new public work should be undertaken which would necessitate the raising of fresh Loans either in India or in England; and that, in order to place the finances of India on a satisfactory basis, the distinction which is now made between Ordinary and Extraordinary Expenditure should be discontinued,"—(Mr. Smollett,) —instead thereof.


said, he did not regret the criticisms that had been pronounced upon Indian finance by the Mover of the Motion under discussion or the Amendment which had been proposed, and of the hon. Members who had spoken upon the question; because, as a general rule, Party feeling was not allowed to interfere with the desire to ascertain the best manner of grappling with questions submitted for discussion in relation to Indian affairs. He had often impressed upon those responsible for the conduct of Indian finance the great danger of throwing the whole system into discord by the new-fangled system of mixing up the accounts relating to ordinary and extraordinary expenditure. At the same time, he could see no prospect of a Committee appointed in the present Session coming to a satisfactory decision, and lie, therefore, found it impossible to support the Motion of the hon. Member for Hackney. He had sat on one Committee of that House which occupied three Sessions, and also on the Committee of 1874, appointed to inquire into the whole Indian accounts; and his opinion in favour of renewing that Committee was not such a strong one as to induce him to place much reliance on the result. He thought it would be better, under present circumstances, when the Government of India were struggling with a new famine, and with the consequences of the cyclone in Bengal, to take means to ascertain in what way the revenue and expenditure could be made to balance. It was quite impossible that the present state of things with regard to the finances of India could continue. The Duke of Argyll had initiated a policy which had led to the expenditure of £17,500,000, on the assumption that the public works would be remunerative; and therein lay the whole question. Unfortunately, every effort to make these works remunerative had signally failed, and he thought it high time that measures should be taken, both at home and in India, in order to go back to the state of things brought about by Lord Mayo during the short period of his Viceroyalty. The finances of India were in too grave and critical a state for a Committee to attempt to deal with them; and he would suggest that, inasmuch as an officer of high rank had been sent to India to inquire into the question of public works, and inasmuch as there would soon have been 20 years administration by the Crown, there should be an inquiry by a Royal Commission or otherwise, how that administration had been conducted; and he thought, therefore, it would be better to leave things as they were at present. He could not coincide with all the sweeping criticisms of his hon. Friend (Mr. Fawcett), though he believed that under them there lay a strong substratum of facts which it would be well for India that the Government should at no distant date attend to.


observed that every argument used by the hon. Member for Cambridge (Mr. Smollett) and every statement he had made tended in the strongest way in favour of the Motion of the hon. Member for Hackney. The hon. Gentleman used very plain language; he had dealt out his blows right and left, his own friends coming in for the largest share of them; he repeated the phrase of "plundering and blundering," and talked about accounts being cooked; but the House could not accept such statements merely on the authority of the hon. Member. They needed inquiry to establish how far they were true, and how far they were not. Deputations had waited upon the Secretary for India, asking that the protective duties on cotton goods might be modified on the ground that they pressed grievously upon our manufacturing interest, and Lord Salisbury had informed them that while heartily participating in their views, he was unable to accede to their request in consequence of the financial position of India. But surely this sum of £800,000 per annum, which was raised by means of these protective duties, might be saved in some way or another, and thus enable this grievous burden to be taken off the shoulders of our manufacturers. The expenditure upon reproductive works appeared to be the key to the position of Indian finance. If such works were truly reproductive, and if they were executed with judgment, honesty, and economy, it was good policy to undertake them; but they would prove ruinous in opposite circumstances, and he was afraid that these works in India had been carried out without judgment, without economy, and he was afraid even without honesty. In all these circumstances he was of opinion that inquiry was necessary, and he should therefore give his voice in favour of the Motion of the hon. Member for Hackney.


agreed with those who regarded this question as being a grave and an important one.

It was quite true, as had been stated by the hon. Member for Hackney (Mr. Fawcett) in his very interesting and moderate speech, that the great pressure occasioned by the state of the finances of India was a source of political danger, and the only question was whether the remedy proposed by the hon. Member, that of inquiry by a Committee of that House, was a proper one to meet the evil he had pointed out, and the speech of the hon. Member himself and those of the other hon. Members who had supported his Motion rather proved the contrary. In his opinion, questions of this kind could be very much better discussed in debates in that House than in Committee. The fact was that the Members of Committees appointed to inquire into Indian subjects, instead of being kept within the limit of 15 fixed by a former Resolution of that House, had been increased to 30, and comprised all the hon. Members, whether speakers or listeners, who were usually present when such questions came before the House. Therefore, hon. Members might just as well discuss Indian matters in their places in the House instead of going upstairs to take what had been termed untrustworthy and unsatisfactory evidence. Those hon. Members who had spoken this evening had shown that besides having given considerable attention to details, they were capable of grasping the subject as a whole; and, therefore, they were not likely to derive much benefit from any information they would obtain by further inquiry by a Committee, the Reports of which were almost always a matter of compromise between men holding different ideas. A very interesting debate was had upon Indian affairs in 1871, and that, at all events, was not open to the objection mentioned by the hon. Member for Cambridge (Mr. Smollett), that these debates were always put off until near the 12th of August, because it was held on the 24th of February. In that year the Government, in compliance with the suggestion of the hon. Member for Hackney, proposed that a joint Committee of both Houses should sit to inquire into the matter. This, however, was not agreeable to the House, and, eventually, a Committee of the House of Commons alone was appointed; and that Committee when it sat was presided over by that very able gentleman, Mr. Ayrton, who did his work admirably, and who, though he had lost his seat in that House, had not lest his interest in the subject, having since then compiled one of the most valuable records in the shape of evidence and a digest that had ever resulted from the sitting of any Committee of the House. That Committee sat for three Sessions, and it made a series of very short but very important Reports. In 1872 and 1873 Indian questions were amply discussed in that House, many of them being those which were pending at the time before the Committee. Many Members who took part in those discussions were no longer there to assist their deliberations. Mr. Eastwick, Mr. Fowler, Mr. Dickinson, Mr. Magniac, Sir Charles Wingfield, Colonel Sykes, were no longer in the House, but others with perhaps equal knowledge had taken their places. The other Committee to which the hon. Member for Hackney had referred was one over which he (Mr. Cave) had unworthily presided, and its inquiries were much more limited in scope than had been those of the preceding one. It simply inquired into the charges payable in this country for which the revenues of India were liable: though certainly he had had much difficulty in preventing the inquiry running wide of the mark. The Report of that Committee did not err through want of liberality towards India. It laid down as wide a proposition in favour of India as ever a governing country laid down for a governed country —namely, that there should be no expenditure of Indian revenues except for the purposes of India. But payments for the Army and the Navy, where they were employed for Indian purposes and payments for public works in India, came fairly within the terms of that proposition. That Committee inquired, among other matters, into the way in which India was treated at home, and whether the India Office could hold its own against the other offices of State, and whether the India Office itself was sufficiently careful of Indian interests. At that time an interdepartmental Committee, which had been sitting for some time, was endeavouring to bring to issue certain disputed questions between the War Office on the one hand and the India Office on the other, but it had come to a dead-lock.

Our Committee reported that although for some time matters had been very loosely conducted, they had then greatly improved. We further reported that the inter-departmental Committee ought to be strengthened by the adding to its members of the Departments an independent head, when it would then be better able not only to examine but to bring to a practical conclusion the questions that came before it. Some dissatisfaction was expressed as to the result of that Committee, it being stated that the War Office had been unduly favoured; but he was unable to express an opinion upon that point. He was ready to admit that the inquiry conducted by the Parliamentary Committee had been incomplete. The last resolution of that Committee was that it should be re-appointed the next Session for a very limited purpose indeed —namely, for the purpose of inquiring into the expenditure in this country on public works in India into Home charges unconnected with military expenditure. That was not his Resolution, and he confessed that he would rather it had not been passed, because he thought that ample information on this point was contained in the evidence before Mr. Ayrton's Committee; but, of course, he was bound by that Resolution. He doubted very much the utility of appointing a Committee for the purpose of inquiring into the general question. The fact that various subjects of inquiry had been proposed in the course of this debate showed that the House ought to be extremely careful about the appointment of any Committee; otherwise they would be involved in a general inquiry on such questions, as whether the transfer of the Government of India from the East India Company to the Imperial Government was an advantageous thing, for the hon. Member for Kirkcaldy (Sir George Campbell) went as far as that. That hon. Gentleman wished an inquiry into the relations of the Governor General and the Secretary of State and the unwillingness of statesmen in this country to go to India as Finance Ministers or as Governor Generals. [Sir GEORGE CAMPBELL said, he only used those questions as arguments.] But that was next door to inquiring into those questions. At any rate, that showed what was in the hon. Member's mind at the time. [Sir GEORGE CAMPBELL said, he only re- ferred to those matters for the purpose of showing how widely the Members who had spoken differed.] Just so; that was exactly his own meaning. The hon. Member for Cambridge (Mr. Smollett) wished for no inquiry; but he wished the House to affirm principles, which were no doubt good to a certain extent, but could not be carried to the extent to which he wished them to be carried. You could not state a capital and revenue account of a country like that of a firm. The whole country was the capital, but when works were carried on by special loans, then no doubt Returns should show that the money which had been borrowed had been spent on those objects for which it was borrowed. He agreed that money should not be diverted from the objects for which it was borrowed, and if, as alleged, this had been done, in should be noticed and exposed. At the same time, he thought it was going too far to say that extraordinary public works were unproductive because they did not produce a revenue. It was well known from the evidence of the Committee which sat on the subject that the value of land, the value of produce, the rate of wages, and a great many other things had risen enormously in those parts of the country in which public works had been constructed. But it was quite true that it required the greatest possible care to prevent these things being done too rapidly, and, especially, to prevent their being wastefully done. Lord Salisbury stated his opinion before the Committee—that the true safeguard of India was the watchfulness of the House of Commons. He would rather see that watchfulness show itself in debates on all these questions than see them shelved, he might say, in the Blue Books of Committees. Still, he admitted that any objection that might be raised with regard to the way in which expenditure on those works was carried on, and especially as to the charges payable in this country might be a legitimate object of inquiry, as the Committee which sat on this subject pronounced it to be, and, as he had before said, he, for one, was bound by the resolution of that Committee, and could not go back from it. The inquiry ought most certainly to be limited to that, for if there was one thing wanted in India more than another it was the strong hand of government. There could not be a worse thing than appearance of divided counsel. Such a division would surely be exaggerated in India, and especially in the Native Press. With regard to inviting Natives to come to this country and give evidence in the House on any grievances, he must say he thought that was a proceeding which ought to be most carefully guarded against. There would be no lack of such witnesses, and the Committee would either excite false hopes, or be accused of shelving the question. He admitted the pressure, he admitted the danger; but, for reasons already mentioned, he viewed with alarm the re-opening of an inquiry before a Committee. The speeches he had heard that night confirmed him in his opinion that the fittest place for discussing Indian questions was the floor of the House of Commons.


supported the Motion. He thought it would be a wise and proper course, especially at the present time, to appoint a Committee to inquire into the subject of Indian finance. Considering the position of Eastern affairs at this moment, it was necessary that we should show the world that India was governed not only on generally right principles, but with a prudent regard to her financial resources. Turkey's present condition was a striking illustration of the evils arising from an unsound system of finance; because it was mainly owing to the successive borrowings which we had permitted her to indulge in since the Crimean War that she had fallen into so disordered a state. Much of the oppression now and. recently existing in Turkey was due to the necessity of raising money from the impoverished people to cover the interest on these constant loans. No doubt the wasteful extravagance of the Sultan in building palaces and laying in stocks of guns and arms as well as warlike machinery must also have increased largely the financial pressure. We ought to take warning from her deplorable experience and avoid the like system we were following in the case of India. Since 1857 hardly a year had passed without our raising money by loan on account of India, whose Debt within the last 20 years had more than doubled. He did not say that they ought under no circumstances whatever to borrow for Indian purposes; but he main- tained that some limit should be laid down in respect to the contraction of such debt; and he had, therefore, hoped that the Government would have been only too glad to allow the House of Commons to appoint a Select Committee to investigate the state of the finances of India both as regarded the Indian and the Home Charges. As to the doubts expressed about there being no danger of Russian interference with our great Dependency, he might mention that her interference had led to the largest amount of Debt which India had contracted in the present century; and as long as Russia might approach to the borders of our Empire he maintained that the experience of the past showed that great commotions must be expected there unless we proved by good administration that our Government was more worthy of ruling over that part of the East than was Russia. In the event of these commotions arising it would be impossible to garrison India with our present Forces, and it would be necessary to increase the European and Native Armies at a cost of £10,000,000 or £12,000,000. Either the finances of England must bear a portion of this expenditure, or additional taxation must be imposed on India, which would be attended with the greatest danger. Our powers of taxation in India had been restricted by our own acts. And as we had not derived all the advantage we ought to have done from the land tax, we had been obliged to resort to other taxes, such as the income tax; and we had largely increased the salt tax, until in a few years we had quadrupled it in Madras, and raised inordinately the price of a condiment so necessary to the poorest classes of the population living mainly on a vegetable diet. In support of the demand for inquiry he urged that the Members of the House required, for the discharge of their duties, fuller information than they now possessed on many points of importance. The Home military expenditure of India was believed to be far beyond what was necessary for the maintenance of the garrison, and a burden was thereby thrown upon India from which she ought to be relieved. The provision and the maintenance of vessels for the transport of troops appeared enormous. About £4,000,000 had been spent in the annual maintenance of these costly vessels, and year by year these charges would increase. Now, considering the use that might be made of the excellent and efficient mercantile fleet engaged in the India trade it was a blunder to retain these vessels; there were no more costly white elephants than these transports. The extraordinary Budgets interfered with any real check on expenditure, and it became a question how to alter the form in which the accounts were made up so as to remove all inducements and opportunities to cook them. It was also desirable to ascertain how most easily to introduce a system of audit that would show whether all the liabilities of a year were or were not charged within that year, which at present was entirely wanting. With regard to the point as to irrigation works raised by the hon. Member for Cambridge (Mr. Smollett), he (Sir George Balfour) quite admitted that great mistakes had been made; and here, again, Parliamentary inquiry was required to ascertain why the vast expenditure incurred had not produced such satisfactory results as had been expected. But that inquiry would bring to prominent view the immense benefit to the Madras Presidency from the money spent on irrigation works. The labours and good services of Sir Arthur Cotton would then be fully known and appreciated. But it was not necessary to go to India to find such a state of things in connection with public works. An official Return, which would shortly be in the hands of Members, showed that on harbours in this country there had been an unprofitable expenditure which would probably surprise hon. Members. In spite of the failures, however, it must be admitted by the hon. Member for Cambridge, himself, that there had been a most marked improvement brought about by the irrigation works of the Madras Presidency. That hon. Gentleman was Secretary of the Board of Revenue of that Presidency in 1833, when a dreadful famine visited the country, and no doubt he was aware that districts which suffered severely then, but which had since had the advantage of irrigation, were comparatively free from the distress which at present prevailed.


I had nothing to do with the Board of Revenue at that time. I was assistant in the Chief Secretary's office.


maintained that the endeavour to guard against periodical droughts by means of irrigation works had been a very proper experiment, and he hoped that, profiting as much as possible by the mistakes of the past, Government would continue the attempt to store up water into the arid parts of India. He believed it could be done at a general cost of £2 for every acre irrigated. It was lamentable that famines should occur in districts where there were rivers full of water now running in a great degree into the sea, and affording an abundant supply of water which might be used to fertilize the soil. As to the administration of the Public Works Department, it had always appeared to him that the object Government had had in view had been merely to spend money, not to employ it to the greatest advantage; and that the failures in works of all kinds had been more due to faulty administration than to defects on the part of Government in deciding on the necessity of the work. One radical mistake was that minute supervision of the works had not been left to the local authorities, who were most interested in seeing that the money was properly laid out. That control was mainly centralized in Calcutta. He had never been able to realize the propriety of establishing an Engineering College in this country, on which they had already spent in one way or another £250,000 sterling. He very much doubted whether the experience and training which the pupils got here would supply a sufficient number of qualified engineers, and it was certainly a point that required full investigation. Another matter, which he thought might very properly be made the subject of inquiry, was that of the customs duties in India. There were now about 300 articles upon which import duty was chargeable, and he contended that all but three or four could be given up without any appreciable sacrifice of Revenue. The hon and gallant Gentleman concluded by referring to the system of military expenditure at home in connection with India, as well as to the outlay on military organization in that country as subjects which demanded inquiry. It was fully expected that the inquiry of 1874 would have been continued, but not only had that been set aside, but even information asked for in respect to the heavy demands on India for military expenses at home had been refused. He hoped the House would insist on the necessity of also completing those investigations into other questions which still remained unfinished. So far from any evil resulting from such inquiries the people of India would be glad to find that their affairs wore being regarded with a watchful eye by the representatives of the English nation.


mentioned the names of Lord Elgin and Lord Mayo, as a refutation of the statement which had been made that as good Viceroys could not be got now as formerly. The name of Lord Mayo would descend to the people of India and be as much prized as the names of Canning and Dalhousie. The hon. Member for Kirkcaldy (Sir George Campbell) was mistaken in supposing that the Viceroys of India procured the appointments of their own Finance Ministers, who were appointed by the Secretary of State in Council after mature consideration. As to the proposed Committee of Inquiry, he thought that after the experience of the Committee of 1871, which had sat for three consecutive Sessions, and taking into account the numerous subjects which were spoken of that evening as demanding investigation, it would be idle to expect that the labours of such a Committee would be concluded in the lifetime of any human being now in existence. He was, at the same time, of opinion that the question of Public Works Ordinary and Public Works Extraordinary in India and the division between them was one well deserving of consideration, for when the state of Indian finance was borne in mind it seemed to him to be somewhat appalling that the country should have been called upon to bear the enormous additional burden of £50,000,000 for irrigation works. A great portion of the money so laid out had, he was afraid, been expended in a very hasty way and on objects which had not been thoroughly considered. The fact was we had, he was afraid, too many irons in the fire in India, where, he contended, the true policy was to proceed gradually, so that so great a strain might not be put on her resources as in former years. As to such an inquiry as that which was suggested, however, by the hon. Member for Hackney (Mr. Fawcett), he saw no chance of its being productive of any practical good, for every diminution of expenditure which could be made had already been advocated and every increase of taxation which was possible devised. It was a very, difficult thing to tax the people of India, who might be said to live from hand to mouth, and he believed the taxation at present was about as great as they could bear. As far as the Army was concerned, it might be taken as certain that if the Government reduced the expenditure they would be obliged to reduce the number of men; and the question, therefore, was one for the War Office and the Secretary of State for India to decide, and not for the House of Commons to express any opinion on. Such a subject, therefore, could not with advantage be referred to a Committee such as was proposed. There was another consideration to be borne in mind. India was a country subject not only to the ordinary fluctuations of finance, but also in a peculiar degree to famines, cyclones, little wars, inundations, &c., and it would be impossible for a Committee to lay down any general rules for the guidance of the Viceroy in the case of any of those calamities. Moreover, even although the appointment of a Committee was desirable on general grounds, it would be somewhat inopportune at the present moment. Lord Lytton had not been long enough in India to have gained a thorough knowledge of the country, and the Finance Minister (Sir John Strachey) had only been recently appointed; so that the action of the Committee would probably fetter their hands to an undue extent. He hoped, therefore, the Government would not accede to the appointment of the Committee now asked for, but that they would see their way to grant a Committee for the investigation of the expenditure in connection with Public Works, Ordinary and Extraordinary.


said, he did not regard the proposal to appoint the Committee as at all inopportune. On the contrary, the appointment of a new Viceroy and a new Finance Minister rendered the proposed investigation desirable, more especially as the latter was not a man of the highest financial experience. Any attempt to discuss in.tricate Indian questions in that HOUSE without the information which the Com- mittee could supply would be hopeless. The only result would be that a few Members would come down, and he counted out in half-an-hour. On every ground the best course was to refer such questions to the Committee, and thereby show the people of India that Parliament was alive to its duties. It was now some years since the Finance Committee was appointed, and in the interval there had been two famines and a cyclone, and the Debt of India had been enormously increased. Surely, if an inquiry was necessary then, it was much more necessary now.


said, there were many questions in connection with India which would be much better discussed by a Committee of Gentlemen conversant with those subjects than by the House of Commons; and he thought his hon. Friend the Member for Hackney (Mr. Fawcett) had made out a strong case in support of his Motion, from the fact that the House some years ago had appointed a Committee, and that at that time the appointment was supported by several Members of the present Government. Every reason which had been urged in the course of the present discussion against a Committee being appointed now might with equal force have been urged when the Committee to which he referred was agreed to years ago. It had been contented that the Motion of the hon. Member for Hackney should not be adopted, because the Committee which he contemplated could not report during the present Session of Parliament. But why should it do so? What harm would there be if the Committee extended its labours over two Sessions? The Committee which had been formerly appointed sat for three Sessions, and yet a Resolution had been unanimously passed by the Members who composed it that it should continue its labours to future years. He could not support the Amendment of the hon. Member for Cambridge (Mr. Smollett), because it went too far, asking the House, as it did, to affirm a Resolution to the effect that no more money should in future be borrowed to be spent on public works in India. How could the House, with the limited information they possessed, adopt such a Resolution? The real reason which led him to give an implied support to the Motion of the hon. Member for Hackney was the inefficient manner in which Indian affairs were dealt with in that House. He remembered seeing the Indian Budget brought forward at the close of last Session in a House consisting of 16 Members, and the present was the first time in his recollection when the subject of Indian finance was discussed at the commencement of a Session. He could not agree with his right hon. Friend the Member for Shoreham (Mr. Stephen Cave), that Indian subjects could be better discussed in that House than in a Committee. Upon every ground he thought the House should accept the Motion. No possible harm could be done by the appointment of a Committee, and he feared that, if the House peremptorily refused to make an appointment which would result in an inquiry into Indian finances—a matter of inconceivable importance to the millions in our great Eastern Dependency—the people of India would think that in a matter so deeply affecting their prosperity, the House of Commons were more than indifferent to their welfare.


said, no one could have heard the speech with which the hon. Member for Hackney (Mr. Fawcett) opened the debate without admitting that the hon. Member had been singularly fair, and that his argument was a very able one. The hon. Member had stated his case very clearly, and, undoubtedly, if circumstances had had not changed between 1871 and 1877 that case would have been a very strong one. While he differed from the hon. Gentleman on many of the views he had expressed with reference to Indian finance, he admitted that the hon. Member showed a sympathy with Indian matters and Indian affairs which he could wish many more hon. Gentlemen would emulate, for though he might be obliged to oppose many of the Motions made by the hon. Gentleman, yet opposition would be preferable to apathy. The subject which the House had now to consider was not merely the proposed appointment of a Committee, but the question of what good such an appointment would effect. As practical people, what they had to consider was whether the Committee would be likely to lead to an alteration and improvement in any of the many subjects which had been alluded to by many of the speakers during the debate. The hon. Member stated exactly the circumstances in which the Committee of 1871 was appointed. That Committee was an experiment—he did not think it was a very successful experiment. It sat for three years and did not report. It accumulated, no doubt, an enormous amount of evidence; but there was one very significant fact which had not been stated—the Committee when appointed consisted of 21 Members, and the quorum was seven. It was increased to 30 Members, and it was found necessary to reduce the quorum to five. That fact showed that the great bulk of the Members of the Committee either felt that the reference was so large, or the inquiries pushed by individual Members were so irrelevant, that it was not worth their while to continue their attendance. He had no doubt it was due to the large scope of the inquiry that it sat for three years and did not report. The hon. Member for Hackney correctly stated that the Committee referred to came to the conclusion at the end of 1873 that Natives of India should be examined as witnesses; and he went on to insinuate that because they had not been called, they had been shunted by a side wind, which was an unworthy and ungenerous device. There was, however, no ground for such an insinuation. The only side wind which had been at work at the time was a Dissolution of Parliament, which brought the Committee to a close. The first duty which devolved upon him as Under Secretary in the ensuing Session was to ascertain from several Members of the Committee who had been reelected what their views on the subject were; and he was shortly afterwards asked by the hon. Member for Tyne-mouth (Mr. T. E. Smith) whether it was the intention of Her Majesty's Government to move for the re-appointment of the Committee? Replying to the Question he said that— The Committee had sat three years, and was composed of 31 Members. Of these 31 Members three had, owing to recent Ministerial changes, accepted posts which would not enable them to give their personal attendance on the Committee, even assuming that it was possible to re-appoint it. Of the remaining 28 no fewer than 13 had unfortunately lost their scats at the General Election, among them being the well-known names of Mr. Ayrton, the Chairman of the former Committee, Mr. Fawcett (who had since fortunately been re-elected), Mr. Eastwick, Mr. Crawford, and Sir Charles Wingfield. Under those circumstances it was not possible for the Government to re-appoint a Committee, a large number of whose Members were no longer Members of the House. At the same time, it was under the consideration of Her Majesty' Government whether or not it would be advisable to appoint a smaller Committee with a more limited reference, directing their attention to definite and tangible points connected with East Indian finance."—[3 Hansard, ccxviii. 337.] Well, later on, he moved for the appointment of such smaller Committee, and that Committee sat for a year and made a Report. It was perfectly true that at the end of their Report the Members of this Committee suggested that they should be re-appointed, and, if he recollected aright, that suggestion was made on the Motion of the hon. Member for Hackney. It was perfectly true that Committee was not re-appointed; and as he had moved for its appointment, he was quite ready to take the responsibility of not moving for its re-appointment. He did not do so, for the simple reason that there was nothing further of a practical nature for the Committee to inquire into. That he was prepared to show from their own Report. According to their Report, they divided the Indian Charges payable in this country into two heads—the first dealt with wide and somewhat speculative questions of policy, the next with matters of detailed account. As to the second, there was nothing further to inquire into; and could anything have been more absurd than to have re-appointed 21 hon. Members to inquire into and report upon matters which dealt with wide and somewhat speculative questions of policy? He was ready to admit that it appeared inconsistent to refuse to re-appoint the Committee after its Members had been once appointed, and after the suggestion of the Report had been made that they should be appointed again; but, on the other hand, he believed it to be far better to have left himself open to the charge of inconsistency than to have re-opened an inquiry which could not have led to any practical result. But the Committee had sat for a year and inquired into military charges which were payable in this country; and what was the result of that inquiry? The Committee suggested the re-appointment of a departmental Committee, as they found it impossible to go into the enormous mass of details which the question in dispute between the War Office and the India Office involved. An inter-departmental Com- mittee was then appointed, with Mr. Bouverie as Chairman, who made a Report, and at that moment he (Lord George Hamilton) was Chairman of a Committee to consider that Report. Therefore, the only result of the Report of the Select Committee was that, on its recommendation, an inter-departmental Committee was appointed whose Report was now under the consideration of a departmental Committee. That was really a strong practical objection to the appointment of a Committee, as the process seemed interminable before they could arrive at any definite conclusion. The great object of the appointment of the second Committee was, if possible, to limit the Order of Reference, because the Notice put on the Paper was so wide that it was impossible for any Committee of that House to arrive at a conclusion. Whatever objections he might have had to the appointment of that smaller Committee with a more limited reference had been immensely strengthened by the hon. Member for Hackney, because he said, "Only give me that smaller Committee, and there is not a question on Indian finance upon which I shall not be able to inquire." What the Government did not want was a roving Committee, inquiring here and there and doing no good; but if they had a definite Committee, they could refer definite points to them, in order to arrive at a definite conclusion. Then the hon. Gentleman said that in the next Session he (Lord George Hamilton) moved, not the reappointment of this Committee, but the appointment of a Committee to inquire into the grievances of certain Indian officers, and the hon. Member insinuated that he had been almost too conciliatory in consenting to serve upon it. He did not think the hon. Member agreed to serve on that Committee from any excessive display of conciliation, but rather from an uneasy conscience, because the Committee had to deal with a question which had been taken out of the control of the Secretary of State for India by the House of Commons. In 1866 Lord Salisbury had to deal with certain grievances of the officers of the Indian Army. He made certain suggestions and proposals which were carried into effect. In 1870, however, Colonel Sykes upset that arrangement. The Government of that day opposed the proposal of Colonel Sykes, but they were beaten, and among the hon. Members who voted against the Government and upset Lord Salisbury's arrangement was the hon. Member for Hackney. The Government had to send to India for information, and when it was received at the India Office, it was found that the Resolution of the House was recorded against the Secretary of State for India. The Government had all the information to enable the India Office to act upon the Resolution, and therefore Lord Salisbury authorized him to move for a Select Committee, on the understanding that, as the House of Commons had passed a Resolution upsetting his more economical arrangement, on that House must rest the responsibility of agreeing to a final settlement with those officers. The hon. Member for Hackney was asked to serve on that Committee, and he (Lord George Hamilton) admitted that the hon. Member readily served and performed his duty well. The hon. Gentleman said that the finances of India were in such a state that they could not meet any exceptional expenditure, but that it had to be met by a loan. The hon. Member had been erroneously informed. The hon. Member for Cambridge (Mr. Smollett), who had moved an Amendment, spoke and indulged in a great amount of strong language, and he showered his epithets right and left. In those which he particularly applied to him (Lord George Hamilton) he charged him with being incomprehensible and repulsive; but in the statement which he made concerning the Under Secretaries of State, and which he must notice, the hon. Member said—"We manœuvre with great success in order to postpone the Indian Budget." That was a statement which, as far as he was concerned, was devoid of the least shadow of foundation. The hon. Member for Cambridge used a great deal more strong language, which he did not think it was necessary for him to notice, except in one particular point, and that was that the officers, as he understood him, of the Public Works Department in India deliberately cooked their accounts. [Mr. SMOLLETT: Hear, hear!] He would state as deliberately that that was a statement which no Member of the House should make. They might indulge in strong language towards each other, because they all knew what it meant—that it meant no- thing. The hon. Member for Cambridge could not, however, express himself otherwise than in strong language, but it was a very different thing when language of that kind was applied to English gentlemen serving thousands of miles away from their native land. They were naturally very sensitive as to what was said in this House, and it was neither proper nor becoming for a Member of the House to accuse all the officers of a large Department of the Indian Government of deliberately cooking their accounts. Whatever orders those officers received they acted on them, and he was certain that there was not the slightest intention on the part of the officers of the Public Works Department to lay garbled accounts before Parliament. As to what was said of himself personally, he did not care; but he spoke warmly on the subject, because it was his duty, as representing a Department, to reply—in the name of those who had no power to reply—to statements made in that House which he doubted would be made outside its walls. The hon. Member for Cambridge had also accused him of not understanding the various financial subjects he had to deal with; but he was afraid before he sat down he should have to convince the hon. Member that the hon. Member did not understand the A B C of the system which he attacked. He would, however, first refer to the subjects alluded to by other speakers. There was an evident impression on the part of the House that the Indian Government had great difficulty in balancing their ordinary Revenue and Expenditure; that they were in the habit of rushing into the Money Market on every occasion of difficulty; and that in consequence of the expenditure increasing in a greater ratio than the income the Indian Government was rapidly approaching a state of insolvency. He would first take the Ordinary Indian Expenditure, next the Extraordinary Expenditure, and lastly he would deal with the Home Charges. If hon. Members wanted to know the position of Indian finance now and what it was 16 or 18 years ago, they had nothing to do but to read the powerful and lucid statement of the late Mr. Wilson, who was sent out in 1860 to take charge of the finances of India. When he arrived in India he was obliged to estimate for a deficit for the past three years of £30,500,000. He proposed to put on additional taxation and reduce expenditure, but he was actually obliged to estimate for a deficit of £6,500,000. When he looked back upon the past, therefore, he found it to be much more gloomy than the present. He had heard favourable views expressed as to the management of the finances of India by the Court of Directors. But let the House look to the Returns from 1814 to 1860—a period of 46 financial years. The surplus in 13 years alone amounted to £8,895,437, and there was a deficit in 33 years of £72,195,416, and that was the condition of Indian finance when India was handed over to the British Crown. The Debt was, however, no doubt much smaller. During the three years—namely, 1857, 1858, and 1859—there was a deficit of £30,500,000 to be made up by loan in consequence of the Mutiny. All that excessive expenditure of £72,000,000 was unremunerative outlay for the purpose of meeting the deficits of succeeding years, or for war purposes, or perhaps for both. The position of Mr. Wilson was such as to lead any ordinary mortal to despair, but he so admirably estimated the finances that in a few years great changes occurred. He had great difficulties to contend with. He had an enormous Army expenditure to meet. Owing to the Mutiny in India there was an increase of 45,000 European troops. In addition, barracks had to be provided for the men, and this entailed an enormous and immediate expenditure on the Indian Government. Nor was Mr. Wilson able to make any corresponding reductions in the expenditure in the Indian Army, because the Government were bound to give the officers their pay, allowance, and pensions, whether they were employed or not. Whatever opinion that House might have of the East India Company, they did little more than maintain peace and collect revenue. When India was transferred to the Government of the Crown it was necessary to think of improving the condition of the people by promoting education and doing other things which in this country were undertaken by local authorities, in the absence of whom in India they devolved upon the Central Government. In 1860 and 1861 the financial revenue amounted to £42,900,000, and the expenditure to £46,900,000, leaving a deficit of £4,000,000. In 1875-6 the revenue was £51,300,000, and the expenditure £49,600,000, showing a surplus of £1,700,000. [Mr. FAWCETT: That does not include Extraordinary Expenditure.] Certainly not; and unless you kept Ordinary distinct from Extraordinary Expenditure you could never understand the financial position of India. It was because he confused capital and revenue accounts that the hon. Member for Hackney (Mr. Fawcett) arrived at the conclusions he did. The great increase in the Revenue of India had not been the result of increase in the taxation. The income tax, which brought in £2,000,000, had been abolished, Customs duties had been diminished, and only the salt duty had been raised. The income tax affected only that class in India which was at present the least taxed of all—namely the well-to-do Natives. He did not blame Lord Northbrook for what he did. He was subjected to great pressure from the Home Government; but in looking back impartially upon what bad occurred all must agree that the abolition of the income tax was a mistake. There had been a great increase in the trade of India. In 1860 it amounted to £63,000,000, and in 1875-6 it amounted to £104,000,000, conclusively proving that India was not excessively taxed, or it would have been impossible for the trade to have increased to such an extent if taxation had been of the nature described. The impression had been conveyed that the Government were in the habit of borrowing money to meet deficits caused by the excess of Ordinary Expenditure over Ordinary Revenue, but from 1860-1 to 1875-6 there had been surpluses as well as deficits; and notwithstanding exceptional expenditure, and including the first year when Mr. Wilson had to borrow £5,000,000, the surpluses exceeded the deficits by £793,000. From 1860 to 1875-6 not 6d. had been borrowed to meet the ordinary expenditure of the year, and yet the revenue had borne a number of new charges which were formerly charged to capital and raised by loans. From 1869-70 to 1875-6 the surplus of ordinary revenue over ordinary expenditure, including all kinds of expenditure, had amounted to £6,600,000, and, excluding famine expenditure, to £13,000,000. In ordinary years the surplus of ordinary revenue over ordinary expenditure might be estimated at £2,000,000. He did not say that according to the Budget Estimates that would appear, because the Government were very cautious in framing those Estimates; but, if hon. Members looked at the accounts they would find that was the result. Now we had to deal with two great disasters in the current financial year — a heavy fall in silver involving the loss of about £2,000,000, and the serious famine in Madras and Bombay. If there had been no famine, there would have been no deficit in consequence of the loss upon silver; but there would be a deficit on the present year, because of the famine. The finances of no country could stand such a drain as was put upon them by these disasters; and if they were to be anticipated by ordinary taxation, it would be heavier than was necessary for carrying on the government. He hoped, therefore, the House would get rid of the illusion that the Indian Government were unable to make both ends meet when a famine occurred, and were obliged to borrow, when the fact was that since the year when Mr. Wilson took charge of the finances every famine had been met out of the ordinary revenue, and yet there was a surplus. He would next refer to the extraordinary works. When Mr. Wilson went out, two classes of works were necessary—namely, unproductive works, such as barracks and civil buildings, which were chargeable to revenue, and reproductive works, such as irrigation canals and railways, which were necessarily undertaken by private companies with a Government guarantee, because there was no prospect of profit without such guarantee. The question at that time was whether everything was to be allowed to stand still or whether it was worth the while of the Government to undertake the works in order to develop the material prosperity of the country; and, on mature consideration, it was concluded that it was better to make the necessary guarantee an annual charge against revenue. The direct results did not adequately represent the advantages of such works, which were indirectly enormous, greatly increasing the strength of our military force, economizing administration, and increasing the wealth which was subject to taxation. In 1869 Lord Lawrence wrote an elaborate Minute, pointing out the enormous advantages that had accrued from the construction of railways, but pointing out that they had been constructed on an expensive system. The guarantee of 5 per cent had not secured economy in either construction or management. Lord Lawrence, therefore, suggested that the Government should undertake the construction of irrigation works and railways, and the principle then adopted was extended by Lord Mayo and Lord Northbrook. The only reason why there was apparently an annual deficit now was, that the whole of the annual expenditure upon the construction of irrigation works and railways was now charged against revenue, whereas formerly it was not shown as such a charge. He could not help smiling when the hon. Member for Cambridge found satisfaction in referring to certain years in which he said there was a surplus which was no sham, for, when account was taken of the guarantees at 5 per cent there was a deficit of £7,000,000, and, in later years, when he assumed there was a deficit, the whole amount of the sums expended upon these works was charged a inst revenue, although only a portion of that sum was borrowed not as formerly at 5 per cent, but at 4 per cent. It was in consequence of the extravagant system of guaranteeing companies that the Government of India undertook to construct their own works. They estimated the amount they might expend annually, but it formed no additional charge on the revenue of India, because there was an increased return on the older works, which would compensate for the works under construction for which money was borrowed. That was the principle on which the Government of India proceeded. There was a two-fold process going on. The annual loss on railways and irrigation works was decreasing, while the mileage and amount of irrigated land were annually increasing. It was further assumed that these works would be constructed out of borrowed capital; but the fact was that a considerable portion of them were paid for out of revenue. If the estimates and figures were correct, there could not be the slightest doubt that India was not rapidly approaching a state of insolvency. It was in consequence of the adoption of a certain form of accounts that the hon. Members for Cambridge and Hackney had placed before the House their gloomy views with regard to Indian finance. He was willing to admit that in the construction of these works there was an amount of risk; because the outlay was certain and the profit uncertain, and, therefore, they ought to be very careful; but he said unhesitatingly that the accounts for the last two years had turned out far better than the estimates for Public Works, and upon the whole the House could not complain of the state of the finances of India. Looking to the Revenue side of the account there would appear a deficit, but that was not what in England would be so called, any more than an expenditure by a railway company out of capital. On the other side they would see how that deficit was caused by the expenditure on Public Works Extraordinary added to the ordinary expenditure of the year. The Finance Minister of India kept his accounts in a different manner from the financial accounts of England. He had first to provide for the whole ordinary expenditure of the year out of the ordinary revenue. The actual account turned out better than the estimate, and this surplus, which in England would be a balance applicable to the reduction of Debt, was in India put into Public Works Extraordinary. The Public Works Extraordinary were provided for first from the surplus of the preceding year, and next by loan; the whole interest of the loan being included in the interest as Funded and Unfunded Debt, and charged on the year. The Indian Government had adopted a system of accounts which was too honest; for the system led most persons to put an interpretation upon the accounts which was not strictly accurate. Last year he stated that during five years no less than between £17,000,000 and £18,000,000 had been spent, and only £14,700,000 borrowed. The balance was made up of the difference between ordinary revenue and expenditure. Would any hon. Member support such a Resolution as that proposed by the hon. Member for Cambridge if it applied to a railway company? Substituting the two words, "Railway Companies "for "Indian administration" and "Revenue and Capital Accounts" for "Ordinary and Extraordinary Expenditure," how would the Resolution read?— That this House, viewing with alarm the financial deficits of Railway Companies during the last ten years, and the constant additions made to the capital account, is of opinion that no new railway should be undertaken which would necessitate the raising of fresh Loans, and that, in order to place the finances of Railway Companies on a satisfactory basis, the distinction which is now made between Revenue and Capital Accounts should be discontinued. If it was necessary to extend railways in England it was far more necessary in India. The productive power of India was practically unlimited, and all that was required was facility of communication; and therefore he was sure hon. Members who would refuse to apply such a Resolution to any company in England would still more object to apply it to India. He would undertake to prove by applying any such Resolution to any railway company in the Kingdom, that it was rapidly becoming bankrupt. The constant practice was to annually increase their capital as against revenue. What they really wanted was a more accurate form of account. If they adopted the views of the hon. Member for Hackney, he could show that there was not a railway company in this country which was not bankrupt; but if increased communication were more necessary in India than in England why should they attempt to apply a principle in India which they would never adopt for themselves? He was ready to admit that this system of Public Works Extraordinary was an innovation. But it was remarkable that the instances to which the hon. Member for Cambridge alluded—the Orissa Canal and Madras Irrigation Works—were not constructed by the Government of India; indeed, it was the very failure of those works that had obliged the Government of India to construct their own works. It was contrary to our idea that the Government should undertake public works of a remunerative character; but if they wanted an accurate estimate of what they spent and of what they got for their expenditure they must alter the present form of account. With the valuable assistance of the Financial Secretary he hoped he might shortly be able to make proposals which would show what was their capital liability and what was their revenue, and then they could see whether the increase of their capital was met by a corresponding increase of their revenue. It was by an alteration of account and not by laying down any absolute rule that they could improve the public works system in India. The Resolution of the hon. Member for Cambridge was not worth the paper on which it was printed. There was a great famine in Bombay and Madras. Hundreds of thousands of people were employed on public works, and they were going to pay them out of borrowed money. If this House declared that no public works were to be constructed by borrowed money, and if he came down and said that it was absolutely necessary to infringe that Resolution, or otherwise that hundreds of thousands of people would starve, he ventured to say that the House, by an overwhelming majority, would support the Government. He was ready to admit that there might be some difference of opinion in regard to Public Works Extraordinary. He would not assert that they wore not a proper subject to refer to a Select Committee; but what he would say was, that they ought not to be so referred at the present moment, because the policy of the Public Works Extraordinary expenditure was closely connected with our Famine policy. The more he considered the subject the more he was inclined to some policy which would throw a greater responsibility on the local authorities, so that we might say to them —"If you wish to construct those works you must find the funds." By some such system as that we should deal better with famines. We had now in India a new Viceroy and a new Finance Minister, and he was perfectly certain that suggestions would be made by both with regard not only to the treatment of famines, but of Public Works Extraordinary. It would be very unadvisable to appoint a Select Committee until the House was in possession of the views of the Indian Finance Minister, and of the Secretary of State for India, and then the Government would be perfectly prepared to refer this subject to a Select Committee, the reference to which should be carefully guarded, the question being whether it would be proper to continue this extraordinary outlay from public loans. One word with respect to the Home Charges to which attention had been directed. He was quite ready to admit, and had already stated, that it was the duty of every Secretary of State, if possible, to lessen the growth of these Charges. Admiration of private enterprize had, he thought, led them to borrow too much in the English market; they should borrow more in Calcutta and in India. The Secretary of State had pronounced a strong opinion on the subject, and therefore there was no need to refer the question to a Select Committee. One or two remarks now as to the position of the Indian Government. No one could be, for the short time he had been, in a subordinate position in the India Office without being struck by the great and increasing difficulties of the Government in India. They had established in India a Government which was perfectly unique in its character. They placed at the head of it a Governor General, whom they surrounded with civil administrators and military advisers, who were the ablest men that this country afforded. The Viceroy exercised a power and patronage such as no other subject enjoyed, and which did not always belong to Sovereigns. But although it was a great and powerful Government, every iota of the authority exercised by the Viceroy was derived from Acts of Parliament. They, a self-governing people in Europe, had established an absolute Empire in Asia. The action of the Indian Government should be strong, persistent, and continuous, its policy should be mature and well-defined. And yet there was not a small detail of policy in the administration of that great dominion, not an isolated act of the Government of 200,000,000 of people, which could not at any moment be reversed by a House 10,000 miles away, whose elements were as shifting as the sands of the sea. They were anxious to infuse every element of stability and permanence into the Government of India, yet they were forced to subject it to the control of an Assembly upon which every breath and every change of public opinion must leave its impress. How had these two elements been reconciled? Simply because Parliament had declined to interfere, unless it saw that good results would follow; and had placed the responsibility of governing India upon a Minister who was responsible to it just as the Home or Foreign Secretary was. Although, therefore, he was perfectly ready as far as he was himself concerned to welcome inquiry into any subject connected with Indian Administration, yet he thought they should not go and turn the whole of that Administration topsy-turvey unless they knew the objects they had in view. There could be no object, in fact, there was nothing but danger, in perpetually burrowing and undermining the authority of the Indian Government. If that were so on ordinary occasions how much more on the present. He did not wish to exaggerate the crisis through which they were passing, and he hoped he might be able to make proposals this year which would satisfactorily meet their temporary difficulties and which would tend to a solution of their more permanent difficulties. One of the writers of the present day had accurately described the Government of this country as nothing more than a Parliamentary Committee. The Secretary of State was one of a Parliamentary Committee, and he had control over the Viceroy of India for the simple reason that he was nearer to the centre of authority. The hon. Member for Hackney would be the last person to wish to embarrass the Administration of India. But if one of the Houses of Parliament, from whom all authority was derived, chose to delegate its powers to a Select Committee, was it possible to prevent the interference of that Committee with the action of the Government of India? They had now a new Viceroy and a new Finance Minister, both. men of great ability, and they ought to give them fair play in the great crisis through which they were passing; and, if he might go a step further, he would say that the Secretary of State for India was a man in whom the great majority of the people of England had confidence. He was told that hon. Members on the other side were as ready as those on the Ministerial side to acknowledge the great services the Secretary of State had rendered in representing this country at Constantinople. But it was a somewhat curious way of showing the gratitude they felt by interfering with him in his own Department. ["No, no!"] He was sure the hon. Member had not the slightest intention of doing anything unfair. But suppose the Select Committee expressed opinions contrary to those sent out by the Secretary of State, would not that be interference with the Secretary of State? He thanked the House for the attention with which they had heard him. He quite admitted that the question of Pub- lic Works Extraordinary deserved attention. He could only state with regard to the Motion of the hon. Member for Hackney, he opposed it, not because he feared investigation, or wished to curtail the powers of the Committee, but for the simple reason that it seemed to the Government inopportune, and that its operations could not fail to be, to a great extent, mischievous; and if the hon. Member pressed his Resolution to a Division he would appeal to the practical sense of the House to assist the Government in refusing a Motion which was nothing more than an inopportune attempt to resuscitate a Committee which had already come to a natural and not altogether undesirable end.


said, he was disposed to defend the noble Lord against one of the strictures levelled against him by the hon. Member for Cambridge (Mr. Smollett), who said that Under Secretaries for India were anxious that the Indian Budget should be postponed till the latest day of the Session. In his opinion, on the contrary, the Under Secretary for India was the last person to wish to avoid a field-day; and the House had seen to-night, from the cheerful animation of the noble Lord, the great ability he had shown, the lightness and vivacity with which he had handled the subject, and his great industry in dealing with his figures, his surpluses, his Ordinary and Extraordinary Expenditure, that on no account would the noble Lord have wished to avoid discussion. He ventured heartily to congratulate the noble Lord upon the speech he had just delivered. Commencing by alluding to the Committees which had sat on Indian Finances and to the proceedings of those Committees, the noble Lord concluded with some general observations, in which he laid down the broad principle that to appoint a Committee was to supersede the Indian Secretary in the discharge of his important functions. Surely the noble Lord must have forgotten that the Leader of the House, the Home Secretary, and other Members sitting upon the front Ministerial Bench, had served with great satisfaction upon an Indian Finance Committee while out of office—.a Committee which had sat for three years—and they did not appear to be of opinion that these three years had been wasted. The noble Lord said that so difficult was it to secure the attendance of Members, that it had been found necessary to increase the number of the Committee from 20 to 30, and even then it had been found difficult to secure a quorum, from which, he argued, that it would be unwise to re-appoint a Committee. If so, why did the Chancellor of the Exchequer vote for the re-appointment of that Committee? He (Mr. Goschen) preferred the unanimous opinion of those who sat upon that Committee—that it was desirable to re-appoint the Committee—rather than the opinion of the noble Lord which was formed just now. Then the noble Lord stated that, though this Committee was appointed with the approval of both sides of the House in 1871, circumstances had so far changed that it was no longer desirable that the Committee should sit. How had circumstances changed? Indian finance was now in a more critical position even than it had been five or six years ago, when the Committee was appointed. Since that time the finances of India had been threatened by dangers which then were hardly contemplated; and so far from a Committee being less necessary now, many grave questions had arisen which needed investigation in a still greater degree. The Committee would not be appointed with any view to supersede or interfere with the Indian Government while they were grappling with a famine, but to assist in interesting this House in the affairs of the great Empire for whose welfare the House were responsible with Her Majesty's Government. The useful Motion of the hon. Member (Mr. Fawcett) had led to as serious a debate upon Indian finances as had for some time been witnessed; and the noble Lord was to be congratulated that, instead of occupying little attention and speaking to empty benches, he had had the satisfaction of seeing that the House took a real interest in Indian administration. The supporters of the Motion asked the Government, then, not to cool that interest by refusing the materials and the information which were necessary for any useful discussion. He did not agree with all the reasons urged for the appointment of the Committee. For example, he did not think, as the hon. Gentleman (Sir George Campbell) suggested, that a Committee would prevent those oscillations which had occurred in Indian financial policy. No Committee, however long it might sit, would prevent such oscillations at home; and it would be impossible to prevent changes in cardinal questions of fiscal policy by any Committee of that House. But was the House sufficiently acquainted with the whole facts connected with Indian financial administration? The Chancellor of the Exchequer would not contend that the labours of a Committee, which would elucidate many difficult points and assist Members in taking part in Indian financial debates, would be wasted. If the reference were too wide, let the Government limit it; but he hoped they would not say—"There is no subject connected with Indian finance which we would wish to confide to the investigation of a Committee of the House of Commons." A broad distinction might be drawn between matters of policy and matters of fact. He agreed that there were many questions upon which no Committee would be able to arrive at so authoritative a couclusion as would our Indian administrators. On the other hand, there were several questions on which the House of Commons would be able to assist those who were intrusted with the administration of the Indian Government. There was, for instance, the question of the silver currency, which affected the whole financial system in India, and with regard to which the Committee proposed to be appointed might usefully consider the relations between England and India as to taxation and its payment in silver or gold. If last year the Government had not had the courage to resist the financial advice which came from India, a great mistake would have been made. As it was, the position taken by the Government at home, supported by the conclusions arrived at by the Select Committee, enabled the House of Commons to prevent the Indian authorities from taking steps which might not have been advisable. The question was one in reference to which the House of Commons had a perfect right to take steps in order to get all the information possible. The noble Lord had referred, in opposing the Motion to appoint a Committee, to the fact that a Committee had been appointed in 1874; but he seemed to forget that that Committee was appointed to inquire as to a different branch of the question, and its appointment was one of the reasons upon which the present Motion of the hon. Member for Hackney was based, because an unanimous recommendation of the Committee was that it, or another similar Committee, should be re-appointed in order to carry the inquiry through as regarded the whole of the questions involved. Although the Committee was not re-appointed it was, he thought, the general opinion of the House, that there were matters connected with Indian finance, in regard to which an inquiry might be usefully conducted by a Committee of the House of Commons. With regard to the scope of the inquiry, he had no desire that the Committee should deal with questions in reference to which the Indian Government was already working in the direction of reform; but he wished that it should deal with such other subjects as would properly come within its purview, and report at the end of the Session as to the results of the inquiries it had made up to that point. The House of Commons had already shown a great interest in questions affecting Indian finance, and he appealed to the Chancellor of the Exchequer not to check that interest which appeared to be growing, especially as the whole tone of the debate showed that there was no desire to embarrass the Indian Administration either at home or in India. The hon. Member for Cambridge (Mr. Smollett) had stated that, on the occasion of the Indian Budget, the debates got into a muddle on account of an Amendment that had been moved by the hon. Member for Hackney; but it was to be feared that this debate had got "into a muddle" on account of the hon. Member for Cambridge having moved an Amendment which, however important and interesting in itself, had really taken the House away, to a certain extent, from the question whether there should be an inquiry or not. The noble Lord, hearing certain criticisms on the conduct of Indian Administrators during some years, had taken the opportunity of vindicating generally the policy of the Indian Government; but that was scarcely a subject which the House could at present enter into. The noble Lord certainly took a very rose-coloured view of Indian finance in the statement he had made, and had forgotten one point which had been stated over and over again on both sides of the House—namely, that the taxation in India was such that in no emergency would it be possible to increase it. The state of Indian finance was such, though there might be a surplus in some years, as to demand serious consideration. Two millions for India was the ordinary surplus to which the noble Lord pointed, and that was a handsome sum; but in view of the great dangers involved in such an enormous outlay, and the immense difficulty of raising additional taxation in India, certainly the state of things was such as to require careful and anxious watching, and there was no Member of the House who would not deem it his duty to endeavour to form a judgment on these matters if they should come before it in the form of practical legislation. Members would not be able to discharge their duty satisfactorily if the Government did not assist them by placing before them the means that were at their disposal for educating themselves and for educating the country in regard to the facts of Indian finance. It was to be regretted that the Government had come to the resolution to refuse the appointment of a Committee. If they had been prepared to assent to the appointment of a Committee on a more limited basis, the hon. Member for Hackney would probably have been very willing to listen to some proposition of the kind; but to say that there should be no inquiry, notwithstanding the recommendations of former Committees, and because, there being a famine in India, officials could not have their minds distracted, was to throw more cold water on the growing interest in Indian finance than seemed either wise or expedient in the circumstances.


Sir, after the extremely able and exhaustive speech of my noble Friend the Under Secretary for India, I had thought that it would not have been necessary for me to have troubled the House with any remarks on this subject; but I feel bound to make a few observations in deference to the very pointed appeal which has been made by the right hon. Gentleman who has just sat down. He asks of myself and of some of my Colleagues the question which, undoubtedly, it is not unfair to ask—namely, how it happens that although we now object to the appointment of this Committee, we have on previous occasions served upon Committees of a similar character, and have joined in recommendations for their re-appointment. I would say this in regard to myself at all events—that the Committees which sat in 1871, 1872, and 1873, were appointed at the instigation, and on the initiation of the Government of the day, who were of opinion that it was desirable, for reasons stated at the time, to appoint those Committees to inquire into certain matters connected with Indian financial administration, and that I had the honour of being placed on those Committees. Certainly those Committees entered into a very exhaustive and minute inquiry into the accounts of the Indian Government, and among the results which I think were derived from that inquiry was this advantageous one —that officers of the Indian service, who were connected with Indian financial departments, came over here and were brought face to face with Gentlemen accustomed to the English financial system, and were subjected to examination, and were required to give explanations that led to a better understanding on their parts with regard to the mode of keeping accounts. With regard to our motives in recommending that the Committee should be re-appointed, it seemed to me undesirable at that time to close the inquiry until it had been brought to a natural termination, and had the late Parliament entered another Session it would perhaps have been well to have endeavoured to obtain some practical result out of the labours of that Committee. That, however, is speaking of the time that is past. These labours were necessarily left incomplete in consequence of the Dissolution of Parliament and the dispersion of the Members of the Committee; and I should like to know whether it is in the purview of the hon. Member for Hackney, in making his present Motion, that we should take up the work of that Committee and that we should undertake the duty of reading up and studying the whole of the evidence taken by the Committee. We are told that the labours of the Committee resulted in the production of a great deal of valuable evidence. I am quite ready to admit that; but I should like to know how many hon. Members of the House have made themselves acquainted with all that mass of matter. I think that it would not be at all an unprofitable undertaking if hon. Members who now take so much interest in Indian affairs and in Indian finance would, before they enter upon another inquiry, make themselves to some extent, at all exents, masters of the evidence which has been obtained by former inquiries. Several advantages have resulted from the inquiries which have already been held. Thus, by degrees, we have got rid of many delusions and misunderstandings which at one time were prevalent amongst us, and those who take an interest in Indian finance understand many questions which were sealed books to them before. Moreover, those inquiries have led to certain improvements in keeping accounts in India, and to the minds of certain Indian officials being directed to points which were not satisfactory. But in addition to that the last Committee led to the practical result of the appointment of a departmental Committee, over which Mr. Bouverie presided, and which brought to light things which it would have been impossible for a Committee of the House of Commons to have dealt with. I submit, therefore, that the previous inquiries have not been without useful and practical results. But what are we now expected to do? It is certainly not desirable to have a Committee of the House of Commons sitting en permanence on Indian finance. It would be a very serious step to take to advise the appointment of such a Committee, who might possibly begin to inquire into the amount of influence which the Viceroy ought to have in dealing with financial matters. The hon. Member for Hackney may, however, say that he would have the Committee appointed to inquire in some special matters; but it seems to me that the inquiry he proposes would have a very wide range, and that it would have very little definiteness in its object. We have not now more than some two or three Sessions remaining of this Parliament, and if we were to reappoint the Committee of 1871, 1872, and 1873 we should merely accumulate the same mass of evidence without being able to attain any more practical result than the previous Committee secured. No doubt, Gentlemen might get a great deal of valuable and interesting information if a Committee were appointed; but you must bear in mind that the proposed inquiry would be a most serious inconvenience to the Administration of India. If the inquiry is to be worth anything, you must bring home your best officials from India in order that you may examine them. If you do not do that, you will do very little good; and if you do that, it would undoubtedly cause a great deal of inconvenience in India. My noble Friend does not deny that it may be desirable to have at a certain time further inquiries into particular points, and he has indicated one upon which at some future time it would, no doubt, be interesting, and might be very valuable, to have the opinion of a Committee of this House—namely, the system on which public works are pursued. But my noble Friend points out that if a Committee were now appointed you might cause great inconvenience to the Government of India just at the moment of a great crisis—just at the moment when a new Financial Secretary has gone over from this country and is anxious to supply himself with all the information at his command and the means of employing every official that he wishes to employ for the purposes of both grappling with a great emergency and considering this question in India. Not from a want of interest in India, far from it, but simply because we believe the appointment of a Committee at the present time would be inconvenient to India, we feel ourselves bound to resist the Motion of the hon. Gentleman.


, in his reply, admitted that, on one assumption, he agreed with all the Under Secretary for India had said about the finances of India, for if the extraordinary expenditure were omitted, he agreed that the finances of India might be represented to be in a satisfactory condition. He contended that the extraordinary expenditure ought not to be excluded, and believed that a Committee would find that such expenditure being included, the finances of India were not in a satisfactory condition. He protested against the remark of the Under Secretary for India that the passing of this Motion would imply a censure on Lord Salisbury. Was it ever said that the passing of previous Motions for the appointment of a Committee implied a censure on the Secretary of State? As to the inconvenience which it was said the appointment of a Committee at the present time would cause to India, it should be remembered that when the Committee of 1874 was appointed the Bengal Famine was at its height. As he had obtained no satisfactory answer to his arguments from the Government, he must take the sense of the House on his Motion.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 123; Noes 173: Majority 50.

Question, That the words 'this House, viewing with alarm the financial deficits in our Indian Administration during the last ten years and the constant additions made to the debt of India during that period, is of opinion that no new public work should be undertaken which would necessitate the raising of fresh Loans either in India or in England; and that, in order to place the finances of India on a satisfactory basis, the distinction which is now made between Ordinary and Extraordinary Expenditure should be discontinued' be added, instead thereof, put, and negatived.