§ Order for Second Reading read.
§ THE CHANCELLOR OF THE EXCHEQUER
Sir, I apprehend that it is now my duty to move that the Bill be now read a second time, and in doing so I will not detain the House by making a long statement on the subject. If any question is raised in the course of the discussion, my hon. Friend the Under Secretary of State will be able to give further explanations, and the House will have an opportunity of considering the Amendments which have been placed on the Paper. All I wish now to say is this—we cannot in this country hold ourselves indifferent to the position of Indian finance, although we cannot undertake to control or direct it from this country. As a general rule, the principle upon which we act in regard to India is that she should, to use a familiar expression, "stand upon her own bottom." That is to say, we recognize that, as far as possible, India should be responsible for her own expenditure, and for the means taken to meet it; and that, although her proceedings are, from time to time, brought under the notice of this House, and very properly so, we should interfere with her affairs as little as possible. We must bear in mind, however, that although India is, in a certain sense, self-supporting, there are some qualifications to that position. When we say that a country should be entirely self-supporting, it seems to me to be a natural condition that she should be altogether self-governing; because, if a State provides her own revenues, it is, of course, desirable and fair that she should have the direction of her own policy, so as to be able to accommodate her expenditure to her means. With regard to the relations between England and India, we cannot say that that is exactly the position of India. The government of India is, in the first place, directed by officers appointed by the United Kingdom; and, in the second place, not only is the administration of Indian affairs in the hands of Europeans, but, to a certain 1302 extent, public opinion in England and the action of the English Parliament do influence the expenditure of that country, both in civil and also in military matters. We call upon the Indian Government to undertake great public works, to introduce improvements in education, and in the promotion of sanitary matters in that country, and to undertake other matters which are very excellent in their way. Similarly, the engagements of this country, from time to time, and the entanglements of its foreign policy, affect Indian finance, although we keep it as distinct as possible from English finance, in a way which we cannot view with indifference, and involve India in expense which she would not have incurred if she had been entirely separate from us. It therefore becomes necessary, from time to time, that we should see whether or not we are under any obligation to give assistance to that country. Now, on the present occasion there is, as the House is aware, a state of affairs in India which renders it difficult for the Indian Government to meet all the demands upon it without imposing upon the country burdens which it is undesirable to impose, and which it would be unnecessary to impose, if temporary relief can be given. In these circumstances, the proposal has been made to the Imperial Government that they should come to the temporary assistance of the Indian Exchequer by an advance of money for a limited time to assist her in her financial difficulties. Hon. Members are aware, from the discussions that have already been held, what the condition of the Indian Exchequer is. They know what exertions are being made to reduce the expenditure of the country; and they know, also, the two events which have mainly contributed to derange the Indian Exchequer. One is the war which took place on the North West Frontier last year and the beginning of this year, and which is now, happily, ended; and another, which is also of a temporary character, I hope, is the derangement caused by the peculiar state of the exchanges, consequent on the fall in silver. Well, in these circumstances, the Indian Exchequer has applied for assistance to the English Exchequer, and we have intimated our willingness to propose to Parliament that we should go to the aid of the Indian Exchequer by a temporary loan. The loan is one of 1303 £2,000,000, and it is proposed that it shall be made without interest, repayable within seven years by annual instalments. There have been many transactions of a similar kind from the early days of the last century; but in those cases it not unfrequently happened that the loans were made to England by the East India Company, though they were, perhaps, to be regarded rather as payments for the advantages of the renewal of the Charter and the other facilities which the Company obtained. Thus, in 1708, a loan was made by India to England of £1,200,000, without interest. On other occasions loans were made to India by England. In 1773, there was a loan of £1,400,000. In 1810, there was a loan of £1,500,000; while in 1812, there was what was, practically, a loan of £2,500,000—for funded Debt to that amount was raised under the guarantee of the English Government. In addition to these, there have been a great many cases in which money has been advanced by the English Exchequer on account to India, and delay granted for repaying the same, without any charge being made for interest in respect of that delay. But I do not rest this Bill upon any exact precedent; I rest it upon the circumstances of the case; and I think the proposal on behalf of Her Majesty's Government will be considered fair and reasonable on the part of the House. I observe that in one of the Notices of Amendment given upon this Bill it is assumed that the £2,000,000 are a contribution to be made by this country to India on account of the expenses of the Afghan War, and that it represents the share which England takes in the burden of that war. Now, I have never taken that view of the subject, for I shall be glad to remind the House what it was I said at the beginning of the Session, now so far back as the month of December last, for the House has been sitting since December. I said at that time, when we were discussing the operations in Afghanistan, that it was right to consider what the position of India would be with regard to wars beyond, or within, her own Borders. With regard to wars within her own Borders, I assume that India ought to bear the expense; but with regard to wars altogether beyond her own Frontier—wars in distant countries—it was not the 1304 duty, or, at all events, it was not consistent with the practice of Parliament, to lay on India any expense in connection with such wars. It had been done in some instances in former times; but it was generally considered that it ought not to be done, and that if Indian troops and resources were used for such wars it should be at the expense of England. But when we come to the case of Border wars, and have to consider wars within what may be called the Indian circle—the regions bounding India—and wars that are undertaken for what may be regarded as Indian objects, it is a matter for adjustment and consideration on each occasion where the burden shall fall. Now, I regard the war which was recently carried on on the North West Frontier of India as being strictly and properly an Indian war. It was as much an Indian war as any other of the Border wars in which India has from time to time been engaged. To a certain extent, it is true that the war may have been precipitated by the action of an European Government, and the possible action of the English Government may have been more or less precipitated by circumstances that have occurred in Europe and other parts; but, speaking directly with regard to the circumstances which led to that war, they were of a purely Indian character. It was of importance to India that she should have a quiet Frontier on the North West, and that she should live on good and satisfactory terms with her neighbours in Afghanistan. In order to attain that end, the object at which the Indian Government aimed was to establish and maintain satisfactory relations with the Ruler of Afghanistan, and, at the same time, to safeguard our interests by preventing his entering into cordial and diplomatic relations with any other Power. Well, when circumstances arose which seemed to show that the Ruler of Cabul was receiving Envoys from another Power, and not from England, it was thought necessary on the part of the Indian Government to take steps to right ourselves, and make it clear to everyone that Russian influence was not to supersede English influence in Afghanistan. The same feeling prevailed in India, that it would be of serious detriment to the peace of India; and, therefore, it became necessary that steps should be taken to counteract the action of Russia. The step we took to insure that was of a very simple and 1305 harmless character—namely, to send a corresponding Mission to the Ameer, with a request that it might be received. That mission was not received. It was repulsed under circumstances to which I need not now refer, but, undoubtedly, in a manner which would have tended very much to diminish the authority and influence of the Indian Government on the Borders of the Empire, if such a rebuff had been allowed to pass unnoticed. It was consequently felt necessary by the Government of India to take steps to compel the Ameer of Afghanistan to admit that Mission, and to come to terms with the Government of India. The result was that, after a brief and very brilliant campaign, its object was obtained. A satisfactory peace has, we trust, been concluded with the Ameer; and I hope that the relations now being established between India and her neighbour will be conducive to the peace, prosperity, and tranquillity of India. In these circumstances, it was our duty to consider to what extent, if any, the English Treasury should come in aid of the Indian Treasury in respect of the cost of the war. I have already stated that if it was to be regarded merely as a Border war I thought India might very well bear the expense; but that if it should become complicated by European intrusion into it and should take a wider range, and assume anything of the character of a European and Imperial war, then that it might be a matter in which the Forces of the whole Empire would be called into play, and that in that case we should come largely to the aid of India. Well, Sir, that did not happen. There was no such complication, and, in the circumstances, I think we are doing all that we are called upon to do in making the proposal I have now to submit to the House. We now ask for power to issue this sum, out of the Consolidated Fund, by way of loan to the Secretary of State for India. If that authority is given, our intention is to raise the amount by borrowing it on some proper security; and, in point of fact, I may at once say that it will be advanced to us out of the funds at the disposal of the National Debt Commissioners. We shall borrow from them, and not in the open market. I may also add that repayment will be made annually in equal amounts over a period of seven years. The transaction is of a simple character and capable of being 1306 easily understood, and, under the circumstances, I beg to move the second reading of the Bill.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Chancellor of the Exchequer.)
§ MR. FAWCETT,
having presented Petitions from influential inhabitants of Bombay and Madras, Native and European, against the proposal of the Bill, as entailing a disproportionately heavy charge on India, proceeded to move, as an Amendment—That, considering that it has been officially stated that the Afghan War was undertaken in the interests of England and India jointly, this House is of opinion that it is unjust to make India pay towards the expense of the war more than seven times as much as will he contributed by England.The hon. Member said, the principles involved in the Bill were of a most important character. As was evident from the statement of the Chancellor of the Exchequer, it divided itself into two portions—first, the form in which it was proposed to make this contribution; and, secondly, the amount of the contribution. These two questions ought to be kept perfectly distinct. To the question as to the form he would very briefly refer, as it could be raised, if necessary, at a future stage of the Bill; but he would remind the House that the right hon. Gentleman the Member for the City of London (Mr. Hubbard) had stated that rather than there should be a loan made to India without interest an adequate sum ought to be paid down once and for all. That opinion had been greatly strengthened by the statement of the Chancellor of the Exchequer. He (Mr. Fawcett) wished emphatically to endorse the principle laid down by the right hon. Gentleman—namely, that India was bound, as he expressed it, to "stand on her own bottom," and should not look to this country for grants-in-aid, or subventions. What were the precedents as to this question? The Chancellor of the Exchequer said that loans were formerly made by India to England. When was that? Just at the time the East India Company were seeking a renewal of their Charter. Could any worse precedent have been adduced? The proposed contribution was either a gift or subvention; or it was given in discharge of a legal and equitable obliga- 1307 tion. If it were a gift, he would be the last to object to its adequacy; but rather than have that fatal gift accepted he would be in favour of imposing increased taxation upon India. If India was to be encouraged to look to this country for grants-in-aid and subventions, the day of sound financial administration was gone for ever. Once proceed on that footing, and there would be no kind of wild enterprize on which India might not enter, and come to England for re-payment. Every guarantee for economy and thrift would be swept away, and full scope given to a career of extravagance. If the question was to be argued as one of gift, he would oppose the Bill in toto, and say that India ought not to receive one penny as a gift. For his part, the motive that had influenced him was that if there was not greater economy the day would come when India would not be able to stand on her own bottom, but would come to England for grants-in-aid. He did not believe that day had come. He did not take so gloomy a view as that. Knowing what could be done by wise financial administration, he thought that India, well-administered, could stand alone, and need not undergo the humiliation of being a suppliant to that House for grants-in-aid. He wished to regard the question as one of legality and equity, and did not want India to receive one halfpenny more than she was entitled to according to the strictest justice; for were she to receive more than she was entitled to it would only be a damnosa hœreditas. He thought there could be no doubt as to the legal position of the matter. Lord Derby, in introducing the Government of India Act of 1858—the Act under which India was governed at the present time—said, in reference to the 55th clause, that its object was to protect the financial interests of India, and that it accordingly laid down the principle that if Indian troops should be employed beyond the Indian Frontier in Imperial warfare the cost should be paid by England; but if in Indian warfare, then by India. Lord Derby added that it would be the duty of the House of Commons to see whether such warfare as the clause related to was an Imperial or an Indian enterprize. Now, could there be any doubt as to the character of the recent Afghan War? When it was sought to support the policy of the war 1308 the Government taunted their opponents again and again by saying—"You are such parochial-minded politicians that you do not understand the nature of the great Imperial enterprize upon which we are embarking." Such was the language employed by the supporters of the Government inside and outside the House. Now, however, the Chancellor of the Exchequer entirely altered his tone, saying—"Oh, this is purely an Indian war; purely a little Frontier war, or Border dispute; and, consequently, India ought to bear the larger portion of the expense." He would prove that this argument put forward by the Chancellor of the Exchequer was adduced for that particular and special occasion. If there were two men in the world who ought to know what was the real character of the Afghan War better than anybody else they were Lord Lytton, who was responsible in India for the war, and Lord Beaconsfield, who was responsible in England. Well, the former said—After several personal interviews with Lord Salisbury (who was then Secretary of State for India) I went to India determined to treat our Frontier relations as indivisible parts of a great Imperial question, mainly depending for its solution upon the foreign policy of the Government.Lord Beaconsfield, too, amid the cheers of the assembled Peers of England, when it was a question of magnifying the importance of the policy of Her Majesty's Government, and not a question of paying the bill, said—It is a mere question of the Khyber Pass, or of some small cantonment at Dacca or Jellalabad. It is a question which concerns the character and the influence of England in Europe."—[3 Hansard, ccxliii. 519.]And yet, when the Bill became due, the war was reduced by Her Majesty's Government to the dimensions of a miserable Border dispute. Now that he had read these extracts he thought the House would scarcely sanction this plan of blowing hot and cold—of treating the war at one time as a great Imperial enterprize, and reducing it at another to the proportion of a mere Border dispute. He would now consider what, according to the statements of the Government, would be the exact amount of the contributions made towards the war by England and India respectively. The expenses of the war were officially stated to be £2,600,000. Towards 1309 these expenses England was to contribute £2,000,000 free of interest. This capital was to be re-paid in seven years, the first re-payment being made at the end of next year. Now, what was the exact amount which England would lose by this surrender of interest on £2,000,000 for seven years? Reckoning compound interest, he found that the amount of England's contribution would be less than £320,000. India, however, would contribute £2,280,000 towards the expenses of this "great Imperial enterprize undertaken for the maintenance of the influence and character of England." In other words, wealthy England would contribute £1 for every £7 contributed by India on a great Imperial question. Besides that, £60,000 per annum was to be devoted to the new Ameer, and India would have to pay every shilling of that sum. Confining himself, however, to the actual financial estimate of the direct cost of the war, he found that the Bill of the Government would virtually cause the House of Commons to sanction this principle—that for every £1 contributed by England £7 should be contributed by India. He did not seek to enforce his case by appeals to generosity and sympathy. What he had done was to argue it on the basis of strict justice and pure legality. This was a consideration that ought to be presented to the House when the question arose as to the proportion in which the cost should be divided between England and India. If there were any doubt upon the matter, the benefit of the doubt should be given to India, and not to England. As it was, however, India would have to pay for the war, whether she liked it or not. The Indian population had no choice in the matter, in that they were not self-governed, as were the English people, who, if the war had concerned them directly, as it did the people of India, would have been able through the agency of Parliament to bring public opinion to bear upon the question. He held, therefore, that those who supported the Government in commencing the war ought also to support him in the Motion which he was about to make, because they held that the war was of an Imperial character and not a mere Indian Frontier war, and ought, therefore, to be willing to put upon the Imperial Exchequer a far larger proportion of the costs than was proposed. The Chancellor of the Exchequer once said 1310 that what we required to maintain our rule in. India was to be just, as well as strong. Could it be just to impose on poor impoverished India seven times as much as England for a war that was undertaken, he would repeat, not for India, but to maintain the influence and character of England in Europe? He begged to move the Amendment of which he had given Notice.
To leave out from the word "That" to the end of the Question, in order to add the words "considering that it has been officially stated that the Afghan War was undertaken in the interests of England and India jointly, this House is of opinion that it is unjust to make India pay towards the expenses of that war more than seven times as much as will be contributed by England,"—(Mr. Fawcett,)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ SIR JOHN LUBBOCK
said, he did not deny that the Afghan War was undertaken in what were supposed to be the interests of the whole British Empire, thereby understanding those of England and of India jointly; but with the deduction drawn by his hon. Friend the Member for Hackney (Mr. Fawcett) he was unable to agree. Indeed, if the principles on which Imperial expenditure ought fairly to be divided between the different parts of the Empire were to be revised, he was satisfied that India would be called on for a much larger contribution than she now paid. It was hardly going too far to say that while India, the Colonies, and the Mother Country, each bore its own special expenditure, the whole burden of Imperial expenditure fell exclusively on the Mother Country. The amount which thus pressed on the tax-payer of these Islands was enormous. Last year, for instance, not only was our military expenditure very heavy on account of the unsettled state of the East, but there was a special Vote of Credit of £6,000,000, of which, however, India was not called on to pay one penny. It would be remembered, moreover, that our Mahommedan fellow-countrymen in India called on us to interfere for the protection of the Sultan of Turkey; and though Her Majesty's Government did not actually go to war for Turkey, they put our Army and Navy in such a position as they thought would increase their weight and influ- 1311 ence in European Councils, and especially with Russia. The whole of the expense, however, fell on us. Nay, so scrupulous were we that, when Indian troops were brought to Malta, we bore the expense ourselves. Yet our interest in the Eastern Question mainly arose from our Indian and Australian possessions. But for them, we should be no more concerned in it than Germany or France; and he contended, therefore, that it was not unjust to ask India to pay a portion of the expenses incurred for the protection of that country. Moreover, when his hon. Friend complained that this country was, under the Bill, bearing only one-seventh of the cost of the Afghan War, he must remember that the population of India was five times as great as that of these Islands, and if, from British energy and industry, Englishmen were individually richer, they might not unfairly object to bear extra taxation on account of their own industry, though he should not be disposed to press that argument to its logical conclusion. He rejoiced at the successful termination to which the skill and bravery of our soldiers had brought this war in Afghanistan; but, considering the terms of peace, he could but ask himself what would have happened if we had not been successful? Let hon. Members consider the actual arrangements that had been made. First, we were to have an English, instead of a Native, Resident in Afghanistan—and that did not seem to him a very important matter either way; next, certain districts were "assigned" to us; we had not annexed them. Now, "assigning was a new term, which, as far as he could make out, meant that we were to pay the expenses, and hand the revenues over to Afghanistan; thirdly, we were to keep the Hill Tribes in order; fourthly, we guaranteed the Ameer against an attack by Russia; and, lastly, we consented to pay him an annual tribute of £60,000. And that was the result of a war in which we had been triumphantly successful. But he would not pursue that subject. The immediate question was the mode in which the expenses was to be met. He had already objected to that mode, and would not repeat what he then said, further than to point out that one great objection he had to the Bill was with respect to the mode in which it was proposed to raise the money, because it would introduce additional confusion into the ac- 1312 counts of both countries, and render it more difficult for the people of India to perceive the additional burden thrown upon them by the policy of Her Majesty's Government. But, while disapproving the Bill, he could not support the Amendment of his hon. Friend the Member for Hackney, because the question must be considered not only with reference to this particular item, but in reference to the general relations between England and India; and, as he had already said, he believed that if the principles on which expenditure was distributed as between India and the British Isles were to be revised it seemed to him that we should be very great gainers. The Expenditure of this country fell under three great heads—Civil, Military, and the service of Debt. Even with regard to our Civil Service Estimates there were some items of which India and the Colonies ought in equity to bear a share. The service of Debt cost £28,000,000 a-year; and, of course, much of our Debt was incurred for purposes in which India and the Colonies had no concern; still there was a large part in which they were interested. Passing, however, over these two items, he came to our Military and Naval expenditure, which last year amounted to £32,000,000. For the mere defence of England probably £10,000,000 would amply suffice, and the rest was required, or supposed to be required, for the maintenance of the Empire; but out of 200,000,000—which was the total number of Her Majesty's subjects—only 34,000,000 contributed to it. Then let them consider our Navy, for instance. Last year it cost £12,000,000, while India for naval purposes only spent £70,000, and the Colonies practically nothing. Our Mediterranean stations were required to keep up our communication with India; but the whole expense, amounting to about £750,000, was borne by us. If, then, the expenses of the Empire were to be revised and equitably distributed, it was clear that India would have to make a very large contribution. That, of course, was not now contemplated. The hon. Member for Hackney complained that India was paying towards the cost of the Afghan War seven times more than England; but, after all, the Frontier question was mainly an Indian question, and the population of India was five times greater than that of these 1313 Islands. He did not think that his hon. Friend took a sufficiently wide view of this question. The Afghan War was merely one episode of the Eastern Question; and, taking that Question as a whole, England would have spent at least £10,000,000, as against £1,500,000 paid by India. It seemed to him, therefore, that England was bearing even more than its fair share of the burden; and, in these circumstances, while anxious to treat India not only with fairness, but even with liberality, he was unable to support the Amendment of his hon. Friend the Member for Hackney. He must, however, say that, although he was precluded from supporting it, he, and he thought hon. Members generally, would agree, to a great extent, in the speech with which the hon. Member had moved it.
§ MR. LAING
said, that if the hon. Baronet the Member for Maidstone (Sir John Lubbock) was as practically conversant with Indian finance as he was with financial matters nearer home, he would have hesitated before making the observation that, as regarded financial arrangements between the two countries, England had to complain of India. He (Mr. Laing) would assert, without fear of contradiction, that owing to the policy forced on India against the advice of her best statesmen, and to the Army organization scheme, which went entirely beyond Indian wants, India was paying at least from £2,000,000 to £3,000,000 a-year more than would be necessary if her own local authorities and Governors General had been allowed to organize her Army in her own interests. With regard to the Mahomedans in India, and the pressure they could bring to bear on public opinion there, did not the hon. Baronet know that they formed but a minority of the population? A subscription had been started in India in support of the Sultan during the late war, and, with a Mahomedan population of 60,000,000 or 80,000,000, the whole amount contributed was under £6,000, and he was informed that £2,000 of that sum was given by two large Mahomedan houses. But the question the House had practically to consider now was, whether the proposal of the Government was a fair apportionment of the expenses of the Afghan War as between England and India? The principle had been stated by the Chancellor of the Exchequer that in cases of this kind 1314 there should be a joint contribution. In purely local wars the right hon. Gentleman said that India ought to pay the whole cost; in wars distant from India, England should pay the whole. Now, in considering whether what was proposed was fair, they should also consider the position of India and her ability to bear the whole cost. The war was stated by the Chancellor of the Exchequer to have been undertaken almost exclusively for an Indian object. But that was at variance with the statement of Lord Beaconsfield, that the war concerned the character and interest of England in Europe. It was because England had assumed a particular line of policy that the Russian Embassy was sent to Cabul, and so the war originated. In the financial position in which India was, who would have thought of precipitating her into a war for remote and contingent dangers? If either Lord Canning, Lord Lawrence, Lord Mayo,—he quoted his name the more readily because he was an excellent Governor General and a Conservative—or Lord Northbrook had been Viceroy, that war would have been impossible. Neither of those noblemen, being opposed to any idea of the extension of our North Western Frontier, would have undertaken it, which was a conclusive proof that it was unnecessary, and, therefore, unwise. Yet, in the face of all that, we were told that this was a mere Frontier war undertaken for Indian purposes. And now as to the capability of India to pay for the war. The cost of the war stood on the Estimates at £2,670,000. He accepted that estimate, but with considerable misgiving, and. he must confess that it would be a most agreeable surprise to him if it should turn out that it was no more. But supposing the expense of the war to be covered by £2,670,000, that was an insignificant part of the cost. We should look to the permanent expense entailed by that extension of the Frontier. His (Mr. Laing's) prediction that the new scientific Frontier would render necessary an increase in the military expenditure of India had been more than realized; for Sir Henry Durand had estimated a permanent addition to the Army of India of 10,000 troops, and to the military expenditure of at least £1,000,000 a-year, as the consequence of exchanging a secure Frontier at one side of the mountains for a scientific Frontier beyond. An 1315 expenditure of that sort in the present financial condition of India was a matter of the most grave importance. He had but one complaint to make of the speech which the Under Secretary of State for India lately made on the financial condition of India; it was so candid a statement, it was so agreeable a surprise, that the Government at last realized the necessity of economy, that criticism was turned into compliment, and many thought the financial difficulties of India were nearly at an end. That was very far from being the case. The Debt of India had increased from £107,000,000 in 1874 to £139,000,000 in 1879, or an annual average increase of £6,000,000 a-year, and the extent of the expenditure by the extension of their territory into Afghanistan had not yet been seen. There was now a net total income of £21,000,000, and an expenditure of £24,000,000, which was an expenditure in excess of income, when, as Lord Beaconsfield said, in order to maintain English influence in India they rushed into the Afghan War. It was only by largely extended economies and a great reduction of military expenditure that India could be saved from bankruptcy, or this country from crushing taxation. Our acquisition of the new "scientific Frontier" of India was to have produced a greater feeling of security, and a more settled state of affairs between England and Russia. This was the contention of Her Majesty's Government and their supporters; but there were other persons who had all along pointed out that the idea was delusive, and he was very much afraid we had not yet seen the end of our military expenditure in Afghanistan. All the distinguished military authorities who had discussed the subject were of opinion that if we extended our Frontier into Central Asia, although we might easily conquer the Natives, the greater would be our feeling of insecurity, the greater would be our actual insecurity, and the greater would be our expenses. Not only that, but we should be very likely to involve ourselves in the shifting quicksands of Afghan policy, and every step we took would only render us more sensitive and nervous as we approached the Russian Frontier. These prophecies were already being fulfilled; for the Russians, alarmed and jealous, no doubt, in consequence of our conquest of part of Afghanistan, were at that moment carrying out an expedition 1316 further into Central Asia, and the British Government was all in a fidget lest the expedition should attempt to advance on Merv. No doubt it was said Merv would not be occupied by Russia; but expeditions undertaken by civilized nations against predatory hordes must be followed up, and sooner or later the place would probably be occupied by Russia. Instead, therefore, of being diminished, we should be obliged largely to increase our expenditure on our new Frontier, stationing there more troops to counteract the moves of Russia. Our scientific Frontier would, therefore, cost us more than £1,000,000 a-year. The condition of India with the present deficit was critical and dangerous. The danger to our rule in India lay, not outside that country, but inside it, for the teeming millions of its Native population required more constant care, and were capable of being a more terrible FOR than Russia. Let them be treated fairly, justly, and kindly in matters of expenditure and everything else, and our rule over them was safe; but let them be treated in a contrary manner, and our rule over them could not be maintained. Whatever we might think was the effect of our military achievements, the Hindoos placed one quality much higher, and that was our sense of justice. It was simply because our Governors General, and their subordinates, had been more just than the Native Princes that we had gained such a great hold over India; and he trusted that neither a mad determination to keep up a great military expenditure, nor anything else, would cause Englishmen to lose their reputation for justice. The main, indeed he might say the only, chance of saving India, he would not say from bankruptcy, but from depending directly on the British taxpayer, was to get England to endorse and sustain her credit, and by a very large reduction of military and other expenditure. He was afraid, however, that the conclusion of the Treaty with Yakoob Khan rendered that more difficult than before. Indeed, he very much feared that in a short time we should be forced to go to the rescue of Indian finances; and, in his opinion, it would be far better not to pass this Bill. His hon. Friend the Member for Hackney (Mr. Fawcett) deprecated any part of the Indian charges being thrown on the taxation of England; but lie (Mr. Laing) did not agree 1317 with him. It was only through the English taxpayer feeling that he must ultimately bear the burden of Indian extravagance in increased taxation that any hope could be entertained of finding a remedy for the present state of things. He believed that temporary loans would have a pernicious rather than a beneficial effect by encouraging extravagance, and that the true policy was to let India, as the Chancellor of the Exchequer said, "stand on her own bottom." But there was another matter equally deserving attention, and that was the manner in which Indian public opinion had, on more than one recent occasion, been outraged. What, for instance, could have been more damaging to the reputation of England for justice and straightforwardness than the application to alien purposes of the Famine Insurance Fund, the reduction of the cotton import duties—not for the benefit of India, but in obedience to political considerations at home—and, lastly, the gagging of the Native Press? It might be the desire of Her Majesty's Government to govern India for the good of India; but their policy during the past few years, it appeared to him, strangely belied their professions. He very much feared that many persons in this country regarded the Hindoos as people who could be dealt with exactly as their Rulers pleased; but such an idea was a great mistake. There was in India an intelligent and growing public opinion, which could understand and condemn, as distinctly as our own people, any act which violated the principles of justice, and that opinion would, he was convinced, condemn the proceedings of the present Government.
§ SIR GEORGE CAMPBELL
said, he had placed on the Paper the following Amendment, which the Rules of the House did not permit him to move, but which he would read as the text of his speech, seeing that it entirely set forth his views on the subject:—That there is no reason for departing from the ordinary rule which places the obligations of India on the credit of India, and not on that of the United Kingdom; but any assistance given to India in respect of the Afghan War should lie given from the revenues of the United Kingdom, and not as a loan.We had, in what had been considered the interests of India, taken means to secure her against the approaches of other Powers; he, there- 1318 fore, thought that she should be called upon to contribute towards the cost. England bore the major part; it was only proposed to require India to pay the minor portion, and, holding the views he did, he regretted that he could not altogether, on this occasion, agree with his hon. Friend the Member for Hackney (Mr. Fawcett). He did not take what might be called the sentimental view of our connection with India; and when he came to consider whether the money at present under consideration should be paid by his constituents in Kirkcaldy, or by the people of India, he was inclined to think that a great part should be paid by India. Those who argued to the contrary, on the ground of British entanglement in Eastern complications, must take those complications as a whole, and not in detail; and they would see that, whether right or wrong in being jealous of Russia, we were jealous in consequence of our possession of India. The major portion of the expenditure had already fallen upon England, out of whose Exchequer, of course, the Vote of Credit for £6,000,000 had to be met. He would admit that the people of India were very poor; but he altogether denied that we had imposed a grinding taxation upon them; on the contrary, we had relieved them from many burdens which they bore in earlier times, the only serious burden imposed upon them being the salt tax. If we had not dealt generously with them, we had, at least, done fairly by them. True, we had recently put upon them the licence tax, which was of a somewhat grinding description; but that was not a conclusive proof that the taxation was really so grinding as it was sometimes supposed to be, because he did not think the present Governor of India superlatively wise. He did not take the chivalric view that we were to be unjust to ourselves in order that we might be generous to India, which we had governed for the benefit of its people. He did not so much object to the amount of the assistance that it was proposed to render to India as to the form in which it was to be rendered; and that objection was expressed in the Amendment of which he had given Notice, but which he could not now move. The effect of the course taken by the Government was to shirk the whole question of this obligation, for it was not faced either by India or England. India did not admit that she 1319 was obliged to borrow money, and the British. Government did not boldly take it from the taxpayers. The forgotten precedents cited by the Chancellor of the Exchequer were outweighed by the fact that, in the present century, in great financial difficulties India had stood alone, even when loans had to be raised at 5½ per cent. The arguments of the Chancellor of the Exchequer would have been just as valid in support of a proposal to pledge the credit of England for the whole Debt of India, or in support of a much larger loan by India for the expenses of the Afghan War; but he entirely failed to show that there was any particular reason why this particular sum should be raised on the credit of England. There was no such financial stress as should induce the Government to depart from the ordinary rule. He was driven to the conclusion that it was thought better to postpone facing the charge than to put it upon either India or England—to put it aside for the present, and to leave it to be dealt with by the taxpayers of another generation. How far were we to go in this imprudent course? A man would rather give £5 than put his name to a bill for £50, which would probably be followed by another bill for a larger amount. Surely the credit of that country was good enough, without resort being had to the credit of this. If the policy of Her Majesty's Government were accepted by the House, and this bill were backed by England, in all probability other bills would be forthcoming from the Government of India. With regard to the Afghan War, he was surprised that the Chancellor of the Exchequer should have taken the opportunity of pronouncing a eulogy on the operations in that campaign, and thus have challenged discussion on that subject. He, for one, did not share the belief that the Treaty concluded with Yakoob Khan would put an end to all the difficulties connected with the Afghan policy. In this case, the Afghan operations must be followed by increased expenditure, for it was admitted that eight regiments would form the garrison of the Khyber Pass, while as many, or more, would be required at other posts, so that from 16 to 20 regiments would be occupied in holding the newly-acquired territory, while all history rendered it probable that we should be involved in many Frontier troubles with tribes whose trade was plunder. 1320 We should be obliged to make endless expeditions, and incur endless expense, before the Native tribes were reduced to submission. With respect to the Treaty entered into by the Government of India with Yakoob Khan, if the Ameer were able to carry it out he would find no fault with it; but no one who knew anything of Afghanistan could doubt that the Treaty could not be carried out without renewed trouble and great expense. With respect to the question more immediately before them, he feared that Her Majesty's Government had entered upon a very dangerous path and asked the House to agree to a very doubtful principle, and he should, therefore, give his vote against it. With reference to the means to be adopted in reducing Indian expenditure, he quite agreed in the propriety of providing that the Natives should be promoted to higher offices and employment in the Government, as they were paid less than Europeans. They were becoming more fitted for such promotion every day, and it would be not only an act of justice to them, but an act of sound financial policy; further, the Government must be firm in reducing the Army.
said, that he rose chiefly for the purpose of deprecating a discussion of the details of the Afghan Treaty. The Chancellor of the Exchequer was, no doubt, a little in fault in leading hon. Members on to that track; but it was clear that no advantage could accrue to the Government, or to the Opposition, from the discussion of that subject at present. They had not, in fact, the materials for that discussion. The Treaty could not be understood without the fullest explanation. As it stood at present, it was a most unintelligible document; but as far as he could make it out, if the despatches to be laid before the House did not put a different face on the Treaty, it seemed likely to prove a calamity to us. He, therefore, hoped the Government would lose no time in the preparation and production of the Papers in reference to it, as he (Mr. Grant Duff) could assure them that nothing was further from the intention of the Opposition than to allow the Treaty to pass without the fullest discussion directly after the despatches relating to it were laid on the Table. With respect to the Bill before the House, looking at it with Indian spectacles, he could not but think that his 1321 hon. Friend the Member for Orkney (Mr. Laing) was too severe in the observations he had made in criticizing the speech of the hon. Baronet the Member for Maidstone (Sir John Lubbock). It was his (Mr. Grant Duff's) duty for a period of years to watch the financial relations between England and India; and it was his firm impression that they were very far indeed from deserving the strictures which the hon. Member for Hackney (Mr. Fawcett) had passed upon them. In fact, if those relations could be tried before some impartial arbitrator, he was not quite sure that the judgment would not be that something was owing by India to this country, and that she ought to pay more than she now paid. That view was held by some persons who had given the longest and the most anxious attention to the subject. He agreed entirely with the first part of the Amendment which had been placed on the Paper by the hon. Member for Kirkcaldy (Sir George Campbell), and regretted that it could not be moved. With regard to the Bill itself, he was bound to say that he viewed this £2,000,000 to be handed over to India as a mere benevolence, but a benevolence given in the worst possible way. It would form a very vicious and bad precedent, and was one as to which it would be better for India that it never was given at all.
§ GENERAL SIR GEORGE BALFOUR
opposed the Bill, having placed the following Amendment on the Notice Paper:—That it is alike dangerous to the finances of India as of England to make loans to India out of the taxes of the United Kingdom; that it is unnecessary to aid India by loans of this kind if proper economies were enforced, and Indian expenditure restricted to that which ought justly to be charged on Indian revenues; that the expenditure in England, Civil and Military, now chargeable on Indian revenues, but under the control of the Government of England, is susceptible of large reductions to an extent far in excess of the sum which is needed to pay for the interest on two millions; and that the costly organization of the Imperial troops now forced on India by the Government of England is capable of being so modified as to ensure a diminution of expenditure, without diminishing efficiency, as would amount to a sum far in excess of many borrowed millions.The hon. and gallant Gentleman said, that no one could consider the precedents which the Chancellor of the Exchequer had quoted in favour of the present measure of aiding the finances of India by temporary loans from the 1322 Imperial Government without looking forward to the like evils to India that flowed out of the former loans. The Chancellor of the Exchequer had even referred to loans which had been made to the Imperial Government, more especially those which related to the renewal of the Charters of the Bank of England and of the East India Company, without a feeling of shame for the manner in which the public and India had been treated by this country. At one time the whole capital of the Bank of England had been loaned to the Imperial Government, and even at present nearly the whole was so lent to the injury of commerce. And in bygone years large sums were also lent or given by the East India Company in order to induce Government to grant a monopoly of commerce. He regretted that it was now proposed to follow the evil example set in former days, for he feared that the result would be to check economy and to encourage extravagance. If any Member would search the financial record prepared by Mr. Chisholm, and laid before Parliament on the Motion of the right hon. Gentleman the Member for Greenwich, he would there find conclusive evidence of the way in which India was supplied with loans by the Imperial Government in the form of depreciated Exchequer Bills, and repaid by India at nearly their full nominal value. No doubt, the plea was put forward, both formerly and at present, that England provided India with military establishments; but that attempt to manage the affairs of India, instead of allowing India to take care of her own matters, was a great evil, both as respected the costly nature of the management and its bad results. He contended that they were not getting either efficiency or the worth of the money that had been spent on the Indian Army. An hon. Member who preceded him had implied that the work was well done. In answer to that, he wished to state one fact. There was now one battalion under orders for India, which would embark within two months. In that battalion there were 340 soldiers of less than one year's service, and 370 who were under 20 years of age. Would anyone say that those men were qualified, and capable to stand in the ranks of the Indian Army? He considered that they were endangering the reputation and the honour of the British Army by sending such soldiers into the field 1323 After reminding the House of the way in which India was treated after the China and Abyssinian Wars, and the acquiring of Ceylon and Mauritius, he would impress upon hon. Members that the steps taken in India with a view to economy were likely to have a contrary effect—when
§ MR. SPEAKER
drew the hon. and gallant Member's attention to the fact that the Question before the House was the East India Loan (Consolidated Fund) BILL.
§ GENERAL SIR GEORGE BALFOUR
remarked, that his object in mentioning the details of bad management was to bear out the statement in the Amendment that if India could be allowed to manage her own affairs that economy and efficiency would certainly be secured.
§ MR. GOSCHEN
said, he wished to put a question to the Under Secretary of State for India. He would be glad if that hon. Gentleman would state to the House what were the present financial relations between India and this country, as regarded the balance of Debt? Supposing that the House should vote the £2,000,000, would that go in diminution of the annual drawings, or would the £2,000,000 be in addition to the present Debt of India? This point, if cleared up, he held, could not fail to have a very important bearing upon the future financial transactions of the Government with India. He wished also to express his opinion that the proposal of the Government to raise these £2,000,000 by way of loan to India was alike shabby and unsatisfactory. It seemed to him that there must either exist, on the part of the Government, a sense that they ought to contribute towards the war—in which case the cost should be treated as expenditure—or a sense that the war was purely an Indian affair, in which case their proposal was, as had been well said by the hon. Member for the Elgin Burghs (Mr. Grant Duff), pure benevolence. The Chancellor of the Exchequer had not, however, said that the finances of India were reduced to such a position that it was absolutely necessary that we should make her a charitable contribution of £70,000 a-year, the interest upon £2,000,000. Why, then, was that loan proposed? From the consciousness that the war was not purely an Indian war, and that the Empire ought, consequently, to be called upon to make this contribu- 1324 tion. If he was right in that conjecture, he objected altogether to the contribution taking the shabby form of this loan; and the proposal was not only wrong, inconsistent, and shabby, but most dangerous as a precedent for the future. Let expenditure be borne where expenditure had been incurred; let that expenditure appear either in the Indian or the English Budget; but do not let the House indulge in a kind of jugglery in order to ease off a transaction which might not be satisfactory to either country.
§ MR. E. STANHOPE
wished to make an appeal to the House whether, considering the ample discussion that had taken place, and the late period of the Session that had been reached, they were not in a position to decide the point that had been submitted to them? The subject had been debated very fully and with great ability on both sides of the question. There had been the able speech of the hon. Member for Hackney (Mr. Fawcett), and that of the right hon. Gentleman opposite, representing one view of the question; and the speech of the hon. Member for Maidstone (Sir John Lubbock), together with the speeches of other hon. Members, representing another view of it. With reference to the remarks of the right hon. Gentleman who had just sat down (Mr. Goschen), he (Mr. E. Stanhope) could assure the House that the proposal before it had not been made in the belief that the war was not a purely Indian war. On the contrary, it was made in the full belief that this was a purely Indian war. The tone of the Chancellor of the Exchequer, at the commencement of the war, was precisely the same as it was now. The right hon. Gentleman, speaking when the war began, said—We must wait and see what will happen. If this war assumes a wider development, then we must re-consider the whole matter; but if it remains a mere Frontier war, there can he no reason why England should go to the aid of India.The war was now over; the cost was comparatively small, and it had retained what he might call a local character. The Government, therefore, put their proposal forward on the distinct understanding that the war was almost entirely a purely Indian war. The reason they made the proposal was this. The Government of India applied to the Government at home to make the advance 1325 upon this ground: they said—" We have had this war upon our hands; we have to meet its expense at a time when the remittances which we have to make to England are larger than ever they were before; and, looking to the rate of exchange being so high, it will be hard upon us to make those remittances. Grant us this loan, which will not only enable us to meet the cost of the war, but assist us in the matter of the remittances." It was in direct expectation of this loan being granted that the Government of India estimated at £15,000,000 the amount which they would have to remit to this country in the present year, the estimate being based upon a calculation of the probable rates of exchange. Allusion had also been made to the cost which might be entailed upon India in the future, in consequence of the new Frontier arrangements recently effected in Afghanistan. He was not yet in a position to go into details on the matter; but he might inform hon. Members—and there were some hon. Gentlemen present whose prophecies as to the cost of the war itself had been completely disappointed—that, in his opinion, the extra expense which these arrangements would necessitate would not be anything considerable. Reference had likewise been made to the subject of keeping up large garrisons in Afghanistan. A question on this subject had been put to him the other day. The arrangements which he then sketched out with regard to the Khyber Pass were essentially provisional; but, even if it were necessary to continue such an arrangement as he had indicated, there would not necessarily be an addition to our military Force, but simply a re-distribution of it. He would not go into the question of the general state of Indian finances; but he might say that, looking at them now with the added experience of two months, and the more perfect knowledge of what they had before them, he believed that if he had to make his statement now, instead of two months ago, he should be able to give a much more favourable impression than he had then done. He believed that the pledges they then gave, that if circumstances were favourable they would be able to put their finances upon a sound footing, would be amply redeemed.
§ MR. CHILDERS
observed, that the right hon. Gentleman the Chancellor of the Exchequer had described the war in 1326 which this country had been engaged in Afghanistan as a Frontier war, and, therefore, one the cost of which ought to be defrayed by India. But while the right hon. Gentleman the Chancellor of the Exchequer omitted to explain why the loan to India had been proposed, the Under Secretary of State for India explained that it was proposed chiefly in order to bring the balances as between India and England into a more satisfactory position. If that was so, he (Mr. Childers) should like to know how the statement of the Chancellor of the Exchequer, that the war was a mere Frontier affair, the cost of which ought to be borne by the Indian population, was to be reconciled with the statement of the Under Secretary of State that this loan was to be made on account of the war? But the advantage which would be derived, in the most favourable circumstances, by India was so small—being, in a financial point of view, as between English credit and Indian credit, only £52,500—that he could not conceive any sufficient ground for the proposal which had been made, and had provoked so much feeling in Parliament and in the country. Neither could he conceive it right, for such an object as that, to disturb the whole rules of finance. There had been no shadow or pretence of justification in the speech of the Chancellor of the Exchequer for the proposal to make a large gift from the English Exchequer to the Revenues of India, no record of which would ever be found in the accounts laid before Parliament in such a form as that it could be discussed in Parliament. He hoped, if the House gave a second reading to the Bill, that it would be so amended as to remove some of the objectionable features.
§ MR. J. G. HUBBARD
said, it was not a pleasant thing to criticize the acts of one's friends; but he would not be dealing honestly if he did not say that he was deeply distressed by this act of the Government. It was at variance with the ordinary system of finance; for in this proposal the Government had introduced something which, in finance, was utterly unknown. It was, in fact, a financial monster, the production of which he could not account for; for a loan bearing no interest was not a loan only, but a gift to the extent of the interest which was forborne. Either the English taxpayers were bound to contribute to the cost of the recent Afghan 1327 War, or they were not. If they were not, where was the object of the Bill? If they were, let them estimate their share of the responsibility and of the contingent gain, and pay accordingly. His hon. Friend the Under Secretary of State for India had explained that this loan was asked for by India; but he (Mr. Hubbard) should like to know whether it was asked for without interest? [Mr. E. STANHOPE: Yes.] If that was so, the Indian people were very ingenious, and he was afraid had set an example likely to be largely followed. But strange as was the proposal, the reason given for it was even more strange. The Indian Government complained of the loss by exchange upon their remittances to this country, and they desired a loan to mitigate the immediate pressure; and now see how the proposed arrangement would work—of a loan of £2,000,000 without interest, and repayable in seven years by instalments each of nearly £300,000. The interest of the loan, if contracted by England, would be £60,000 a-year; if by India, £80,000. Therefore, instead of paying £60,000 or £80,000 a-year, India was now to pay £300,000 a-year. Obviously, the only reason given in support of the Bill told the other way—it was an aggravation of the exchange difficulty, not a mitigation of it. This loan was intended to be an act of grace to India. Was it not possible to make this act of grace still more gracious? He thought he saw how that could be done. In the stipulations of the Treaty with Yakoob Khan we undertook to pay him £60,000 a-year as a subsidy. That was precisely the amount which this country would have to pay as interest on the loan. Well, then, let the subsidy be an English investment; and, instead of this loan of £2,000,000, let us give India the £60,000 a-year outright. He could vote neither for the Bill nor for the Amendment before the House; but he would readily vote for the proposal of the hon. Member for Kirkcaldy (Sir George Campbell), if he were able to take the decision of the House upon it.
§ SIR ARTHUR HAYTER
said, he had no doubt whatever as to the vote he should give on the present occasion. He maintained, in opposition to the Chancellor of the Exchequer, that the Afghan War was essentially an English, and, therefore, an Imperial, and not an Indian war; and he would refer hon. Members 1328 to the letters from The Times' Correspondent, in which the writer went on to show that it had shattered one of the finest of our Cavalry regiments, and had played havoc with some of the best Infantry, as well as Native regiments. These had been shattered not by the swords of the enemy, but by the disease which they encountered in the Khyber and other Passes. Such had been the result of this short campaign, which was rather a mere military promenade than anything else, and it was one of the most expensive results that could be obtained. The question of the military expenditure of India was especially forcing itself on the attention of the people of England. Three years ago the expense of the entire Army, Native and European, was £16,639,000; last year it was £17,010,000; and this year it was £18,225,000, of which £2,000,000 were due to the Afghan campaign. If these £2,000,000 were deducted, the cost would be nearly the same as it was three years ago. According to the Commission which sat in 1859, the amount and distribution of the permanent Forces necessary to be maintained in India must be always affected by the political necessities of the country, the railways opened, the military roads, and other similar considerations. The hon. Gentleman (Mr. Laing) had told the House that railroads had sprung up over India, and yet we had not reduced our military expenditure. The proportion of Europeans to Natives in the Army of India was, before the Mutiny, as one to three; after the Mutiny it was one to two. His hon. Friend ought to impress upon the Commission now sitting in India that Members on that (the Opposition) side of the House would not be satisfied until they saw very large reductions in the garrisons of India. An Army of 100,000 Natives and 50,000 Europeans would at once create a reduction of 40,000 men.
§ THE CHANCELLOR OF THE EXCHEQUER
said, he must say the hon. and gallant Gentleman who had just spoken (Sir Arthur Hayter) had carried them over a rather wide field of discussion, into which he did not propose to follow him. The question of the military situation in India was, no doubt, a very important one, which would have to be discussed on a proper occasion. Again, how far he was correct in describing the late operations of the Afghan War as a 1329 military promenade was a question upon which he would not then enter, nor would he stay to contrast the views to which the hon. and gallant Gentleman had now given utterance with those expressed by right hon. and hon. Gentlemen opposite some months ago, when they said, that the campaign would comprise some of the most formidable operations in which England ever was engaged, and that they could only look forward to the most frightful dangers and disasters. All this was beside the question. They must proceed on the data which were before them. The real question was that the Indian Government, finding that in balancing their accounts for the current financial year they were in a position of deficit, caused to a great extent by the operations in Afghanistan, had to consider how that deficit could be met. It might be met by an addition to taxation; but, for reasons already stated in the House, the Government of India considered that would not be an expedient course. It would have involved great pressure on the people of India for a temporary purpose. That being the case, it was necessary, in some way or other, to raise money by way of loan. Then there came the question how best that money should be raised; and, under all the circumstances of the case, the Indian Government made an appeal to Her Majesty's Government to advance a certain sum—£2,000,000—to carry them over the difficulty at the moment, the Indian Government undertaking to provide for its re-payment in seven years, repaying it without an addition to their taxation. His right hon. Friend the Member for the City of London (Mr. Hubbard) said the loan they proposed to make without interest was "a monster"—he had never heard of a loan without interest; it was a monster so terrible in its shape and form, that he earnestly protested against it. His right hon. Friend said whatever assistance we were bound in justice to give to India should not be given in this way. He (the Chancellor of the Exchequer) confessed he had some difficulty in following the argument of his right hon. Friend. He could quite understand the argument of the hon. Member for Hackney (Mr. Fawcett), when he said we had more share in these transactions in India than we were willing to admit, and we ought to bear a greater portion of the burden; he could understand the 1330 argument of others who said this was a purely Indian difficulty and India should be left to get out of it as she best could; he could understand, also, the argument of those who said we ought to make this as a gift; but, assuming that this was a proper measure, he could not see the force of the argument against the particular form of the loan. Why was a loan without interest a monster, and why was it not a loan? He confessed, for his own part, he could not see it. Would a loan made below the current rate of interest be a monster? Perhaps his right hon. Friend would say it was. [Mr. J. G. HUBBARD: So it is, in its degree.] In that case, a loan at 2 per cent would be a little monster. In fact, the monster would get larger as the proportion of interest decreased. He confessed he was unable to go into this elaborate study of natural history, and it appeared to him that a loan at 2 per cent, or 1 per cent, or ½ per cent, was still a loan; and a loan did not become a monster merely because it was under the current rate of interest. It also occurred to him that the Government were at perfect liberty to take the step which they had taken without incurring the censure which his right hon. Friend endeavoured to cast upon them. The right hon. Gentleman the Member for Pontefract (Mr. Childers) said this was done in a way to conceal, from those who studied these accounts, the assistance which England was giving to India year by year. He (the Chancellor of the Exchequer) did not think that would be the case. Year by year they made loans, under the Public Works Loan Commission, to public bodies, at a lower rate of interest than they could borrow them for themselves. The money for this advance to India would be borrowed from the National Debt Commissioners; but it would be placed in an account which would show to everyone the nature of the transaction, and the amount of our contributions during each of these seven years. The 4th clause required that a full account of all receipts, payments, and transactions under the Act should be made up every year and audited by the Treasury. He had formerly explained the course proposed to be taken, and there would be no difficulty in exactly tracing what the nature of the transaction was. It was merely a question of book-keeping, and, therefore, not insoluble. He hoped the 1331 House would feel that, in making this proposal, the Government were not making such, a tremendous attack upon national morality as had been supposed. He could not see, when once they admitted the principle that England ought to come to the assistance of India, that there was any difficulty in the matter.
said, he was not surprised that the Under Secretary of State for India was anxious to bring the debate to a close, considering that it was rather a remarkable fact that hardly anybody seemed cordially to support the principle of the Bill under discussion. Objectors approached the Bill from directly opposite points; but they all agreed that the Bill was not one that ought to be adopted. Looking at the number of financial and Indian authorities in the House, it would have been satisfactory if a "stray" Member could have been induced to rise and say that the Bill was, from some point of view, a consistent application of a sound principle in connection with Indian finance. That, however, remained to be proved. The Chancellor of the Exchequer had not answered the main point of the right hon. Gentleman the Member for the City of London (Mr. Hubbard) as to the burden that the exchanges would throw on India in making remittances to England. The Government, in fact, had sought to justify the measure by its operation on the present state of the Indian exchange. Let them try it by this test. Every year, up to seven, the Government were going to burden the exchange by the necessity of India remitting home about £300,000; whereas had they left her to raise the loan in the open market, her remittances would not have been £300,000 yearly in respect of this loan, but would have been £70,000. As to the Indian exchange, he did not pretend to say what would be the rate of that exchange 20 or 15 years hence; but, certainly, no person could regard as permanent the state of affairs which now existed. With respect, then, to the proposed limit of seven years, it appeared to him that the proposals of the difficulty already existing in the matter of exchange; and when they looked at the question from a point purely of figures, it seemed to him that the Chancellor of the Exchequer had altogether failed to answer the arguments of his right hon. Friend the Member for Pontefract. His 1332 right hon. Friend pointed out that, by the proposal of the Government, they were to give a pecuniary benefit to India amounting to the difference between the rate at which we could borrow and she could borrow—an amount somewhere about £50,000—but, at the same time, they were asking the people of England practically to make a present of something like £300,000 to India. On that ground alone, as a mere matter of finance, this was an extraordinary operation; nor was the description of it as a monster so extraordinary, although it had been criticized very ingeniously by the Chancellor of the Exchequer, but it had been the established practice to make use of illustrations from natural history within the region of the stock market; and so the right hon. Gentleman the Member for the City of London (Mr. Hubbard) was perfectly justified in placing that department of science under contribution for the purpose of illustrating his argument. The Chancellor of the Exchequer had not accurately understood the point that they were by this transaction going to lay out between £200,000 and £300,000 yearly of the money of the people of England, and that outlay would never appear in the public accounts, where it ought to appear as part of the public expenditure. No doubt the re-payment of the instalments would be duly recorded, but the expenditure would not appear as such. An important question involved was the surrender of the important principle of the independence of the two Exchequers. He admitted that, as a rule, the cost of an Indian war ought to be borne by India; but the war in question was an Imperial war, due to Imperial policy, and had reference, not to Asiatic Powers, but, above all, to one great European Power. The Government ought, therefore, to have boldly and manfully assumed the responsibility for England. He was prepared to vote for the Amendment of the hon. Member for Hackney, although he did not think he could do so on the Main Question, because there were other Motions upon the Paper which might be more acceptable. The position of the Government was this—the Chancellor of the Exchequer had laid down, in the most distinct manner, the principle that the Afghan War was an Indian war; that it belonged to that class of wars the cost of which ought to be borne by the Indian 1333 Exchequer, and not to that class the cost of which ought to be borne by a mixed contribution.
§ THE CHANCELLOR OF THE EXCHEQUER
Not entirely. I said that this had been something rather more than a Frontier war, and therefore there was a certain obligation, but only a small obligation, upon England; but if it had gone to a much larger extent, and a European Power had come in, we should have recognized a much greater liability on the part of England.
rejoined, that that was not the impression which the right hon. Gentleman had left on those who had heard him. The Chancellor of the Exchequer now said this was not in the first class of wars, but in the second class, to be met by a mixed contribution, though, in his view, it ought to be confined in very narrow limits. But he (Mr. Gladstone) ventured to think they ought not, for any trifling sum such as the difference between the rates of interest at which the Indian and the English Governments could raise money, or the differences on exchange, to depart from the principle of the independence of the Exchequers. A graver financial question could, not possibly be presented to the mind of the British Parliament than the assumption of responsibility by England for Indian expenditure. Whatever was done in that way should be from serious cause, and not merely for securing to India the trifling benefit of getting any of the sums now at issue. He was entirely at a loss to know, when once the Government admitted that England ought to bear some portion of the cost of this war, by what consideration it was that they arrived at the conclusion that it should be limited to one-seventh of the cost. He could not conceive, if this were a war having reference, as was admitted, to a policy involving questions of the general balance of power, by what argument the liability of India was fixed at six-sevenths, and that of England at one-seventh. In the points that were now mainly raised with reference to the financial operation of the loan, and the effect on the exchanges, adding to that the argument of his right hon. Friend the Member for Pontefract, that every operation of the public expenditure should be represented in our accounts as expenditure, Her Majesty's Government had entirely failed to make good any argu- 1334 ment for the presentation of a Bill which they admitted themselves had reference to a state of the Indian finance which the Under Secretary of State assured them was now passed away. The finances were, the hon. Gentleman had said, much improved; and, that being so, there could be no justification for the present measure.
§ Question put.
§ The House divided:—Ayes 137; Noes 125: Majority 12.—(Div. List, No. 194.)
§ Main Question put, and agreed to.
§ Bill read a second time, and committed for Monday next.