§ Order read, for resuming Adjourned Debate on Question [22nd May], "That Mr. Speaker do now leave the Chair" (for Committee upon East India Revenue Accounts).
§ Question again proposed.
§ Debate resumed.
§ MR. J. K. CROSS
said, it might, perhaps, be convenient to the House to direct their attention to the point at which this debate had arrrived when it was adjourned a fortnight ago; and he would do so, because it would be within the recollection of many hon. Gentlemen that they had not been present since the Under Secretary of State for India had made his very able Statement, and, therefore, they probably had not followed the course of the debate. Most of the speeches made had been addressed rather to general Indian questions than to protests against, or criticisms upon, the speech of the Under Secretary; indeed, with the exception of protests against the remission of the cotton duties by the hon. Members for Hackney (Mr. Fawcett), Plymouth (Mr. Sampson Lloyd),and Kirkcaldy (Sir George Campbell), and against the great reduction in Public Works expenditure by the horn Members for Hackney and Kirkcaldy, there had been a somewhat dangerous agreement in favour of the Government proposals. Why his hon. Friend the Member for Kirkcaldy should, in denouncing the 1725 Government for their action on the cotton duties, have turned the battery of his indignation upon him (Mr. J. K. Cross) he could not conceive, unless it was that he happened to be the one Liberal Member present. Really, he assured him that he was not answerable for the Government's action in this matter, and he dared say that they would not care that he should say a word in their defence; but, really, his hon. Friends, who were so anxious that India should be lightly taxed, must be aware that those who would be the gainers by that remission were the poorest of the people in India; for it was they who bought the common goods, on which the duties were remitted; and he could not understand how they could be aggrieved by having the few square yards of common shirting on which their respectability somewhat depended at a lower price than formerly. Another point of great interest raised in the debate was the question of exchange, which the hon. Member for Plymouth would rectify by universal bi-metallism, and which his hon. Friend the Member for Stalybridge (Mr. Sidebottom) would remedy by a bi-metallic currency, failing which he thought the Loan Bill the next best way of rehabilitating silver—a monstrous long word, which meant, so far as India was concerned, screwing up the price of the rupee. The right hon. Gentleman the Member for the University of London (Mr. Lowe) would regenerate India by giving her a paper standard of value based upon an ideal redemption in gold—a redemption seemingly, at least, as ideal as anything that ever perplexed the brain of the most bewildered student of metaphysics, and which would require a fuller revelation than that vouchsafed by the right hon. Gentleman before they could accept it. So far as he understood his proposition, it seemed to be ably answered by the noble Lord the Vice President of the Council (Lord George Hamilton), who also clearly pointed out that the nominal loss on exchange greatly exceeded the real loss, which could not be estimated at more than £2,750,000 sterling. The Under Secretary of State had begun his eloquent and exceedingly able speech so pleasantly, that it was a long time before they discovered how grave was the statement he was making; but before he had finished, they had certainly come to the conclu- 1726 sion that he had laid before the House by far the gravest official Statement as to Indian Finance that had been put before Parliament since the Government of India had been transferred from the Company to the Crown; and so great was the contrast between his speech and those which had so often been heard from his Predecessors, that they might be excused for believing either that on that occasion the hon. Gentleman had painted far too gloomy a financial landscape for their contemplation, or that his Predecessor had been in an equal degree too sanguine. But now, having that grave statement before them, they might accept it as an official notice that we were no longer to look upon Indian finance through the glamour of Eastern romance. We had dismissed fiction, and taken fact into our service. He would examine the teaching of fact respecting the Accounts of the year 1877–8. At paragraph 32 of the East India Finance Accounts for 1877–8 he found what was called the true result, which was as follows:—The whole true excess Expenditure of the year becomes £9,266,179, or, more correctly, 9,26,61,790 rupees, which is the measure of the increase of the Public Debt during the year.At paragraph 33, we have the following:—Of this largo sum, £4,968,123 is due to the construction of Productive Public Works, in pursuance of the policy deliberately adopted. The Famine affected the Accounts of 1877–8 adversely by £6,500,000. If this Estimate is correct, it follows that, but for the Famine, the Revenue Accounts of 1877–8 would have shown a surplus of about £2,201,944. Provided that the works upon which the excluded £4,968,123 was spent could be trusted to be truly reproductive, this result might be regarded as very satisfactory.But at the foot of the page there appeared an explanatory paragraph, stating that the Public Works productive expenditure included £177,071 for loss of exchange. That could no more be reckoned as profit or invested capital, than a London merchant, having made a bad debt of £177,071, could add it to his stock at the end of the year as part of his capital. At paragraph 37, they had what was called the "final conclusion," which ran thus—This, then, is the out-turn of the finances of 1877–8. If the Famine, costing £6,500,000, and the expenditure on productive Public Works, amounting to £4,968,123, be eliminated, 1727 there remains a surplus of £2,201,944. But for the measures to which reference has been made, this surplus would have been smaller by £461,276, or, in all, £1,740,668. On the other hand, it has to be remembered that a portion of the productive Public Works, costing £1,670,930, is expected (however useful the works may otherwise be) to yield, for a long time to come, only small interest.Taking the "true result" and "final conclusion" together, they found that from the nominal surplus of £2,201,944 there required to be deducted for Famine £6,500,000. Productive Works expenditure, which should have gone to Public Works ordinary, £1,670,930, and loss by exchange, £177,071, together, £8,348,001, leaving a not deficit for 1877–8 of £6,146,057, in place of a nominal surplus of £2,201,944. He would not go further into finance accounts; the later years were in the womb of the future, and it was ill speculating on the complexion or features of the unborn; but he would like to ask the House to consider three of the proposals of the hon. Gentleman—namely, the great reduction proposed in Public Works expenditure, both ordinary and productive; the policy of borrowing in India at a much higher rate than that at which the money could be obtained in England; and the policy of the Loan Bill, involving the consideration of the Government controlling the exchanges. Now, the proposal with regard to the Public Works expenditure was that it should be reduced by £750,000, and that Public Works productive should be limited to £2,500,000. The expenditure under both these heads would then be—for Public Works ordinary about £4,000,000, and for Public Works productive, £2,500,000; making a total of £6,500,000, against the present total of £9,330,647,or a reduction of £2,830,647. He did not see how such a reduction as that could be effected in one year.
§ MR. E. STANHOPE
explained, that he had stated that the reduction could not be made at once. In the present year it would only be £1,000,000, and it would take some time before the whole reduction could be effected.
§ MR. J. K. CROSS
said, he was glad that he had elicited that explanation; but he wished to point out that this was a very startling proposal, and it involved very grave considerations. It was a reduction of no less than 30 per cent, and it was an open question whether it was 1728 possible to effect so great a change. The Departmental expenses were now over £2,000,000 a-year; could they be reduced by £600,000? There were at present 1,100 civil engineers in India, at salaries averaging £600 each, or a total expenditure on that head alone of £660,000. Could they reduce that item of expense by so large a sum as £198,000 in any reasonable time? If they could not reduce the Establishment charges in proportion to the total reduction, the works undertaken would cost even more in proportion than they cost now, and at present the supervision charges were a monstrous abuse, costing, as they did, at least 23 per cent on the work done. But there was a very grave political question involved, for the reduction meant the discharge of a vast army of workmen who for years had been engaged in the Government service. Had the Government any idea of the number of men they were going to cast loose upon the face of the country, and who would have no occupation? If £1,000,000 out of the £2,800,000 saved was withheld from the wage-earners, at least 130,000 would have to be discharged, and no one could contemplate that state of affairs without grave misgivings. The advantages of borrowing in India, instead of in England, were supposed to be two-fold—political and financial. It was for the political advantage of the Government that the Indian Debt should be held by Indians; and it was a financial advantage that the interest should not come into the exchange market for remittance to England; there was also the advantage of the interest and principal being payable in silver. If the Government was assured that it had secured these advantages, it might not be bad finance to pay a higher rate for money in India than it would have to pay in England. But he ventured to assert that in the Loan issued in India, the Government did not know that it had secured either of the two first advantages, and it had paid an enormous price for the third. 40,000,000 rupees had been borrowed at 4½, the subscription price being 94¾; the product was 37,900,000 rupees; the annual interest 1,800,000 rupees. If this Loan had been issued in England, the same amount would have been realized (reckoning the rupee at 1s. 7d.) by a loan of £3,000,400; the annual interest, at 4 1729 per cent, would have been £120,016, I which, at 1s. 7d. per rupee, would have been placed in London by a sale of 1,516,000 rupees, or a loss annual charge on India by 284,000 rupees than that incurred by the Government. This difference of charge, accumulating at compound interest, would repay the Loan at maturity, and it did seem to him to be at least a very doubtful piece of finance. He now came to the policy of controlling the exchanges involved in the consideration of the Loan Bill. There seemed to be a strong opinion among many Members of the House that it would be a great advantage to India if exchange and silver were to rise greatly in price. Many people outside the House of Commons seemed to think that India was about to be ruined by cheap silver, and that seemed to him to be such an extraordinary delusion that he would ask permission of the House to say a word or two upon the subject. First let him say a word about the question in gross, and then consider it in detail. India had in bygone years absorbed vast quantities of silver, and had given her products in exchange for that metal. For 20 years, ending in 1875, she had absorbed some 32,000,000 oz. a-year, and had given £8,000,000 of her products in exchange for it. Would she have been poorer if she had obtained 40,000,000 oz. of silver annually in exchange for her £8,000,000 worth of produce? If she were an exporter of silver, she might gain by its advance; but as she still bought more than she sold, it surely could not be a great disadvantage to her that the commodity she bought should be cheap. But let them consider the question in detail. The Madrassee rice-grower who owed taxes or interest sold his rice to enable him to pay those taxes or that interest and he now took his 40 lbs. of rice, exchanged it for the rupee, and, so far as the rupee would go, he discharged his debt. Screw up the price of the rupee by 10 per cent, give it a greater purchasing power, and he would have to take 44 lbs. of rice to exchange for the rupee; but surely, by so doing, he would not be richer. Again, the cotton-grower in Bombay or Bengal now scraped together 5 lbs. of the worst cotton he could find and exchanged it for the rupee, with which he paid his indebtedness as far as he could; but would he be 1730 better off if he had to take 5½ lbs. of cotton to do that work? Let them apply this principle at home, and see how it would work. The Prime Minister, a little while ago, made a speech attributing some of the evils of the farmers to the appreciation of gold; he described how its enchanced purchasing power compelled the farmer to give more of his produce for it, and so impoverished him; and he described the evil vividly, as was his wont. But if a rise in the standard of value in England was bad for us, could a fall in the standard of value in India be ruin to India? That it seriously affected the Government was visible to anyone, and it would be well to consider the position of the Indian Government in this matter. They had a dual duty to perform—they had to govern India, and to sell silver. In their functions as a Government it was their duty to render the rupee, the medium in which taxation was paid, as easy of acquisition by the people as possible. As sellers of silver their duty was to get the highest price they could for it. Those functions were hardly compatible, and, no doubt, were hard to fulfil. The Government raised 500,000,000 rupees of taxes in India, and they had to sell 200,000,000 rupees of that to provide home remittances. If the rupee were screwed up 10 per cent, the Government, as silver merchants, saved 20,000,000 rupees; but the whole 500,000,000 rupees was harder by 10 per cent for the taxpayer to lay hold of. He had to part with more of his substance for it, and the taxation of India would be practically increased by 50,000,000 rupees. Was it worth while for the Government to tax India 50,000,000 rupees more in order to save 20,000,000 rupees on exchange? Then there was the opium sale; the price of opium must rise as silver depreciated. Indeed, the measure of the depreciation in silver should be the rise in opium, and if the opium sales equalled the silver sales, one should balance the other. But as the opium sales were only 100,000,000 rupees, and the silver sales were double that amount, the Government could only gain on opium half what it lost on silver; but that it must gain in proportion to its opium sales was certain, if silver had really depreciated equally with exchange. Those things took some time 1731 to settle, for commodities did not quickly follow exchange fluctuations; but in the long run they were certain to do so. Now, if the Loan Bill was not intended to enable the Government to hold back silver when the market price seemed to them to be too low, the Bill had no meaning. The only excuse for the Loan Bill was the difficulty of selling exchange, which was really selling silver. As silver merchants, the Government were quite right in holding their silver, provided they thought it certain to rise. But before they asked the House to endorse a loan for that purpose they were bound to put before the House a careful forecast, showing the whole position as clearly as possible. They should tell them what silver they would have to sell for the next two or three years; they should endeavour to estimate what silver would come into the market against them; and, above all, they should make an estimate of what India would be able to absorb during the next few years, for on that he ventured to say the price of silver mainly depended. It was now three years since that question was prominently before the House, and he would endeavour very shortly to put one or two considerations concerning it before hon. Members. When the Silver Committee reported in 1876, they found three primary and three secondary reasons for the fall in silver. They were—first, the discovery of mines of exceeding richness in America; second, the demonetization of silver by Germany; third, the diminution of the Indian demand; fourth, the change of the standard of value in the Scandinavian Kingdoms from silver to gold; fifth, the stoppage of the free mintage of silver by France, and the limitation of the coinage by the countries of the Latin Union; and sixth, the expectant attitude of Holland, she having stopped the coinage of silver and adopted a gold coinage. In considering the case now, we might eliminate from the list the Scandinavian cause, because its action had passed by, and the Dutch cause, Holland now having adopted a gold standard, though still preserving silver as a legal tender. We should have four causes left, the American, the German, the French, and the Indian, which he proposed shortly to examine in the order in which he had named them. The American cause, which was considered very important, proved to 1732 have been exaggerated. Hon. Members would recollect the sensation created when we heard of pyramids of silver awaiting a market, and an outpour of £14,000,000 to £20,000,000 was feared. On reference to No. 9 of the Consular Reports for 1878, he found the following, which rather disposed of that exaggerated view:—It appears from the minutes on the production of silver in the United States that it is very much less than the financial world believed. Instead of producing silver to the amount of £20,000,000 a-year, the United States have in six years only produced£31,120,000, or an annual produce of £5,200,000.And in confirmation he would quote a statement which seemed to be authentic, taken from The Economist of the 26th April—That investigations made by the American Government concerning the product of the precious metals on the Pacific coast disclose the fact that the estimates made both by the Wells, Fargo "Express," and by the Director of the United States Mint, are excessive.This statement also showed that the product had risen to £7,636,000 in 1876; but that it was estimated at only £5,000,000 in 1879. He might also state that the import of silver into this country from the United States was £19,300,000 in four years ending 1874, and only £9,000,000 in the four years ending 1878. He asked the House to conclude that the American cause was not, and had not been, a factor in the European depression of silver. But at some not very distant future time, when America should have supplied her currency requirements, the American production would again require a market in Europe, and should the Eastern absorbing power not return the price might be seriously affected. The German demonetization appeared to be almost accomplished. It had been estimated that in 1876, out of a total amount of silver supposed to be in circulation in 1871 of £59,000,000, there would be required for subsidiary coinage, £21,500,000; already sold, £6,000,000; remaining, £31,500,000. And from what he could learn from the first bullion brokers in the City, the total now sold by the German Government amounted to about £32,000,000, which was confirmed by a statement in The Economist of the 24th of May, taken from a Report to the German Reichstag, accounting for £52,600,000, by saying 1733 that £19,200,000 had been recoined, and that £33,400,000 had been melted down and sold. It appeared, then, that there could not be much more silver to come from Germany. The amount sold by Germany was certainly large, and he had been unable to trace the destination of this largo amount; but, had India maintained her old absorbing power, this £33,000,000 sold during the six or seven years could not have materially affected prices unless other causes had been at work. Perhaps we might consider the German cause as passing away and almost spent. The French cause—the stoppage of the free mintage of silver—could not in itself be considered a cause of depression, though it did become a depressing cause when any surplus silver was on the market. Hon. Members were aware that for the whole of this century Franco had held open her Mint for the free coinage of either gold or silver, and that anyone who took to that Mint 1 cwt. of gold or 15½ cwt. of silver would get the same amount in notes. The existence of this bi-metallic monetary equilibrium value practically regulated the relative value of gold and silver throughout the commercial world, and as long as it existed it mattered little to merchants whether their balances came to hand in silver or in gold, in the relative proportion of 15½ oz. of silver for one of gold. They always could convert the one into the other at the French Mint. That that was a great convenience to gold countries trading with silver countries, and vice versâ, no one would deny; and, however they might hold to one metallic standard, (here was no doubt that during the time that this bi-metallic value was open exchanges between silver countries and gold countries were wonderfully steady. But immediately this value was closed any little surplus silver ran about looking for some place to hide in, and if a buyer did not appear at the moment, the price fell. He might state that at the beginning of this century the production of silver was 46½ oz. to a production of 1 oz. of gold, and that in 1852 the production of silver was only 4 oz. to 1 oz. of gold; yet the variation in the relative prices of these metals was not more than 4½ per cent during 70 years, whilst since the closing of this bi-metallic value the fluctuations in 10 days exceeded the previous fluctuations in 70 years. So, if India had maintained 1734 her absorbing power, that cause would not have depressed silver. This cause would seem to be rather a removal of the regulating power than a cause of depression in itself, and would leave the future of silver in Europe to be settled by the demand at the moment. He next came to the fourth cause, the stoppage of India's absorbing power. During the last 39 years she had absorbed £315,000,000 of bullion, mostly silver. In 20 years ending in 1875 she had absorbed £86,692,000 gold and £162,602,000 silver, or together, £249,294,000. In those years she had taken all the silver the world produced, and would have taken more if it had been obtainable, and the remainder of her balances had to be settled in gold. But since 1869 there had been a great diminution in her absorbing power. Thus the amount of specie absorbed in the two years ending 1857 was £23,846,000; in the four years ending 1861, £52,149,000; in the next four years to 1865, £75,280,000; from 1865 to 1869, £59,160,000; from that year to 1873, £29,948,000; and from the last period to the year 1877, £20,910,000. In the first 14 years of this period of 22 years India absorbed£210,000,000 specie, or at the rate of £15,000,000 a-year; but that in the last 8 years—including 1877—she had only absorbed £6,300,000 a-year. They should try to find out why India could not absorb in the way she did a few years ago, and it was only when hon. Members came to look into the finance accounts that they would find the reason clearly written. They would find there that the Home charges were going on increasing year by year. In 1868, it required only 84,970,000 rupees to satisfy the English or Home indebtedness; but, in 1879, it required 189,000,000 rupees. This was a monstrous increase. It was perfectly impossible that India could stand it and keep above water, and it was necessary the country should look into this matter as soon as possible. What was the cause of it? That seemed to be the difficulty. India sent us a very large quantity of surplus products. She sent us nearly £20,000,000 a-year more than we send her in merchandize. Where India would take, had she her own way, her returns in silver, salt, and shirtings, we forced her to take all kinds of things that she did not want. We made her take expensive soldiers, and still 1735 more expensive civilians; and we made her pay for absentee soldiers—for soldiers who never went near her. He was not blaming any particular Government. He had shown that in 1868 the Home payments amounted to a sum equal to 43½ per cent of the land revenue, and that in 1879 they required a sum equal to the whole net land revenue. This showed an increase of annual charge upon India of 104,000,000 rupees in 11 years. The evidence of Indian officials showed how some of this increased charge arose. Men of great distinction were examined before the India Finance Committee in 1873, and they gave very telling evidence. In reply to a question, General Pears said—Every regiment in India has its colonel, usually a general officer, not an effective officer with the regiment, but at home. We pay that, as he belongs to, and is a member of, a regiment serving in India.So that colonels did not appear to be with their regiments in India, but in London, though India had to pay for their services. Then, as to the cost of recruits, General Pears said that under the Company it was£42 per head, whereas now it was£82 per head. The hon. Member for Hackney asked the same witness the following question:—According to the figures you have just given, one-fourth of all the officers belonging to the Indian Army, for whom India is paying, are in England?" The reply was—"Yes, I think that would not be very far from the mark.On the same subject, Sir John Strachey, an Indian official whose opinions were entitled to great weight, had ended a strong protest against the existing system, by urging that it was the duty of the Government of India, by economizing, to provide for the charges that became due on account of Military Services in the country. He had made various suggestions to the House in regard to Indian finance, and he was most anxious that hon. Members would consider various points which arose out of what he had ventured to urge. For instance, he would suggest the importance of considering whether the Public Works in India should be carried out, unless the Establishment charges could be brought into proportion with the value of the work done; and also whether it was advisable to borrow money in India at a higher rate than it 1736 could be obtained in this country, unless it could be proved that India would derive advantage from that mode of dealing with the finances of the Dependency. On all the grounds he had stated, he asked the House to agree with him in thinking that the future course of silver, and, therefore, of exchange, would depend upon the absorbing power for silver which India possessed; and it seemed to him that that power depended upon her being rich or poor. She was rich if she had good harvests, economical administration, few absentee allowances; and poor if she had bad harvests, extravagant government, and monstrous absentee allowances. The harvests were not under our control; but we might hope that the usual rule of nature would be followed, and that years of famine would be followed by years of plenty. Might they also hope that extravagant government would be followed by economic rule; that monstrous absentee allowances would be cut down; and that, by a policy of peace abroad and retrenchment at home, the Homo Government would do their utmost to put the people of this country in a position to absorb more of India's produce than in days gone by. If they could hope for this, they might expect a brighter future for India; but if they could not, the blackest page in the history of England's Colonial Empire, as far as its finance was concerned, was written.
§ MR. J. G. HUBBARD
thought the House ought to be thankful to the hon. Member for Bolton for the exceedingly interesting and useful speech in which he had dealt with the industrial progress and financial state of India. Returns showed that both the Revenue and the exports from India during the last 14 years had increased to a very large extent. Looking at that fact, he thought they must come to the conclusion that the financial and industrial condition of India was not such as need cause the serious alarm which had been raised. That difficulties had arisen and called for remedy was beyond doubt; but the question was to how the remedial measures could best be framed. The main cause of the immediate difficulty arose from the exchange difference in the value of the rupee. In India we found, not a gold, but a silver currency, and that currency, being the legal tender 1737 and the standard of value, must be dealt with precisely as the sovereign was dealt with here. One of the plans suggested by which to improve the existing state of things was that of a double standard, more properly called an alternative standard, for the one standard must always be in advance of the other in value; and while payments would be made in the less precious metal, the more precious metal would be exported. The other remedy, which was a very ingenious device, was called the bi-metallic system, and bi-metallism had been preached as a doctrine by a variety of distinguished men. It had been remarked that this scheme was entirely free from the inconvenience attaching to a double standard; because, whereas this inconvenience consisted in the fact that one or other of the two standards was always varying in value, under a bi-metallic system, the standards must always remain of the same relative value. The bi-metallic system, however, involved the necessity of all countries—at all events, those within the circle of civilization—combining to determine that gold and silver should, relatively to each other, have a certain defined proportionate value. If we had such a system in this country, any amount of silver, or any amount of gold, might always be introduced and lodged to the credit of the importer at precisely the rate fixed by this cosmopolitan convention. But it would never be possible to obtain from the nations of the world the consensus required before a bi-metallic system could be established. If its establishment were possible, however, what would be the result in England? Why, supposing a Mexican were to discover an exceedingly rich mine, and be able to produce an enormous amount of silver at 1s. an ounce, he would have a right to send it to this country and have it carried to his account at the contract price, which might be 5s. per ounce. The consequence would be that the combined currency of gold and silver would be so much enlarged that the whole of it would deteriorate in value, and that this country might be seriously injured through the diminished value of the medium in which foreigners would discharge their debts to her, now payable in gold. Neither the alternative standard system, nor the bi-metallic system could 1738 be adopted in this country if we possessed any reasonable regard for our own interests. The right hon. Gentleman the Member for the University of London (Mr. Lowe) had presented a scheme of his own, to which he wished to call the attention of the House, as it was of a nature to challenge criticism. The right hon. Gentleman said that the rupee possessed a much higher value in India than in Europe; and that, though rupees were much depreciated here, in India they maintained very much their old value, so that the same coin had two very different values. With regard to these propositions, he was constrained to demur to the statement that the rupee possessed a much higher value in India than in England. Gold and silver could not be in one country at a higher value than in another, except to the slight extent of the cost of conveyance. With regard to the special scheme presented by the right hon. Gentleman, he quite failed to understand how a currency as good as gold, in which gold was to have no part, could be devised. The right hon. Gentleman wanted to do without gold. This was a scheme which could not be realized, and its announcement might have a mischievous tendency, as it might lead people to suppose that legislation could effect marvels in connection with the question of currency. The House, he contended, ought not to encourage a resort to any empirical remedies. If he were to be asked what should be done in the present state of affairs, he should frankly answer that he did not know what could be done to remedy the irremediable. They could no more reverse the past than they could foretell the state of things which would prevail 12 months hence. The difficulty in which we now stood was the result of circumstances which no legislation could have remedied. The pressure of the German silver constantly hung over the market, and affected its value; but that had a tendency to pass away at present. The difficulty was for this country to receive its Indian revenues in silver and apply them to the discharge of debts in gold at home; and he had come to the conclusion, without being able to suggest any remedy himself, that we ought not to attempt to remove this supposed difficulty by tampering with the currency of India, for successive changes did more to 1739 add to the evil than mitigate it. We should enter into no speculative engagements which would prevent a distinct and clear statement of Indian accounts, which was really what we ought to look to. Let them, therefore, adopt the present rate of exchange as regulating the financial affairs of India, balance their accounts, so to say, on that basis, and then start afresh. The Loan of £5,000,000 to India would enable them to tide over a certain time; but he altogether objected to any portion of that loan being made without interest. The idea of a loan without interest was abhorrent to sound finance, for a loan without interest was a gift. If India was in such a state of penury that she could not pay interest, then they ought to give and not to lend her the money. If, on the other hand, they looked forward, as he believed they might, to a prosperous future for India, they ought not to insult her by such an offer as that which had been suggested.
Sir, I have listened with all due attention to this debate, though it has extended over a considerable time; and I feel, though India has on this occasion established her title to much more attention than her affairs have usually received from us, yet no extravagant claims have been made on her behalf; on the contrary, I think that we are still rather on the threshold and the surface of great questions connected with the interests of India and her relations with this country which are now forced on our notice. Indeed, everyone who considers the greatness of the Indian problem must at first sight be astonished to perceive how very small is the share of interest the Indian questions appear to excite in this House. In my opinion, the explanation is not very far to seek. It is not that anyone in this House depreciates the vast importance of those questions; it is, if I am right, that this Assembly, which is, I believe, the most active of all deliberative Assemblies in the world, and which transacts by far the greatest amount of business, is also a most over-weighted Assembly, and one, consequently, most in the condition of being obliged to pass by a great number of the important subjects that lie within its jurisdiction, not being physically or morally able to give them anything like the attention they deserve and require. The consequence is that we approach 1740 the discussion of Indian affairs now, perhaps, for the first time, under circumstances that are new—new in this respect, that they are now felt to have, what they were formerly only known in the abstract to have, an imperative claim upon the attention of this House. The debate of to-night has taken a course which I have observed with great satisfaction as far as the leading propositions advanced by the speakers are concerned; but it has been restricted almost entirely to the monetary aspects of this question, of which I shall say hardly anything. I cannot, however, approach the discussion without considering the favourable position in which we are now called on to deal with the subject of Indian finance, not as a mere Registration Court, which is, for the most part, what we have been for the transactions of the Indian Department at home and the Indian Government abroad, but as a Parliament which feels that very grave problems present themselves to us, and call upon us for solution in tones which are already loud, and which threaten to become imperative. I cannot help being impressed with the belief that we now stand at a point whereat, unless we are alive to the full gravity and urgency of the situation, the course of events, and that not a very prolonged course, may bring us into a position in which we shall have but one question to face—namely, the question of assuming responsibility for Indian Expenditure, in addition to our own engagements, as a charge upon the British Treasury. That is a contingency which presents to us such gigantic difficulties and dangers that I think, of the two, it is better rather to run the risk of exaggerating than in any way to extenuate the weight and importance of the question immediately before us. If we wish effectually to exclude the arrival of that—I will call it tremendous—contingency, I believe we can only do it by opening our eyes to the full difficulties of Indian finance as they now exist, and by determining to be content with nothing but adequate and effectual remedies. It was with great satisfaction that I heard in the speech of my hon. Friend the Under Secretary of State for India that Her Majesty's Government were determined to make a serious effort to effect retrenchment in Indian Expenditure. That, of itself, is a great step in the 1741 right direction, and I will not stop to discuss whether the communication of I that determination was not made at a comparatively late period. That it was made at all must be a cause of much satisfaction to us. But what remains to be considered, and what we have not yet fully ascertained, is whether the view taken by the Government of the range necessary for their economic measures is a range which will be entirely adequate to the circumstances of the case. On looking at the figures presented to us—the £250,000 expected to be saved in the Civil Service, the £650,000 in another important Department, and the rather vague items of saving in Army expenditure—I cannot say that my mind is wholly relieved from apprehension. I have a double apprehension: first, that the measures taken may be comparatively narrow; next, that in point of time they may lag behind the necessities of the case—necessities which are constantly and rapidly accumulating. I am sorry to think that the general state of India does not appear, at the present time, to give a bright and encouraging hue to our discussions. Painful impressions have been received in this country that the economic and material condition of the people of India is not what we should desire. No doubt, exaggerated statements have obtained currency, and salutary corrections have been applied; but I often think we are too apt to fall back on the abstract and theoretical splendour of the possession of the Indian Empire, and we do not sufficiently recollect that the administration of that Empire, in the final judgment of history, will bring no advantage or glory to us, except in the exact and precise proportion that that administration confers benefit upon that Empire, and renders India prosperous and happy. The facts before us in general do not show—I do not speak of what has been done by the particular policy of one Government or another—but I do not think that many in this House will cheer themselves with the belief that the material condition of India is advancing at a rate which they would desire, or, indeed, at a rate—considering the great efforts made to improve its social and legislative and administrative condition—which most reasonable men would expect. There are signs of deep-seated mischiefs the root of 1742 which we seem not altogether to have reached. My hon. Friend the Member for the Elgin Burghs (Mr. Grant Duff) referred to disturbances in a particular portion of Bombay with an apprehension which I noticed, especially as coming from him, because I do not think he is at all given to exaggerated views upon any portion of our Indian policy or administration. There are signs of uneasiness, and even of violent uneasiness, in the body politic of that portion of India, which might rapidly spread, and which are disagreeable indications of the general condition. And this brings me to refer to certain measures which have been passed of late years for India, and which, I am afraid, wore not only of questionable policy in themselves, but have been productive of deplorable effects. There was, as we all remember, great difference of opinion expressed in this House when the Queen was invested with the title of Empress of India. I am not about to express any adverse opinions upon that measure; but there can be no doubt that the assumption by Her Majesty of that title meant an increase in our responsibility towards India. It was a promise of great things to India—a promise of larger privileges and material advancement. But what has been the course of Indian affairs since the assumption of the title, and what is that assumption likely to carry with it on the minds of the people of India? Why, the period that has since elapsed has been one of peculiar difficulty and augmentation of taxes; and as regards the people, the Government have passed an Arms Act, which places the possession of arms under hard restrictions, and which, un-precedentedly, I believe, in the legislation of India, has much more the character of retrogressive than of advancing legislation. Above all, there has been the passing of that unfortunate measure for the curbing of the Vernacular Press. At a period of financial difficulty like the present, what could have been more important to us than to know what the people of India thought, not merely in their wisdom, but even in their occasional aberration? But this is the period we have chosen to limit the expression of Native sentiment, by placing the whole Vernacular Press at the mercy of the Government. I confess I thought it a most objectionable measure at the time; 1743 but I hoped that the Government would allow it to remain a dead letter, like that of the Ecclesiastical Titles Act, and merely to be held up in terrorem. But I have heard with the greatest regret that a journal standing nearly at the head of the Native Press has been placed under warning—that is to say, placed in a condition so precarious and dependent that it can no longer be published—and that on account, not of an editorial article, but merely of a foolish and imprudent letter from a correspondent. Feeling, with the Duke of Buckingham, how important it is to us to know the prevailing currents of Native opinion, I deeply lament this rigorous treatment of the Native Press; and I trust this House will not contentedly suffer that a policy should be pursued in India of a nature to estrange the people from our rule. These are the conditions under which I approach the Revenue of India. As regards that Revenue I think the discussion this evening, and especially the very able speech of the hon. Member for Bolton (Mr. J. K. Cross), which has afforded most valuable information to the House, has shown that we ought to beware of attempting to meet difficulties which may be temporary, and which, at any rate, arise under the operation of natural laws, by empirical remedies, and that we ought to preserve those general principles in relation to currency which experience has shown to be sound. The hon. Member for Bolton has raised the very important question whether we have not greatly exaggerated the magnitude of our loss by the Indian exchanges. The Government themselves have greatly reduced the figures in which the loss was ostensibly represented. Instead of £3,000,000 or £4,000,000, they place the loss at a sum not greatly exceeding £2,000,000. [Mr. E. STANHOPE: £2,750,000.] I beg pardon; I thought it was less. But what I wish to call attention to is the offset which the hon. Member for Bolton showed us we gained from opium—an offset amounting probably to £1,500,000. It is very important that the observations of the hon. Member for Bolton on this point should have their full weight with the House. It is not for me to say whether they can be impugned. If not, they will tend to impress us with the conviction that, however inconvenient and disagreeable, however costly even 1744 and injurious, within certain limits, to the Government of England the present depression in the value of silver might be, it is not one of the main subjects with which we have to deal. It is an evil probably of a transitory character—one which the natural law of supply and demand will in due time remedy. There are other matters more deserving of attention. The hon. Member for Bolton has referred to the revenue from opium from an important point of view—namely, its relation to the value of silver, and I wish to consider it from another point quite different. Nearly all that is said upon this subject appears to be based upon the assumption that Indian Revenue is in the main like British Revenue, that it is as much within our control, and that we can equally assure its continuance and reckon upon its solidity. But we have no right to reckon upon the opium revenue as if it were a domestic revenue, because it is so largely dependent on the policy and legislation of a foreign country. It is all very well to say there is something in the quality of Indian opium which will insure the demand for it; but we ought not, as prudent men, to found our hopes of a revenue on such an opinion, which may at any time be falsified by improved methods of cultivation or treatment in China. The revenue from opium is not to be counted upon like the revenue from land, or like that from salt, which, be it objectionable or not, is under our control. The opium revenue we may accept with more or less compunction and regret, as ministering to our present necessity; but we have no right to reckon upon its full continuance. This is one consideration that ought not to be overlooked; another is the loss by exchange, though it may not be so largo as it is sometimes assumed to be; and another is the recurrence of Famines every few years—a matter not yet divested of formidable features. I cannot omit referring to another subject, on the merits of which we are at issue with the Government—the unhappy Afghan War. Having regard to the extent of the operations, the number of troops in the field, the time they have been beyond the Indian Frontier, the altitudes at which they have been encamped, the I season of the year, and the means of 1745 transport, if the cost be defrayed by the £670,000 charged on the financial year just expired, and the £2,000,000 to be put on the Indian Estimates, the economy of the war will have been truly wonderful. The Abyssinian War, which was a military operation extending over only a few weeks, cost some £9,000,000, and far exceeded all the estimates. I do not feel assured that the costs of the Afghan War will not be greater, considering what the cost of the former Afghan War was under the administration of the East India Company, which was certainly not less economical than that of the present Indian Government. I must, in passing, express deep regret at the charge of this expense on the Indian Revenue. It is impossible to answer the arguments contained in the Petitions from India presented by myself and others. I am afraid a deep sense of wrong and resentment will be generated in India by a course so little worthy of the greatness and magnanimity of this country as calling upon the impoverished people of India to bear nearly the entire charge. I do not say the whole charge, because a loan without interest is simply a mode of making a small contribution to the expenses of the war. I am afraid the charging of the greater part of this expense upon India will engender—and I am not prepared to say it ought not to engender—a sense of wrong, not extravagantly extended beyond the bounds of the subject, and of ungenerous treatment. I do not perceive that the Government have taken into account the effect of the war upon the future permanent finances of India. It is admitted that there are immediate expenses to be incurred; but will there not be a permanent increase of expense? We have advanced into a difficult country, and have undertaken to hold mountain passes, without escaping from any internal responsibilities. A high authority, Sir Alexander Arbuthnot, who was intrusted with the introduction of the Vernacular Press Act, and who approved the policy of the Afghan War, has recorded his opinion that it will entail a permanent increase of military charges; and since then it has been announced that a subsidy is to be regularly, and by Treaty, payable to the new Ameer. With regard to the remission of the import duties, there seems to me to be something distinctly 1746 repugnant in the way it has been done in the time of India's distress and difficulty, by the Government of a Party I which has done all in its power to retain every protective duty in this country, and which, from year to year, as the occasion arises, advises the Crown to I assent to Colonial Acts imposing fresh duties upon British manufactures. What an invidious, almost odious, picture of inequality we exhibit to the millions of India! The Free Trade doctrines that we hold so dear, that we apply them against the feeling of the Indian people in their utmost rigour and without a grain of mercy, disappear in a moment when it is a question of dealing with those whose interests and opinions we cannot lightly tamper with—namely, the free Colonists of this Empire. The Governor General says he cannot see that financial difficulty can in any way be pleaded as a reason against what he calls fiscal reform. If that be a true principle of government, it has been discovered for the first time by the present Viceroy. There has not been a Free Trade Government in this or any country which has not freely admitted that the state of the Revenue is an essential element in the consideration of the application even of the best principles of Free Trade. An argument has been used by the hon. Member for Hackney (Mr. Fawcett) which it is difficult to answer; at any rate, it is high time it should be answered, if answer can be given. In an able article on Indian finance, he has put this question—If you determine to apply your doctrines of Free Trade, why do you apply them to the import duties upon cotton goods, and why not to the export duties on Indian produce? On every principle which has governed legislation in this direction, export duties have been marked out as the very first victims to he offered on the altar of Free Trade. In this instance there is the strongest additional reason for beginning with the export duties, for one of your embarrassments is the state of exchange, the difficulties of remittance, and the low prices at which Indian bills are sold in consequence of the want of a market for them.This argument is one we are entitled to expect Her Majesty's Government to meet in full if they intend to adhere to this measure, which has been, I think, precipitately and unwisely adopted in opposition to the strong sentiment of the Indian people for the repeal of the cotton duties. It will not be supposed 1747 that I am one who can recommend those duties upon principle as desirable, in comparison with others, when you can afford to part with them. It is the time and circumstances of their repeal which appear to me to constitute its gravity. Indian Revenue appears to be surrounded with an unusual number of risks and difficulties. It is less solid on its basis than a corresponding Revenue of equal amount in our own country, or, probably, in any other. There are peculiarities in its nature; it is hampered by the difficulties of ex-change; it does not show that solidity and up-springing power in meeting difficult times which we should desire; and the review of the whole case greatly deepens in my mind—as I think it may also in the minds of others—a sense of the gravity of the situation, and a conviction that we ought not to put ourselves off with any unreal, or even with secondary or inefficient remedies, but, if we can, go to the root of the matter. Then, there is the question of new taxes. And there, again, I find official statements put forward which seem to indicate a belief that, upon the occurrence of an adequate cause, it would not be such a difficult matter to discover new taxes to be imposed in India. But how does this matter really stand? The experience of this country goes far towards establishing this financial proposition—that the imposition of an Income Tax is to be considered rather in the nature of a last resource in time of peace. The Income Tax has been tried in India, and, as I am convinced, has proved a failure. What have you done?—I do not say done wrongly; it is an indication of the real state of things, and the necessity under width we lie. You have established a licence tax, on which I shall only make two observations. The first is, that I cannot justify the resorting to this description of tax upon Indian enterprise and industry without you establish a corresponding tax upon English enterprise and industry in India and all English official salaries. But my main point is this—that you carry your licence tax down to incomes of £10 8s. per annum, so that a man who has 4s. a-week on which to maintain his family is called upon to pay the tax. I do not presume to say that this is wrong. It would be going far beyond what my knowledge would justify if I were to say so; but I 1748 say this, that if it is right, it proves that you have reached the limit of taxation. That is a proposition of enormous scope and importance, because it reduces the Government to this position—thatintheir duty of providing a deficiency which is now stated at £3,250,000 annually, with so many dangers and embarrassments surrounding the whole prospect of Indian Revenue, they have, humanly speaking, no title to look to the imposition of new taxes. Therefore, the whole force of the arguments and speeches we have heard, even to a great extent the speech of the Under Secretary of State for India himself, goes to show that to retrenchment, and to retrenchment alone, we must look for meeting the difficulty. And if the scale of necessity has not been enormously mistaken, this retrenchment must be a very large retrenchment. My hon. Friend the Member for the Elgin Burghs (Mr. Grant Duff), who is by no means given to exaggeration in his views of Indian policy, but whose reputed disposition is, on the contrary, to colour it too favourably, has fixed the measure of retrenchment he considers necessary to give solidity to Indian finance at £4,000,000 a-year. That is a very grave statement, and I do not believe it is an exaggerated one. It means that there must be a reduction of what we may call 10 per cent, or from 10 to 12 per cent all round, in the real Expenditure of India. I think the race of economists, which was at one time a thriving and prosperous race and multiplied in the land, has of late dwindled away, and is now only represented in this House and elsewhere by here and there a solitary individual. But the most sanguine of these solitary individuals would, I am sure, make this admission freely—that it is no trifle you propose to yourselves when you talk of making a reduction of anything like £4,000,000 in the Expenditure of India. The main question is—in what temper are we to approach the operation? Are we to approach it in the spirit which is disposed to allow this plea and that, this inconvenience and that, nay, even to conjure up phantoms of possible dangers, as conclusive reasons against reduction, irrespective of the fact that there is no danger more pressing, or more formidable, than the condition of a country whose expenses are greatly in excess of its real income? To escape that great danger you must be prepared to take measures 1749 of corresponding strength. You must not proceed by paltry and peddling steps; you must not be afraid to have it east in your teeth that you are making reductions in modes inconsistent with the dignity of this Government, or with the efficiency of the Service, or even with the security of the country, provided you believe that efficiency and security are not to be placed in real peril. You must get rid of a vast amount of conventional estimates; and it depends upon the rejection of these conventional estimates whether your measures of retrenchment will be effectual or not. Small measures of retrenchment will be worthless, and not only so, but if they blind us during the moments that are so precious to the real magnitude of the emergencies with which we have to deal, the mischief they may thus do may be greater than the good which they effect by establishing a partial saving here and there. I will say but a very few words upon the different heads of Expenditure. There is the question of the Civil Service. I think it is difficult to resist the force of those arguments urged on behalf of the Indian people themselves and by Indians, as they were indicated to-night by my right hon. Friend the Member for Birmingham (Mr. John Bright) from the Petitions he presented, with regard to Civil Service appointments. I think we must not be turned aside by apprehensions such as those the Under Secretary of State for India put forward—namely, the fear lest we repel from seeking Indian appointments the class of men we require. I do not want to repel any such men; but we shall travel a good way before we roach the point at which that repulsion will take place. In the first quarter of a century of my lifetime every Government and every Parliament was firmly, and in a masculine spirit, set upon economy. I am sorry to say that I cannot congratulate recent Governments or recent Parliaments upon having acted upon similar principles. It is for this House to take care that it earnestly discharges its great and important duty of acting as a check upon the spending dispositions of the Government of the day, and so prevent itself from becoming that which I am afraid it has a tendency to become—the most powerful organization for increasing the heavy burdens now laid upon the people. There is one subject which I hope will 1750 not escape attention—the question of the conversion of stocks from high rates to low ones—which I believe to be a practical and available, though limited, means of real and solid economy, which would have the secondary advantage of acting upon the portentous mass of remittance to this country, which has been admirably described as the core of the financial and economical difficulties of the case. As regards the proposed reduction in the expenditure on the Indian Army, it would be premature and most unwise of me to enter into the subject in detail; but what I cannot help fearing in some degree is that this question of reduction in the Indian Army has been viewed by the Government as a small subject, and from which no great results will follow. I trust that it is not so; for, if it be so, then, I confess, my expectations of retrieving the position of our Indian finance will be sorely damped. I should be very sorry if this subject were to be dealt with as one calling merely for the appointment of a Commission in India. It appears to me that there are many questions of principle connected with Indian Army finance reform, and with other subjects, which require to be considered in England quite as much as in India. It appears to me that leading principles which ought to be at the root of reform and retrenchment in the Indian Army are matters that ought to be either wholly or mainly considered and determined here. It is difficult to bring home to the minds of Indian Administrators the necessity that has arisen for economy in Indian finances, and for this reason—because no system could be devised which would throw upon them the ultimate responsibility. Neither the officers of the Army, the Council of the Governor General, nor even the Viceroy himself, are the persons who are ultimately responsible for the success or failure of Indian finance. The glory or the shame in connection with it may be in part reaped or suffered by them; but tire ultimate responsibility must devolve here, upon those who sit upon these Benches within these walls. And I confess I am very jealous of mere professional delegations on these subjects, and most jealous when their operations are to be carried out in India. I do not agree with those who think that much is to be gained for India by are-adjust- 1751 ment of the Home charges. It is true that there are men on the Indian Establishment, paid for by India, who are not in India; but it is also true that you do not make a man a soldier by putting a rod coat on his back—he must be trained, he must learn his profession, and until he has learned his profession up to a certain point he is not practically a soldier. I have much more difficulty, I own, in dealing with the statement of the lion. Member for Bolton (Mr. J. K. Cross), extracted from the evidence taken before the Committee, of the officers borne on the Indian Establishment—that one-fourth are usually in this country. I am not presuming to blame anyone in this matter; but it is very difficult, with justice to India, to reconcile such facts. It is still more difficult to reconcile them with the doctrine, plausibly held, that, whatever retrenchment we think of in Indian expenditure, we must on no account reckon on a reduction in the British garrison in that country. It was pointed out in the debate on this subject during the last Parliament, that India derives some advantage from having in England what may be termed a military bank. That military bank is obliged to keep, as it were, in its coffers, an available fund to meet all demands. When the authorities in India want more British soldiers, they simply draw a draft upon the military bank in this country, and they get those soldiers at a moment's notice. When the authorities in India find that they have more British soldiers than they want, they send homo so many regiments, and those regiments are immediately thrown upon the charges of this country. That is, undoubtedly, a matter which must be taken into consideration when you look at the system of Homo charges, because on certain points of detail you might possibly find that some retrenchment could be made for the advantage of this country by transferring this charge to the British Exchequer. The greater question of the military reorganization in India I will not presume to deal with further than to say that many think that the present system of military transport for India is one of enormous cost, and that it would be better to resort to the cheaper and wiser system of relying upon the free and independent shipping market. That is a subject not entirely 1752 without importance; but there are questions still connected with military organization in India, which, in my opinion, you will have to search to the bottom. It is not for me even to indicate them, since they are questions two or three removes from the subject under our immediate consideration; but I am convinced that if you are to effect the work you have taken in hand, you must have large retrenchments in the Indian Service, from top to bottom, and those retrenchments must largely include subjects of military expenditure. In all their measures of retrenchment and financial reform, I hope Her Majesty's Government will have special regard to the extreme desirableness, not only as a political, but as an economical measure, of locating Indian expenditure, as well as Indian service in India itself—to chock, to arrest, if possible, to reverse, that injurious and even disastrous movement of the vast increase of remittances to this country—on all grounds, that is a subject of great importance. There is another question on which I wish to say a word. A long acquaintance with the financial system of this country has shown me that, whatever remains of economy there may be in our present system of Public Expenditure, and whatever hope that the spirit of retrenchment which possessed this House 30, 40, and 50 years ago may again return upon it, a very large share—an essential share—of the credit and efficiency of all measures for giving effect to those hopes belongs not to this or that Party, but to a particular Department of the Government and to its admirable organization—namely, the British Treasury, which is itself responsible to this House. Looking at Indian Expenditure, we must feel how completely wanting is anything bearing the faintest resemblance to the British Treasury. The control of the British Treasury over every other Department is a control felt not only after long intervals, but from day to day. It is part of the circulation of the life of the whole system, and it affects and modifies the entire character of our Expenditure. That Expenditure is now between £80,000,000 and £90,000,000. But when we pass over to India, with its Expenditure exceeding one-half of that amount, we find a total absence of anything of the same kind. The men who are connected with Indian 1753 finance have, no doubt, the best dispositions and intentions, as far as they are personally concerned, in regard to saving the resources which are extracted in the shape of taxation from the Indian people. But they have none of the advantages which the British Treasury possesses. I do not think you can supply that tremendous void by any contrivance such as has suggested itself to my mind; but I am still convinced that a good deal might be done by introducing some direct influence drawn from the fountain-head of the English Treasury upon Indian Expenditure, not to affect those questions where the Indian Exchequer and the British are in competition with each other. On those questions, and on those alone, I should hold the English Treasury to be biased. But I believe that by an agency judiciously chosen and applied, we might bring some part of the rules and of the spirit of the English Treasury to bear on the details of Indian finance. That is a point which I would strongly commend to the serious attention of the Government. Ear from enforcing any difference of view between those on this side and those who sit opposite—far from seeking the miserable gratification of making good and driving home any accusation against any one in this grave matter, what I most earnestly of all desire is, that this body of the Representatives of the people of England, upon whom, in the last resort, the whole responsibility must fall, should fully and clearly understand that they are approaching, and are called upon to deal with, no remote or secondary matter of the interest of a Dependency; but that they have to solve a problem, the solution of which is intimately associated, it may be, with the material, but undoubtedly with all the higher moral, interests of the nation and with the honour of the Empire.
§ MR. SMOLLETT
said, there was a great air of unreality, generally speaking, in that House when they came to discuss an Indian subject. In this present Session the Government stated that they were going to bring forward the Financial Statement of India in the month of May, and it was admitted on both sides that the matter was going to be made one of Party and faction. A "Whip" went out on each side, and a great audience 1754 was secured. But when, on the very first night of the debate, the intention was abandoned of making this a Party and factious fight, then all interest in the matter subsided; apathy, indifference, and neglect prevailed in every quarter. Great orators, such as the hon. Member for Orkney (Mr. Laing), and the lion. Member for Kirkcaldy (Sir George Campbell), spoke to empty Benches, for very few people in that House cared one straw for India so long as the Indian dividends were paid. Tonight, and for the last two nights of the debate, they had heard nothing discussed except the currency question. The only speech he had heard worth listening to was the speech delivered by the right hon. Member for Greenwich (Mr. Gladstone). The right hon. Gentleman went to the root of the matter, and spoke of retrenchment, economy, and reform; things which were dear formerly to hon. Gentlemen on the opposite side, but of which very little care was taken now. It was upon these doctrines solely that he intended to address the House. He would speak quite unreservedly of officials on both sides. In his judgment, the affairs of India had got into a state of great derangement; but both Parties, both factions in that House, were answerable for that derangement, and the Liberal Party was more responsible than the Tory Party, because they had been longer in Office. The seeds of financial waste were sown in India many years ago; and lately, in 1874, when the present Government came into power, they succeeded to what he might call a damnosa hereditas in the management of India. He dared say that the Administration did not know it; they did not even now realize the idea; but it was true. The fact was, that the right hon. Member for Greenwich, in his Administration, intrusted the government of India in England to the Duke of Argyll, and, perhaps, among Liberal statesmen there was no man less competent than was his Grace to perform the duties which then devolved upon him. Nevertheless, the Duke of Argyll got on very smoothly in the India Office so long as Lord Mayo was Viceroy and Governor General of India, for Lord Mayo was a man of intrepidity, a man of character, and a man who would not be imposed upon, and he was an ardent supporter of economy and 1755 retrenchment in Indian Expenditure. One of the cardinal features of Lord Mayo's Administration, the keystone of his policy, was that he would not allow a single rupee to be spent on what were called Extraordinary Works. They were now called "productive," but they were falsely so called. But why did not Lord Mayo allow any money to be spent on what were called productive works? Because Lord Mayo had taken the Public Works Department under his own charge. He knew the extravagant demands of that Department; he knew that it overrode all the other Departments of India; he knew the lavish expenditure which was constantly going on in that Department; he was determined to put a stop to it, and he did. In the last year of his Administration, he only permitted the Public Works Establishment to spend £1,500,000 upon "Extraordinary Works," and the keystone of his policy was that no money should be expended except what came from the revenues of the year in which it was spent. But in February, 1872, when Lord Mayo fell by the dagger of an assassin in one of the Andaman Islands, the policy of retrenchment and reform was abandoned, and the vicious policy which now existed was established under the orders of the Duke of Argyll, and with the concurrence of Lord Northbrook. What the present Government, therefore, was answerable for was that they did not prevent that policy from being continued when they came into Office in 1874. They permitted that waste to continue, and now they had got into a state of difficulty which it would require all the courage of great statesmen to face. In that respect he quite agreed with the right hon. Member for Greenwich. In his judgment, the state of financial affairs revealed in Calcutta in January last was most disheartening. The accounts then published referred to three distinct years of Revenue and financial management—the years 1877, 1878, and 1879. In each of those years the wretched system of making a distinction between ordinary and extraordinary Expenditure was persevered in. That system, in his opinion, was introduced for purposes of delusion, and it was continued to prevent Parliament from seeing the real state of affairs. But his object was to show the result. In 1877 I the ordinary Expenditure exceeded the 1756 entire income of the year by £3,543,087. But that was not the deficit of the year. In that year £4,790,052 was borrowed, and expended upon what were called Extraordinary Works, now classed under the delusive epithet of "productive outlays." The deficit was, therefore, largely augmented, and the Revenue fell below the Expenditure by £8,334,800. That certainly showed a very sad kind of management of the finances of the country. In 1878, £2,000,000 of fresh taxation was placed on the people of India, which, however, did not yield that sum. In that year the Finance Minister made the very tardy admission that we were living beyond our income in India; that it was necessary to impose fresh taxes to bring about an equilibrium, and to provide a Famine Insurance Fund of £1,500,000 sterling. Our Rulers in India seemed to think that every 10 years there must be a Famine, and that £15,000,000 must be expended upon it. He thought that a delusion; and he was quite sure there would be many Famines in India, if £15,000,000 were to be expended on each recurring Famine. In 1878 the fresh taxation was entirely absorbed, and the Famine Insurance Fund existed only on paper. In that year, £4,599,000 was expended in what were falsely called reproductive outlays, and the deficit in the Revenue was £3,299,000. Then came the present year, 1879–80, for which we had only got the estimate of accounts. This year, the first time in 20 years, we had a war expenditure in India, and the amount charged against the year 1879–80 was £2,000,000. That war, in his opinion, was a just and necessary war, and he had supported it in that House. It was a war undertaken for the purpose of driving the Russians out of Afghanistan, and preventing that Power ever having a paramount influence in the government of that State. That war was supposed to have cost £2,000,000. India in former days could have paid three or four times the amount, and would have no difficulty in paying it now if the country were governed on the principles of common sense and justice; but India was ruled at the present moment in a very different spirit. What was the issue of the present year? These £2,000,000 were properly charged to the ordinary Expenditure; and the Expenditure exceeded the income by 1757 £1,395,000. In addition to this, Lord Lytton modestly asked for £3,500,000 more to be spent on productive outlays—on works which wore not worth a farthing—and the consequence would be, if that waste were permitted, that we should have this year a deficiency of £4,895,000. In the three years, 1877–8–9, the Expenditure of India exceeded the income by £16,500,000, and it would have been £20,000,000 but for the fresh taxation of 1879. This state of Indian finance, in his opinion, was not only serious, but most alarming. It was the more alarming because we had always had "prosperity speeches" delivered in connection with Indian finance. The noble Lord the late Under Secretary of State for India (Lord George Hamilton) never appeared so happy as when dilating on the great benefits India was deriving from possessing an irresponsible Secretary of State—for the Secretary of State for India was practically irresponsible. The noble Lord used to revel in his statements of imaginary surplus millions flowing into the Exchequer of India, and fructifying there for the benefit of the people. When Members got up and spoke about deficits, they were told they did not know what they were talking about. They were ignorant of the very A B C of finance; no one could understand that subject but the noble Lord. He (Mr. Smollett) had once modestly hinted that the prosperity accounts on which the noble Lord relied were based upon cooked accounts; but the noble Lord was indignant. He said it was a foul aspersion on great Departments in India—on Gentlemen who wore a great deal too honest to cook accounts. He made the charge; he adhered to the charge; and he repeated the charge, with this addition—that the accounts were purposely cooked, and he should prove it. The noble Lord the Secretary of State for India at that time (the Marquess of Salisbury), speaking in "another place" on the 4th of March, 1876, stated that the finances of India were in a most prosperous condition. He said the finances were admirably managed; that in four years, if the accounts sent to him by Lord Northbrook were correct, from 1869 to 1873 inclusive, there were enormous surplus revenues brought into the Exchequer and accounted for. They amounted to the magnificent sum of £8,571,000. These were surplus re- 1758 ceipts, after paying every proper charge in India and in this country. The noble Lord the Under Secretary of State, of course, re-echoed this statement in that House. Not having the fear of Secretaries of State and noble Lords before his eyes, he ventured, on the 13th of February, 1877, to move a Resolution declaring that the House viewed with alarm the state of Indian finance; but he had some difficulty in finding a seconder. The hon. Member for Ashton (Mr. Mellor) seconded it. The noble Lord, in replying to his Resolution, declared that there was not a word of truth in it from beginning to end. "Deficit," said the noble Lord, "why, in this very year, the accounts of which are just about to close—in the year 1875–6—there is, and will be found, a clear surplus of £1,700,000, after paying every proper charge that the Government can bring against the Revenue." The noble Lord made that somewhat audacious assertion in a year when he had refused to permit any alteration in the cotton duties paid in India, on the ground that there was no surplus Revenue. The noble Lord said—"You talk of deficits at a period when no Secretary of State has been required to borrow one single halfpenny"—or as they would call it in Scotland, not a single baubee, in order to carry on the Government of India for the last 10 years." "Deficit! Why, in the six years from 1869 to 1875 we have had a surplus of £13,000,000, after paying every possible charge. There has been a Famine in these years. There was a Famine in 1874–5, and the amount of money spent in that year in respect of the Famine was £6,500,000, or very nearly £7,000,000." "Who paid it," he said. "We had not to borrow the money. It is a perfect delusion to suppose that we have borrowed the money to pay for it. It was paid out of the £13,000,000 of surplus which accrued from 1869 to 1875. And there were £6,500,000 loft after paying that enormous charge." About that charge there was a perfect scandal. There was no Famine in Bengal in those years. There was a death, but nothing like a famine, and £1,500,000 would meet every possible charge that could be honestly made in respect of expenditure in India in those years. ["Hear, hear!"] He was glad to hear an hon. Member on the Opposition side 1759 take that view. He (Mr. Smollett) once had a different view himself; but he had found that what he now stated was the fact. His opinion was that there was not a word of truth in the statement about Famine expenditure and a surplus of £6,500,000, and that it was furnished from cooked accounts. The money to meet the Famine had been borrowed in the City of London, and the balance of £6,500,000 remaining in the Treasury was a myth. But the noble Lord assumed all this to be true, and spoke of the prosperity of Indian finance. He said that in normal years there was a clear surplus of £2,000,000 sterling per annum—a sum sufficient to meet Famine charges, and to leave still most satisfactory surplus receipts in the Indian Treasuries. Now, these statements were perfectly true in one sense; but they were most fallacious and deceptive in another aspect. They wore true, provided we shut our eyes and refused to acknowledge the fact that the Government was borrowing largely in each of the years during which we boasted of surplus receipts. In those years the Government borrowed millions of money and kept the loans out of sight, carrying the sums borrowed to the head of a suspense account, or entering the loans on account under the head of "recoverable assets." This mode of dealing with loans might be correct, provided the money borrowed had been honestly spent upon productive works—works which, within a limited period, produced large returns, and provided great care had been taken to prevent large outlays being charged as recoverable, although spent on undertakings which were wholly unproductive. Parliament was constantly assured that this was the case, that no works made with borrowed capital were sanctioned in India, save such as were sure to be largely reproductive. These were the accounts and statements which he assailed as unveracious. He frequently quoted instances of irrigation canals upon which millions had been wasted, and from which no returns were anticipated. His charges were disbelieved. Nobody took the smallest notice of them; but they were true nevertheless, and the truth was disclosed in 1877, just three or four weeks after the speech of the noble Lord the Member for Middlesex had been made, in which he took credit for a surplus of £13,000,000 in six years. In 1760 March, 1877, Sir John Strachey brought forward the Budget for that ear. He took what he called a hopeful account of India at that period. He demanded £4,000,000 for Extraordinary Works, for productive works which produced nothing but mischief; but the Finance Minister admitted that in this sum there was a charge for works, which ought to have been classed as ordinary, amounting to £1,200,000. This charge had been erroneously foisted into the account. Sir John Strachey next admitted that he had looked over the accounts of his predecessors in office for the last six or seven years, and had found, somewhat to his surprise, that £4,700,000 had been expended in those years, and had been regarded as recoverable assets, which had been expended on railways made for military purposes, works never expected to yield mercantile profits. Lord Lytton admitted that this was true, acknowledging that positive orders had been sent from England not to allow undertakings of this nature to be entered as extraordinary; but these orders had been disregarded. Now, what was this but a direct admission that the accounts of Expenditure had been improperly cooked in order to show surplus receipts of Revenue when none existed. But this was not all. The Finance Minister said nothing of vast sums wasted upon irrigation works wholly unproductive, yet, in like manner, treated as productive outlays, although no one knew the fact bettor than Sir John Strachey. For, in this Budget Statement for 1877, he proposed to impose on certain districts of Bengal a local cess of £275,000 a-year. This local cess was imposed to recoup the Government for the interest of some £6,000,000 sterling spent on irrigation canals, which were found when finished to be wholly unproductive. The demand, was a most discreditable one; but the fact that it was made amounted to an admission that, with the military charges, a sum of £12,000,000 had been carried to a false or improper account, and had been treated as a recoverable asset; whereas the money should have been charged to the ordinary Expenditure of the years in which the outlay was made. These admissions proved how erroneous were the calculations of surplus receipts made in the six preceding years by the Under Secretary of State. In the same year, in December, 1877, the 1761 Finance Minister imposed fresh taxes upon India, which were expected to produce £2,000,000 sterling, upon the ground that the money was urgently required; while in February, 1877, the Under Secretary of State was boasting of a clear surplus of £2,000,000 annually then existing, sufficient to meet Famine charges, and still leaving larger surplus receipts upon an average of six financial years. These contradictory statements, proceeding at one and the same time from officials in Calcutta and in London, sufficiently displayed the ignorance which, two years ago, prevailed in the matter of Indian finance. In Asia, as in Europe, these gentlemen lived in a Fool's Paradise. In the speech of the Under Secretary of State (Lord George Hamilton) on the 13th February, 1877, the noble Lord insisted that it was popularly believed that the Government of the late East India Company practised a strict economy, while the Imperial Administration was extravagant and wasteful. The reverse, he said, was the truth. The noble Lord proved it in this way. He took India from 1814 up to the period when the Company's rule ceased, and he said that during those years the East India Company exceeded its income by £72,000,000. £42,000,000 of this amount were added to the National Debt from 1814 up to the year 1856; and during the last three years—from 1857 to 1859 inclusive—£30,000,000 more were borrowed to put down insurrection. The noble Lord declared that the whole of this was unproductive expenditure—that £72,000,000 had been recklessly wasted. He never heard a more extraordinary statement than that, or a more odious comparison. In 1814 the Company did not possess one-half of the territory which we now held in India. It did not enjoy anything like a moiety of the revenues which we now drew from those territories. From that period—1814—up to 1855–6, the East India Company was engaged in constant wars—wars of aggression, usurpation, conquest, and annexation. During those years the Company was engaged in acquiring, in building up, and in consolidating the vast Empire over which Her Majesty now reigned—he wished she reigned with greater success. The Marquess of Hastings was Governor General at that time. He carried on great and successful and expensive wars against the Mahratta powers, and spent huge sums 1762 in putting down the Pindarree insurgents. The successor of the noble Marquess was Lord Amherst, who quarrelled with the King of Burmah. He spent £10,000,000 or £12,000,000 in a Burmese war, and he added the present Tenasserim Provinces by conquest to our Empire. At a later period Lord Auckland sent a great military expedition into Central Asia—into Afghanistan—costing £17,000,000, paid by the East India Company, borrowed in India, and no difficulty found about the borrowing of it. That was part of the £42,000,000 spent up to 1855–6. Lord Ellenborough succeeded. He lived in an atmosphere of war, and had a passion for war. On one occasion, at a meeting in Calcutta, he (Mr. Smollett) heard Lord Ellen-borough declare that the only moments of unalloyed enjoyment in his official life were those which he had spent in the camp. Lord Hardinge, who followed, entered into a fierce struggle with the Sikh Army, which was at last overthrown, and we added the Punjab to our rule. Then came Lord Dalhousie, who annexed Pegu and Oude, which led to the Mutiny, costing £30,000,000. The Mutiny was suppressed, and we secured possession of one of our finest States, Oude. No doubt, the East India Company spent £72,000,000 in that way; but it was idle to say that the expenditure was not productive. It produced the Indian Empire; it added annually £30,000,000 to £40,000,000 to our means. The charge which he (Mr. Smollett) brought against the Imperial Administration was this—that ever since Her Majesty's Government took possession in 1860, in a time of profound peace, it had managed India with such an utter want of discretion, prudence, thrift, and economy, that at the present moment we were, and for many years past had been, drifting into something like bankruptcy. He had the accounts of India during the last seven years, going back to 1873, in his hands, and he would read them. Why did he go back to that year? Because that was the first year of Lord Northbrook's Administration, and because, in 1872, under Lord Mayo, who had enforced economy to a vast extent, there was a surplus of income. But Lord Mayo's policy was set aside with this result—the deficit of income in 1873–4 was £5,360,000; in 1874–5 the 1763 deficit was £3,930,000; in 1875–6 the deficit was £2,601,000; in 1876–7 it was £5,992,000; in 1877–8 it was £8,334,000; in 1878–9 it was £3,299,000; and for 1879–80 it was estimated at £4,895,000. The total deficit in seven years was, therefore, £34,500,000 in round figures. The increased taxes imposed to meet this state of affairs were destroying the loyalty of the people of India to our Government. We must now make reductions, for this state of things should not be permitted to continue. What, then, was the remedy? We were told that a change had at last come over the official mind, that the gravity of the situation was admitted. The confession of amendment was certainly not hearty, although they heard no more of millions of surplus receipts fructifying in the Indian Treasuries. The necessity of cautious economy was admitted; but the reductions contemplated were peddling. If the statements he had just quoted of the deficits of the last seven years were true, a reduction of at least £6,000,000 sterling of annual Expenditure was needed to place the Government of India in a secure position. What was the proper position of a Government? It should be able to meet, one year with another, the entire ordinary and extraordinary Expenditure from the annual Revenue without borrowing. A strong Government should have a considerable surplus Revenue to meet emergencies, whether of War or of Famine—it should have funds at its disposal to reduce the National Debt, or to remove onerous and grinding taxation. Steps to insure this should be taken. The hon. Member for the Elgin Burghs (Mr. Grant Duff) stated in this discussion that Lord Mayo had cut down the lavish expenditure of Lord Lawrence by £5,000,000. Why, he (Mr. Smollett) asked, could not this, and more than this, be done again, and in the same way? Of course, a man of determination, and of pluck, and of backbone was required to do this; and as Lord Lytton was, confessedly, not a statesman of this sort, another plan must be taken. In his (Mr. Smollett's) judgment, a Royal Commission should be forthwith despatched to India empowered to carry out large reductions in the expenditure of the Civil and Military Services, to the extent of at least £2,000,000 per annum, and that in the space of one year. Some 1764 £5,000,000 more could be saved at once by wise reductions in the Establishment of Public Works. He should not enter then upon a history of the origin and growth of this Department. The Establishment, in its present position and magnitude, was universally spoken of as the scourge and curse of our Government. He had it from a high authority that the cost in wages, salaries, and emoluments was at least £1,250,000 a-year. He should suggest that one-half of the Establishment, beginning with its head, Sir Andrew Clarke, should be discharged; and that a maximum sum of £600,000 should be the limit of the charge for the Department in future. He saw from the public accounts that the disbursements under the head of Ordinary amounted to £3,500,000 a-year. He knew that the expenditure under the head of Extraordinary had been £4,700,000 in the last two years—thus, the entire charge in each year was, with the office Establishment, £9,500,000. In his judgment, the expenditure should be limited and fixed at £4,000,000, including cost of Establishment; and this should, on no account, be exceeded. If this were done, there would be a saving of £5,500,000 a-year. He might add, in conclusion, that great and sweeping retrenchments of this character would restore confidence and loyalty to the Native mind. The suggestions he had made were simple, easy of accomplishment, and thoroughly practical. They would make no impression upon official minds, he was sure, on either side of the House—for officialism detested frugality. Retrenchment and common sense, applied to Indian finance, were repugnant to the official mind.
§ MR. RATHBONE
I am sure it must be a matter of great satisfaction to all those who have really watched the course of our management of the affairs of India that at last there seems some approach on the part of the House to recognizing the importance and difficulty of the task which we have undertaken in the government of that country. I have only one comment to make on the very able speech of my hon. Friend the Under Secretary for India in opening the debate—that it was only too able, and too successful in one of the objects he had in view, that of allaying alarm; for, in order to give him power to carry 1765 out the reforms contemplated, it is necessary that public opinion in England should continue alive to the very serious, though by no means hopeless, position of the finances of India. The hon. Gentleman's admissions were so candid, and his assurances in many respects so satisfactory, that it was evident that hon. Members went away with the feeling that though there had been danger, the Government, being aware of that danger, it was a thing of the past. But this is very far from being the case. I do not propose to go at all into the general question; but having studied very carefully the last India Financial Statement, ordered to be printed on the 2nd May, 1879, and having listened attentively to the debate, I want to call attention to some points which, in the interests of the people of India, as contrasted with the Government, the trading community, and the capitalists of this country, have not been sufficiently considered. First, with regard to productive Public Works, the Indian Government say, in the Financial Statement, paragraph 11, page 5, that—The financial condition of that State is unsound whose yearly Public Revenues, rigidly criticized, are habitually less than its whole yearly Public Expenditure, excepting only that portion which may be confidently trusted to produce a revenue at least sufficient to cover the interest on the excess of Public Debt which results from it.Now, this statement is so sound and clear that it is to be regretted that their subsequent statements seem to show that, as men of business, they are not aware how much more strictly that principle must be applied in future if they are to avoid insolvency; for they go on to treat as productive expenditure that which they themselves say, in paragraph 148, page 125—Cannot be expected within any time that can be foreseen to produce a profit equal to the interest upon it.And anybody who will cast his eye over the Paper circulated this morning—which I regret there has not been more time to consider—will see that among a great many of the undertakings treated as productive, and, therefore, as good assets, there are several which are not worth anything like the amount of capital which has been expended upon them. Now, I venture to think that this mode of account-keeping is just that which has brought the City 1766 of Glasgow Bank to its present position. They, like the Government of India, continued to value at its cost expenditure intended to be productive, but which had not proved so. Of course, I am not advocating a sudden reduction of expenditure, which might be politically dangerous, and very hard on the people of India. But what is absolutely necessary to prevent insolvency, is a much more careful investigation of the probable adequate return for expenditure. The expenditure now proposed of £2,000,000, if added to the Debt of India for works that are not, to use the words of the Government of India, sufficiently productive to cover the interest or the excess of Public Debt which they cause, must ultimately break down the finance of India; and it will be seen, on referring to page 12 of the Paper issued to-day, that the return in 1877–8 on the £18,000,000 expended during the last 10 years on State Railways does not yield quite ¾ per cent towards it; whereas the cost of money to the Government has been stated by them to be 4½ per cent. A small part of the deficiency is, no doubt, due to incomplete undertakings; but it is evident that much of it is due to undertakings which will not, within any reasonable time, be remunerative; and when people point to the satisfactory improvements in the returns from guaranteed railways, it must be borne in mind that in the first instance, of course, English capitalists selected the large main lines, which were likely to be most productive, and that most of those that are left are those that are less promising. The Government of India should furnish us with a careful estimate of the probable return, within a reasonable time, of revenue from those so-called productive works; and such as are not likely to be productive within a reasonable time should no longer be treated as productive expenditure. Again, with respect to a remark made by the hon. Gentleman, that he would be sorry to reduce the expenditure on the Civil Service in India for fear of injuring the quality of the Service, of which he spoke with justifiable pride, I am satisfied, and so, I fear, are most of those who have studied the present position of affairs in this country, that the returns from trade and manufactures, and other occupations, are not likely to be on the same prosperous scale in the next 20 years 1767 that they have been in the last; while, on the other hand, there will be a much larger supply, from the increased facilities for education, the best educated services. Therefore, the Government of India are likely to meet in future much less severe competition for the service of superior educated men of the best description than they have done in the past. A more moderate rate of remuneration and of superannuation will secure for the Government the high-class servants whom they have hitherto secured; and, acting as they are for such a poor population as that of India, they are bound, while giving a fair, not to give a remuneration beyond that which is necessary to secure the services which they require; and I am satisfied that there may be considerable reduction in this respect. There is another point on which I think the Government, acting for so poor a population as that of India, is bound to be very much more strict than it has hitherto been. I mean in dealing with capitalists. Now, it was an unjustifiable thing, for which, I believe, neither this nor the late Government were originally responsible—but I care not who is responsible for it—it was utterly unjustifiable to purchase the Orissa irrigation works, at the cost of the people of India, for £1,000,000, when the undertaking was unsaleable in the market at £600,000, besides giving, if I remember right, £70,000 to the officials of the Company, as what I can hardly characterize as anything but a bribe, for concluding with the Government an operation so disadvantageous to the country. And even in the East India Financial Statement of the 2nd of May, the Government seems to consider that it may be justifiable to give to capitalists, for work actually completed and done with, more than the strict letter of their contract entitles them to receive. When you look at the amount of English capital which is seeking investment, and the readiness—nay, the rashness—with which English capitalists seek investment that is likely to be profitable, it appears to me an improper thing to pay on account of the poor people of India to capitalists who were guaranteed against loss, and who have made very handsome profits, more than they are bound to pay. If it be contended that there is no great readiness on the part of English capitalists 1768 to invest capital in India, it must arise from one of two causes—either that this coddling system is really injuring instead of promoting enterprize in that direction, as, in fact, the system of Government aid has a tendency to do; or the enterprizing English capitalist does not find in these undertakings profitable employment for his capital. In that case, it ought to be a caution to the Government to be careful how they undertake operations which are thus shunned by private enterprize. Now, I know that people will sometimes point to the large increase in the exports from India as an indirect advantage, which must be taken into account; but when these exports are stimulated by undertakings which can only be paid for out of the taxation of the people of India, they are not a benefit to them, but an evil. You are, in fact, doing the very thing that we blame the French Government for doing in the sugar bounties. If you promote the export of grain from India by carrying it to the ports by railways, which do not pay, but would have to be paid for out of taxation levied on the people of India, you certainly may cheapen the price of grain to the consumer in England and France, but it is at the cost of the poorer people of India; and I do not know how far our agricultural friends will, any more than our sugar refiners, like competition in the supply of wheat thus artificially stimulated. There is only one other point which I think has not been sufficiently considered in its effect upon the Indian population. The silver question has been generally treated as if it had only one side to it. People speak of the depreciation of silver solely with the view to its effect upon the Debt of India, contracted to be paid in gold, and upon our trade with India and other countries with silver currency. Now, I am not going to trouble the House with a discussion as to whether it might be wise to introduce a bi-metallic currency. Nor am I prepared to deny that if the Government see their way clearly within a reasonable time to withdraw the sums they require from India at a more advantageous rate of exchange, they might not be wise to postpone the transfer of money from India; but, unless they do see their way clearly to do this, I do say that any tampering with the exchange temporarily to raise the rate, at what 1769 may prove to be the cost of the people of India, would be a most unwise and improper tiling. It must be borne in mind that the working population of India are large debtors of sums to be paid in silver, and that the cheapness of silver must have diminished enormously to them the pressure of the evils which they have recently been suffering under. The ryot in India has to pay the moneylender in silver, and the zemindar in silver for the rent of his land. Had the trade been in its ordinary state, the effect of the depreciation of silver would have been largely to raise the rupee value of the produce of his labour and of his land. Owing to the very bad state of trade, it has not taken this form, but it must have prevented enormously the depreciation of the value of the produce he had to sell, and of the value of his labour; and you have no right, at the risk of its being at his cost, artificially to raise the value of the sums which he has contracted to pay in silver. When gold was discovered in California and Australia, we did not find that the abundance of the metal which formed the basis of the circulation of this country was injurious to us. On the contrary, it greatly stimulated the prosperity of this country; and why should not a similar cause produce a similar effect in India? The Government of India require to be very much on their guard in viewing this question, because, of course, the whole Civil Service of India, and the whole mercantile community, have a decided interest in this matter antagonistic to the interests of the people of India; and it is most difficult, therefore, for the Government to hold the balance even where most of their advisers are deeply interested on one side of the question. The Under Secretary of State for India, at the close of his speech, spoke of the greatness of the task we have undertaken in the government of the millions of India. Not only is it a great task, it is a greater task than has ever been successfully accomplished by any nation which has borne Imperial sway over other countries. The hon. Member is, as we all hope and believe, on the threshold of an eminent career; and I venture to think he could set before himself no nobler undertaking than that of thoroughly mastering and bringing home to the people of this country the enormous responsibilities they have undertaken, and the 1770 enormous difficulties of the task of making out of those millions of poor people of India a nation, not merely of well-fed beings, but of industrious, intelligent, self-reliant men.
§ MR. GOSCHEN
The state of the Indian exchanges and the price of silver play so important a part in the discussions of Indian finance that I feel I need make little apology if I confine my remarks on this occasion exclusively to this one topic. Other parts of the Indian Budget command the very greatest interest, and it is no want of appreciation of other most weighty matters which induces me to speak of the question of exchanges alone to-night. I shall confine myself to this one topic, because it is in itself so wide that it would scarcely leave me at liberty to dilate on other matters. And, in the first place, lot me express my satisfaction that, on this occasion, the question of exchanges has not been discussed simply on the basis of the loss of so many millions sterling, but that the much more important bearing which it has on the population of India has not been lost sight of. I am afraid that heretofore the whole subject has been too much looked upon through European spectacles, and with reference to the difficulty which is so painfully apparent to those who have to receive payments in silver on which they sustained a loss when they convert it into gold. Heretofore, it seems to have been almost forgotten that the internal transactions of India must be considered as much as its external trade.
Now, I purposely made a distinction between "the state of the exchanges" and "the price of silver." They are two separate, though connected, facts. The state of the exchanges may be very unsatisfactory, while the condition of the silver market may have a very different effect upon the condition of India generally. Is it so absolutely clear that the depreciation of silver is a calamity to countries with a silver currency? It has, at all events, never been explained why the flood of silver into India must have such disastrous effects, while the influx of gold into England, after the discovery in Australia, was hailed as a fertilizing stream. Gold was depreciated, but trade was said to be stimulated thereby. Silver is depreciated in India, and why should we there expect a con- 1771 trary effect. Again, let me say that the question must be looked upon from the Indian point of view, and not to so great an extent, as has been usually the ease, from a European stand-point. The hon. Member for Bolton (Mr. J. K. Cross), in his able and most lucid speech, has rendered the greatest service in drawing attention to this duty.
I am not sure whether the House generally has sufficiently observed that we have escaped a very great danger. It will remember the statement which was made by the Under Secretary of State for India when he opened the debate, that proposals had been made by the Indian Government which had been disallowed by the Government at home. The danger which we have escaped is this—It was intended artificially to raise the value of the coined rupee. It must not be forgotten what the currency of India is. Indeed, I have been tempted to ask myself whether it has not become necessary to repeat in another form the famous question of Sir Robert Peel, and say, not "What is a pound?" but "What is a rupee?" A rupee is a coin containing 165 grains of silver and 15 grains of alloy. At the old price of silver, when the porportion between gold and silver was as 15½to 1, these 165 grains of silver were worth about 1s. 8d. Their present worth is about 1. 8d. That is the simple account of the rupee; but it must not be forgotten that in India bars of silver, in unlimited quantities, may be brought to the Mint to be coined, and coin obtained in exchange; and, just as in this country, the currency is co-extensive with the amount of gold which those who have anything to sell are able to obtain in return for their goods, so the currency of India is co-extensive with the power of India for procuring silver by the means of selling goods. It is an unlimited silver currency; and it is on the basis of that silver currency that all contracts have been made in India. If any measure were adopted to close the Mint upon silver, the privilege would be taken away from debtors of paying their debts through the medium of the coinage of silver bars; and it would compel all debtors to apply to those who have coined rupees to sell. Now, the great sellers of rupees are the Indian Government. The Indian Government have £15,000,000 worth of coined rupees 1772 to sell every year. It would certainly be an ingenious plan, if it were proposed that as the Government could not sell coined rupees with advanage under the present system, they had better suspend any fresh coinage of silver altogether. Such a step would raise the value of the coined rupee, it would raise the price of the lowest drafts; it might save the Government from heavy loss. But such a course would, practically, be equivalent to sweeping away, in an arbitrary manner, the supply of silver for circulation in India. Any measure thus designed artificially to raise the value of the rupee would disturb the whole of the internal transactions of India; and, clearly, we must be careful, lest in our attempts to save the Government from financial loss, we do injustice to the population over which they rule.
But other evils are alleged besides the loss to the Government from the sale of their bills; for instance, the violent fluctuations in the exchanges, the instability of the price of silver—elements of uncertainty said to paralyze trade. No doubt, these violent fluctuations have been disastrous to many, and have been a great trial to the whole Indian trade. We have passed through a period which has been viewed by all merchants trading with India with regret and alarm. And I do not wish to minimize these causes for regret, if, on the other hand, I call attention to the fact that this country has continually done a prosperous business with countries subjected to no less violent fluctuation in their exchanges. Look at the trade with the United States when gold was at an immense, but ever-varying premium. Look at the Russian exchanges, utterly without stability; at the Austrian exchanges. Yet England has always done good business with such countries, nevertheless. There is nothing new in disturbances of trade through fluctuations in exchange; and surely we must be exceedingly careful to avoid being tempted by such a difficulty to have recourse to empirical remedies. I am glad to find that empirical remedies have been repudiated in so many quarters of this House. Again, as regards actual loss by the fall in the price of silver. No doubt, there has been a loss for many besides the Government. But it is very important to realize who are the losers. The hon. Member for Bolton has alluded to the various classes; but I 1773 it is worth while to make this very clear. Those likely to lose, in the first instance, are such as receive their income in rupees and have to remit a portion to their families in Europe. Most Indian officials belong to this class; but many persons besides may have to make remittances to Europe out of an income measured in rupees. Then there are the great banks trading with India. Many of them are in this position—they have taken deposits in England and Scotland in gold, or in £1 notes, and have lent the money out in India. They cannot bring silver home without experiencing a serious loss. When events occur, such as the breaking of the City of Glasgow Bank, an event which affected very distinctly the commerce of India, many of the Eastern banks might find it expedient to bring money home from India to strengthen their position. Such remittances could not be managed without considerable loss. Then there are the manufacturers who have exported goods to India. The value of those goods is due in rupees. The value of the silver in the rupee falls, and when exchanged for gold gives a worse price for the goods. Of the loss of the Government I need not speak again. There are the classes who suffer, or have suffered, by the fall of silver, and every credit should be given to the Government for having withstood the pressure of them all—the class of officials, the class of traders to India, the banks, and, above all, their own interests in connection with the sale of their bills. I believe we have escaped a real danger by the Government refusing proposals of which the full scope, I am sure, has never been thought out. To judge of these proposals it was necessary to recall the classes in whose favour they were made; but to judge properly of any remedies, let us be sure that we thoroughly understand the causes of the evils we wish to meet. How far are they temporary or permanent? How far are they natural or dependent on legislation?
Now, we have frequently heard that the excessive production of America has been the real cause for alarm; and I saw it recently stated that, compared with the production in America, the sale of the German silver could not be supposed to have had a material effect. I will examine the extent of these respective causes. I readily believe that the production of silver in America has had a 1774 great effect on the minds of the dealers in silver; but it has been rather an effect on the mind which has been witnessed, than any excessive supplies of the metal itself. What are the figures with regard to these supplies from the United States? It is really startling, after the discoveries of the mines of Nevada, to look at the facts with regard to the amount of silverwhich has actually come to England. From 1871 to 1874, England imported in silver from the United States, £21,730,000, or, on an average, £5,000,000 a-year. From 1875 to 1878 the total net imports have been £8,200,000, or an average of about £2,000,000 a-year. The amounts in the years 1875–6–7–8, were respectively £3,090,000, £2,257,000, £2,315,000, and £532,000. In this last year, which exhibited the lowest amount, the gross imports were £1,615,000; but£l,083,000 was actually sent from the United Kingdom to the United States, leaving a balance imported from the United States of little more than £500,000. The significance of these figures is unquestionable. It is true, on the other hand, that a certain amount of silver went direct from the United States to Japan and China; but, nevertheless, an examination of the documents presented to the House show that the exports of silver from America have been less during the last few years than they were before. On the other hand, I observe, and the fact should not be neglected, that in the first five months of this year there has been an increase, as compared with former years, in the amount coming from the United States; and I particularly wish to state this fact, as I am anxious to avoid producing any bias in the minds of anyone with regard to the future course of the silver market. What I feel bound to do, after all that has been said about the production of the United States, is to call attention to the remarkable figures which I have quoted. Let me go back for one moment to the Committee of which I was Chairman in 1876. We expected that the production of the year 1876–7 would be £9,000,000. It turned out to be £7,000,000; but in the following year it was £9,000,000. Hon. Members have doubtless seen, with regard to the most recent dates, statements in the public papers on the subject of the scale of the production of the Comstock Lode, and those extraordinary mines which in 1876 1775 excited so much attention. It appears that in the present year the produce of these mines is distinctly decreasing; but I have no special information upon this part of the case. What I have wished to bring to the notice of the House is this, that hitherto—though it may not continue to be the case—notwithstanding the large production in the United States, very small supplies have come to these shores. The main part of the produce of the United States silver mines has been used for coinage purposes in the United States themselves; but if production in these mines continues on the scale which we have witnessed hitherto, I should think it very doubtful whether the United States will be able to continue to use all the silver they produce, and, if not, it is clear that exports may re-commence on a large scale.
I now turn to Germany, where the situation has been exceedingly remarkable, and I will place such facts as are in my possession before the House. I wish that more facts were known and accessible to the public. The German Government has been exceedingly reticent. It has been most difficult to extract anything from them; and, to my mind, they have pursued a short-sighted policy in supplying as little information as they possibly could. They have doubtless done so in the vain hope of preventing speculators acting against them; but the result has been constant alarm, much of which might possibly have been avoided if the truth had been told. There has been no reticence on the part of any other Government. At the Conference held in Paris, and in which I took a part, Representatives of nearly all the Governments of Europe were perfectly open, both as regarded information on the position of silver in their countries, and as regarded the policy of their respective Governments. But the German Government refused to be represented, even though they were assured that nothing would be asked from their Representatives beyond a statement of facts, and that in no other way would they be compromised. The absence of full and authentic information with regard to the silver question in the German Empire seems to me a public misfortune.
I will now proceed to state to the House the progress of the demonetization of silver in Germany, and the sale 1776 of their silver, so far as it can be ascertained. The total coinage in Germany before the late reforms was about £90,000,000. It was estimated that possibly one-third of the existing coinage might have vanished—that is to say, £30,000,000—which, deducted from the £90,000,000, would have left a total of £60,000,000 to deal with. An amount of about £20,000,000 was required for re-coinage, leaving £40,000,000 for sale. Of this amount £6,000,000 had been sold at the time when the Committee on the Depreciation of Silver sat in 1876, so that there remained about £34,000,000 which might come upon the market. This, however, was at that time considered quite a maximum estimate. The Committee, after a most careful inquiry and examination of the various estimates submitted to them, stated that those estimates ranged between £8,000,000 and £30,000,000. But what has been the result? Since that date the Gorman Government have actually sold £26,000,000, which, added to the £6,000,000 sold before, makes a total of £32,000,000 already sold by the German Government. These are stupendous figures as compared with the £2,000,000 per annum which we have received latterly from the United States. But the more interesting question is, what has the German Government still got to sell? On the estimate that after provision for re-coinage had been made, there remained £40,000,000 to sell, as £32,000,000 have been already sold, there would only remain £8,000,000. But what is stated now? Reference has already been made by the hon. Member for Bolton to the letter from Lord Odo Russell, in which it is said that the German Government has £10,000,000 for sale, and that the amount is likely to be increased by the one-thaler pieces not yet withdrawn. The hon. Member for Bolton is unable to understand this figure, as, considering the very large amount of one-thaler pieces still in circulation, and considering the official documents presented to the German Parliament at the beginning of this year, it is difficult to make this statement of Lord Odo Russell's informnnt square with the other facts. Now, those facts appear to be these. An official publication submitted to the Gorman Parliament stated that about 7,000,000 lbs., withdrawn from circulation, had been 1777 sold or prepared for sale, and that there remained about 380,000 lbs., a sum which I presume would be worth about £1,700,000. The same document estimated that there might be in circulation, after making the deductions for coins which had vanished in the course of time, about 117,000,000 thalers, a sum equivalent to about £17,500,000. This memorandum would, therefore, show that at the beginning of the year there was in stock, ready for sale, silver to the amount of about £1,700,000, and thaler pieces which might be called in, but which were still circulating, to the amount of £17,500,000. An examination of the published figures had led it to be generally supposed that the amount of silver which would probably come upon the market would not be more than from £12,000,000 to £14,000,000. But I can now state that I have received a letter from a high authority in Berlin, informing me that the Government have £10,000,000 in ingots in their hands for sale, and this without making any deduction in the estimate of the thalers still in circulation. This confirms the statement of Lord Odo Russell; so that, on the one hand, we have the official documents showing that the Government had about £1,700,000 for sale at the beginning of the year; and, on the other hand, the statement that they have £10,000,000 in ingots for sale. I can only see one possible explanation of the apparent discrepancy. I have been informed that of the large amount of thaler pieces in circulation, 60,000,000 are in the hands of the Imperial Bank. This is equal to a sum of £9,000,000; and this, with about £1,700,000 in ingots—since reduced by some sales—which the Government admitted to have in their hands at the beginning of the year, would give about £10,000,000 which they could sell at any time they pleased. But in this case, of course, the 60,000,000 thalers—equal to £9,000,000—would be deducted from the thaler pieces in circulation. However, I only put this as a speculative explanation, and I hope Her Majesty's Government may be able to clear up the question.
One thing is perfectly certain—there is a considerable amount of silver still in Germany, and the question is, what are the German Government going to do? I have received a very distinct and categorical assurance from a high authority 1778 that the German Government do not intend to make any further sales of silver. One reason probably is that they have; pitched at too low a figure the requirements of the German nation with regard to the small coinage. They have fixed it at 10s. per head, and, I believe, in doing so, they have been influenced by the amount of shillings per head which experience has shown to be necessary in England. But it does not follow that if this amount is sufficient in one country, it is, therefore, sufficient in another. The differences in the social habits of various countries produce differences in the amount of subsidiary coin required. For instance, in this country, the use of cheques limits the requirements of small coin; and, again, the system of paying tradesmen's books every week or every month economizes the use of silver to a great degree, as compared with the German system of marketing for cash almost every day. It is, therefore, perfectly intelligible that the 10s. per head may not be an adequate sum for German requirements. I believe I may add that I shall be correct in saying that the Germans do not think that they have made a particularly good bargain by the transfer of their old gold currency into the new currency, and that there has been possibly some hesitation in Berlin as to whether, all other silver coins having been called in, they should further call in and demonetize the old one-thaler piece which is still in circulation. Certainly, it is possible that we may be approaching the end of the crisis in the silver market which has been produced by Germany.
There remains one serious matter to be considered, to which allusion has already been made, and that is the question of the power of India to absorb silver. This is the only point with respect to which I find myself unable to agree with my hon. Friend the Member for Bolton, who seemed to doubt the capacity of India for such absorption. For what are the facts? What does the House suppose has been the amount of silver actually imported into India since the Report of the Committee of 1876 appeared? In the year 1876–7 the net import of silver into India was £7,200,000; in 1877–8, £14,700,000; and in 1878–9, £3,970,000; or more than £25,000,000 sterling in three years. Going back to 1870–1, I find that the 1779 net import was only £940,000; in 1871–2, £6,500,000; in 1872–3, £705,000; in 1873–4, £2,450,000; in 1874–5, £4,600,000; in 1875–6, £1,600,000. It will be seen, then, that in the three years previous to the last three years, the total imports of silver into India were only £8,500,000; while, during the last three years, they amounted to £25,000,000. Now, what may appear astonishing at first sight, but not at second sight, and what may interest those who are interested in statistical curiosities, is this—that £26,000,000 worth of silver was precisely the amount which has been sold by the German Government during the period in which India has taken the £25,000,000; so that India has been able to absorb, or compelled to absorb, almost the whole of the amount which has been sold by Germany. It is possible, of course, that a large amount of silver may have been remitted from England to India, and may still be hold there on English account; but, on the other hand, it is quite as possible that there has been some withdrawal of capital from India to this country, in consequence of the panic created by the fall in exchanges. I think I ought to add that the gross amount of silver imported into India during the last three years has been £30,000,000; and nearly the whole of the £5,000,000, the difference between that sum and the £25,000,000 which I named before, has been distributed over China, Japan, and other silver-using countries, a portion of it having been sent to Ceylon. It has, in fact, been taken by the East.
Now, I wish to know whether, looking at the question as it ought to be looked at—from a broad point of view—the House will think it necessary to stop the operation of natural causes by arresting their action in favour of dangerous remedies? The course of nature has been carrying the silver of Germany into India and the East. Let me call the attention of the House to one circumstance. In 1876, we—the Committee who sat on the depreciation of silver—examined most minutely into the whole facts of the case. The information which we received with regard to facts has, in many instances, turned out misleading and inaccurate, while the deductions which we made from the natural laws of political economy have proved 1780 in all respects to be correct. The late Mr. Bagehot, that eminent economist, whose loss we all deplore as a calamity to the country, placed all the circumstances of the case before the Committee with prophetic instinct, or rather, I should say, not with instinct, but with science; and he explained how it was a mathematical certainty that Asia must continue to absorb silver to an unlimited extent. The Committee recognized that, owing to the immense increase in the Council drafts, India would have to take either less silver, or less commodities. They also saw that only £1,500,000 had been sent from England to India in the year previous to that in which they were appointed. Nevertheless, it seemed to them a matter capable of absolute demonstration that this was only a temporary circumstance, and that the natural correction to the fall of silver was its distribution over those vast areas where its price could but slowly subside. The result has proved the entire correctness of the forecast.
I have shown how silver has poured into India, and has stayed there. There may be, at this moment, a temporary cessation of the demand—but that is not to the point. The question ought not to be looked at from month to month; but as there has been a flow of silver into India, so silver will continue to flow. As long as the Mints in India are left open, every bar of silver in London represents, if I may use the expression, so many potential rupees. So long as a bar of silver in India will purchase any commodities, so long as silver remains a legal tender, and so long as the Mints are open to silver, the market must be sustained as long as India and the East retain any purchasing power whatever. I could easily illustrate to the House how India could be compelled to take silver; and it is, too, an absolutely incontrovertible proposition that the low price of silver must stimulate her exports, while it discourages her imports. I can give the simplest possible illustration of the way in which exports are stimulated. Suppose a man to have £2, with which he desires to buy a quarter of wheat. Before the fall in silver, those £2 might have been turned into about 20 rupees for purchase of wheat at Bombay, and into $5 for purchase in the United States. With those $5, or with those rupees, he would, subject to differences of quality, or of 1781 cost of transport, have been able to buy, let us say a quarter of wheat, either in New York or in Bombay. But the price of silver has fallen, and the £2 will now realize 25 rupees instead of 20. It is assumed that prices in India have not risen. Whether that proposition is tenable, I will not at the moment discuss; but this assumption lies at the root of all the remedies that have been proposed. Well, if the price of wheat has not risen at Bombay, the buyer would still be able to buy the quarter of wheat as before with his 20 rupees, as he would still be able to buy a quarter of wheat for his $5 in the United States; but his £2 have given him 25 rupees; consequently, he has 5 rupees over, if he buys in India, as compared with buying in the United States—a state of things which, under the laws of competition, must at once correct itself. A competitor would be content with a profit of 4 rupees, and would give 21 rupees for the quarter of wheat. Another competitor would raise his bid to 22 rupees, and still be better off than buying elsewhere. These competitors will either give more gold for silver—that is to say, silver would rise—or else they would give more rupees for the wheat—that is to say, prices would rise in India—and exporters and producers gain. This is one illustration of the natural laws which, in my judgment, will ultimately supply a remedy for the present situation.
But artificial and immediate remedies are suggested, which would, in fact, counteract and absolutely neutralize the natural remedies. Some persons, frightened at the absence of a temporary demand for silver, proposed to introduce a gold currency in its place. Nothing could be a greater mistake. Look at the enormous silver currency of India, and consider what would become of it. It is said that a portion of the silver would have to be sold; but who is to buy it? Those who recommend this plan continually forget the difficulty of finding a buyer. If, after the steps which some nations have already taken in Europe to introduce gold instead of silver into their currencies, India were to be added to the number of countries who were sellers, instead of purchasers, of silver, what country could possibly be expected to buy the surplus stock thus thrown upon the market? It is clear there would be no buyers for such vast amounts. 1782 But, again, what does the introduction of a gold currency into India imply? It means that gold, which, it has been said, has now been appreciated in value in Europe, is to be still further appreciated by being introduced into a country where the great bulk of the population do not wish to use it at all. Of all the schemes which have been suggested, this seems to me to be the one of which it is most difficult to follow the reasoning. To send gold to India just at the time when it is almost inconveniently appreciated in Europe, is to expose India to the evils of an appreciated currency in order to rescue her from the misfortunes of depreciation. The one evil might prove to be greater than the other. I object, then, to any plan that would shut the door to silver, by substituting a gold currency. In my view, the rectification of the market ought to be brought about by the natural flow of silver over its natural area, and that area is the East.
But consider a further argument. I believe that it is for the interest of commerce generally, not only in India, but in Europe, that the great aggregate of the world's commercial transactions should be based upon silver and gold together, rather than that it should rest upon gold alone. Monometallists make a great mistake when they endeavour to convert all nations to the use of gold only. They allow the argument of uniformity to outweigh the argument that these variations are more likely to occur upon the small quantity of gold than upon the larger aggregate quantity of gold and silver together. Look at the historical relations of the two metals from the earliest times. I hold it to be a wrong policy to attempt to dethrone silver where silver still reigns supreme. But let me not be misunderstood. I am in favour of gold and silver being left to continue to perform the aggregate work of currency together; but it is a perfectly different thing to say, as the bimetallists say, that those countries which have a gold currency now ought to supply themselves with a silver currency as well.
But here is another difficulty as regards the introduction of a gold currency into India. At what proportion ought you to start? Is the new currency to be introduced into India at the old rate of 1s. 10½d., or at the present rate of 1s. 8d? 1783 The difference is enormous. The one alternative would entail a vast amount of injury in the case of contracts, and be ruinous to debtors; the other would involve enormous loss to the Treasury. For my part, I urge the Government to do nothing until they are quite certain that the abnormal and temporary causes have been exhausted and have disappeared, and they have only natural causes to deal with.
I have heard of other ingenious combinations, which aim neither at maintaining a silver currency nor at establishing a gold currency, at least for the present; but which propose to put into the hands of the Government powers by which, from time to time, they would regulate the exchanges by limiting the currency. On behalf of mercantile interests, I entirely demur to placing such a power in the hands of Lord Lytton, or Sir John Strachey, or any other Indian Viceroy or Financial Secretary. I prefer the vagaries of the precious metals to the vagaries of Legislative Councils. Or, is silver, as some suppose, to be only a "limited legal tender in India?" Remember the ignorant masses of India. Let the House call to mind how, in the case of Scotland, it would create almost a revolution, if we were to attempt to abolish the £1 note. Populations cling with the greatest tenacity to the currency to which they have been accustomed—and can we mean to try an immense experiment of this kind upon the Native population of India? Fancy introducing into India a "limited legal tender!" It might, indeed, be oven difficult to translate the phrase into Hindustani—but what suspicion and distrust might such an arrangement not produce? The labourer would receive his wages in silver; and, when he took his coins to make payment of rent or of taxes, he would be told that they could not be received, as they were only "limited legal tender." To try such an experiment with an uncivilized population would surely be as absurd as it would be dangerous.
If I am asked myself what I would do under the circumstances, I would distinctly reply, in the first instance, that I would leave natural causes alone. I would leave them to work out their own effect to the full; and, when the temporary and abnormal causes were exhausted, if I then saw that natural causes still left the 1784 situation such as to create embarrassment in the Budgets of India, owing to the fall in the value of the coin in which taxes were paid, coupled with the obligation to make large payments in gold, I should then consider it to be the duty of the Indian Government to look thoroughly into their receipts and expenditure, to revise the system, and to adjust it to the altered price of the rupee—for a new price there would certainly be. The final depreciation of silver must mean a rise in the price of commodities which that silver is to buy. Let the House remember the illustration of the hon. Member for Bolton (Mr. J. K. Cross) as regards the opium sales. Let me give another illustration. The Home charges include interest for the guaranteed railways to the amount of about £4,500,000. If silver settles down at a price showing a great depreciation, and a general rise in prices, then it would be perfectly just to raise the tariffs of the railways in proportion to the increase in price of other commodities; and, by such a revision, the Government would gain in one way what they lost by the payment of the interest in gold. I give this merely as an illustration of the mode in which expenditure would have to be revised. But, however this may be, whatever financial measures it may be necessary to take with a view to establishing a financial equilibrium, I deprecate measures which would tamper with the currency of India, which would tend still further to depreciate silver, and to close the avenues to its use, and that at a crisis when we should rather see how we could further open the door to silver in the East, where, from the remotest times, it has always been required; and I deprecate also, in the strongest manner, measures which would leave the management of the exchanges in the hands of any Government. I am glad to congratulate Her Majesty's Ministers for having had the firmness to resist the proposals of the Indian Government on the subject of the currency—proposals which ought never to have been made.
, as a Member of the Departmental Committee which had sat to consider the proposal of the Government of India with respect to the currency, wished to say a few words on that subject. It was clear, then, in the first place, that all the schemes which had 1785 been proposed as remedies for the evils which had been referred to, and especially that of the right hon. Gentleman the Member for the University of London (Mr. Lowe), were based on an artificial, instead of a natural currency in India. They attempted to establish a currency whose value should depend, not on natural causes, but on the action of the Government; and they ran counter, therefore, to the opinion of all the authorities on the question who were of the least weight. It was only on grounds of the utmost gravity that the principle of a natural currency should be departed from, and then only when it was conclusively shown that the remedy would completely cure the evil sought to be removed. Now, what was this evil? The right hon. Gentleman the Member for the City of London bad said that it consisted in extracting from an impoverished population an extra £3,000,000—the £3,000,000, namely, which were required to make up the difference between the number of rupees required to pay the Home charges when the rupee was at 2s., and the number required when the rupee was at 1s. 7d. If it was true that the Indian taxpayer would, in the long run, have to pay this additional charge, no doubt, any scheme which, in the long run, promised to relieve him of it would deserve respectful consideration. But it was a mistake to suppose that any fall in the value of the rupee could have such an effect. The burden which taxation in any country threw on the taxpayer might be estimated—could, indeed, only be estimated—by the proportion of the produce of his toil which he had to hand over to the Government. The fact that more rupees were required (owing to the fall in silver) to pay the gold debt, did not in the least show that more of such produce was required to pay that debt, and did not consequently show that the Indian taxpayer would have to undergo more sacrifices in order to meet his liabilities. It was true that he would have to pay more rupees; but the very circumstances which produced this state of things would provide him with more rupees wherewith to pay. He maintained that as long as the products of India retained their existing ratio in relation to gold, it was impossible that the taxpayers of India could suffer by a depreciation in the value of the silver coinage. On the con- 1786 trary, he maintained that the fall in the value of silver would lighten, instead of increasing, the burdens of the taxpayer of India, because India had a silver debt; and while the loss on the gold debt would in the long run be only nominal, the gain on the silver debt would be real and substantial. He would not, however, underrate the great difficulties which the present state of things threw on the Government of India. Those difficulties were extremely grave, but they were only administrative difficulties. They embarrassed the Indian Government, because they compelled it to alter the incidence of taxation, and to re-distribute its taxes. Moreover, a great amount of uncertainty was thrown into all anticipations of Revenue, and it was impossible to frame a Budget that could be depended on. He was not surprised, therefore, that every Indian financier should grasp at any remedy for such a state of things. But every historical example of a currency artificially managed, and in the hands of a Government, showed that a currency of this kind was subject to fluctuations of an extremely violent character. If, then, the object of the Indian Government was to obtain certainty in their calculations, that object would not be attained by adopting a currency depending on the caprice of men rather than on natural causes. Considering, therefore, that the evils to be remedied were by no moans of the serious kind sometimes imagined, and also that such evils as existed would probably not be remedied by any interference with the currency, he thought that Her Majesty's Government had done wisely in rejecting any scheme of the kind, whether it was that proposed by the Indian Government, or that proposed by the right hon. Member for the University of London. Turning now from the question of the exchanges to the speech of the right hon. Gentleman the Member for Greenwich (Mr. Gladstone), he observed that though this was full of gloomy anticipations, yet that the only part of it in which he understood the right hon. Gentleman to have attacked the financial policy of the Government was that which related to the cotton duties. He had listened to the arguments of the right hon. Gentleman on that point with extreme surprise. The right hon. Gentleman indignantly asked "What sort of country it was 1787 which they had selected for their economic experiments?" and seemed to think that the poverty of India was a sufficient reason for leaving her without Free Trade. Then the right hon. Gentleman invited them to compare that with their conduct towards Canada, which, as he seemed to imply, we permitted to settle her own fiscal system, because we were afraid to meddle with her. Those were extraordinary remarks to come from a Free Trader like his right hon. Friend. They seemed entirely to misapprehend the nature of the Free Trade argument. When the right hon. Gentleman said India was so poor that we ought not to force her to adopt Free Trade, one might think that, in his opinion. Free Trade was a costly luxury. And when he said that we allowed our Colonies to adopt their own system and compelled India to adopt ours, one might imagine that Free Trade was an economic theory devised for the benefit of Great Britain, and which we propagated by force wherever we thought we might do so with impunity. Such arguments seemed to him to miss the whole point of the Free Trade doctrine. What was the essence of that doctrine, and why was it absolutely opposed to the imposition of differential duties? For this reason—that the result of such duties was that the unfortunate consumer had to pay a great deal more out of his own pocket than came into the Treasury from the tax on the article he bought, the difference going into the pocket of the manufacturer who was protected. But the poorer the country was the less it could afford so to subsidize the producer, and the more important was it to give it the boon of Free Trade. It was only a rich country that could afford to be Protectionist.
§ MR. E. STANHOPE
said, he had a few observations which, with the permission of the House, he desired to make before the debate came to a conclusion, especially as during the two former nights of the discussion certain questions had been addressed to him, and several matters of a controversial character had been referred to in the course of the evening by his right hon. Friend the Member for Greenwich (Mr. Gladstone). His right hon. Friend had indulged in very gloomy anticipations as to the future of India, and, among other things, had pointed to the case of the 1788 Bombay riots. He felt it his duty to state that the latest information which the Government had received upon this subject was, he was happy to say, that these disturbances had in them nothing whatever of a political character; and the opinion of those best qualified to judge was that there was nothing very serious about them to which it was necessary to attach importance. His right hon. Friend the Member for Greenwich seemed to think that India had within the last few years made a very much smaller improvement in its social condition than we had a right to expect, and, at the same time, he appeared to minimize the advance which had actually taken place. With regard to that, he could only say that trustworthy Civil servants who had spent the last 25 or 30 years in India, and had lately returned, were of opinion that there was nothing more remarkable than the changes which had taken place in that country during the last quarter of a century. There had, as they all knew, been an advance in education, and the material prosperity of the people, which although retarded, as it undoubtedly had been, by Famines, had in more recent times considerably advanced. His right hon. Friend seemed to think that since Her Majesty the Queen had been proclaimed Empress of India a very different condition of things had been brought about, and he suggested that not only the financial condition, but the financial legislation of India had gone to the bad. With the permission of the House, he would touch upon two or three points to which reference had been made. In the first place, the right hon. Gentleman had condemned, in no measured terms, the War in Afghanistan. Well, the House and the country had decided that question; and by the brilliant success of the British arms we had obtained not only a strong Frontier on the North-West of India, but, as the Government believed, the friendship of the Ruler of Afghanistan. His right hon. Friend had dwelt, also, upon the remission of the cotton duties, and appeared entirely to disapprove the action of the Government with reference to those duties; but he (Mr. E. Stanhope) had noticed that when a Motion upon this subject was brought forward by the hon. Member for Blackburn (Mr. Briggs) neither he nor any other right hon. Gentleman were in their 1789 places, and the House only now had it in on the authority of the right hon. Gentleman that he resolutely opposed the policy of Her Majesty's Government. He had asked why they had thought it necessary to remit any portion of the import duties in preference to the export duties? The reason was simple; the House of Commons had declared by a unanimous Vote that the remission should be first made in the cotton duties. Another conclusive reason was, that if they had to deal with the export duty on rice they would have had to supply the loss by making a provision to the extent of nearly £500,000; but by extending the exemption to a certain portion of the cotton goods imported into India, it was found that they could give specific relief to that portion of the trade which was seriously hampered by protective duties on imports by sacrificing £150,000 a-year. Again, his right hon. Friend appeared to think that during the time in which Lord Lytton had been in India, grave events had happened which placed the financial system in India in a worse state. Now, as far as he was able to judge, there was very little to support any such contention, although his right hon. Friend had managed to drag in every conceivable topic—such as the legislation with respect to arms and the Vernacular Press, and other matters of prejudice against the Government of India. The fact was that Lord Lytton and the Government of India had had to deal with a most exceptional state of things, for instance, with the terrible loss by exchange. They had also been obliged to contend with Famines; but, in spite of all this, what had they achieved? They had advanced in a very material degree the policy of decentralization happily commenced by Lord Mayo, which everybody would admit to be of the greatest possible advantage to India; they had equalized the tax on salt which previous financiers had desired to accomplish; and they had introduced enormous reforms into the import and export tariff of the country. That was a catalogue of services which would one day be fully recognized, but which his right hon. Friend did not think it worth while to notice in the view which he had taken of the financial situation. But he (Mr. E. Stanhope) believed that neither the House nor the country would desire to listen to any recriminations, and that they would look at the substantial propositions now 1790 made by the Government, and consider them upon their merits. It had been a source of satisfaction that the policy of the Government had met with the general approval of the House of Commons. They would, no doubt, have very great difficulties with which to contend in carrying out a policy of reduction of Expenditure; but to that reduction that House as well as the Government were pledged; and when Lord Lytton entered upon that difficult task, he would have the gratification of feeling that he had the support not only of Her Majesty's Government at home but of the House of Commons, in the measures which he might introduce. At the same time, it was perfectly well known that everybody was ready to support economy in the abstract; but in matters of detail there was always a great difference of opinion. The right hon. Gentleman seemed to suggest that it was necessary to effect a reduction of annual expenditure to the extent of £4,000,000, and based this view of the case solely upon an opinion expressed by the hon. Member for the Elgin Burghs (Mr. Grant Duff) who, however, if he remembered rightly, had not put this forward as a thing which ought to be done, but as a thing which might possibly be done, because a considerable reduction was made some years ago. The policy which the Government had adopted was simply this—they would endeavour in every financial year to secure a bonâ fide surplus of £2,000,000 sterling, which, if it could be secured year by year, would, as the Government believed, place the finances of India upon a thoroughly sound basis. This was a proposition which had never been controverted, and, relying upon it, he asserted that the reduction indispensably necessary to secure the object in view was far less than that recommended by the right hon. Gentleman. Coming to the item of Public Works, the Government had been told that they were reducing the expenditure in a sort of panic; but nothing could be further from the real facts of the case. The policy of the Government was to lay down for their Public Works expenditure as definite a rule as possible; and they desired to fix the limit of Public Works expenditure at a sum which, in ordinary years, could be borrowed without any extraordinary disturbance of the money market. The 1791 hon. Member for Bolton (Mr. J. K. Cross), in his excellent speech, had objected to a reduction of expenditure unless there was a reduction of the Staff also. Undoubtedly, the latter would have to be reduced; that was an inevitable necessity. And, again, it was also unavoidable that a certain number of labourers in India should be thrown out of employment. They did not propose to make the whole reduction at once; but it would be made by the Government of India as opportunity offered. If the House should approve that policy, then in the Budget Statement of next year the whole amount to be taken for the capital expenditure on Public Works would be limited to £2,500,000. There was another point to which he must allude. It had been suggested that the danger of any such reduction as was now proposed was that there might be a disposition to stop necessary repairs; but, in his opinion, there could be no worse economy than such a proceeding. They must spend as much money as was necessary to keep the works which had been already constructed in proper repair; and as it was their desire to show a good balance-sheet, with regard to the works in question, they had the strongest motive for so doing. He next came to the Army, and would remind the House that the effect of the re-organization of the Army, effected by the Government of the right hon. Gentleman (Mr. Gladstone), was to throw increased charges on India. The Duke of Argyll, to his credit, protested against those increased charges being thrown on India, and, so far as he was concerned, did his best to prevent it; but he had no power in the matter, and the fact was, as had been pointed out on several occasions, that extra charges for the Army had been thrown upon India without the Indian authorities being consulted. The time, in his opinion, had arrived when some of those questions must be re-considered. As to the reduction of Army expenditure, the hon. Member for Hackney (Mr. Fawcett) had asked him the other clay whether he could give some further account of what it was proposed to do; but he was sorry to say that he was not able to give him any full details on the subject. The hon. Member, however, was aware that this question, as well as that of the re-organization of the Indian Army, was about to be dealt with by a 1792 Commission which would be appointed for that purpose. To that Commission important and definite instructions would be given; but with regard to its composition, he was unable at that moment to give any exact information. Some of the Members to be appointed were, however, known; and he need not say that a certain telegram, which had been forwarded from India, as to the composition of the Commission, was entirely without authority. But he trusted before long to give the House further information with regard to the subject, and to state fully what the construction of the Commission would be. Then the right hon. Gentleman said that he hoped the Government did not look for a small result. As he had stated on a previous occasion, they were led to believe by the Government of India that a very substantial result could be arrived at with regard to the Army expenditure, a result which, he trusted, would be fully realized at no distant date. Again, it was asked what was to be the effect of the changes which had taken place on the North-West Frontier of India upon the Army expenditure? Upon that subject he did not wish to give the House any statement of his own at the present time. Undoubtedly, expenses would be incurred; but, on the other hand, that expenditure would, to a great extent, be compensated by the increased security to the North-West Frontier. He admitted at once, however, that some works would be necessary; for instance, the construction of railways on the Frontier of Afghanistan, some extension of which, at least in that direction, would be inevitable, and he felt sure the House would agree that if they could push on those very important works it would conduce very much to the security of our Frontier. With regard to the "cutting down" in the Civil Service, suggested by his right hon. Friend, the subject of reduction in this Department deserved grave consideration; but to use vague language about reduction appeared to him to be utterly useless, and calculated to inspire distrust amongst those who were likely to enter our service. If, however, the Government thought it just that a reduction should be made in the salaries or pensions, they would come down to the House with a specific proposition to that effect. Having indicated 1793 the other day their intended policy of employing a greater number of Natives than heretofore in the Civil Service of India, he was glad to assure the House that, in his opinion, when the actual proposal was seen, it would he found of great importance, and to offer to Natives a larger sphere of usefulness in the service of the country. Upon that subject Correspondence had been passing between the Secretary of State for India and the Indian Government, which would be laid upon the Table of the House; but, perhaps, he might be allowed to reserve his opinion whether they would be presented at the present stage, or their presentation deferred until the Correspondence was complete. His right hon. Friend had urged upon Her Majesty's Government to recommend that, as far as possible, Indian expenditure should be localized in India; and upon this point he might say that they had always instructed the Government of India to make as many contracts in India as possible; if these contracts could be made and paid for in silver, so much the better for them. The right hon. Gentleman had gone on to urge that some greater financial control, such as that which existed by the Treasury in England, was very desirable; but it would appear that, in so doing, he underrated the existing Financial Department in Calcutta, which subjected ail schemes to the most rigid investigation, and in consequence of which it would probably not be far from the truth to say that it was as much disliked as the Treasury in this country. As for the scheme of financial control which the right hon. Gentleman had suggested, it was too grave a matter for him to express any opinion upon it off-hand; and he would, therefore, pass on to other points. First, there had boon a great difference of opinion concerning the loss by exchange; and it was a fact that, while, on the one hand, the right hon. Gentleman the Member for Greenwich (Mr. Gladstone) had said that this fall in silver was not the main difficulty to be contended with, the right hon. Gentleman the Member for the University of London (Mr. Lowe) thought that immediate steps should be taken to remedy it. The hon. Member for Bolton (Mr. J. K. Cross) had said that the Government exaggerated their loss by exchange, inasmuch as they took no ac- 1794 counts of the gain they experienced in consequence of the increased amount received for opium. He was scarcely prepared for the point raised by the hon. Member, but the fact, if it were true, ought to appear in the opium Returns; but he found that while they used to get £133, £138, and £139 per chest for their opium, since the silver difficulty they had been receiving for the years 1875–6, £125; for 1876–7, £128; for 1877–8, £132; and for the year 1878–9, which was an incomplete year, £143 per chest. With the last single exception, which would not, when the Returns were complete, prove to be one, the price of opium per chest was lower since the fall in silver than it was before. The reason for the gain upon opium was that the sales had increased from 45,000 to 55,000 chests a-year. Passing from that point, the hon. Member for Bolton had urged upon the Government that they ought to have given a good forecast of what was likely to happen with respect to the demand for silver.
§ MR. E. STANHOPE
said, he had certainly understood the hon. Member in a different sense; but with regard to a forecast of the future, such a feat was certainly beyond the limited powers which he possessed, and the speech of the right hon. Gentleman the Member for the City of London showed how difficult it would be to attempt to make one. One event alone, the suspension of the sale of silver on the part of Germany, had entirely changed the aspect of affairs. It remained for him to thank the right hon. Gentleman the Member for the City of London, with the greater part of whose speech he cordially agreed, especially for his sympathetic expressions with regard to the Indian Government in the present conditions of affairs; he had pointed out great difficulties, but had made the fullest allowance for them, and had, at the same time, attempted to remedy them. It was a gratification to know that in the anxious and important crisis of affairs in India, the decision of the Government to make no change in the currency was supported by the opinion of that House. It appeared to him that the increase of the Home charges was the greatest difficulty in their financial arrangements; and he 1795 could not help thinking that there was some inconsistency in that part of the speech of the hon. Member for Bolton where he urged upon the Government, first, the propriety of reducing their Home charges, and then the necessity of borrowing, not in India, but in England. He (Mr. E. Stanhope) quite admitted that, financially speaking, a great deal might be said on both sides of this question. It might be right to borrow in England, and it might be right to borrow in India, upon purely financial grounds; but he thought the political grounds were conclusively on the side of borrowing in India at the present period; and if they were to reduce the Home charges, they must, undoubtedly, endeavour to reduce their borrowing in England. Hon. Members had listened to a very interesting and exhaustive debate, extending over three nights; and he took the opportunity of reminding the House that the Government had already given up two nights for the purpose at an early period of the Session, for which reason, among others, he trusted that there might be no further delay before going into Committee.
§ Question put, and agreed to.
§ ACCOUNTS considered in Committee.
§ (In the Committee.)
§ MR. FAWCETT
said, that after the long debate which they had had that evening, he did not desire to offer any opposition to the passing of these formal Resolutions; but he did hope that before the Budget was agreed to the Under Secretary of State for India would give them more specific information than had yet been given. Throughout all the speeches which they had had that evening, and especially in the speech of the right hon. Gentleman the Member for Greenwich (Mr. Gladstone), which had produced so great an effect, the cardinal point which had been dwelt upon was the reduction of expenditure upon the Army. At present, however, they were without specific information as to what course the Government was going to take upon that point. It seemed to him that the utmost economy in Public Expenditure in India was desirable, and he took that opportunity of giving the Under Secretary of State fair warning that the greatest possible dissatisfaction would be felt, and that there would be the greatest and most serious re- 1796 action, if it was found that the only economy practised had been in Public Works, and that nothing was done to reduce the Army expenditure. He, for one, held the opinion, which, he thought, was shared by everyone who had devoted any attention to Indian finance, that it was absolutely impossible to place the finances of India in a satisfactory condition unless the present expenditure of the Army was reduced by at least £3,000,000 a-year. And a reduction like that could not be expected unless some fundamental change were made. They ought, too, to be told by the Under Secretary of State for India that there was no truth in the telegram that had appeared in some of the journals purporting to come from India, to the effect that this Commission, upon the appointment of which they had been asked to rest content, was going to be a Commission consisting of three Commanders-in-Chief in India and one civilian. One of the first reflections that would occur to anyone looking at India was that the very first step in the reduction of Military expenditure should be the abolition of the three separate commands in Calcutta, Madras, and Bombay. Were that not done, it would be an illustration of the old adage, "a penny wise and a pound foolish." Yet it had been stated, in a telegram from a person in India, who was generally found to be in close communication with the Government, that it had been already suggested by the Viceroy that the Commanders-in-Chief in Madras and Bombay should be upon this Commission. It would be found that the recommendations of a Committee framed in that manner would extend to economy in everything save Army expenditure. There was another point connected with this of cardinal importance, and upon which that House had a right to expect some information—namely, as to whether this Commission which was going to be appointed would be charged to inquire into changes connected with Army organization, or only with the expenditure connected with the Army in India. He asked the Under Secretary of State to give them some information upon that point; for he felt that if there were to be a sufficient reduction and saving made in the Expenditure of India, it must be done by reducing the present excessive Army expenditure. For these reasons, 1797 he pressed for some definite information upon the points he had named.
§ MR. E. STANHOPE
said, that he would give all the information that he had it in his power to do at present. But it was not in his power to give any definite idea of what the Commission to he appointed would do except that it would deal generally with, the organization and expenditure of the Army in India. The telegram to which the hon. Member for Hackney had alluded, that the Commission would consist of the three Commanders-in-Chief, was not true. The statement that the Home Government would limit the reduction in any way was also not true. The Commission would enter into all questions connected with the organization of the Army. There were, however, many questions affecting it which the Commission in India could not properly have brought before it, and they would be reserved for inquiry in this country. So far as be was aware, all questions affecting the organization of the Army in India, which would properly fall within their cognizance, would he brought before that Commission.
§ SIR GEORGE CAMPBELL
observed, that it had been stated upon the evidence of two civilians, who had been 25 years in India, that a very great improvement had been effected in that country both in the administration and the material condition of the people. He considered that to say that the material condition of the people had been improved was begging the whole question, No doubt there had been very great changes effected in the face of the country in respect of railways and public works, and many other matters. As regarded the physical conditions, in many ways there had been very great improvement. But in respect to the material condition of the people, he must say that, having passed the greatest part of the last 35 years in India, he still considered it quite matter of doubt as to whether any improvement had taken place. They had seen it asserted that the people of India, so far from having been improved in their material condition, had been vastly impoverished. That statement he believed to be wholly exaggerated; but he thought there had not been anything like such a palpable and evident improvement in the material condition of the people as his hon. Friend the Under 1798 Secretary of State for India would have them believe. It had been put to them by the hon. Gentleman that this improvement had been clear and undoubted; and he only said these few words by way of caution, and to express his opinion that there was really doubt whether any such improvement in the material condition of the people of India had taken place as was stated. This matter seemed to him to be one which should be carefully considered before they came to a hasty conclusion.
§ MR. ONSLOW
would remind the Committee that, a few years ago, evidence was given by the Governors and Lieutenant Governors of India upon this question of the material condition of India. One and all of those officers stated it as their opinion that the material condition of the people of India had vastly improved under our administration. They also said that great changes had been made in the direction of material progress in India, and that ever since they had been in India the improvement had been going on. He merely wished, on this occasion, to urge upon the Under Secretary of State for India the vast importance of this Commission which was to be appointed. Was it to be a sham Commission or was it to be a real one? They had expected that there would be some material reduction in the expenditure upon the Army, and they desired to see appointed on that Commission gentlemen of the Army and civilians who would thoroughly go into the matter and sift the whole thing. There were political questions to be considered, and many other topics; and he would urge upon the Under Secretary, and upon the noble Lord the Secretary of State for India, the importance of appointing men upon the Council of the Commander-in-Chief of each Presidency who thoroughly understood the whole question. He was one of those who agreed with the hon. Gentleman the Member for Hackney in considering that only one Commander-in-Chief was required in India; and, therefore, he thought that this Commission should be composed of practical men who thoroughly understood the organization of the Indian Army. After what had taken place in that House it was to be expected that the whole matter would he thoroughly gone into. A great reduction was required, especially in the 1799 matter of the Army, and they ought to have an assurance that this Commission would not be a sham but a reality, and that men would be appointed upon it who thoroughly understood every phase of the administration of India. He would like to say, however, a few words with regard to what had been stated as to the plan to employ the Natives of India in the administration. That was a very important subject; and he hoped that before any plan was adopted it would be laid before that House, and they would be enabled to express an opinion upon it. It was a very serious thing to employ the Natives of India to a large extent in the administration, and, if done at all, it must be done in a very gradual manner. He therefore trusted that no step would be taken until the plan had been fully laid before that House.
§ MR. LAING
wished to point out, with reference to the statement of the hon. Gentleman the Under Secretary of State for India as to the expenditure upon the public works, that it had been laid down as a principle that some works were to be remunerative, and some were to be unproductive. He did not think that the Government had sufficiently realized the fact that they could never cut their Budget down so long as they spent money upon public works which were not authorized by the condition of the Indian Revenues. Within the last eight or ten years there had been an expenditure of upwards of £20,000,000 sterling upon works which had been, so far, utterly unproductive. By the last official Returns, the revenues received from these so-called remunerative works had only amounted to the sum of £2,000 per annum. That was the amount of the receipts upon an outlay of £20,000,000; in other words, that expenditure had been utterly unproductive, and the receipts had been only sufficient to pay for the working expenses. It was not sufficient merely to call works productive with the vague hope that they would produce some revenue, and such a hope did not warrant them in making such an expenditure. It was not sufficient to say that the finances of India were in so flourishing a condition that they could go on spending money so long as they could borrow it in India. There ought not to be a single penny spent upon those works unless they had the assurance that they were going to get a return for their money. But, for the 1800 last 10 years, they had been going on spending money upon works which made no return whatever; and they must fairly face the fact that they had made an utterly unproductive expenditure, and that the money spent had been lost just as much as if it had been bestowed upon the ordinary Civil or Military expenditure of the country. With regard to the Commission, if he might venture to express an opinion upon it, it was this—that they should put it in the power of the Commission to limit the expenditure of the Government of India to a certain point. It was no use telling the Commission to find an item here or there which might be cut down. They should be instructed that the Expenditure of the country was to be reduced to a certain limit. What they wanted was to cut their coat according to their cloth. It should be stated that they must reduce their Military expenditure below a certain figure in order to suit their finances; and the Commission should be instructed to prepare a scheme by which they might get the best Army in India for the money which they could afford to pay for it. He was sure that nothing could be done if the military authorities were merely directed to cut down an item here or there.
MR. C. BECKETT-DENISON
would not detain the Committee many moments; but there were one or two subjects upon which he should like to take that opportunity of making a few obervations. It would be in the recollection of the Committee that during the last few years, and upon almost every occasion on which the Indian accounts had been discussed, very great stress had been laid upon the importance of reducing the expenditure upon the unproductive public works of India. He held in his hand a melancholy record showing an expenditure of £6,500,000 upon barracks in India. He believed that there was a sort of idea that a very large portion of that expenditure had been unnecessarily laid out. There were one or two items which he would quote, which would illustrate very well the way in which money had been unnecessarily and uselessly spent. In the first place, there were some barracks at Allahabad which had cost £250 for each man accommodated. 150 miles due north of these barracks, in the same Province, there were some other barracks where the expenditure 1801 was £130 per man instead of £250. There must be some reason for this enormous disparity in the cost. There were other instances of the same sort of thing. There was a sanitorium built at a place in the Upper Himalayas for a regiment of troops which cost £130,000. The sum was large, but still it might be a proper expenditure; but they found that a road had been constructed to this sanitorium—a military road of 70 miles in length—of which the cost had been £237,000, or £3,000 a-mile. He asked whether that was an expenditure which was really wise under the present circumstances of India. He thought that the reason for it was that someone in a position of authority had been enabled to enforce his ideas in the Military Council of India, and, as a consequence, money had thus been recklessly spent. In his opinion, it was this enormous source of expenditure, going on from year to year utterly unchecked, which brought India into these financial difficulties which they all so much deplored. He did not believe, either with regard to the remunerative public works of India, or the un-remunerative public works, that there was any reason whatever why they should not assume that there was a very large ground for economy. He was afraid that the Commission, of which they had heard that evening, would be one to inquire into the Military expenditure, and would not inquire into the expenditure upon military buildings. It was to be feared that the expenditure on these matters would be outside the reference made to the Commission; and, if so, he saw no reason why the expenditure should go on unchecked in the future as it had in the past. There was, in the present year, a new Estimate for £500,000 on account of Public Works. No doubt it was a small sum compared to other amounts that had been spent; but it was considerable in its way. He did hope that the Commission which was to sit in India would not be deprived of the opportunity of inquiring into every branch of the Military expenditure. It had been stated before in that House that there were but two Departments in India in which it was absolutely necessary to practise economy, and those were the Public Works and the Army in all its branches. He would remind the Committee that the expenditure upon the non-effective Army Services in India were, at the pre- 1802 sent time, £2,000,000 a year. That was a scale of charge for non-effective Services which was utterly without parallel in any Army in Europe. The reason for that expenditure was in the changes that took place when India passed under the Imperial Government, and enormous claims were made for compensation by officers who retired, or wore seconded, or what not. The late Lord Sandhurst pointed out that the non-effective charges for the Army in India, which in his days scarcely come up to £1,000,000, would in a few years be doubled, and his words had been verified by the result. He hoped that this point, also, would not be lost sight of by the Commission, and that the attention of the House would be seriously given to every branch of the useless and unjustifiable expenditure now going on in India.
§ MR. MARK STEWART
said, that he had heard his hon. Friend the Under Secretary of State for India state the very large amount of Revenue which was derived from the opium traffic in India. In calling the attention of the Committee to this branch of the Revenue, he did so because he considered it one of the most important sources of revenue in India, and if it failed, they would be in a far worse position than they were now. But there were undoubted signs that that revenue, which was always so fluctuating and precarious, might undergo very serious diminution. China was now growing large quantities of opium in opposition to the importation from India, and a very hostile spirit had been evinced both by the Chinese Government and people against the import of Indian opium. Therefore, either by the increased cultivation of opium in China, or by the entire prohibition of the import of Indian opium into China—in both those two ways the revenue might be seriously diminished. Considering that this was the second largest source of revenue they had in India, it was but right that the country should know all the facts in discussing this question. Yet, he had observed that in almost every speech made upon this subject, there had either been no notice taken of this precarious revenue, or it had been treated slightingly as of no great moment. Having made these few observations, he would not trouble the Committee at any further length upon the subject at that time. 1803Resolved, That it appears by the Accounts laid before this House that the Ordinary Revenue of India for the year ending the 31st day of March 1878 was £51,795,868; the Revenue from Productive Public Works, including the Net Traffic Receipts from Guaranteed Companies, was £7,173,435, making the total Revenue of India for that year £58,969,301; that the Ordinary Expenditure in India and in ling-land, including Charges for the Collection of the Revenue, for Ordinary Public Works, and for Interest on Debt exclusive of that for Productive Public Works, was £55,147,832; the Expenditure on Productive Public Works (Working Expenses and Interest), including the payments to Guaranteed Companies for Interest and Surplus Profits, was £7,364,556, making a total Charge for that year of £62,512,388; that there was an excess of Expenditure over Income in that year amounting to £3,543,087; and that the Capital Expenditure on Productive Public Works in the same year was £4,791,052.
§ House resumed.
§ Resolution to be reported upon Monday next.