HC Deb 27 March 1879 vol 244 cc1951-61

Considered in Committee.

(In the Committee.)

MR. E. STANHOPE,

in moving leave to bring in a Bill for an East India Loan, said: This Bill gives a power to borrow money in England upon the security of the land in India, and I shall ask the permission of the House to make a few observations upon it. In the first place, the necessity for this loan is in no way connected with the cost of the war in Afghanistan. The House is well aware that the expenditure for that war was estimated in 1879–80 at £2,000,000; and as the Government proposes, with the sanction of Parliament, to apply for a similar sum out of the Imperial Exchequer, it will be understood that our difficulties do not arise from that cause. Nor, Sir, is it asked for in order to introduce or to facilitate any scheme whatever for altering the standard or the currency laws of India. Our position is this—our borrowing powers are completely exhausted. We have done our best to prevent such a state of things. The Secretary of State has strongly and repeatedly urged upon the Government of India the necessity of making remittances to England in order to reduce the Debt contracted here for the purpose of the recent Famine. He has directed that one-half of the Famine Insurance Fund shall be specially reserved for the purpose; but these efforts have been of no avail. In the present state of the Exchanges, it is practically impossible for us to accomplish what we desire. Having no borrowing powers, we have this year to bring over a sum of £15,000,000 to this country. The first suggestion that would naturally occur would be—"Why can you not, by reducing your Home Charges, diminish that amount?" But anyone who will carefully examine the Home Charges—and I propose to place upon the Table of the House some figures which, I hope, will much assist in so doing—will find how very large a proportion of those Home Charges consists almost entirely of items which are practically fixed, and which it is impossible that any immediate action, at any rate, would enable us to bring down. With regard to the Expenditure in India the case is different; and I hope to be able to show the House, when I make a more complete Statement, that we are making considerable efforts in this direction, and especially in respect of public works. But any reduction of the Expenditure in India would not help us in our present condition. By far the greater part of this sum of £15,000,000 must be met by the sale of our bills. And although we have reduced the amount which we offer weekly to a much smaller extent than before, not only has the price which we have obtained for them sunk lower and lower, except during the present week, but the tenders for them have diminished in amount. And, as I have said, having no borrowing power at our back, we are obliged to force the bills upon the market at a time when there is no demand for remittances. We are thus placed practically at the mercy of those who tender with the full knowledge that we must, at any sacrifice, get the money. Moreover, if we, by any reasonable sacrifices, tide over the present difficulties, yet it would be impossible for us to face the long Parliamentary Recess, when the state of the silver market might, at any moment, absolutely prevent us from selling our bills at all. There is one other point. The principle has been laid down over and over again, and has been accepted by this House, that all money that is required to be raised for the purpose of public works must be borrowed in India and not in England. To that principle we still unhesitatingly adhere, and we are prepared to press it upon the Government of India even at a time when, like the present, circumstances are specially unfavourable; and, accordingly, a Loan has been announced in India. But the information which has recently reached us tends to show that, under some circumstances, it may be found impossible to raise in India the whole amount required to be borrowed during the coming year. And we shall be landed in the dilemma of not being able to pay our way. We feel, therefore, that we are bound to place ourselves in such a position as to be able to render assistance if it unfortunately becomes necessary. I hope I shall not be asked to express myself more fully upon this point at the present moment, because, until full information arrives from India, it is very necessary to speak with great reserve on the subject. On these grounds, we ask Parliament to give us additional borrowing powers to the extent of £10,000,000. We hope it will not be necessary to make any addition to the permanent Debt of India; but, on the contrary, we trust to be able to reduce it by the application of the Famine Insurance Fund in future years. We intend to use the powers for which we propose to ask as sparingly as we possibly can, as we believe that a reserve of borrowing power is a great strength to our financial position; and whatever sum we are compelled to raise, we will endeavour to pay off as soon as circumstances are more favourable for sending remittances to this country. It will be obvious that if hereafter the relations between gold and silver should be restored to anything like its former condition, which is at least as likely as the contrary supposition, we shall derive positive financial advantage from borrowing here and not in India. But we do not base our proposal upon any sort of speculation as to the future position of silver; we ask for these powers simply because we believe them to be absolutely necessary for the reasons which I have given, and which I shall be prepared on a future occasion further to explain and to justify. I have now only to ask the House kindly to forbear from entering at this moment into any elaborate criticism of the financial position of India, for we have not yet received from India the detailed statement of its finances. In these circumstances, I venture to think that we cannot discuss what they propose there with satisfaction to ourselves, or justice to those in India who make the proposal. I ask for leave at the present moment to bring in the Bill, which I hope the House will grant; but it is not the intention of the Government to press it now to a second reading. We will leave the second reading until such time as we have the figures from the Government of India, which will enable us to discuss the subject as a whole.

Motion made, and Question proposed, That it is expedient to authorize the Secretary of State in Council of India to raise in the United Kingdom any sum or sums of money not exceeding £10,000,000, for the service of the Government of India on the security of the Revenues of India."—(Mr. E. Stanhope.)

MR. GOSCHEN

said, it was by no fault of the hon. Gentleman the Under Secretary of State for India that he had been obliged to make the remarkable, he would even say startling, statement which had just fallen from his lips at that late hour in the morning. But, notwithstanding the very great issues raised by the debate that had just been adjourned, and although there were but few hon. Members present at that moment, it must none the less be felt that the proposal was one of the most serious ever made by the Government in connection with finance during its whole term of Office. The Under Secretary of State had requested the House not to discuss, and not to criticize for the present, that most important proposal which had just fallen from him, and which he had placed officially before the House. But he (Mr. Goschen) desired to know the object of the Government in asking for leave to introduce at that moment a Bill that they only intended to proceed with in May? Nor could he tell why they took at the same time the extraordinary step of asking the House to refrain from criticism. One thing, however, was certain—that if hon. Members present did not criticize, there would be plenty of criticism out-of-doors, both in England and in India; and it was equally certain that the scheme would be criticized in the City and in other financial circles likely to be affected by the Loan. The present subject was not only of supreme importance to India, but to this country also; and he had felt, during the earlier portion of the speech of the Under Secretary, that the moment had arrived when Parliament must set to work to consider the whole question of Indian finance, and that the time was come when the whole situation must be reviewed. One effect of the Loan, it appeared to him, would be to raise the price of silver, and that drafts of the Council would be sold during the next two months at a very much higher price than they sold for before; and, further, that there would be speculations on the silver market on the strength of this Loan. If, indeed, he was not mis-in-formed, that speculation had already set in, and a remarkable rise in the price of silver had been the conse- quence; for, although the Loan had not become public, somehow or other the impression had got abroad that the Loan would be raised. Personally, be attached little importance to the rise in the price of silver, excepting so far as it showed the extreme sensitiveness of the silver market. It had always been considered right that all fiscal measures should be discussed with the least possible delay, so that no time might be given for those fluctuations which disturbed both the money market and trade generally. Everybody would admit the difficulty of deciding upon the course proper for the House to take in the present case; the proposal having been made with such suddenness that hon. Members had not opportunity of consulting with their Colleagues. He could not help feeling, however, that the Government ought not to press for the entire postponement of discussion that evening, even if it had to be discussed at a later hour. He could not think it fair that the House of Commons should be precluded from discussing the subject until May next. But any reasonable proposal on that point would receive from his (Mr. Goschen's) side of the House the best consideration.

MR. FAWCETT

said, it was, of course, perfectly useless at that time to attempt to discuss what the right hon. Gentleman the Member for the City of London (Mr. Goschen) had described to be by far the gravest proposal that had ever been advanced by the Government with regard to the finances of India. It had been stated that it was the intention to borrow £5,000,000 in India, if it could be done, and that England was going to lend the Indian Government £2,000,000, which, taken in connection with the powers now asked for, made up a sum of no less than £17,000,000. It appeared to him absolutely impossible to over-state the extreme gravity of these facts. Without wishing, in the slightest degree, to embarrass the Government, he was compelled to deny altogether the assertion of the Under Secretary of State, that the Government had done their very best to avoid the necessity for this Loan. They had made no real and genuine effort to reduce the Expenditure, which, on the contrary, had been increased by events for which the present Administration were responsible. Again, the Under Secretary of State had said that it was impossible to reduce the Home Charges; but he (Mr. Fawcett) had always believed that if a minister could be found of sufficient courage and determination to attack the Indian military system, and not shrink from facing the authorities at the Horse Guards, it would be possible to reduce the Military Charges to such an extent as to produce an important change in the value of silver; and he challenged contradiction of that statement. He hoped the country, on reading the announcement of the Government proposal on the following day, would awaken to the gravity of the Indian financial situation; and he ventured to say that after Easter there would be no subject considered more pressing than that of the necessity for doing something to extricate India from her financial difficulties. There appeared to him little use in opposing the introduction of the Bill. He trusted that what he was about to say would be duly reported by the Press, although he feared that the Bill had been introduced at too late a period of the evening. He wished business men, both in India and in England, not to take it for granted that the Loan would be agreed to, although no opposition might be offered to the introduction of the Bill that evening. In his view, the policy of borrowing those enormous sums in India and in England, thereby increasing the Home Charges, was fraught with such peril to the future of India that he, for one, would spare no effort to prevent the Bill passing, or, at any rate, to greatly reduce the amount which the Government under the Bill would have authority to borrow. Therefore, it appeared to him important to make that statement; and he hoped it would not be assumed out-of-doors that the mere fact of the Government introducing a Bill for powers to borrow £10,000,000 was any reason for believing that the authority to do so would necessarily be conceded. Notwithstanding the large majority which supported the Government, he still clung to the hope that on a question like that before the House a discussion without Party bias was possible; and that when the real facts of the case were known and laid before the country, a feeling would be raised which the Government would not be able to overcome. He maintained that business men in this country and elsewhere would not make a correct calculation, if they assumed that the Bill would pass in the form in which it had been introduced; and that they ought not to base their calculations upon the supposition that the Indian Government was going to have authority to borrow £10,000,000. Although, of course, there would be advantages in postponing discussion of the second reading of the Bill until they had before them the whole of the facts, he could not help feeling that there was great force in the remarks of his right hon. Friend the Member for the City of London—that, upon a question involving money and speculation, the less delay which took place the better—and, therefore, it seemed to him open to the consideration of the Government whether they would not fix the second reading of the Bill at an earlier time than that contemplated by them. Knowing that the effect of the Bill being introduced would be to raise the price of silver and cause speculation, to affect the German currency, the rates of exchange, and the monetary system of almost every European State, he considered it a subject well worthy of the attention of Her Majesty's Government whether it would not be bettor to submit to the disadvantage of not having all the details, and proceed with the discussion of the second reading at an earlier date. He took that opportunity of giving Notice that on the second reading of the Bill he would distinctly raise the question indicated by him in the few remarks he had just made, and move a Resolution thereupon, to the effect that he believed economy in the Military and other branches of the Indian Expenditure to be practicable, and that it would be undesirable to add to the amount of the Indian Debt.

SIR GEORGE CAMPBELL

considered that it was scarcely possible for the House to pass that stage of this matter without giving a certain amount of sanction to the proposal which had been just sprung upon the House. He could not consent to do so in so sudden a way. For his own part, he was of opinion that it was better to face the question of ox-changes rather than postpone and avoid it. He had recently in a Committee asked a very experienced person, who informed him that the India Office received in exchange the intrinsic value of silver and something more. There was no real loss by exchange. The only difficulty was the low value of silver, but it was as likely to go lower still as to rise. He begged to move that Progress be reported.

Motion made, and Question proposed, "That the Chairman do report Progress, and ask leave to sit again."—(Sir George Campbell.)

MR. E. STANHOPE

hoped the House would not consent to the proposal of the hon. Member (Sir George Campbell). Having one or two words to say in reply to remarks which had been made by hon. Members who had spoken on the Bill now before the House, he wouldexplain, in the first place, that the right hon. Gentleman the Member for the City of London (Mr. Goschen) had, unintentionally, of course, quite misunderstood him with regard to the discussion of the Bill, inasmuch as he had by no means deprecated that, but only discussion of the details of the financial proposals of the Indian Government before he could lay before the House a Statement of those details. It would, in his opinion, be hardly fair to Lord Lytton, if they were to proceed with the discussion of a mere telegraphic summary of those proposals. With regard to the time named for the second reading of the Bill, that had been fixed because there would really be no time for its discussion before Easter; and it was, besides, felt that it ought to be discussed in connection with the whole financial policy of India. The hon. Member for Hackney (Mr. Fawcett) was wrong in supposing that the Government were proposing to raise a loan of £10,000,000. That was by no means the case; and he thought he had very fully explained that they hoped to raise but a very small proportion of that sum. What they really asked for were borrowing powers, in order that they might have some control over the market when they offered their bills for sale. The right hon. Gentleman (Mr. Goschen) had also asked why the Bill was introduced at that moment? To which he replied that it was done for the purpose of settling the market. It was a well-known fact that the market had been utterly disorganized by the absolute necessity which existed for forcing the bills upon it, because they had no power to borrow; and the public knew perfectly well that, sooner or later, they must ask for those powers. The hon. Member for Kirkcaldy (Sir George Campbell) had said that it was much more honest to face the difficulty of the exchanges; and in this he thought he had been somewhat hard upon the Government, -for it was no fault of theirs or of this country that they could not always sell their bills. He trusted the House would allow the Bill to be brought in.

MR. COURTNEY

said, they were told that the Resolution was proposed in order to steady the market. And it would, doubtless, have a certain effect in that direction, because it would be known that a Resolution had been submitted to the House of Commons by the Government asking power to raise £10,000,000. Unfortunately, however, a formal assent to the Resolution at that late hour would be held to mean that the House approved of the Resolution, and the step proposed to be taken. Of course, hon. Members knew that was not the case; but it would be so understood. Nothing would be reported in the morning papers except the fact that the Resolution was passed; and that would be telegraphed to every bourse in Europe, and interpreted as if Parliament had agreed to a loan of £10,000,000. And, therefore, in view of the importance of the question, he trusted that the Motion to report Progress would be proceeded with by the hon. Member for Kirkcaldy (Sir George Campbell), because then it would not be supposed that they had agreed to the Loan Resolution, which would, in consequence, be put over to some other day. It was necessary that the financial world should not be misled by supposing that the House had approved of the Government proposals to borrow this enormous sum of money in an extraordinary and unparliamentary manner.

MR. RATHBONE

thought it must be evident to the Government that their proposal had taken the House by surprise, and suggested that Progress be reported to-morrow, and the Bill taken after the adjournment of the debate on the Zulu War, at half-past 11 P.M., or thereabouts. The Government proposal was rather a startling one, and he did not see what harm could be done by the delay of 24 hours.

MR. GOSCHEN

said, perhaps the Chancellor of the Exchequer would consider the various proposals made by various hon. Members who had spoken on his (Mr. Goschen's) side of the House. The statement had been made by the Under Secretary of State that the Government's intention in announcing the Bill was for the purpose of giving notice in the silver market, and to those interested in the present question, of the proposed application to Parliament for increased borrowing powers, and that object had therefore been attained. He agreed with the hon. Member for Liskeard (Mr. Courtney) that the discussion should take place upon that very important measure at a time when it could be reported, so that those hon. Members who objected to the manner in which the Bill had been introduced might be accurately reported. He wished it to be distinctly understood that he (Mr. Goschen) gave no opinion on the matter; and that if he had appealed for delay, it was not with the intention of thwarting the intentions of the Government in the slightest degree, but only in order that there might be further opportunity for discussion.

MR. DILLWYN

did not quite agree with the suggestion of the hon. Member for Liverpool (Mr. Rathbone), to take the Bill after the debate on the Zulu Question, for, at half-past 11 or 12 o'clock, they would be again in the same difficulty, and no report would reach the country. The question was one of great importance, and there certainly ought to be a full report, not taken at the time when most of the reporters had left the Gallery. He trusted that the debate might be adjourned until they could have a full discussion and report; and he could see no reason why that should not be done, for the Under Secretary of State had told the House that there was no immediate hurry, and that the second reading was not to be taken for two months.

THE CHANCELLOR OF THE EXCHEQUER

Although the passing of a Resolution to bring in a Bill would be perfectly understood by Members of this House as not in any degree pledging the House to adopt the proposal, or in any way prejudicing the subject under discussion, yet I do think there is something to be said as to the impression likely to be produced outside this House by such a course. Therefore, I propose that we should agree to report Progress, and put down the Committee for to-morrow.

Question put, and agreed to.

Committee report Progress; to sit again To-morrow.