§ ADJOURNED DEBATE. [SECOND NIGHT.]
§ 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.
§ SIR GEORGE CAMPBELL
said, it was very evident, so far as the time of the House was concerned, that the Government proposed, and the Irish Members disposed, for both that night and last night they had occupied the time in discussing their own questions, instead of Indian finance. He hoped the Government would give ample opportunity for the subject to be fully discussed. He might say, at the outset, that he did not intend to move the Amendment which stood in his name, and which was to this effect—That this House regards with apprehension the state of the Finances of India, and is of opinion that they are not sufficiently controlled. Her Majesty's Government having disregarded the letter and provisions of the Acts for the better government of India on that subject.The hon. and learned Member for Oxford (Sir William Harcourt) had given 1161 Notice of a Motion for a future day I which involved very much the same principle, and as a great Constitutional question was at stake, it was better in the hon. and learned Member's hands than in his. He did not propose to enter on the question of the loans, because he understood that the Resolution with regard to the loans would only be passed pro formâ, and that the Chancellor of the Exchequer had promised a day upon which the subject would be fully discussed. He must heartily congratulate the Under Secretary of State for India (Mr. E. Stanhope) on the clear and able way in which he had made his Financial Statement He concurred very much in what he had said, and welcomed the improvement in the general policy of the Government. His only objection to the speech of his hon. Friend was that it seemed to be somewhat too sanguine and rose-coloured, and that it exaggerated in some measure the good points in the finances of India, while it minimized the bad ones. Though the speech had charmed his hon. Friend the Member for Hackney (Mr. Fawcett), so that, beginning by cursing he remained to bless, he, for his part, did not think there was much in the speech which was a surprise to those of them who had studied the subject. The Under Secretary had taken great credit for the reductions of Expenditure which were to be effected; but of what did they consist? With regard to the Civil Services, they cost some £12,000,000 or £13,000,000 a-year, and the general result of the economy that was to be exercised was not to reduce the expenditure all at once, but it was to take place a little at a time, so that some time or other a saving of £250,000 was expected. Though he was thankful for small mercies, he did not think that would be likely to create a revolution in the state of the finances. With regard to the Military Department, which involved an expenditure of some £17,000,000 or £18,000,000, the hon. Gentleman told them how difficult it was to reduce the expenditure, and stated there was to be a Committee of Inquiry. But an inquiry might suggest changes which would cost money, and might mean increase of expenditure as well as reduction, so that they must consider the reduction of Army expenditure as a thing which might or might not be in the future. The one item in 1162 which there was a substantial reduction was in public works. That was a very easy remedy; but it meant cutting down those works which went to the improvement of the country. He did not think this change by any means all improvement, for it would result in the stoppage of many very useful and necessary works. Practically, deducting the military works and works which must go on, they were going to cut down by one-half the expenditure upon ordinary public works. Already it was a reproach to the Government that they had carried their reductions in that Department too far. He was told that it was distressing in Madras to see the extent to which works had been stopped. Even the roads and tanks were not being repaired. There was also, they were told, to be a saving in regard to the extraordinary public works, although the matter was at present before a Committee upstairs. He very much regretted that the hon. Gentleman had anticipated the decision of the. Committee, and, for his part, he did not at all approve of the proposal to limit the extraordinary public works to £2,500,000. If they were to carry out remunerative public works, and such works were really before them, he thought they had far better spend £10,000,000 at once, than go on letting out money in slow and wasting driblets; and, on the other hand, if they had not such works, there was no reason to spend £2,500,000 or any other particular sum. He thought the Government were right to take measures to reduce expenditure where they could; but the fact was that they had entered into such dangerous and expensive political complications on the Frontier of India as to create a deficit, and they were obliged, if he might so express it, to starve the most necessary works and the most necessary part of the administration. He must protest against the airy way in which the Under Secretary had spoken of the "late war" as a matter which had been settled for £2,000,000, and which was something in the nature of a bagatelle. He must protest against the idea that, because the Government had got hold of an Afghan who was willing to make terms with them, they had brought the political difficulty to an end. So far from that being the case, he believed that the present negotiations would be found 1163 to be only the beginning of further troubles and of further expenses. They were treating not so much with the de facto Ameer of Afghanistan as with a man who hoped by their aid to become so, and they might find that they had a second Shah Soojah on their hands. There could be no doubt that a crisis had been arrived at in Indian finance, and it was necessary to do something in order to get matters out of their present lamentable condition. Not only did figures show that the finance of India was in an unsatisfactory state, but recent news from that country regarding disturbances in the Bombay Presidency was of an extremely serious character. He was not an alarmist, but the accounts which had come to hand of overt discontent and of open defiance were very grave; indeed, he might say, speaking with an experience of almost 40 years, they were assuming proportions which he had never known before. There could be no question that those disturbances were connected with the financial position of India, and with the position of some administrative matters in our great Eastern Dependency. He believed that the disturbances to which he referred were caused, in some degree, by taxation which was felt to be an injustice, and also, in some degree, by the stoppage of public works, which took away labour from people who would otherwise be employed. India having arrived at a situation of chronic deficits, he would ask the House coolly and deliberately to look at the situation. First, was there excessive taxation in that country? In his opinion, there had been some exaggeration in what had been said about heavy taxation in India. The real amount was about £40,000,000 when they cleared away the padding of the accounts, and that was derived from six great sources, some of which he maintained were not taxes at all. The first was the land revenue, which was really in the nature of reserved rent, and as landlords we had perhaps dealt hardly with the ryots of Bombay and some other districts. Then there was the opium revenue which was paid by the Chinese. Next came the Excise, a comparatively small amount obtained from noxious articles of consumption, and nobody would wish to see that reduced. Then there were the stamps, and the Customs re- 1164 venue, which was altogether inadequate to the size and resources of India. The only real considerable tax felt by the people was that on salt, which, unfortunately, occupied the position of the property tax in this country, in being raised to meet extra burdens. He regretted to find that the Under Secretary had fallen into the groove in which all the officials of the India Office ran—that of regarding the salt tax as the "horse of all work." The salt tax was in the nature of a poll tax; but there wore limits beyond which it could not be raised. He thought the Government had committed a grave error in imposing the additional £300,000 which was to be produced by the last increase of the salt duty; but He confidently hoped that now that money had been abandoned, the Government would see that they had reached the ultimate limit of that tax. The other sources of taxation would not yield much increase of Revenue, and the only alternative seemed to be local rates, locally administered, for local works. He sympathized very little with the British Association in Bengal; but they certainly had the strongest reason to complain of an unwarrantable breach of faith on the part of the Government of India in absorbing the additional rate which had been imposed on the land revenue in Bengal for a Famine Fund in the general administration and defence of the country. The Government had also thought it necessary to attempt additional direct taxation. They first tried an income tax; but that had been surrendered, and the infinitely worse scheme had been resorted to of a licence tax. The income tax had been abandoned in response to the cry of the rich and noisy, and its remission had only benefited rich people, whereas the licence tax contained all the worst features of the income tax, and, from a political point of view, was infinitely more dangerous. For every rich man who was relieved by the remission of the income tax a hundred poor persons were affected by the licence tax. Last year he ventured to predict that the imposition of this tax would lead to political disturbance, and his words had come true to a lamentable degree. But the Government had not only imposed a most unpopular tax, they had surrendered the cotton duties, of which no one in India had complained. Those duties, and the 1165 tax on sugar, had been surrendered in deference to Lancashire opinion in this country, or to the crotchets of the present Finance Minister of India. It might be right or wrong to remit the cotton duties; but when hon. Members considered the Motions placed on the Paper, and the speeches made on one side of the House and the other, as if the remission had taken place in the interest of the people of India, it was difficult for them, like the Roman augurs, to look at one another without smiling. He believed a well-founded irritation had been created and was felt largely in India upon this subject at the present moment. With regard to the whole subject of taxation, he thought India was not excessively taxed; but the rich were scarcely taxed at all. With regard to retrenchment, he very much agreed with Lord Northbrook in the extract read by the Under Secretary last night. No doubt, the work of retrenchment would require a firm hand: but the necessity for it was so urgent that he hoped the House would strengthen the hands of the Government now that they said they were prepared to deal with it. One advice he would give to Her Majesty's Government was that if they wished to set an example of economy to India they should begin at home. No doubt, over by far the greater part of the Home expenditure Her Majesty's Government had no control. The amount really spent at home was only some £275,000, not a large sum to work upon; but, nevertheless, something could be done. There wore some items not fixed by Act of Parliament, on which excessive extravagance on the part of the Government was shown. For instance, no fewer than eight holders of some of the highest posts at the India Office had been pensioned off, not under superannuation rules, but under what was called re-arrangement of Offices, the fact being that it was thought desirable to promote certain persons; others were dissatisfied, and so were allowed to retire on pensions varying from £733 6s. 8d. to £340. There was no reduction in the expenditure of the Office; on the contrary, there was an increase in the staff. He quite agreed with the Under Secretary that we could not safely reduce our Army in India, though, with short service, some radical re-arrangements might be 1166 necessary. He wished to express his entire concurrence in the measure the Government had announced for the reduction of the numbers of the Civil servants. By more largely employing Natives we should do more justice to them, and by employing fewer Europeans the flow of promotion would be improved in the upper ranks of the Service. He did not think, however, that the Natives would be very well satisfied if they were not paid as well as Europeans. When he was at the head of the Government of Bengal, he endeavoured to substitute cheap Native for dear European labour, thinking that he would secure the eternal gratitude of the Natives; but he was never so greatly or continually abused for anything he had done. They said that if they did the same work they ought to be paid at the same rate. With regard to the remission of the cotton duties, the Under Secretary of State for India had stated, in reply to a Question, that that remission was made with the knowledge and sanction of Her Majesty's Government; but he subsequently said the sanction was conveyed in a confidential telegram of a private nature which could not be produced. He maintained that it was absolutely against the law that the sanction of Her Majesty's Government to an important financial measure should be convoyed in a private telegram. But this was not a single instance. On the question of that remission of the salt duties, the Under Secretary promised to produce the Correspondence; but he had never done so, for the simple reason that there was no Correspondence to produce, no Correspondence except, perhaps, some private telegrams. The result of the system was that there was no real check on the Viceroy. The Viceroy was assisted by a very able man—Sir John Strachey; but Sir John Strachey had his crochets and his imprudences. When acting with such a solid and sensible Viceroy as Lord Mayo, Sir John Strachey was a most valuable public servant; but when Sir John Strachey, audacious and impulsive as he was, was yoked to such a Viceroy as Lord Lytton, who was more audacious, impulsive, and imprudent than himself, the danger was one of considerable magnitude. Had the Rulers of the Mogul Empire been assisted by wise and prudent counsellors, the Great Mogul Empire might still be in exist- 1167 ence at this day; and if a man so hotheaded and indiscreet as Lord Lytton was allowed to govern India, and left uncontrolled to his own conceits and devices, it might happen that some 100 years hence some other Power might rule in India instead of the British Government.
§ MR. ONSLOW
said, he thoroughly agreed with what had been said as to the necessity for reducing the Indian Expenditure. He heartily approved of the Resolution proposed by the hon. Member for Hackey (Mr. Fawcett), but withdrawn; and He thought the course adopted by the Leaders of the Opposition with respect to that Resolution was open to observation, after the meeting at the house of the noble Lord the Member for the Radnor Boroughs (the Marquess of Hartington), where it was understood that they agreed to support it as a Vote of Censure on the Government. The debate on the question before them showed that India was not to be made the shuttlecock of Party in that House, and that both sides were desirous of considering the best interests of India. He thought the Under Secretary of State for India had shown that the interests of India were to be considered in a much better way than they had been in former years. The hon. Member for Kirkcaldy (Sir George Campbell) objected to the policy of the Government with reference to Afghanistan; but he (Mr. Onslow) would venture to say that the opinion of the House, and of the great majority of this country, was that all the sums spent in the Afghan War had done great credit to Her Majesty's Government. India had been made a great deal safer than before. He believed there was no other policy open to Her Majesty's Government, and that this Afghan War was one of the greatest successes which the arms of this country had obtained in India or elsewhere. The hon. Member for Kirkcaldy also objected to the remission of cotton duties; but it was strange that the hon. Member was not in his place when that subject was discussed in the House. The hon. Member for Kirkcaldy said he took a serious view of the disturbances in the Deccan. We all deplored them; but at different times we had riots in different parts of India, and must always expect such riots. He did not, however, attach so much importance to those riots as the 1168 hon. Member; but if they were really dangerous, there was no man better able to cope with them than the present Governor of Bombay. The present Governor General had shown himself determined to carry out the honour and interests of India in a manner worthy of the name of the English name he bore. The Financial Minister in India, we must know, had an enormous difficulty. One of the largest items of Revenue was that from opium. One day it might be up and another day it might be down; and, therefore, the Financial Minister could not say how much he was to get from the opium revenue. A Famine might spring up at any time in any part of India, and that alone might upset the calculations of any Financial Minister, as it had upset the calculations for the year preceding this. At one time it might be a Famine, and at another a cyclone, that upset the calculations of the Financial Minister. Moreover, his calculations might be upset by an unexpected war, which might break out at any moment. The Financial Minister could not give even an approximate estimate of the loss which might occur in the course of the year by exchange. He (Mr. Onslow) hoped that we had seen the most disturbing elements pass away, and that the depreciation of silver would no longer be a bugbear in Indian finance. He thought He should be justified in saying that every Financial Minister since the Mutiny, with the exception of Sir Richard Temple, had been a Liberal. Unless the Financial Minister was backed up by the arm of the Viceroy, he had no more power in the Council than any ordinary Member. We should give greater power to the Financial Minister than he had at present. It was impossible for him to carry out his policy if he found every Member of the Council against him. But even though the reductions which had been promised by his hon. Friend the Under Secretary of State were carried into effect, he had great doubts whether they could be accomplished within two or throe years. When the question came to be dealt with of employing Natives in the place of Europeans, it would be found that it involved great difficulties. The matter was not one merely of salary, but also of pension, and he did not think the Government would get the men they wanted if they were to give Europeans 1169 only the same pay for performing the same duties as Natives. As to Military expenditure, it had always been the object of the Viceroys of India to keep it down; but its reduction depended a great deal on the action of the Home Government, by whom the Viceroy had not often been consulted. In 1864 great reductions had been made; but such had been the increase of wages that the Military expenditure, instead of being diminished, had gone on increasing, and what had occurred in 1864 might occur in 1879. As to the proposed Committee, his opinion was that inquiry by a mere departmental Committee would do no practical good, and the Government ought, he thought, at once to take the bull by the horns and announce that they were prepared to appoint a Royal Commission to inquire into the whole Expenditure of India. He next came to the question of public works, on which he thought a good deal of money was wasted in India, owing to the fact that the House of Commons had run away with the idea that she was a very rich country. Sir Charles Trevelyan even had said that there would be no difficulty in carrying out such works so far as money was concerned, and Lord Halifax had endorsed that view. An unwholesome stimulus was thus given to the prosecution of public works in India; but Sir Charles Trevelyan had subsequently deemed tit to be his duty to inculcate the necessity of observing some moderation in carrying out those works. He hoped, therefore, that in future no works would be entered upon unless there was an assurance that they would be reproductive. It should not be forgotten, He might add, that largo sums had been spent on repairs, for hon. Members generally could scarcely be aware how soon works became deteriorated in the climate of India. He sincerely trusted that the objects of the Government would be realized in a few years, and that they would persevere in their endeavour to improve both the condition and the resources of India. It ought not to be very difficult by careful economy to make the Expenditure equal to the Revenue.
MR. GRANT DUFF
said, he was glad that the very able and elaborate statement of the hon. Gentleman the Under Secretary of State for India (Mr. E. Stanhope) had done two things; it 1170 had made it clear that the Government were going to turn their minds to a serious reduction of Expenditure in India, and, at the same time, it had done away with a great deal of the exaggerated uneasiness with respect to Indian affairs which had been fostered of late by reckless and sensational writing. There was every reason for uneasiness, but no reason for panic. Indeed, he had never known a moment when those who understood it did not view with uneasiness the condition of Indian finance. It was all a question of degree. The old Court of Directors lived in a state of chronic agony in regard to the Indian finances, and, consequently, were so timid about undertaking public works that they very often drew upon themselves the thunders of one of the greatest living orators. Hardly had the Queen's Government taken over the direct management of India than it found that the question of making the two ends meet was one of the gravest with which it had to deal; and it sent to Calcutta, as soon as the fires of the Mutiny had burnt out, the very ablest financier on whom it could lay its hands. Mr. Wilson did great things, but the years from his death to 1869 were no bed of roses for Indian financiers. Then came a period of which he (Mr. Grant Duff) was in a position to speak, that during which the Administration of India was directed by the Duke of Argyll, when the financial question occupied the attention of the authorities, both in England and India, morning, noon, and night, and to so much purpose that whereas the Expenditure of the year 1868–9 was over £52,000,000, that of the year 1871–2 was under £47,000,000. Part of that reduction was owing to the transfer of £700,000 a-year from the shoulders of the Imperial Government to the shoulders of the Provinces; but a good deal more than £4,000,000 was really bonâ fide reduction. He did not see why the same reduction was not possible now. The Expenditure to be reduced was much larger, and if the Government set about it with a will, he did not see why they might not make as large a reduction as that. If they made that reduction, all cause for serious uneasiness with regard to Indian finance would be removed. There was all the difference in the world between the wise uneasiness which came from knowing the difficulty of governing on European 1171 principles with an Asiatic Revenue, and the panic-stricken exaggerations to which the public had been lately treated. It might, perhaps, be asked why we should govern on European principles, seeing that we were recommended by some persons to stop our public works and to govern India after the manner of a Native Indian Administration? The best Native administrators would tell us that their countrymen did not want our ox-pensive Courts, our education, and all the rest of it. A small Revenue might be raised, but the people were not to be teased with taxation; and instead of spending our money on improving India, we might spend it in helping out the English Revenue, or on anything we pleased. If we were going to do no better than that, why were we in India at all? If we were not there to give the Natives of India what they could by no possibility have given themselves, except after thousands and thousands of years, we had better determine to leave them to their Native administrators, telegraphing to Lord Lytton to wind up the concern and come home. It was asked, why must we govern on European principles? Because we were Europeans, and because we could not help it. We were bound to govern India according to European principles, if we governed it at all; but to govern it upon European principles with an Asiatic Revenue was a difficult thing, and must from time to time laud us in serious complications. If Lord Northbrook, in 1874, had determined to treat the Bengal Famine as a Native administrator would have treated it, he would doubtless at first have done what He could to save the people; but, very early in the day, he would have come to the conclusion that circumstances were too strong for him, and, with folded hands, would have said—"It is the will of God." Now, in 1874, there happened to be no very exciting subject before the public, except the Bengal Famine, and it would have been as much as Lord Northbrook's head was worth if he had ventured to act in that manner. A year or two later came another great Famine, during which Lord Lytton's Government did all they possibly could for the saving of life at fearful expense to the State, though their efforts were, alas! very far, indeed, from being entirely successful. Most luckily for them, however, other subjects of a highly ex- 1172 citing kind occupied the attention of the public, or there would have been a shriek of indignation against the supposed inefficiency of our Indian Government. These two Famines, managed on European principles, cost quite £15,000,000, which would have remained in the Treasury of the Native administrator. The men who carried on the Administration of India passed their lives in endeavouring to steer a middle course between those who would have them improve the country quicker than the poverty of the population would permit, and those who would have them hang back, doing little or nothing. He thought that, considering the gigantic difficulties of the subject, they contrived to steer extremely well between the two. Was it true that in doing so they leaned too much to the side of rapid improvement? He did not think so. From time to time there was, no doubt, a movement in that direction, but the pendulum soon swung back. It might be suggested, however, that the very fact that the present Government was ready to make very large reductions proved that our Government of India was habitually extravagant. He did not think that such was the case. In point of fact, it merely proved that from time to time circumstances arose in which efficiency had to be sacrificed to the absolute necessity of economy—that, at least, was the case with nearly all the Civil expenditure that had been cut down, a great part of which was usually under the head of Public Works Ordinary—that was, works of comfort and convenience. He had no reason to believe that the present Government had been more extravagant in its conduct of the internal affairs of India than other Governments. He thought that it was right to take the course it did in the vexed question of the cotton duties, and two years ago urged it to take a somewhat similar course, even at the risk of a small deficit, while he thoroughly approved all that it had done in relation to salt. The case which he thought could not only legitimately be made against Her Majesty's Government, but which it was their bound en duty to make, was this—That Indian Revenues improving but slowly and containing some very uncertain elements, and Indian Expenditure requiring to be kept down with the most watchful care, they had quite gratuitously adopted a course of external policy which would 1173 eventually lead India into the greatest possible financial embarrassment. In order to mate good the foundation of that case, it was only necessary to look at the largest feeders of our Revenue—land, opium, salt, stamps, Customs. Well, then, in the nature of things the land revenue, if it did not increase quite as slowly as was sometimes said, would not rise very much for a considerable time. He saw that, in 1877–8, it appeared as positively a little smaller than in the actual or completed accounts of 1867–8. That must arise, he supposed, from the disturbance caused by the late Famine in Southern India. Still, He apprehended that the Government did not anticipate any great or sudden improvement in its receipts from land. Then there was opium. He had never shared the pessimist view about opium. He had never expected that our revenue from that source would be suddenly cut off. They knew, however, that it was menaced from two sides. There was a party in China which wished to manufacture on a greatly increased scale the Native drug, for the express purpose of killing down our import of opium. It was possible that that party might succeed in overcoming the scruples of those of their countrymen who were in favour of maintaining the old severe laws against the growth of the poppy, and might likewise succeed in making as good opium as we could send from Bengal or Malwa. If that where so, then we might be beaten out of our best—indeed, for practical purposes, our only market, and the Government of India might have to look to taxation to compensate it; or, in other words, India might lose the most magnificent estate which was possessed by any nation in the world—an estate which more than paid the annual interest of her Debt. Again, there was a party in this country which was persuaded that the import of opium into China was wicked, and ardently desired to do away with it at one fell swoop without ever dreaming of compensating India for the loss of India's magnificent estate. If that party over succeeded, the same result would follow—India would have to raise an additional taxation of £6,000,000 or £7,000,000 a-year. He did not think that that Party would ever succeed in inflicting on India so terrible, so utterly ruinous an injustice; but he could quite conceive that the British Govern- 1174 ment might, in the interest of our and her general policy, prevail upon India to diminish her import of opium into China by, say, 1,000 chests every year, until it ceased altogether; and the ultimate result of that to India would be, doubtless, not so embarrassing, but, nevertheless, decidedly embarrassing. The stability of the opium revenue depended upon causes of which we knew so little that no financiers, however sanguine, could possibly be comfortable about it. "Threatened folk live long," he might say, but that was all his comfort. Then came the salt tax. He was not one of those who took a strong view against it, though it had no doubt some disadvantages, yet some of them had been done away with under the Administration of Lord Lytton. He supposed there was no one who had studied Indian finance who did not feel that although the direct mischief arising from the salt tax in restricting the supply of salt to the population had been sometimes exaggerated, it had, nevertheless, in some districts very bad direct effects; while about its indirect evils all over the country in restricting manufactures there was really no kind of question. We must admit, he feared, against the salt tax nearly every thing that his right hon. Friend the Member for the University of Edinburgh (Mr. Lyon Playfair) would allege; but it was our third largest source of Revenue. Could we substitute anything for it? He confessed that a salt tax equalized from Cape Comorin to Peshawur seemed to him an inevitable, though most unsatisfactory and unscientific element of Indian Revenue for many years to come. It was, however, not likely that the revenue from it would much increase. One of the first things that had to be done, indeed, was the reduction of the duty in the Lower Provinces of Bengal. Then there were stamps, which brought in, in 1877–8, a little under £3,000,000 of net revenue. He supposed that that source of income would go on increasing with the increase of education and the advance of civilization, but not very quickly. Then there were Customs; but He trusted that export duties would soon disappear, that the Indian tariff would contain, before very long, as few articles as our own, and that Customs duties would eventually disappear. He thought, seeing there was little chance of any increase from them, that 1175 all Indian financiers should steadily keep in view the importance of getting rid of all Customs duties in India, both export and import. He hoped that the Government of India would save that country from the detestable spectre of Protection which had appeared in the Colonies. We should at least give our great Dependency the benefit of perfect freedom of exchange, which the unwisdom of our Colonies had denied to themselves, though, of course, that could not be done all at once. Even now, only about 3d. per head of the population was produced to Indian Revenues by the import duties. Was it worth contravening sound principles and inflicting endless inconvenience for so contemptible a result? He thought he had shown, without taking alarmist views, that our existing Indian income was likely to increase only very slowly, and it would probably be admitted that no great rise was at present to be looked for in Indian Revenue. The weight of authority seemed to be against all now taxes that had been discussed. It was unnecessary to show in detail how Indian Expenditure tended to increase. It required, at all times, the most anxious and sustained efforts on the part both of the Home authorities and of the authorities in India to prevent it becoming altogether intolerable. Every subordinate Civil official and Military officer who was good for anything thought first of efficiency. It was only those at the head of affairs who kept asking—"What will it cost?" If we had twice as much money as we had, we could spend it all to good purpose. These things being so, the present Government had had the folly to embark on a course of policy which had already cost India a great deal of money, and which would too probably lead, before very long, to far heavier expense than any of which those who commenced it even dreamed. He would be a bold man who would deny that, thanks to this impolitic and fatal interference with Afghanistan, we might in a very few years be obliged to annex the whole of that country, and to draw our next scientific Frontier beyond Herat. He would not try to revive the discussion on the Afghan War in its political aspect. He was looking at it for the moment merely in its financial aspect; and he affirmed that, even if there had not been political reasons which cried to Heaven against 1176 the course which the Government had taken since the retirement of Lord Northbrook, the financial calamities which would but too surely follow on their Frontier policy ought to have been quite enough to condemn it. Anyone who studied Indian history, and who knew the difficulties which the recent advance beyond the North-West Frontier would entail, would know that we should be led on and on by the force of circumstances, until very likely the most pacific Minister who over ruled in this country would, as he had said, be obliged to annex the whole of Afghanistan, thanks to what the present Government had clone. He was sure the right hon. Gentleman opposite knew well that this was so; but he comforted himself with that most unstatesmanlike reflection—"After me the deluge." Some people imagined that men's minds in India would now become calmer about the North-West Frontier. But they were much mistaken. Our North-West Frontier policy was to a great many Anglo-Indians the romance of India. It was the link which connected the land to which they had come with the busy Europe they had left. Dreams about the Russian spectre moving towards us across Central Asia were a relief from the intolerable dulness which often oppressed them. He would admit that the force of circumstances alone, now that it had been given its head, would prove too strong for all resolutions to advance no further. But that force was the weakest which was dragging us. We had, in Yakoob Khan, a new Shah Soojah on our shoulders, of whom we might well wish right hon. Gentlemen joy, if it was they only, and not all of us, who had to carry him. When we once stepped beyond our old Frontier, the curse came upon us—"Vestigia nulla retrosum." The burden which dive and Warren Hastings laid on the shoulders of their country—the necessity of conquering India—was heavy enough. In an evil hour, by changing the policy which for so long had been accepted by both political Parties, they had taken, even if there were no political reasons against it, one of the most imprudent financial steps ever taken by any Government. Was not the burthen of conquering and keeping India enough for a little Island in the Atlantic, that right hon. Gentlemen opposite must needs add 1177 to it the probable task of having to conquer Central Asia also? There were dangers before, behind, and around them, of which, alas! their financial dangers were not the worst. Were matters so perfectly peaceful in India that they could be sure that the Mutiny was the last of their serious internal troubles there? He thought it extremely fortunate that they had so able and active a man as Sir Richard Temple governing the Bombay Presidency at this moment. Recent telegrams told of dacoity prevailing to a great extent in the neighbourhood of Poonah; but they might depend upon it there was a great deal more than mere dacoity there. He went into that district, in which he had naturally a peculiar interest, four years ago, and even to the eye of a passing traveller it was perfectly clear that there was serious disaffection. Those telegrams revealed a state of things precisely similar to that which preceded the great rising of the 17th century; and, although, considering the superiority of our strength over that of the Mogul, he would not venture to say that history would repeat itself, He did say that we were not at the end of our insurrections, and that the breaking out of trouble in that corner of India at this particular moment ought to be a warning to those who dreamt dreams of the beginning of an era of peace for India. What, above all things, was wanted in India was what was wanted everywhere—a steady, well thought out, and continuous policy, not a policy of violent fluctuation or exaggeration on the one side or the other; but that we no longer possessed. Prom the days of Lord Ellen borough our policy had been to remain within the bounds of India, and make the best of the country. It might be said of India what was said by someone of life itself, that it was neither a blessing nor a curse, but a serious piece of business which it concerned our honour to carry through; but to carry it through without such a policy as he had just indicated was impossible. If we were now to be led away by such will-o'-the-wisps as had led us through the Passes of Afghanistan lately, then the whole story of England's connection with that great country from first to last would be nothing better than one magnificent blunder—a blunder full of interesting, noble, and heroic episodes, but none the less a blunder.
§ MR. SIDEBOTTOM
said, it could not, he thought, be denied that the financial position of India must, at the present moment, be a source of grave anxiety, both to those responsible for the Administration of India and to everyone in this country who bestowed the least consideration on the subject. It was not his intention, on the present occasion, to enter upon the question of the import duties levied on cotton goods. The House had more than once affirmed that those duties were alike unjust to Indian consumers and English manufacturers, and ought to be repealed, and he thought it would be scarcely respectful to the House to occupy its time by dwelling on this well-worn subject. No doubt, there had been heavy expenditure in India; no doubt, it was absolutely necessary for that expenditure to be curtailed, and he was glad to see that Her Majesty's Government were taking stringent measures in this direction. No doubt, also, the dreadful Famines which had prevailed had greatly impoverished the country; but, above and beyond these and other causes, there was a very large and a very deep question which was well worthy the attention of the House. He meant the pressing difficulty so long felt with reference to the extremely unsatisfactory state of the exchanges. He would not weary the House by dwelling at any great length on this most intricate and difficult subject, or by enlarging on the causes which had loci to the immense depreciation in silver, or of the increasing scarcity, and, consequently, enhanced value and appreciation of gold. Those causes were deep-seated, and, to a great extent, beyond our control; we had only, indeed, to call to mind the immense rise which took place in the value of all commodities in Spain within a very few years after the discovery of her gold mines in Peru to be convinced that we wore face to face with a very great problem, and a problem which must have a most important influence, not only on our fortunes, but on the fortunes of well nigh every country in the world. As stated by the Prime Minister in "another place," a short time ago, the production of gold throughout the whole world averaged about £9,000,000 a-year up to the time of the discovery of the Californian and Australian mines; but these great discoveries increased the supply about six- 1179 fold, to £36,000,000, and the same effect was produced—though not to the same extent—as was produced in Spain more than three centuries ago; an enormous rise took place in the price of all commodities, everything appeared to increase in value, because gold, the fixed standard by which everything was measured, became more plentiful, and in reality decreased in value; in like manner, it did not seem open to doubt that of late years the decreasing supply of gold, simultaneously with an increased demand from Germany, from France, and latterly from America, had been one main cause of the existing intense depression, and of the fall in prices of nearly all commodities, including silver and including labour. This fall had by no means been confined to this country, but had extended everywhere, East and West, North and South, to all countries; but it had had an especially disturbing influence here, not only because of our extended trade with all the silver-using countries where it was the standard of currency, and where, consequently, the exchange had been directly affected, but also because silver was the currency and the standard in our own Empire of India. In one portion of our Empire—England—gold was the standard, in another portion—India—silver; and there could be no doubt whatever that the fluctuations in the value of silver and also of gold had caused very great derangement to the trade of the two countries, and no man yet might say what would be the consequence, or what disasters the future might have in store for us, if some attempt was not made to remedy the mischief, and arrest the continuous fall. Well, what was to be done? Many plans had been suggested, more or less plausible. One of these was a gold currency for India, same as England; but it was estimated that for that purpose £100,000,000 of gold would be required. Where was this immense amount to be procured? It was pretty evident that the supplies of gold were barely sufficient to carry on the trade of the world under the existing gold currencies; and this plan might, therefore, be dismissed as quite impracticable. Another suggestion was a largely extended issue of paper money; but the experience of other countries was not encouraging, and the great depreciation so often witnessed in paper ought surely to be a beacon and a warning against 1180 any such course as this. Amongst other suggestions there had been that of a bi-metallic currency, such as prevailed in France tip to the time when she suspended the coinage of silver from fear of losing her supplies of gold, in consequence of the demonetization of silver in Germany. Much might be urged in favour of this plan, and it was by no means clear to his mind that it would not eventually have to be adopted by one or more nations to avoid general ruin. One thing was, at all events, clear—that when there was a bi-metallic currency in France these disastrous fluctuations in silver were prevented, because anyone, by taking silver to France, could have that silver coined and exchanged for gold in the proportion of 15½ to 1, and this kept the price of silver steady all over the world, and had practically the same effect as it was hoped would follow from the adoption of the bi-metallic currency now advocated. Many of our troubles, indeed, and the decline in our trade, seemed really to date from the period when France suspended the coinage of silver, and the advocates of bimetallism maintained that in adopting it we should be trying no rash or hazardous or dangerous experiment, but, in reality, only be reverting to the previously existing state of things. But it was said—"Oh! to talk of a bi-metallic currency is absurd and ridiculous. Why, every banker in London is against it. "Well," nearly all great measures in this country passed through three stages. They were pooh-poohed, and said to be absurd and ridiculous in the first stage. Then, in the next stage, after we had felt a few more turns of the screw, after a few more disasters had occurred, after a few more thousands had been ruined, it began to be doubted whether, after all, they were deserving of so much ridicule and contempt. Then came the third stage, when they were suddenly adopted, and they who had been loudest in their denunciations, were often the most anxious to take credit for their adoption. Bankers might, or might not, oppose this plan; but he had yet to learn what special knowledge was possessed by bankers as such—especially by London bankers—on such a question, more than by merchants and others of wide and extended commercial experience, accustomed to business in all parts of the world, and obliged to take large and 1181 comprehensive views on such subjects. Now, what were the real arguments against a bi-metallic currency? He had conversed with many persons of every shade of opinion, and, so far as he understood, the main and the chief objections wore that it would be a watering down, as it were, of the currency, which it was said would, in point of fact, be degenerated; and the fact of Germany resolving to adopt a gold currency same as our own, was cited to show that, by altering our currency, we should be taking a backward and retrograde step. This was all very well, but the experience of Germany did not offer much encouragement as an example. Few countries had suffered, and were yet suffering, more intense commercial depression, and the case was not analogous. Germany had no India; and if in a large portion of the German Empire silver had been the standard, and it had been impossible to change it, we might well believe that the great statesman who presided over her counsels would have shrank from establishing different standards in the same Empire. It was assumed, gratuitously assumed, that it was wished to restore silver by statute to the same value it formerly possessed when coined in France, in the proportion of 15½ to 1 of gold, and many arguments against any change were founded upon this assumption. But he, for one, never understood that this was intended. The question, indeed, was quite as much one of gold as silver. It was difficult to say precisely, in the present fluctuating value of silver, what ought to be fixed as its value in proportion to gold; but one great advantage expected from the adoption of a bi-metallic currency was the prevention of these disastrous fluctuations; and if it be said that no law could effect tins, the plain and obvious answer was that they were prevented when there was a bi-metallic currency in France; and it seemed certain that the same result would again follow its adoption by one or more great nations. It was also said we should lose our supply of gold. Well, if we were the only country which adopted a bi-metallic currency, there might be some force in this argument; but, by acting in conjunction with America and France, all fear of any such a contingency would be avoided. It was also said that all descriptions of property would be increased in value, 1182 that there would be great inflation, and that debtors would be able to discharge their liabilities more easily than at present. Well, it was at least open to doubt whether a little inflation would not, on the whole, be preferable to the intense depression we had so long experienced, or whether an increase in the value of property would be altogether objectionable; and as to debts being more easily discharged, we must remember that those debts were contracted whilst a bimetallic currency was actually in force; that it practically, in point of fact, prevailed up to 1873 or 1874, and that the present state of things was inflicting great hardship upon debtors. It would be easy to prove this from illustrations connected with trading and commercial interests; but take as an illustration the case of a person nominally the owner of landed estates which were heavily encumbered with charges for settlements, mortgages, and the like. Well, in the present unhappy state of agricultural depression, when it was difficult, if not impossible, to make both ends meet, when farms were vacant and rents reduced, such a person was not in a very enviable position; but mark the difference. They who received his money, they to whom his payments were made, so far from suffering any hardship, were really benefited by his misfortunes, because their mortgages having been granted, their settlements having been made under a totally different state of things, although the unfortunate debtor had now far less resources to fall back upon, far less money to pay with, they were receiving the same payments as before, the same number of sovereigns, and these sovereigns would now go a great deal further, and purchase more commodities; and they were, therefore, proportionately enriched at his expense. But those persons possessing fixed incomes were really the only persons who would even nominally suffer by the adoption of a bi-metalie currency; their incomes would not be affected, but remain the same as now, whilst the value of estates and, in fact, property of every description would be largely increased as sovereigns became of less value and possessed less purchasing power; but there was no real hardship in the case at all, for fixed incomes would have the same value as when they—or, at all events, the great bulk 1183 of them—were contracted for, the only difference being that they would no longer be swelled and increased at the expense of the unfortunate debtors; in fact, though no doubt partly, and perhaps largely, attributable to other causes, it seemed to his mind certain that the great depression throughout the world, in nearly every interest and every trade, was to a large extent due to the contraction of the currency caused by the demonetization of silver, and the degradation of that metal from its former position as a standard of currency to a mere commodity, such as iron, or tin, or lead; and, consequently, that the true remedy for our misfortunes, the true, plain, and direct way to revive our waning trade, to arrest the ruinous fall in property, and to restore general prosperity, was to restore silver to its former position as a partner with gold in the currency of the world; and he greatly feared all other plans would end in failure, and be found alike vain and useless. America at the present moment seemed most anxious to unite with European nations in taking action on this question, and if other European nations would do nothing without our adhesion, he thought we ought no longer to stand aloof. At the same time, it could not be denied that the issues involved in adopting a bi-metalic currency were momentous, incalculable, impossible to forecast with any approach to accuracy, and the risks of any error or false step most serious; and if Her Majesty's Government, therefore, should shrink from the responsibility of adopting it for this country, then a loan to India, as now proposed, seemed to him the next best course. No doubt, objections might be taken to any and every scheme which could be brought forward; and he quite agreed that the true course to be followed, and really the best remedy, was to reduce expenditure in India, to spend less money, so that India might be enabled to absorb a larger amount of silver, and, as he had already said, he was glad that the Government were now making great exertions to enforce economy; but even if the most economical arrangements conceivable were at once made, the benefits to be derived would not be felt for some time, and—Whilst the grass grows the horse starves.Something must be done immediately, and without delay; and failing a resort 1184 to some modification of bi-metallism, to be once more adopted either generally or by one or more nations, a loan seemed to him the only immediate practical way of meeting the difficulty, and to some extent relieving the pressure. The right hon. Gentleman opposite the Member for the City of London (Mr. Goschen), in a most interesting and able speech on this subject some three years ago, which sank deep into his mind, seemed to think that the best plan in reference to silver was to do nothing, but leave things to find their proper level by the operation of ordinary laws and natural causes; and, no doubt, this was generally the true and correct course. There were, however, exceptions to every rule, and all classes were now suffering so severely that if ever there was a time when a departure from ordinary rules was justified it was surely the present. It certainly could not be denied that these severe fluctuations in silver had tended in no small degree to produce the existing great depression in trade. On the one hand, the consumers of India, China, and all silver-using countries had not hitherto reaped the full advantage of the excessively low prices ruling, having, of course, in the long run to pay as much more for goods as would compensate for the loss on exchange, the value of these goods being regulated by the law of supply and demand; and, on the other hand, English manufacturers and English merchants, besides direct losses on the exchange, had reaped none of the advantages of an extended trade brought about by low prices and the opening out of new markets. The loss to the Government was indeed sufficiently serious, the loss to thousands of persons of limited incomes remitted from India was grievous in the extreme, but the loss to the trading community, to Lancashire in particular, and directly or indirectly to every manufacturer and every merchant, was frightful to contemplate. It was strangling the whole trade, and no greater boon could be conferred by any Minister upon the commercial classes, and, indeed, indirectly upon all classes, than to devise some means by which exchange could be raised. His hon. Friend the Under Secretary of State, said, last evening, that the Government had made up their minds to face the loss on exchange manfully; he did not, however, at all understand him to say that they would make 1185 no effort to mitigate that loss. He could assure him that the commercial classes had been looking forward with the greatest anxiety to some course being taken in this direction, and he earnestly hoped the Government would continue to give the matter their most serious attention.
§ MR. LOWE
Sir, the hon. Gentleman who has just addressed the House seems to have been more interested in the question of a bi-metallic currency than in the subject immediately before us to-night. As I wish to confine myself purely to this one question, I hope he will excuse me if I do not follow him through his long and able argument. I want to point out to the House as clearly as I can the present state of affairs in India in regard to this question of the currency, to put it to them whether it is possible to allow matters to remain as they are, and, finally, to consider what remedy can be applied to reduce the existing difficulties. I have first to submit a few propositions, which, I believe, can hardly be denied. The first is, that the rupee has a much higher value in India than in Europe. In other words, although the rupee is so very much depreciated when used as the means for the payment of debt in Europe, as long as it is confined to India it very nearly maintains its value, if it does not do so entirely. So that we have the singular phenomena that the same coin, circulating in two countries, has two entirely different values, one very much higher than the other. It is also true that there is no prospect of a considerable change in the direction of equalizing the two. I do not see any probability that the rupee will obtain the same value in England and in India. Of course, we know very well the causes that have produced the difference. The great fecundity of the silver mines; the resolution of almost every great Power in the world to employ gold instead of silver as its standard of value has, no doubt, greatly produced these effects. I cannot imagine that anyone can fairly see, in the state of affairs which now exists, any probability that there will be any considerable change. If there be, I should be glad to be informed of it; because, if there were any recuperative power in the matter itself, it would, no doubt, be infinitely better to leave it to that power than to make any attempt 1186 by strong or violent measures to set it right. For myself, it seems to me that the probability of silver recovering the position it held with regard to gold before recent changes and events is so very small that it would be vain indeed to calculate upon that as a remedy. The effect of all this as regards India is simply lamentable; because, though India is provided with a currency which seems tolerably well to answer its purposes for domestic use, yet, for the purpose of foreign payments, its currency is subject to most disastrous depreciation. That would be a great evil to any country, of course, that its currency should be depreciated. It is singular, because it does not often happen in history, that a currency serving very well for domestic purposes should be found to fall so very much below the mark when used for the purpose of paying debts due to foreign countries. If that is the case in other countries, how much more is it the case in India, which is bound by the most singular and indissoluble ties to England, the very existence of whose present state of Government, and whose condition altogether and entirely depends upon the fact of its being able to remit to England every year very large sums of money indeed? The effect of this is that a man gets a reasonable return for the money he employs in India; but that on the money exported to England he suffers most heavily, and gets a very small and uncertain return indeed. We know, from the accounts laid before us, that India by this means alone actually loses, and is deprived of, something like £3,000,000 yearly. This is a state of things which, if it is to be regarded as permanent, and one not likely to be speedily or immediately relieved, is one utterly intolerable to be contemplated if there be within our reach any means or power of amendment. I think the case is made out as clearly as can be that we should, if possible, avoid so terrible a calamity as that with which India is visited, through no fault of her own, which springs from the institutions which she has, which does not arise from the nature of things, but comes from institutions which are artificial, made by the will of man, and can be altered by the will of man. We are not justified, if there be any means that can possibly be devised by which this loss can be obviated, in sitting 1187 down quietly and acquiescing in it. It may be that the thing may be in some degree alleviated. But it is not as if it were a slight loss. The ground to be made up is so great that I cannot help thinking it is an excess of presumption and sanguineness to expect any change as likely to take place which will put India in a situation tolerable to any country, a situation where she can fairly pay her debts without being subjected to this enormous sacrifice. It is infinitely worse for India than for any other country, because she is placed in a situation in which no country was ever placed before—that her very existence, under her present Constitution and form of Government, depends entirely upon that which is procured for her by the payment of these sums of money. Therefore, I do think that a case is made out, if a case ever was made out, for seeking some remedy. What, then, shall we propose? The hon. Gentleman who has just sat down proposed a double standard. I deny, Sir, that there ever is such a thing as a double standard. To may have an alternative standard, but never a double one. Gold or silver, you may have them together; but one or the other is sure to gain the advantage. You do not really get a double standard; you get either, with the additional evil of uncertainty. Something or other makes an alteration, and suddenly deranges all your calculations by shifting you from one to the other. Therefore, I cannot regard that as any approach to a settlement. What happens? That when there is a shift people pay their debts in that coin which is the cheapest. How, then, a double standard can be any relief where you have a nation whose currency answers their purpose tolerably well in their own country, and utterly fails to answer it abroad, I cannot at all understand. The question is whether we cannot hit upon some other means. What appears to be wanted for India is a standard identical with that of the country with which it is so intimately bound up. As India is paying something like £20,000,000 a-year to us, it seems most extremely desirable that the money should be paid in the way in which it will go furthest. Therefore, I confess that it seems to me that the great object we should have in view, if it be possible to attain it, is that we should get a standard of value identical with 1188 that of England. Almost any sacrifice, considering the enormity of the sum lost, should be undergone in order to obtain that. It will be said that there is nothing easier, and that we have only to declare that we will have a gold currency. Purchase your gold, make it the standard, and reduce the silver to a mere token coinage, as in England. But where are we to get the money to purchase the gold? What possibility is there in a poor country like India, where we are doubting, even at the present time, whether she does not stand on the verge of bankruptcy, how is it possible to undertake anything of that sort? [Mr. JOHN BRIGHT: Buy it with the silver.] The right hon. Gentleman says "Buy it with the silver;" but the very misery of it is that we are ruined by silver already. However desirable it might be from the way in which Indian finance has been regulated, we must see that this is perfectly impossible. Are we, then, to give up the question in despair and do nothing else? Is there any other remedy? The hon. Gentleman who spoke last suggested a paper currency; but he put that on one side, because he said such a currency would not be relied upon—that there were no means of limiting it within the bounds admissible. But is that true? Is there no means of limiting a paper currency? What is the nature of it? What gives a currency its value? It is not because it is made of any particular material. The value of a currency depends on something altogether different. It depends upon two things. First, that it should be made legal tender, which is easily enough done; and then that some means should be adopted by which it shall be limited, so as not to exceed the sum that would be used if gold, for instance, had been employed. If you can do these two things, you have got a currency possessing all the qualities, so far as I know, of a thoroughly good gold currency, with the advantage that you have not to find the gold for doing it. That was the plan developed so many years ago by Mr. Ricardo. So far as I know, it has never been carried into effect; but it has never been refuted, and I have never seen, in the course of my reading, any serious objection urged against it. There is not the least doubt that a currency of that kind, of notes of legal 1189 tender sufficiently limited, will perform, all the duties of a gold currency, with the advantage that you save the wear and tear of the gold. I remember, at a period when I had the means of commanding much bettor information on the subject than I have now, making some sort of calculation as to what would be the effect here if, instead of a gold, we had a note currency, one pound notes for sovereigns, guarding that currency by Mr. Ricardo's proposition that if a person brought notes to the Bank he should always receive gold for them to their exact amount. Assisted by those who were much better qualified than I was to deal with this subject, I calculated that England would save something like £50,000,000 if she adopted the note currency. But English prejudices would not hear of that for a moment. As far as I know, the people may be quite right. The currency satisfies them extremely well, they are used to it, they can afford the luxury of it, just as they can afford the luxury of putting on any number of millions to our Debt; and, therefore, sound as I believe the principle to be, I do not for a moment wish to tamper with the present institution in England. But what possible objection can there be to trying such a thing in India, in the terrible state in which she is now, not as a mere matter of experiment, but in order really to save her from the bankruptcy with which she is imminently threatened? It would be perfectly easy, I think, to introduce notes into India, and to make the regulations that Mr. Ricardo suggested, that a person should receive gold for any notes he might bring in. We know, if there were any redundancy in the currency, that the process would go on until the redundancy ceased. But it would go no further, and then we should be possessed of a currency not so showy, not so expensive, but for all practical purposes quite as useful and as good as the currency in England or as the silver currency of India. I do not enter into the technical question how it is to be brought into working. The system can be reduced by experts to such a state that you would have a token currency of silver just as we have in England, and a legal tender up to a certain amount just as silver is here. There may be, and probably there are, very serious reasons 1190 and overwhelming objections to this scheme. Perhaps a person who, however unworthily, has held the Office of Chancellor of the Exchequer is not even prudent in broaching such a scheme. But I am so strongly impressed by the state in which India is, simply throwing away for her currency arrangements £3,000,000 yearly, that I think any suggestion of any kind, which has any plausibility, any semblance of practibility, that I felt it my duty to offer this suggestion. It may be shown that I have overlooked some principle or some condition which makes my idea valueless; but still I offer it, because I do not believe we can go on long in this way, draining these millions from India, where money comes like blood from the poverty of the people, and where we are put to our utmost shifts to make both ends meet, that we may not die by that most ignominious of deaths by which a great Empire can perish—bankruptcy. I have, at any rate, taken my life in my hand in offering this suggestion. I would not have done it if I had thought we could go on as we are; but I do not see why any country should pay this sum merely for the pleasure of keeping on a very bad currency.
§ LORD GEORGE HAMILTON
In consequence of the withdrawal of the Amendment of the hon. Gentleman the Member for Hackney (Mr. Fawcett), my hon. Friend (Mr. E. Stanhope) is prevented from addressing the House again. As, however, there are some observations which it is necessary to notice, I venture to detain the House for a few moments before we go to a Division. The right hon. Gentleman who has just sat down has dealt with the great loss which the fall in the price of silver has placed, during the past few years, on the Revenue of India, and he calculates that that fall has imposed a loss of something like £3,400,000 annually on the Revenue of India. But my hon. Friend the Under Secretary of State explained that these figures only represented the loss by exchange, and did not mean that that sum is money in gold annually lost. He simply stated that that was the loss, applying to these figures exactly the same test as is applied to every other figure of the accounts—upon the number of rupees annually remitted to this country in order to make certain payments in gold in this country. There- 1191 fore, the loss is not in gold; but it should be put in this way—that the Indian Government, in consequence of losses by exchange, have now to remit something like £3,400,000, or three crores 40 lacs, upon all the gold payments in this country, the difference between the nominal price of the rupee as taken in the accounts—namely, two shillings, and its actual market price in this country. But still, making all allowances for that difference, the loss is so serious that if anyone could suggest any practical means by which this loss could be reduced the Government would gladly adopt it. But in all propositions involving a change in the currency, we have to consider two separate questions. First, we have to consider whether or not any alteration in the standard will be suited to the wants and conditions of the people of India; and, secondly, we have to take care that any remedy or alteration proposed will mitigate, and not aggravate, the present condition of things. It seems to me, and I speak with all diffidence on this subject, that the great object we should have in view is to raise, if possible, the price of silver in London, and not in India. I believe that the purchasing power of the rupee in India has not greatly fallen, and that was, indeed, one of the first propositions of the right hon. Gentleman. It seems to me self-evident that so long as there is a great demand in India for silver, and a small demand for it in England, so long must the purchasing power of silver in India be greater than it is in England. Possibly, some proposition might be made by which the value of silver might be raised in England. Undoubtedly, the sale of the Secretary of State's bills in London has a most depressing effect upon the silver market. How depressing that is I can well illustrate by some figures which I laid before the House some two or three years ago. In the year 1876, there was a very sudden fall in the price of silver. I believe that experts differ as to the actual amount of silver in circulation throughout the world; but I believe the lowest estimate puts the amount at £600,000,000 sterling. It is a curious illustration that I am about to give of the connection between cause and effect. Between January and July of that year, the Secretary of State for India succeeded in selling £2,700,000 of ru- 1192 pees. But the sale of those bills mainly, as I believe, reduced the price of silver as quoted in the London market by 11½ per cent! That very forcibly illustrates the extreme difficulty in which the Secretary of State for India was placed in getting rid, upon advantageous terms, of his drafts upon India. The proposition of the right hon. Gentleman is that we should issue notes in India to represent gold. The first criticism I make upon that is that no notes would have any value, unless they represent something; and although you may say they represent gold, unless the Government have the gold nobody will believe them. The second great objection I have to make is that if you once attempt to make silver a token currency, you involve yourselves in interminable difficulties with the occupiers of land. Then, what are you to do with the enormous amount of rupees in circulation in India, where, at present, there is no token currency, and the purchasing power of the rupee is exactly corresponding to the intrinsic value of the silver contained in it? Another objection is, that if you increase the currency of India by the printing press, by circulating notes, you must diminish the demand in India for silver; and as you diminish the demand for silver in India, so do you reduce the price of silver in London. Therefore, if we adopt the proposal of the right hon. Gentleman, it seems to me that it might have exactly the reverse effect of what we propose, and so far from increasing the price of silver in London, which is the main object of every remedy, it might do just the contrary. The silver market is undoubtedly in a state of excessive sensitiveness, and its extreme fluctuation shave undoubtedly been aggravated by the Bills which the Secretary of State has been forced to sell. I think no one who has looked into the Home charges can believe that any great reduction can be effected. If you apply the most drastic scheme of economy, it could not, for many years, seriously effect the Home charges of the Indian Government, because nearly all of them are connected with services which have been rendered, with money which has been borrowed, with materials which have been forwarded for the benefit of India. Therefore, it is impossible materially to reduce the sums payable in gold in this country unless the Indian 1193 Government repudiates its liabilities, which, of course, is impossible. Such being the position of affairs, the Secretary of State must find ways and means to meet this Home liability. Of course, primal facie, nothing can be more objectionable than getting out of his difficulties by constantly borrowing in this country, because there can be little doubt that one of the main causes of the present condition of things was the system, adopted some years ago, of always borrowing in London for the benefit of the Indian Government. Unfortunately, owing to the peculiar system of accounts adopted, all the liability for the railways was excluded from the capital expenditure, and it was not until a very short time back that this House and the public became aware how great a debt the Indian Government had in England. If, then, it be objectionable, permanently to increase the debt by borrowing in England, I think it may very fairly be asked why the Government ask leave to raise a loan of £5,000,000 in this country? My hon. Friend the Member for Hackney (Mr. Fawcett) made a very unjust criticism upon the proposal, when he called it a proposal to speculate in silver. Now, Sir, so far from the Secretary of State for India having any wish to speculate in silver, I am quite sure I am only expressing the wish of everybody in the Office, when I say that their wish is to have nothing whatever to do with silver. Unfortunately, the Secretary of State, from the exigencies of his position, is the largest seller of silver in the world, and he is obliged to force his silver on the market, whether it is wanted or not. Now, the silver market is like an individual—it has got a digestion, and it can assimilate a certain amount of food. But, if you overload its digestion, like an individual, also, it has a fit of indigestion, and then it cannot assimilate the amount that it could before. I think there are indications that the exchange will improve. I saw a statement, the other day, in the newspapers, and it has not been since contradicted, that there is a complete failure of the Italian silk crop, and that the French crop has been materially affected. In the year 1876 there was a similar failure in the silk crop, and the result, though the House will hardly believe so incredible a statement, is that it made the exchanges rise 20 per cent. If there 1194 be this failure of the European silk crop, there will be an increased demand for Eastern silk, and that cannot fail to engender an increased demand for silver, and a rise in the exchanges. Suppose, then, by a judicious use of this loan of £5,000,000, though I hope the Secretary of State for India will only find it necessary to use a part of it, we are able to raise the price of the rupee. It by no means follows, although you may increase the permanent liability of the Indian Government in England, that therefore you are causing a larger number of rupees to be remitted from there. If, through the use of this loan, silver rises a penny in the rupee, that is a gain of 4 per cent, and upon a payment of £15,000,000, taking the rupee at 2s., it is a gain of £600,000; while if the Indian Government were to spend the whole of this loan, which is most improbable, it will only add permanently to the annual liability of India the sum of £200,000. What we have to consider to-night is not so much the net amount of pounds sterling which have to be paid, as the number of rupees which the Indian Government will have to get to England to meet these payments. Of course, the House may say, although I can hardly believe it under the circumstances, that it does not think it desirable that the Secretary of State for India should have any borrowing powers. If it does that, it will have the effect of forcing him to get home an enormous amount of silver from India. I read only the other day a letter in The Economist, written by an Indian merchant, which expresses so well what the position of the Secretary of State for India is with regard to these Bills, that I will just read two sentences—Why does the Secretary of State for India push his bills down people's throats? The result is that the poor draftsmen are the victims of speculators and the puppets of Exchange bankers.So far as I know, that is exactly correct. The number of purchasers of Indian bills is very small, and, therefore, they can drive by a combination the Secretary of State for India into a corner. It must be remembered that this matter of silver does not merely affect the Government of India. It affects also the whole of our Eastern trade. The depreciation in the value of silver need not necessarily injuriously affect 1195 those who trade to the countries where silver is the standard of value; but what is absolutely ruinous to the trade are these constant fluctuations up and down, because they render unstable the standard of value, which is the basis of calculation of the profits of the individual. I hope, if it was necessary to make out any case after the speech of my hon. Friend, that I have made out a case which will justify the House in giving its assent to this loan. The course of treatment which we are adopting very much resembles that course of medicine known as homoeopathy, which, by giving the patient infinitesimal doses of the poison from which he is suffering, finally ejects it from the system altogether. Perhaps I may be permitted also to say a few words with regard to Indian finance. Undoubtedly the Resolution withdrawn last night which commenced with these words, "This House views with apprehension the condition of Indian finance," did give expression to a feeling of inquietude which it would be very foolish of me to ignore. One may very fairly ask—"What is the cause of that uneasiness?" It is not caused, as was said last night, by the hon. Member for Orkney (Mr. Laing), by any falling off in the Indian Revenues. Figures show that the Revenue, under seven years of extraordinary pressure, remain firm. Eliminating all disturbing influences, the taxes, which, seven years ago, brought in a certain sum, bring in now a larger sum. Neither can it be found in an increase of the ordinary Expenditure. I can show that there is very little increase in the Civil and Military Expenditure. Excluding the war in Afghanistan, there was no considerable increase in the Military Expenditure, and what increase there is was due almost exclusively to changes at home, in consequence of alterations in the terms on which men are enlisted. If, then, these apprehensions were not on account either of a great diminution of income or a great increase in Expenditure, what is the cause of it? I think the cause is that our Government, from the time it came into Office up to the present time, has been subjected to an almost unparalleled pressure. I can illustrate how enormous the strain has been by giving one set of figures. The Expenditure over and 1196 above the ordinary Expenditure of India, for which the Indian Government have had during the past seven years to find Ways and Means, taking the rupee at the ordinary rate of 2s., amounts to the enormous sum of upwards of £57,000,000. The items are £2,600,000 for the war in Afghanistan. That is an expenditure for which, no doubt, Her Majesty's Government are responsible, and they are quite ready to defend their action. The other items are £16,000,000 incurred on behalf of Famines, £28,700,000 incurred for Public Works, which, whether the system is right or wrong, is a system that was in existence when we came into Office, and £9,700,000 loss by exchange. I arrive at this last item by taking the average loss on exchange to India during the seven preceding years, and during the seven years we have been in Office, and the sum lost in the last seven years exceeds that lost in the first period by £2,700,000. Now, how has that £57,000,000 of exceptional Expenditure been mot? It is very frequently said that the India Office takes a very optimistic view of Indian finance; but I think I may say in regard to myself and my hon. Friend that no figure or fact ever set by us before the House has been disputed. Nor do I think that even in my most sanguine mood I should ever have ventured to predict that India, during seven years of such extraordinary depreciation, would be able to meet so large a proportion of the charges out of her ordinary Revenue. Now, how has this amount been met? In three ways. By loans, by the reduction of cash balances, and by payments out of ordinary Revenue. The increase in loans during this seven years has been £33,400,000. There has been a decrease in the cash balances of £8,000,000, but, of that, £4,000,000 to municipalities; so that that makes a total, with the loans, of £37,400,000. Therefore, during these seven years of extraordinary depression, the Revenues of India have found very nearly £20,000,000 to meet the extraordinary charges. From these figures we may draw one very safe conclusion. If you could altogether eliminate from consideration these abnormal charges, no doubt the prospects of Indian finance would be most flourishing. If, on the other hand, every seven years these enormous charges are to be im- 1197 posed upon the Indian Revenues, and we are to be required to find Ways and Means to the amount of £57,000,000 over and above the ordinary Expenditure, no words used in this House are sufficiently gloomy to depict the prospects of Indian finance. But I believe the right and correct view is that although these difficulties will from time to time occur, it is almost impossible for them to occur again simultaneously, as they have done. If we can only reduce our Expenditure, so as to increase that great margin between Expenditure and income which I have already mentioned, and if we are only fortunate enough in the future to have our one difficulty at a time to deal with, I believe, by thrifty and judicious administration of Indian finances, we can so increase the present margin between Revenue and Expenditure, that in a very short time those who now use such strong and gloomy language concerning the state of our finance will be the first to laugh at their own fears.
§ Motion made, and Question proposed, "That the Debate be now adjourned." (Mr. J. K. Cross.)
§ THE CHANCELLOR OF THE EXCHEQUER
said, the arrangement was that the debate should be taken on the Motion that Mr. Speaker do leave the Chair, and that if it lasted more than two nights, that the Resolutions should be passed, and the debate resumed at another stage of the proceedings. He hoped the House would permit that arrangement to stand, and the Vote for the loan to be taken now. The Government, of course, would feel bound, on the second reading of the Bill, for instance, if that were convenient, to put that stage of the Bill in such a position as would give full opportunities for further discussion.
, if he understood the Chancellor of the Exchequer rightly, believed what was of importance was to get through the first stage of the Loan Bill, and that the passing of the Budget Resolution was a matter of form of no practical importance. Unfortunately, they had not had two full nights' debate; and, under the circumstances, he thought the most convenient course would be that his debate should continue on a future night, but that the Government should be allowed at once to take the first stage 1198 of their Loan Bill. Otherwise, those who had already spoken would be able I to speak again; while, as to the Under Secretary of State for India, he was sure the House would do in his case what it had not unfrequently done before, and permit him again to address it on matters arising in the debate.
§ MR. E. STANHOPE
said, that, after the expression of the views entertained by the right hon. Gentleman the Member for Greenwich, which seemed to be generally shared by the House, the Chancellor of the Exchequer would be prepared to adopt the course which he suggested. It would, therefore, be understood that the debate on going into Committee on the East India Accounts would be postponed to a future day, and that the Government should now be allowed to take the Resolution on the East India Loans Bill.
§ MR. FAWCETT
, said, it would be very convenient for hon. Members if the Under Secretary of State for India, when he came to reply, would explain more explicitly what was to be the nature of the Commission of Inquiry into the state of the Indian Army which he proposed to appoint. Some persons thought it was to be a Commission in India, others said it would be a mere departmental inquiry, while others indulged the hope that it was to be a Commission not merely to inquire into departmental questions, but into all questions of military organization. Without such an inquiry, indeed, any attempt to reduce military expenditure would be perfectly ineffectual.
§ MR. GOSCHEN
wished to urge upon the right hon. Gentleman the extreme importance of resuming the debate at the earliest possible date. The attention of the whole mercantile world, both in England and in India, was fixed upon the very serious issues raised in regard to the silver question. It was of the utmost importance that this question of the bearing of the depreciation of silver upon the Revenues of India should be discussed at the earliest possible moment, in order that no hopes might be raised which afterwards were frustated by the impracticability of the schemes proposed. This question of silver must be argued out; and as he was the Chairman of the Committee which considered this question two years ago, and as he also represented this country at the Conference 1199 which inquired into the silver question in Paris last year, he certainly should consider it his duty not to shrink from stating his views.
§ Motion agreed to.
§ Debate further adjourned till Thursday, 12th June.