HC Deb 18 December 1893 vol 19 cc1618-71

THIRD READING.

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read a third time."

MR. COURTNEY

This Bill is for the purpose of authorising a loan of £10,000,000 sterling to the Indian Government, but the discussion of the previous stages have gone beyond the examination of that special proposal. It has—perhaps necessarily—ranged over the examination of the previous proposal which was accepted in principle by a Committee appointed at the instigation of the India Office relative to the suspension of the free coinage of silver. And although this question of the closing of the Mints is, as I believe, completely separable from what has recently happened, the two things have been examined together, and it is necessary that they should be examined together, because undoubtedly the closing of the Mints in India to the free coinage of silver has been productive of a situation which requires some consideration as to what the next step should be; and the determination of that next step must depend on the anticipated consequences of the first step. It is, therefore, quite justifiable (although, I repeat, the closing of the Mints is not necessarily connected with the refusal of the Indian Government to sell their drafts) that there should be this wide discussion. Various hon. and right hon. Gentlemen have suggested that the present situation has actually been caused by the closing of the Mints. It is natural, therefore, that as the only member of the Committee appointed by the India Office to consider that question who has the honour of a seat in this House, I should desire to take some part in these deliberations. The policy of our action has been severely questioned, and it is not astonishing that one should desire to defend a step in which one concurred, if one did not originate it. But at the same time I must repeat once more that the closing of the Mints and the refusal of the Indian Government to sell their drafts on India at the prices which were available are two steps which are absolutely distinct from one another. The one is not the cause of the other. One can conceive of the closing of the Mints having been followed by the usual course of business—namely, the sale of the Council bills in the open market for whatever they could have fetched. One can also conceive of the refusal to sell taking place without any previous closing of the Mints. Nothing, therefore, is more clear than that the steps were not connected. You might have closed the Mints without refusing to sell the drafts; you might have refused to sell the drafts although the Mints had remained upon. As a matter of fact, that step was taken in, 1876, when the Indian Government did refuse to sell their drafts at the price, which they were then offered for them, although there was no previous closing of the Mints. I have insisted on the essential independence of these two things: I must ask also what was proposed for our consideration on that Special Committee, and what it was that we assented to. There seems to have been a most remarkable misunderstanding of the actual steps recommended by us and of the policy of the Indian Government. I read in newspapers of considerable authority that the Committee attempted to fix the rupee at 1s. 4d., and that the Indian Government was actuated by the same desire. I have no authority to speak for the Indian Government. It is represented here by those capable of explaining and defending its conduct. But I may say for the members of the Committee that we should have been extremely astonished if we had been told that we had attempted by a stroke of legislation to fix the rupee at 1s. 4d. from the time that stroke was effected thenceforth and for ever. No such step entered our minds. Had it been suggested to us we should have pronounced it impossible. The rate of exchange at the time was not 1s. 4d., and to think we imagined that by closing the Mints we could bring up the coined rupee to that level is to attribute to us a policy and an assumption which we certainly did not entertain. I am astonished at the suggestion of the hon. Member for Whitechapel (Mr. S. Montagu), who apparently thinks that it was our intention to set up the rupee at 1s. 4d. as an immediate consequence of the closing of the Mints, to which we said that we could not refuse our assent. The simple question before us was this: Through a long course of years the value of silver, and, therefore, of the coined rupee (silver had in all those years been freely coined in the Indian Mints), had continually fallen in relation to the golden sovereign. This produced two disagreeable consequences. In the first place, there was the continual variation in the rate of the exchange between the United Kingdom and India, which disarranged the course of trade between the two countries. No one knew in making an arrangement based on the present value of the rupee what its value would be six months hence, when the transaction thus entered on would reach its conclusion. No one, therefore, could make any safe calculation as to the prospective gain or loss of a transaction. That greatly hampered trade between India and the United Kingdom, exposing merchants and bankers to chances on which they could not calculate, and, in fact, bringing a gambling element into their transactions. But, in the second place, the continued depreciation of the rupee in relation to the sovereign imposed on the Indian Government a growing pecuniary loss. They were required to remit a considerable sum of money to England every year to meet their debts in this country —which debts are payable here in gold— and since, owing to the fall in the rupee, their receipts were becoming more and more insufficient there was not only a disarrangement of commerce, but a growing deficiency on the part of the Indian Exchequer. Thus the question before us was simply this: It was suggested that the free coinage of silver should be stopped in India, and that suggestion was put forward as a means of arresting the inconvenience to which the Indian Government had been exposed and also preventing the variations of the exchange between the two countries and the consequent derangement of commerce. We took a great deal of evidence. We examined almost all the objections raised against the course suggested. I do not think that a single objection has been raised in the Debates on the various stages of this Bill which was not before us and fully considered. Our decision, as is well known, was that we could not recommend the Government at home to refuse to accede to the request of the Government of India that they should stop the free coinage of rupees. Well, it is said that that is all very well, that our action showed that we anticipated a rise, even a rapid rise, in the value of the rupee. My right hon. Friend the Member for St. George's (Mr. Goschen) said that he had read the Report of the Committee carefully, and that he could not but come to the conclusion that the Committee anticipated an immediate rise in the value of the rupee—not only a momentary rise, but a rise that would be maintained. The Committee, as a whole, expressed no opinion the one way or the other upon the point as to whether there would be a rise or whether that rise would! be rapid. Their language does not lend any countenance to the belief that they did anticipate a rise, still less a rapid rise. Their words show that they looked forward to the possibility of a very slow rise, even the possibility of no rise whatever, that they are not to be accused of what has been imputed to them of anticipating a rise which has not happened, still less a rapid rise. Here is a paragraph in their Report which deals expressly with this question. I refer to paragraph 64. What they there say is as follows:— Next as to the effect of simply closing the Mints on the future value of the gold price of the rupee. If there be already, as there is reason to suppose, a quantity of unused rupees in India, they would have to be absorbed before the closing of the Mints produced an effect on the value of the rupee. In that case, there might be some time to wait before there was any increase in its value. The apprehensions of men concerning the future might cause an immediate effect of a serious character; but one cannot venture to say for what length of time this would be maintained. Neither could one trace the progress of the enhancement of the value of the rupee, in respect of time or place, which we should expect to follow the closing of the Mints. I may say that we had reason to believe that there were a quantity of unused rupees in India and we expected that they would have to be absorbed. In that case there might be some time to wait before there was any increase in the rupee value. How is that consistent with the objection that we looked forward to a rise—even a rapid rise? Further on in the Report—paragraph 149—I read— What then would be the effect of the scheme suggested by the Government of India? …. It is true that those who think that exchange would not for a considerable time rise at all, and that even the existing ratio might not be maintained, may be right in their anticipations. The Committee, in their concluding recommendations, admitted that it might be that a considerable time would elapse before there would be any rise at all. And they pointed out in the previous paragraph, which I have quoted, that if there was any comparatively large amount of unused rupees in India they would have to be absorbed before any rise could be expected. The assumption, therefore, that we thought that the rupee would jump up to 1s. 4d. is an assumption which we did not intend to be drawn from our Report. Speaking for myself, I have a Memorandum by my side at this moment—a Memorandum which was circulated amongst the members of the Committee expressing my own opinion—and in that Memorandum I anticipated that some years would elapse before any alteration would be found in the value of the rupee relative to the sovereign, and therefore before there would be any considerable alteration in the financial position of the Indian Government. The fact is that this imputation upon us arises from our extreme caution. We wanted to make as little change as possible. We desired to keep things, if it were possible, exactly in the position in which they were — to prevent the rupee depreciating, but also to prevent it becoming inconveniently appreciated. Some persons in authority, no doubt, thought that the rupee would jump up a good deal and remain very much enhanced in value, and it was suggested that that should be prevented by the adoption of the provision which we recommended to the Government, and which they acted upon, that the rupee should be exchangeable for sovereigns at the rate of 15 rupees to the sovereign. At that it could not go above 1s. 4d. In order to prevent the possibility of it getting above that we proposed this limitation which fixed the maximum value of the rupee—the minimum value being fixed by other circumstances. We proposed to leave it at the precise value it was at when the Mints were closed, at the same time preventing any large or inconvenient rise by laying down the provision that the Indian Government should be under an obligation to exchange rupees for sovereigns at the ratio of that indicated. As to the minimum value, of course the rupee could not fall below the value of the silver—below its natural value as one of the precious metals. We should have secured two advantages which the Indian Government sought for. In the first place, we should have secured the steady ratio of exchange, saving commerce from the fluctuations which it had been exposed to—the disturbing influences which had worked so much mischief amongst the bankers and traders; and, in the second place, we should have secured the Indian Government against the further loss in the depression of its revenue from the depreciation of the rupee. I do not mean to say that even by stopping the coinage of rupees altogether the value of the rupee was saved from any possible fall. I wish to point out this, which is now in my mind, and has not been mentioned by any previous speaker, that if the value of the rupee in the past had changed relatively to the sovereign, in consequence of an alteration in the value of gold as much as in consequence of an alteration in the value of silver, any future change in the value of gold would still affect the value of the arbitrary rupee. It would not, by our arrangements, be saved from the variation consequential on the variation in the value of gold. But it would be saved from the variation in the value of silver. I do not think that that is a matter which attracted much attention. But it is a point to be considered. We could not say that the rupee would not fall even if we stopped the coinage of silver, because it might fall in consequence of a rise in the value of the sovereign as gold, and not in consequence of a fall in the price of silver. Let me add that we knew the closing of the Mints would produce consequences which were different from those which would have come to pass if the Mints had not been closed. We were quite conscious of what my right hon. Friend the Member for St. George's dilated upon, that our intervention was pro tanto an alteration of the relations of debtor and creditor. 'With regard to contracts which are to be settled in the future, if we prevent the rupee from falling we do something which will affect the amount to be paid hereafter, and make that amount different from what it would have been if our action had not been taken. In other words, the creditor would receive more than he would have received had the Mints remained open. But I submit that the circumstances were such as justified this intervention. I must say, in reference to the fear of my right hon. Friend, that in this matter he is paying a little too much respect for form and too little respect to fact. It is quite true that the form of the contract is subject to modification if you alter the character of the rupee—if you give it the artificial value which attaches to it by closing the Mints —but if, in so doing, you secure a fulfilment of the contract nearer to the sense of the contract, you secure justice far more than if you allowed the contract to work out in its own way. Let us look back to the period when there occurred such an enormous change in the value of the precious metals in the 16th century. Who now, looking back to that time, would say that the statesmen who had interfered—and Lord Burleigh did, though in a small way, interfere—with the contracts then running, and saved those entitled to the money from the depreciation which followed, and exposed those liable to pay money to pay something which would counterbalance the depreciation, would not have imposed on the contracting parties a condition of justice far more real than was secured by leaving the contracts absolutely unchanged? Here, if the circumstances are such that we believe the bargains between different parties would be observed in spirit more closely by keeping the rupee more closely at 1s. 4d. than allowing it to drop to 1s. 1d., or 1s., the Legislature is justified in interfering. The intervention of the Legislature saves the obligation from being changed. If the Member for St. George's refuses to look at the circumstances which require the problem to be from time to time reconsidered, and to inquire whether a state of affairs has not arisen which justifies intervention to change the mere form of the contract in order to secure regard for its spirit, he is really enslaved to the form and neglecting the importance and reality of facts. Now, Sir, I have stated what the exact recommendation was which was submitted to our consideration on the Committee, and which was acted upon. If the Indian Government had been content with closing the Mints, and gone on selling its drafts as before, what would have happened? We cannot say with precision. We cannot give an exact figure as to what would have happened. But I think that we can say this, that the drafts of the Indian Government would have sold for something —have sold between certain limits which were clearly definable. Their drafts could never have gone beyond 1s. 4d. in the rupee value, because we had made the provision that the Indian Government should be under the obligation to give rupees in exchange for the sovereign at that rate. And, therefore, it never would have been worth anybody's while to give more than 1s. 4d.—to enter into a higher bargain. On the other hand, the drafts could not have gone below the value of the raw silver; That would have given about 1s. 1d. in the rupee, for the rupee considered as raw silver would be worth about 1s. 1d. If the Indian Government had gone on selling its drafts it would have realised for these drafts something between these two rates, and, judging by the rate which prevailed while the Mints were still open, we should not have been far wrong if we had believed that the drafts would have secured something like 1s. 2½d. The question therefore arises, has the Government been wise in refusing to sell the drafts at all, for anything like the price which could have been obtained for them, and in borrowing as it has to the extremity of its borrowing powers, and coming to obtain even further powers of borrowing to meet the demands which have to be met here? The Indian Government knows that it could have sold drafts, no doubt, not at tenders which would have come to the amount which they desired, but the drafts could have been sold if they had been put on the market. There have been remittances going on to India all along, and, strange to say, there have been remittances of silver going on all along. But, unfortunately, the Indian Government did not leave the matter alone. They refused to sell their drafts. The hon. Member for Whitechapel is not content with the Indian Government because they did not insist that they should get 1s. 4d. I must confess that I have much respect for his experience. But how he thinks that they could have got that amount, when they could not secure 1s. 3d., is to me a considerable puzzle.

MR. MONTAGU (Tower Hamlets, Whitechapel)

By an Import Duty on silver.

MR. COURTNEY

My hon. Friend now thinks that an Import Duty on silver ought to be associated with the closing of the Mints. The Committee did consider the question of an Import Duty on silver, and we rejected it for two reasons. In the first place, we had to meet the question of the continual variations of exchange. The imposition of an Import Duty on silver would have left those variations as lively and active as ever. It would have loaded silver with a percentage of increase, no doubt, but it would not have affected the frequency of the variations of silver in relation to gold. The rupee would have gone up and down in precisely the same way. Next, there is a certain quantity of uncoined silver in India. An Import Duty on silver would have been a bonus to every holder of such silver; it would have been a loss to the Government, a loss to every person engaged in trade and commerce, but a benefit to a certain number of banks and speculators who had uncoined silver in their hands in India, and who would have realised all the Import Duty imposed upon it. The expectation of the imposition of an Import Duty now has been to a large extent the cause of the state of things that has recently prevailed in India. I regret that my right hon. Friend the Chancellor of the Exchequer did not say a word in reference to this point on Thursday last. Speculators have been accumulating stocks of silver in India in the anticipation that an Import Duty is going to be put on. I trust that my right hon. Friend will state that the Government have no intention of imposing such a duty. It would certainly not only be an interference with ordinary trade, but it would give a bonus to persons who do not deserve anything of the kind, whilst it would give no considerable assistance even to the Indian Government themselves. I should look with considerable jealousy on any proposition of the kind. If it were necessary to adduce any additional reason to induce the Indian Government to put its foot strongly down with reference to such a proposition it would be the fact that the importation of silver, which has been going on from the United Kingdom during all these months, has been the one reason why the Government has been unable to sell their bills. Those who have sent over silver in this speculative way are not only doing the Indian Government an injury now, but will do so in the future, and deserve to have no boon offered to them. It is said that the Indian Government are unable to say what the exact rate of exchange would have been had the drafts been freely sold. The effect of their action in refusing to sell their bills has been to turn the balance of trade the other way to that which we have experienced for many years. We, Members of the Committee, are charged with not having anticipated any effect upon the balance of trade of the closing of the Mints. That is another statement which is not supported by an examination of the Report of the Committee. We did think that closing of the Mints might have a temporary effect on the exchange and on the course of trade, and might temporarily restrict exports from India and temporarily inflate the volume of imports into India. But we said we did not believe that any permanent effect of the kind could be produced. In paragraph 123 of our Report we said— So far as concerns their effect on the import of silver into India, the Council bills now compete with silver; the closing of the Mints to silver would relieve the Council bills from this competition, and the immediate effect would be a tendency for the bills to sell at higher price. The merchant wishing to pay for Indian goods would have to pay more gold for the Council bills. If their price should rise so far as to make the business of buying Indian goods unprofitable, it would, no doubt, pro tanto, check the export trade of India, and the price of bills must fall. But it would only fall so far as would be necessary in order to make the trade again profitable. In short, India must pay her debts by exports, and the Indian Government cannot in any way avoid whatever expense is necessary to pay them. That these exports should ever consist of silver, depreciated as silver is in the Western world, is highly improbable; but if this should turn out to be the case it would be because silver was the article which India could best spare. Of course we relied on the fact that India must pay her debts; we did not expect that the Indian Government would have thought that the payment of the debt might for a time be arrested. If the Indian Government had gone on selling their bills the necessary effect would have been an alteration of prices which would have compelled the Indian producer to send over here goods which, as things are, have not been sent. India has always to pay a very large sum annually to Great Britain, and it is necessary that the balance of trade between the two countries should follow that fact. The goods must be sold, and the trade will be regulated in the end by the necessity under which India is of paying the debt she owes to people on this side with respect to interest on loans, and other matters of that kind. The truth is that the whole of the working out of the problem has been embarrassed by the refusal of the Indian Government to sell their bills. By that refusal they have delayed the re-establishment of the situation which is necessary for the placing of commerce in its proper position. In fact, the Government, by their action, have taken away that spur of necessity which requires goods to be sent over here in order to pay for the bills. The bills have not been sold, and the goods have not been sent. One question which has been raised in the course of the discussion is, whether the change involved in the closing of the Mints, and the giving to the rupee of a value differing from that which it might have had under free mintages, produces any change in the taxation of India. The Chancellor of the Exchequer (Sir W. Harcourt) was rather shy on this question on Thursday, and quoted the opinion of some unknown authority which he said led him to the conclusion that the closing of the Mints did not involve any change to the detriment of the Indian taxpayer. The Committee never accepted any such conclusion as that. We always recognised that if the closing of the Mints was to be operative in altering the value of the rupee there must be, pro tanto, an addition to the taxation of India which might be concealed, but was all the same perfectly real. The language used by my right hon. Friend (Sir W. Harcourt) really supports that contention. The argument quoted by my right hon. Friend was to the effect that when in the past the rupee has been depreciated the rent paid by the ryot has been a depreciating rent, and the taxation of the ryot has been a depreciating taxation. If, however, you reverse the process you find that the rent paid by the ryot becomes an increasing burden, and, therefore, the taxation of the country is increased. Indeed, what motive is there for the whole of this business except that of obtaining something more in taxation, and freeing the revenue of the Indian Government from the embarrassment in which it is placed? We are not afraid of recognising that consequence of our action. I am inclined to think that the government of India by England is worth its cost, and that, if necessary, the taxation of India must be increased to meet its cost. I do not mean to say that we should not reduce the expenditure to the lowest limits consistently with safety, but I do say that, whatever is the necessary cost of government in India, that government is worth it. Therefore, I do not shrink from the conclusion, nor do I shrink from avowing here, that the stoppage of the coinage of silver, if followed by the appreciation of the rupee, is an increase of taxation, and, if followed by a depreciation of silver, a cessation of what would be a relief of taxation. The Government, no doubt, had a grave question before them when, after having closed the Mints against the rupee, they found they could not get as much for their bills as they had hoped. The question whether they did right under these circumstances in suspending the sale of their bills depends upon the estimate of the time that must be taken in changing the value of the rupee. If you could anticipate that in six months the rupee would go up, it might be desirable to enter into a speculation as to the future rise of the rupee. If, on the contrary, there is reason to believe that a long time must elapse before you can by any possibility sensibly appreciate the rupee, it becomes a very dangerous and hazardous policy to keep back your bills in expectation of the rise. My right hon. Friend (Sir W. Harcourt) cited what was done in 1876, when the noble Lord the Member for the Ealing Division (Lord G. Hamilton) was Secretary for India, and the sale of rupees was for a time stopped, in justification of what is proposed to be done now. But my right hon. Friend did not tell us how that experiment worked out. That omission from his speech of the other day he will have an opportunity of supplying to-day. In 1876, the rupee having fallen much below what the Indian Government liked, that Government suspended the sale of their bills and borrowed some money for the purpose of supplying the funds they would have obtained by the sale of them. How has that worked out? I have looked at the price of the rupee calculated in gold from 1876 to the present time. There was a short interval during which, if that debt were repaid, it might have been repaid without any loss to the Indian Government, but if the debt was not repaid within that time—and it was so short a time that to attempt to unload the whole debt during the interval might cause the rupee to depreciate and so prevent full payment of the debt—then undoubtedly the transaction would have been one which was full of warning as to what should not be done, rather than an encouragement of what should be done. What did it come to? The rupee being in that condition that about 12 went to the sovereign, it was thought desirable to raise a loan; but if you had to repay that loan now, instead of being able to repay it with 12 rupees for the sovereign, you would have to pay 16 rupees, the cost to the Indian Government would be increased 30 per cent. You might be very glad if you could repay it at 15 rupees to the sovereign. I do not know what happened with that particular debt, but if that particular debt is still existent, the burden to the Indian taxpayer has been increased in consequence of the withholding of the sale of drafts at that time, and the conversion of the debt. It is true we are not quite on all fours now with the situation then, because having arrested, as we may fairly hope, the rupee for a very considerable time, in future you do not run the risk of that very considerable falling which has happened since 1876. But, on the other hand, you have a new element brought into the matter, and that new element is one which very much affects the whole question—namely, that you are in the face of what you hope to be an appreciating standard. If the hopes of the Government are realised, the rupee will be increasing in value every year, and slowly but surely you will be going through all the experience of an appreciating standard. Now, an appreciated standard has many advantages, but it is not a favourable thing to trade, commerce, or industry. It is a time when prices are falling, and it is a difficult thing to re-adjust all the relations of life to a continuous fall of prices resulting from an appreciated rupee. You have to adjust the rates of labour with the employment of capital, and all your occupations of capital which involve the use of money involve this consequence. It is good for those who lend money, but it is bad for those who use things. The man who uses things with the assistance of money finds at the end of a certain time that the goods he uses are worth less, and the money he has to pay is worth more. Thus an appreciated standard is good for the banking world, but bad for the industrial, manufacturing world. And certainly, if you look at the future of India through all the consequences which may follow from the appreciating standard, that is a thing which will make the rise in your standard very slow, because it will be a drag on the course of commerce. It is a future which had to be faced; we thought it worth while to face it; we never concealed it from ourselves; and it is very risky indeed to pile up debt in the hope of a rise of the value of the rupee when that rise must be slow and may be indefinitely delayed. I confess, therefore, that the action of the Indian Government, though very intelligible and though taken under great temptation, is one which appears to me to involve considerable risks, so much so that I certainly should be slow to take it myself or to approve of it after it has been taken. But it may be said— if you look forward to the future of India in this way, if you consider that the appreciation of the rupee is a matter which will interfere with trade by acting as a drag and preventing the development which would otherwise grow—if you look forward to these consequences, how came it that you were able to approve of the stoppage of the mintage at all, as this is a necessary consequence? There was a deficiency in the Indian Government, a deficiency which could not be met, so far as we could see, by any easy imposition of taxation. The reduction of the expenditure of the Indian Government was not a point before us, and we may be sure it is not easily accomplished. Here we had a problem involving, no doubt, such consequences as I have described, but also involving the extreme advantage of arresting the constant drain on the resources of the Indian Government, and also of checking that constant variation of exchange which affects Indian commerce. And putting oneself into the position as far as possible of an Indian Prince—if you can suppose such a thing —who is under an obligation to remit a certain amount of gold to Great Britain, and whose means of payment were in silver, and who was unable to obtain any other re-adjustment of the monetary relations of the world, the question came before the Committee— Is it or is it not expedient to allow this particular plan to be adopted? And the Committee—and here I am speaking more for myself than for some other members of the Committee—could not but acquiesce in the proposal. But speaking for myself, I always realised the risks which were involved in it, the risks consequent on the continuous appreciation of the currency in India, if that appreciation were to happen. The Memorandum to which I have before referred expresses my own opinion, which is to the effect that if the standard were changed, as recommended, above the value of the raw silver contained in the rupee there would be a grating and grinding of parts until the adjustment of the economic machine was reached. In my opinion, fixed payments, like rent, would necessarily be more burdensome, money wages would slowly decline, prices would decline, in different proportions and at different rates of speed, commodities imported from the European markets falling first, and there would be a tendency to diminish exports and production. All these consequences were, in my view, to be contemplated. And putting oneself as nearly as possible in the position of a patriotic Indian Prince in relation to the position of the Indian Government and the Government of Great Britain and in relation to the monetary difficulties of the time, it was impossible to refuse to accede to the suggestion before us, although in my judgment it involved the consequences to which I have referred. But it did not involve what the Indian Government has taken upon itself to add to those consequences—namely, the refusal to sell their drafts in India. That, indeed, was something never before us; and I do not know what would have been the opinion of my colleagues if that had been offered for their consideration. Some of them, I know, would have looked upon it as a very risky and adventurous course, and I confess with' the uncertainty of the future which is before us, I should rejoice if I understood, as I do understand, that the Indian Government will unload this debt as soon as it sees any opportunity of doing so, and that this is not looked upon as a permanent loan; and that the moment any power of selling the drafts arises which will in any degree meet present difficulties, the drafts will be sold, the debt will be paid, and the course of commerce, as far as the Government is concerned, will be left absolutely unchecked; and, for the future —though the result to India may not be entirely satisfactory in an economic sense —it will not be embarrassed by the action taken during the last two or three months. I offer no opposition to the passing of the Bill now, but it is, as I said, a step full of grave uncertainty, and my only satisfaction in connection with it is the assurance of the Chancellor of the Exchequer, that the earliest possible opportunity will be taken of clearing off the debt which has been created so as not to leave it for the future inheritance, as apparently the debt of 1876 has been left to us—very much to the injury of the Indian Government and the Indian Treasury though it was intended to be beneficial to both.

MR. CHAPLIN (Lincolnshire, Sleaford)

Mr. Deputy Speaker, I have followed the speech of my right hon. Friend, and I confess there is one statement which he made in the earlier portion of his remarks which I do not quite clearly understand. I understood him to say that there was no expectation on the part of Lord Herschell's Committee that the rupee would be raised to 1s. 4d. If that were so, Sir, I do not understand the paragraph in the Report in which it is stated that the closing of the Mints for the free coinage of silver should be accompanied by the announcement that though closed to the public they would be used by the Government for the coinage of rupees in exchange for gold at a rate to be fixed—say, 1s. 4d. a rupee. If there were no expectations of the kind, I do not see exactly what is the object of that paragraph.

MR. COURTNEY

Some persons advocated it, if the Committee did not. It was to prevent those persons from being uneasy.

MR. CHAPLIN

I understood that the ultimate introduction of a gold standard was part of the plan. I do not think the answer is sufficient and complete. The right hon. Gentleman used another argument in the course of his speech which I heard with satisfaction— that is, from a bimetallist point of view. The right hon. Gentleman met the objection urged by the right hon. Member for St. George's (Mr. Goschen), that the raising or fixing of the rupee would impose a burden upon the debtor in India greater than he had before, by proceeding to argue that such an infringement of contracts in certain circumstances would, in his opinion, be justifiable. That is an answer to the main objection which has hitherto been urged against the adoption of the principle of bimetallism. Now, Sir, I wish to begin by making a confession. I am well aware that I have no special claim to speak upon the general condition of affairs in India; but I hope the House will not think it undue presumption on my part to take part in this Debate on a subject in which I have long taken a very great interest. We are asked to give our final sanction to a Bill which increases the borrowing powers of the Indian Government by £10,000,000 sterling, and I desire, with perfect frankness, but without political bias or Party feeling, before it leaves this House, to express my views on the general policy which has necessitated the introduction of the Bill. It will be in the recollection of the House that the Government refused to allow any opportunity for the discussion of the policy of closing the Mints before it became law—and that notwithstanding repeated appeals from these (the Opposition) Benches from right hon. and hon. Gentlemen, and from a number of supporters of the Government as well. My hon. Friend the Member for Kingston (Sir R. Temple) said this policy had been practically approved by the House. I hope he will forgive me when I say that I differ with him altogether, and that I must emphatically demur to that statement. The House of Commons never had an opportunity of approving or disapproving of the proposal. I know this — that I took the earliest opportunity, after it became law, by a Motion for the Adjournment, of expressing my disapproval of it and my great apprehensions of its probable results, and on that occasion I was supported by the Leader of the Opposition (Mr. A. J. Balfour) and by other gentlemen on both sides of the House who took part in the Debate. I only refer to the matter now to correct the misapprehension to which, I think, the statement of my hon. Friend, if it remained uncontradicted, would give rise. So far as I am concerned, the views I ex- pressed on that occasion are strengthened and confirmed by what we have seen since then. It appears to me that the necessity for the present loan is the first-fruit of the policy to which I then took exception, and the Bill of the Government looks very like a confession of failure and of the collapse of their scheme. If it be so, I may be asked why I do not oppose the Bill. If I am, the reply, it seems to me, is simple and conclusive. When a Minister comes forward, with the full responsibility of the Government, and tells the House of Commons that unless his proposals are accepted a great Dependency like India cannot meet its obligations; when he hints, and not obscurely, at the possible danger of bankruptcy, if his measures are rejected or even delayed, I, for one, am not prepared, however much I may dislike or disapprove his policy, to take upon myself the responsibility of rejecting it. But that being the position, upon the Minister's own showing, it is not possible to over-estimate its gravity, and I do think that Parliament ought most seriously to consider how this grievous state of things has come to pass. One or two speakers, including the Chancellor of the Exchequer, have expressed a hope that the subject of bimetallism would be avoided and that the Debate would be conducted in a practical manner. I have no desire to introduce the subject of bimetallism, nor do I intend to do so, except so far as it is strictly ad rem.; but I must remind the House that it was the Chancellor of the Exchequer who first introduced the subject. Some of the statements which he made were most inaccurate, and I must not be blamed if I have to spend some minutes in replying to them. And I would wish to remind those hon. Gentlemen who take this view, and who think this question can be practically considered without taking into consideration a whole variety of questions absolutely inseparable from bimetallism, that it seems to me that they have yet to learn some of the first elements of the question. How, for instance, is it possible to ignore the fact that it was nothing but the abandonment of bimetallism which has been the origin and source of all the present monetary troubles in India? This cannot be denied. It is the statement of the Indian Government repeated to the Home Government over and over again. The initial difficulty which has been the cause of all your troubles has always been the great fall in the value of silver, caused entirely by the legislation of foreign countries commencing in 1873, and the proof of this is that up to that time silver had for generations maintained its parity with gold without any practical variation. Your difficulty with the rupee was unheard of up till then, and the constant and continuous fall in silver, the origin of all your troubles, was unknown. That being so, I should have thought that a wise Administration would have sought to reverse a policy that had been so injurious to its great Dependency; or, if it were not possible to bring about a rise, at any rate to arrest any further fall in the value of silver. But the present Government has, unhappily, adopted a policy of a precisely opposite character. The very moment the Conference at Brussels came to an end, the Government proceeded to make war on silver themselves. By closing the Indian Mints to the free coinage of that metal, they deprived it of the most important and the largest market still left open in the world, thereby lowering its value to such an extent that within a single week of that event silver fell in value by 8d. an ounce—a thing which was absolutely without precedent in. the history of the world.

SIR W. HARCOURT

It fell 10d. in 1876.

MR. CHAPLIN

Not in a single week. No doubt in 1876 there was a heavy fall in silver after the closing of the European Mints, but it was gradual, and extended over many months; but in this case it fell 8d. in a week. And the most extraordinary thing is this: that it was done in the teeth of the evidence of all the practical men of business and experts examined on the subject almost without exception. The right hon. Gentleman may say he relied on the Report of Lord Herschell's Committee. I venture to think that that is not sufficient justification of the Chancellor of the Exchequer's action. For the; consideration of important questions like this there is always a Committee in existence, and that is the Cabinet itself, in which, as a matter of course, upon a question of this kind, the right hon. Gentleman would exercise a commanding influence. And what was the evidence that he had before him? Witness after witness, comprising some of the most eminent men of business and most practised experts in the country, gave the clearest and most convincing evidence against the policy of closing the Mints. The right hon. Gentleman spoke of the imports of silver bullion into India, and he expressed the opinion that it was impossible for anybody to say why these had occurred, or what had become of them. If he had studied the evidence given before the Committee he would have found that some of the experts who were examined foretold that this would be the case. If he likes, I can refer him to the paragraphs. They pointed out that, while it created a further fall in the value of silver, the raising or fixing of the rupee would everywhere check Indian exports, in the East especially, and that there would be the greatest possible danger that the balance of trade, hitherto in favour of India, might be reversed; that there would be no demand in consequence for the Government bills, and that they would be unable to sell them. In fact, these experts, one after another, foretold, when examined before that Committee, exactly what has since occurred, and how Lord Herschell, with all his experience as Chairman of the Gold and Silver Commission, and with all this weight of evidence before him, how he could have put his name to the Report is a thing which passes my comprehension, and which is extremely difficult to comprehend. They did report, however, in the sense of which the House is aware, and the Cabinet accepted the conclusions. And why was this done? Simply because, so to speak, Her Majesty's Government had closed the door upon themselves. They choose to consider, for what reasons I know not, that anything and everything in the nature of a bimetallistic remedy was impossible— was altogether beyond discussion, and that under no circumstances whatever were they prepared even to consider it. The Chancellor of the Exchequer has given his reasons for this decision. The Royal Commission of 1888 had, he said, condemned bimetallism as applied to India—

SIR W. HARCOURT

I said a section of it—the section whose views were adopted by the Government and Lord Herschell.

MR. CHAPLIN

I am quite ready to accept that qualification, but it was not the statement made in my hearing I think, and it is not the statement reported in the right hon. Gentleman's speech. The right hon. Gentleman further said infinite danger would have occurred to India. It would have injured the natives of India, and one of the main reasons for rejecting it was the injustice it would do to the natives, and the social and political injury which would result. The right hon. Gentleman went on to add that the Conference at Brussels would not have it, and he further told us that the President of the United States had intimated to the English Government that he had no desire for any renewal of the Conference. Well, Sir, I am afraid I shall be obliged to traverse each and all of these assertions. Now, with regard to the Commission of 1888, I really think it would be difficult to imagine a greater accumulation of errors than was contained in the statement of the right hon. Gentleman. In the first place, I should have pointed out, only the right hon. Gentleman has admitted it himself, that it was not the Report of the Commission, but only one of its Reports. In the second place, it was the Minority Report of the Commission; and one of the six gentlemen who signed it, with more experience on the subject, has abandoned, I understand, the attitude which he maintained at that time, and has expressed views of an opposite character. In the third place—and this is a most important point—the objections which were urged by that section of the Commission, whatever they may have been, were objections which were limited —and this is what the right hon. Gentleman has altogether overlooked—to bimetallism at 15½ to 1—

SIR W. HARCOURT

No, no.

MR. CHAPLIN

You will find that is so. I read the Report half-an-hour ago. It is absolutely the case, that the quotation which the right hon. Gentleman made from the Report was in reference to bimetallism at 15½ to 1. No one that I know of has asked for such a ratio, and it is not a necessary condition to the adoption of the policy. My hon. Friend the Member for Whitechapel at that Commission asked for a recommendation of bimetallism at a ratio very much higher than that. In the fourth place, I should be prepared to contend that if injury there was at all to the natives, so far as it would not have been counteracted by the rise of gold prices in the West, it would have been limited to a section of the population only, and that the population as a whole would have been enormously relieved to a much greater degree by the decrease in taxation which would have immediately followed upon it. In the fifth place, I want to point out that the right hon. Gentleman at the present moment is trying, by much more ineffectual and much more clumsy means, to do exactly the same thing himself. The right hon. Gentleman is trying, by closing the Mints, to give a scarcity value to the rupee—in other words, to depress the prices of the produce of the natives of India, and concurrently with this—and this is a most important point—he leaves them open to the increased competition of their fellow - producers in the East through the fall in the exchange with silver countries, which he himself has brought about, which I am afraid is destined to be most injurious to the natives of India in the future, and which at all events under bimetallism could not have happened. I am sorry to have detained the House so long upon these points, but I am bound to reply to what seemed to me to be the very great fallacies put forward by the right hon. Gentleman the other night. And while we are dealing with the subject of injury to the natives of India I must take the opportunity of replying again to what the right hon. Gentleman said in reference to the uncoined silver in the possession of the natives. I must contradict the statement that he made on that point—namely, that The supposition that the natives hold great stocks of uncoined silver may now be regarded as entirely exploded. May it indeed? I would like to know what authority the right hon. Gentleman had for that statement? I quoted in this House the authority of Sir David Barbour that there are 130,000,000 of uncoined silver in the possession of the natives. That has not been contradicted. The right hon. Gentleman has never attempted to meet it. I will give him another authority, one more recent than that, whose evidence was before Lord Herschell's Committee and his statement is in the Appendix of that Report. I refer to Mr. F. C. Harrison, a gentleman who, I understand, stands high in the Financial Department of the Government of India itself. What does he say— In my first Momorandum, I have estimated the silver in India to be about 510 crores. A crore, I understand, is £1,000,000 sterling—

MR. MONTAGU

One million rupees?

MR. CHAPLIN

It would be £1,000,000 sterling if rupees were worth the old price—2s. Mr. Harrison goes on to say— In my first Memorandum I have estimated the silver in India to be about 510 crores. Of this, 166½ crores is in active circulation, and 343½ crores remain to be accounted for. Of this considerably less than 50 crores is hoarded in the form of rupees. Roughly speaking, it may be said that 300 crores may be held in India in the form of bullion, obsolete coins, and ornaments. In Madras 1822–3 was a famine year, and the country bullion (silver) brought to the Mints was 92½ lakhs. You have by your action depreciated that enormous mass of property in India, and then, forsooth, you come down to the House of Commons and tell us that you oppose bimetallism, because it would injure the natives of India. A more daring assertion, I think, was never made on the part of a Minister. Perhaps, if the right hon. Gentleman is right, he will tell me where all the silver bullion now being sent to India is going? It is not going to the Mints, because the Mints have been closed; and if the silver bullion is not in the hands of the natives, if it is not being used for hoarding purposes, perhaps the right hon. Gentleman, who is so confident on this point, will be able to explain to the House where it goes. I do venture to think that I am justified in saying that in face of such evidence, which I have been able to put before the House on this point, the right hon. Gentleman ought to refrain from reckless assertions of this kind, which are absolutely contradicted by such authorities as we have. I hope I have now more or less disposed of the statements of the Chancellor of the Exchequer with regard to the Commission of 1888, and on the question of uncoined silver. The next points are the Conference at Brussels, and the intimation given by the President of the United States to the English Government, and in regard to which I venture to express the hope that the Chancellor of the Exchequer will take an early opportunity of laying it on the Table. It is a document that will be read with great interest. Upon the first point, the question of the Conference, as the House is aware, I have always maintained that the failure of that Conference was due to the action of England. I have done what I daresay few Members of the House have done. I think I have read every single word of the Report of the proceedings of the Conference, and if my statement is seriously challenged, I will be prepared to give chapter and verse for everything I have said on the subject. Listen to the statement of one of the Indian delegates— Now, the quasi-official declaration of the hon. Delegate's views (Sir Rivers Wilson) not only precludes any advances by other Powers towards a solution of the difficulty, but places Great Britain in the invidious position of being the principal, if not the sole, obstacle to a satis factory solution of the difficulty under which we labour. Indeed, I gather from conversation with many of the foreign Delegates that this is the prevailing impression to which his declaration gave rise…. In fact, England holds the key of the position. I have often heard it stated—the right hon. Gentleman has stated it more than once—that Germany is entirely opposed to any alteration. We have had some very important information on this subject as lately as last week. It appears that the Agricultural Party in Germany have made bimetallism one of the main planks of their policy, and this Party in the German Parliament was only defeated last week by a majority of 24. What are the facts? In the German Parliament, on the 14th of this month, Count Caprivi was reproached by the Agricultural Party with the conduct of the German Delegates at the Conference. He replied— That the Government, seeing that the Conference was doomed to failure, had bean unwilling to entangle Germany in the fiasco. And why was it doomed to failure? Count Caprivi said— Without Great Britain nothing could be done, and under the present Prime Minister there was no chance of anything being attempted. [Ministerial cheers.] I quite understand those cheers; but do not tell the House of Commons and the country, as they have frequently been told, that the Conference was broken up because cither nations would have nothing to do with it? What I have read is a very significant admission on the part of Germany, and it is quite possible that at no very distant date it may be very important to remember it. As to the President of the United States, I do not know at present what he intimated to the English Government.

SIR W. HARCOURT

I have read the words.

MR. CHAPLIN

But I do know his Message to Congress on December 4 last. It is more significant, I think, than the language of Count Caprivi in Germany. So important does President Cleveland consider the question, and such a wholly different view does he take of it from the lofty disdain which the right hon. Gentleman opposite always exhibits for the interests of silver that he asks Congress for general powers to summon another Conference whenever he pleases. He said— It seems to me that it would be wise to give a general authority to the President to invite other nations to such a Conference at any time there should be a fair prospect of accomplishing an international agreement on the subject of coinage. I maintain that all this shows it is owing to the action of England alone—I do not now say whether that action was right or wrong. I am not arguing that question atall—but it was owing to the action of England alone that the Conference failed. However, the Conference did fail. The English Government adopted an opposite policy altogether. They closed the Mints in India, creating thereby a further fall in the value of silver, with the result that the balance of trade has been affected and the Indian Government has been unable to sell their Council bills now. The experts who were examined before Lord Herschell's Committee foretold that result to the Committee, but Lord Herschell and the able men who were his colleagues apparently did not see it. The right hon. Gentleman the Member for Bodmin, who was one of the Committee, said just now that all they intended to say upon that point was that the difficulty would not be permanent. I hope my right hon. Friend will prove to be right, but I see no symptoms of it at present. It seems to me the Committee relied on past statistics. There is a paragraph in their Report which shows that they relied on past statistics. The experts, on the other hand, relied on their practical knowledge and acquaintance with the subject, and, as may be easily understood, the experts were light and the Committee turned out to be wrong. That is shown by the figures of the balance of trade at the present moment. In 1892, from April 1 to September 30, the balance of trade in favour of India was 149,000,000 rupees. In the same period in 1893 it was 91,000,000 rupees. In the month of October of the present year the balance against India was 17,000,000 rupees, while in October, 1892, the balance in favour of India was 15,000,000 rupees. That shows a change for the worse of no less than 32,000,000 rupees. No doubt matters may improve in the early months of next year. So far as I can learn from all the best authorities it is most probable that they will. But the question we have to consider is this: Will they improve sufficiently to enable the Government to overtake the losses they have incurred already and to pay their current expenses as well? That seems to me to be really the whole question we have to consider. Of course, it would be unbecoming on my part, except with the greatest diffidence, to express any opinion at all on a point like this. But I must say that on that point I am by no means re-assured by the reasoning of the Chancellor of the Exchequer, which seems to me to be altogether fallacious. When he was asked this question by the right hon. Gentleman the Member for St. George's the other night, the Chancellor of the Exchequer thought he had met it triumphantly by citing a similar recovery in 1890–91, and by pointing to a similar transaction by the Indian Government in 1876. But does not the right hon. Gentleman perceive that the circumstances of 1890–91 and 1876 have no bearing whatever upon the situation in 1893? The circumstances in 1893 are wholly different from what they were during the years to which he has referred. In 1890–91 and 1876 the value of the rupee and of silver were absolutely the same all the world over, but in 1893 there is an immense divergence between them which you yourselves have brought about. The exchange with silver countries has fallen in consequence of your action, and your exports to these countries—from India—have been very grievously affected thereby. That is very important when we remember how large is the proportion of her total exports, which is sent by India to silver-using countries. From a table of the net Indian exports which is contained in the Report of Lord Herschell's Committee I find that of merchandise alone in the year 1892 the net exports from India to gold countries were Rx. 19,000,000; whereas during the same period the exports to silver countries were Rx. 22,000,000. But the other night the right hon. Gentleman said the trade of India was in the proportion of 75 per cent. with gold countries and 25 per cent. only with silver countries. That may be right about the total trade; but, unless the figures I have quoted from official sources, and I have taken pains to have them verified, are entirely wrong, so far as exports are concerned—and that is the important point. The right hon. Gentleman is entirely mistaken. I venture to think that what I have just shown is alone sufficient to upset your calculations as to recovery, or, at all events, to put your calculations on that point in very great danger. At any rate, the right hon. Gentleman must admit that it is a possible contingency which we must contemplate. Well! Supposing that the experts are right as to the future of Indian exports, and supposing you continue to be unable to sell your Council bills, what are you going to do? The hon. Baronet the Member for Kingston advised you to sell your cash balances, as he did in 1872. The answer to my hon. Friend is the same as to the right hon. Gentleman—the circumstances of 1872 and 1893 are totally different owing to the action of the Government. But even if you were to adopt the policy of selling your cash balances, where is the market for silver bullion? What is the price you expect to obtain to-day? I should like to ask the hon. Member for White-chapel, who can give an opinion probably as good as that of any man: Supposing you were to put even a million of silver bullion on the market now and sell it for whatever it would fetch, what effect would that have upon its price? But you do not want a million only, but five or six millions at least. I want to know, is it a practicable proposal, except at the cost of enormous loss to India, to recover your position by selling our cash balances? It seems to me that there is no difference whatever between that operation and putting your Council bills on the market and selling them for whatever they would fetch. But what other resource have you got? Can you reduce the expenditure in India? You can do so if you choose to stop your public works, and if you greatly reduce your estimates for the defence of the country. But to do the first would be most prejudicial to the interests of India, and to do the second, would be to place our Empire at the mercy of the invader. Can you increase taxation? That is a point upon which I am unable to give an authoritative opinion; but I know that the very best authorities in India have told us over and over again that to attempt materially to increase the taxation in India at the present time would be accompanied, in all probability, by serious political danger. Then, are you to go on borrowing as you are borrowing now? If you are to go on borrowing ten millions after ten millions, unless the balance of trade is restored I do not see how that operation can lead to anything except bankruptcy in the ultimate issue. Turn in whatever direction you may, it seems to me that this unfortunate policy on the part of Her Majesty's Government has landed us in a difficulty from which there appears at present to be no clear way of escape except one, which the right hon. Gentleman has pledged himself never to use. Now, I think I am entitled to ask this question, and Parliament is entitled to receive an answer. Do the Government see a way out of the difficulty which they have created themselves? If they do, will they take Parliament into their confidence, and will the right hon. Gentleman tell us or not what is to be their policy in future? I will not prolong my observations any further now, except to ask the Government again—and we have a right to know—what their policy is to be, and what are the Government going to do if their great scheme of currency for India continues in the future to be as great a failure as it seems to have been up to the present time?

THE CHANCELLOR OF THE EXCHEQUER (Sir W. HARCOURT, Derby)

I observe that the two speeches we have had have taken up two hours. I will endeavour to avoid that result, especially as I spoke the other day, and will try to confine what I have to say to a quarter of an hour. The right hon. Gentleman opposite, in a somewhat minatory tone, complained that Her Majesty's Government did not submit their plan to Parlia- ment before it was adopted. We refused, deliberately refused, to do so, and for good reasons. We did not want to bring about a wild speculation in silver in India during the progress of a discussion in this House. No, Sir, we took upon ourselves the responsibility of what was done, and we are willing to accept it. That is my answer to that part of the question. And if it be necessary to adopt any other change in the currency of India, we shall take the same course, and we should not promote the most wild speculation upon the subject by saying beforehand what we are likely to do under some possible contingency. A more reckless and unjustifiable proceeding than that it is impossible to conceive. Why, you might just as well, before the Budget, announce what you were going to do with the duties on tea and spirits. Everybody knows that the action of the Government in that matter, if it were announced beforehand, would lead to speculation of the most injurious character. So much for that part of the charge of the right hon. Gentleman. Then he says, "Oh! but any wise Administration, when they found the fall in silver going on and the injury being done to India, would at once have applied some remedy to it." Well, there were strong men before Agamemnon, and so there were wise Administrations before the present one. And what did the late wise Administration do, of which the right hon. Gentleman himself was a Member? There had been a formidable fall in silver from 60d. to 38d., which had affected the Government of India in the most serious way. Complaint had been made of it in all their Despatches. Yet did the late Government adopt bimetallism? The present Leader of the Opposition is a bimetallist, and who was the person who got up and refused to encourage an inquiry into the matter? It was the late Mr. W. H. Smith, from this very place, and he was supported by the late Chancellor of the Exchequer, and good reasons were given by him for not even inviting a Conference. At the time of the Brussels Conference, the Government of the United States having proposed that the discussion should be directed specially to bimetallism, the right hon. Gentleman declined to accept the reference upon these terms. The right hon. Gentleman quotes the opinion of a bimetallist upon that Conference as to the conduct of the Conference. I do not accept that at all. The German Government began the Conference by saying that 'Germany, being satisfied with its monetary system, had no intention of modifying its basis. That was the first declaration made upon the first day, before the English Delegates had made any declaration on the subject at all.

MR. CHAPLIN

Count Caprivi told you why.

SIR W. HARCOURT

I entirely differ from the right hon. Gentleman, and that has nothing whatever to do with the present question as to the view of the German Government upon the subject. As to the view of the American Government, certainly the right hon. Gentleman is entitled to have the Despatch. I quoted the words on a former occasion. Now the right hon. Gentleman has no doubt made a profound study of all these questions, and he says he cannot understand how Lord Herschell's Committee came to the conclusion they did.

MR. CHAPLIN

In the face of the evidence.

SIR W. HARCOURT

The right hon. Gentleman thinks he knows better than the Government of India at Calcutta, better than Lord Herschell's Committee, better than the Council of India, and, of course, better than Her Majesty's Government. I am not in that position. I do not pretend to understand these matters better than the Government at Calcutta, Lord Herschell's Committee, and the Government of India. The right hon. Gentleman does. He has the advantage of me in that respect. I am more modest, and I am willing to believe that these authorities know better about Indian affairs than I do, and though I am perfectly willing on the part of Her Majesty's Government to take the responsibility of the decision, I have no hesitation in saying that, in coming to that decision, we were mainly influenced by the opinion of the people who thoroughly understand Indian affairs, and I will take the liberty of saying that I doubt whether the right hon. Gentleman does. With regard to the hoards of uncoined silver, I will not go into that matter again. The right hon. Gentleman was entirely refuted by Mr. O'Connor in the letter he wrote, and if the right hon. Gentleman wishes to know Sir David Barbour's opinion, he has only got to read that distinguished gentleman's speech when he recommended the Bill to the Government at Calcutta.

MR. CHAPLIN

I wish to point out that Mr. O'Connor's letter and the statement to which he refers were unofficial and were not accepted by his own Government, while the quotations I have made from Mr. Harrison are official statements made on behalf of the Government.

SIR W. HARCOURT

I leave the right hon. Gentleman all the advantage of that. In my opinion, it has nothing to do with the present question. As to the export of silver to India, the right hon. Gentleman thinks he knows all about it and where the silver goes to, and of course he has means of information and sagacity of penetration which do not belong to the Indian officials. I find, however, there are as many opinions as there are men upon that subject. Some think that that has happened which occurs in ordinary times—where a commodity becomes suddenly very cheap, a great many people buy it simply because it is cheap, hoping that at some future time it may be raised in value. It is much too early, I believe, for any one whose opinion is worth having to pronounce upon the subject. The figures I gave the other day as to the exportation of silver were correct in the month of November, and they showed a considerable decrease, but I am informed that since that time the export of silver has been increasing again and is on the increase, and that therefore there is at present, so far as one can see, no tendency to a decrease in the importation of silver, but rather the reverse. Now, I pass to the speech of my right hon. Friend the Member for Bodmin, who spoke with the authority of one of the able members of Lord Herschell's Committee, and he justified and defended of course the conclusion at which they arrived. He said that the course of the Indian Government in refusing to sell their bills below a certain price was not one of the things before that Committee, and ha further said that the object of the recommendation of the Committee to close the Mints was to arrest the fall in silver and to prevent fluctuations in the exchange. But, supposing that the Indian Government had allowed the exchange to run down, how would the fall in silver have been arrested, and how would the fluctuation in exchange have been prevented? My right hon. Friend asks me what the view of the Government is on the subject of an Import Duty on silver. For the reasons I have already stated, it would be highly improper on my part to make any statement on that subject, and I utterly decline to make it. This experiment must be tried; time must be given for it to be tried.

MR. CHAPLIN

For how long?

SIR W. HARCOURT

That, again, I must decline to say. It has not been adopted with the view of its being a permanent thing. If it turn out that a mistake has been made, of course measures must be taken to correct that mistake. The position of Her Majesty's Government is this: They were called upon by the Indian Government to take the course proposed. They submitted the proposal to a competent Commission; that Commission reported that they did not feel justified in overruling the Government of India in this matter; and we do not feel justified in overruling the Government of India. Of course, we cannot go on for ever without selling Council bills; everybody knows that; nobody proposes that that should be done. My right hon. Friend alludes to the increase of taxation in India. He says, and I have never undertaken to deny, that these operations with the rupee may be considered as an increase of taxation; and I have ventured to say that you may argue the question just as you may argue whether an increase of rate here falls upon the owner or upon the occupier—a controversy in which the disputants on both sides may be right to a certain degree. If the scheme which has been adopted is not successful, we may have to find some other. We are told that the cause of the difficulty is increase of expense to the Indian Government due to the loss by exchange; but that is an error. The financial difficulties of India are not mainly due to the course of exchange; they are due to the cause which has brought financial difficulties upon all nations at all times, and that is the enormous increase of expenditure in relation to the resources of a country. That is the real cause of the financial difficulty of India. The right hon. Member for Sleaford was good enough to send me a pamphlet upon Indian currency dangers by a gentleman named Herman Schmidt, which contains an acute criticism upon the policy now being adopted by the Indian Government. The writer is adverse to the closing of the Mints, and there is a great deal worth considering in what he has written. To my mind, the most striking part of his observations upon that matter is one which is contained on page 34 of his pamphlet, in which he says that loss by exchange is not the only item of Government expenditure. He takes the total expenditure of the Government of India in 1879-80 at 61 millions of tens of rupees; he finds that the loss on exchange was 3¼ millions; and thus you get 57 millions as the expenditure of the Government of India. In 1892–3, the total expenditure was 88 millions, and the loss by exchange was eight millions; and thus you get 80 millions for the present expenditure of India, or an increase of 22½ millions, totally apart from the loss of exchange. The writer remarked that it was difficult to believe that the Indian Government should say so little about the 22 crores of additional general expenditure and so much about the eight crores due to the loss by exchange. I do not touch these figures, but there is much that is worthy of consideration in these remarks. This difficulty has now to be met somehow. All that Her Majesty's Government have done is to ascertain from those who are best able to judge what was the best method that could be suggested. It is admittedly an experimental course they have sanctioned; and I fancy that few gentlemen will have the courage of the right hon. Member for Sleaford and to speak ex cathedra as to the consequences that are to ensue. [Mr. CHAPLIN: I did not.] I, for my part, make no pretence of doing so.

MR. CHAPLIN

I did not do so. I wish the right hon. Gentleman would not misrepresent me. I said that on that point I spoke with the greatest possible diffidence. I only said I feared what was going to happen.

SIR W. HARCOURT

The diffidence of the right hon. Gentleman consisted in his expressing his extreme disapproval of Lord Herschell's Committee. My diffi- dence goes so far as to accept the conclusions of Lord Herschell's Committee. At all events, the Government are satisfied with the great weight of opinion that recommended the course they have submitted to the House; and I am glad the House is going to accept the proposal made by the Indian Government, which must be judged by its results. If it is not successful, then, of course, any errors in the experiment must be corrected in the future.

SIR J. LUBBOCK (London University)

I was anxious to have moved some Amendments in Committee, but the Chancellor of the Exchequer appealed to me on the ground that the Bill must absolutely be passed through both Houses by the 5th of January, or the Indian Government would be unable to meet its engagements. Under these circumstances I did not feel justified in pressing my Amendments, but I cannot help asking, why was the Bill deferred to the last moment? We are often told that this House does not take sufficient interest in our great Dependency. Yet here is a Bill dealing with £10,000,000 of money, and we are told that it must be passed at once, and that no time can be given for discussion or amendment in Committee. The Government have had almost the whole time of the House for the last 10 or 11 months, and yet they drive off this Bill to the last minute; they closure my right hon. Friend the Member for Bodmin in the Debate on the Second Reading: they decline to give a single evening, or even part of an evening, for Committee, and I understand that the Debate on Third Reading is to be sternly limited. This power to borrow £10,000,000 is asked for because the Government have stopped drawing Council bills under the belief that in the spring they will obtain a better exchange. The whole case made for the Bill is that in the opinion of Government the exchange is almost sure to rise. I venture to characterise this as a speculation in exchange. My right hon. Friend asked what a merchant would do who had a large stock of wheat and found that freights were high. He says the merchant would wait. I do not think so. I believe he would send his wheat forward, perhaps not quite so quickly, but by degrees—at least, if he were a prudent man. But if he hoarded all his wheat till freights fell, that would certainly be speculation in freights. Then my right hon. Friend quoted The Statist as saying that the shrewd Manchester merchants have abstained from drawing, as he has. But the passage which be quoted says, as it seems to me, exactly the reverse. The writer says that the closing of the Mints has stimulated exports from Lancashire to India, and that The consequence has been a very large increase in the number of merchant bills offering in competition with the India Council. This is the very reverse of what the Government have done. It is true that the writer adds— Some of them have taken a favourable view of the exchange, and they have shown an increasing disposition to obtain advances on their bills, thus taking on themselves the risk of loss in exchange. But, Sir, what does The Statist say this week. In a temperate and able article it supports the view we have taken, and gives strong reasons for doubting the wisdom of the policy adopted by the Indian Government. Another great authority, The Economist, also speaking of the expectation of the Government that they will be able soon to draw at better rates, says— It may be doubted whether this hope will be realised…. It is certain that the attempt to confer a scarcity value upon the rupee must continue to act as a stimulus to imports and a check upon exports to silver-using countries… . That is itself a reason for doubting whether the demand for Council bills will be so active as to enable the Secretary of State to fix his own price for them, and there is a further reason for doubt, in that he has latterly, by refusing to sell, been causing the market to seek for and become accustomed to other methods of transferring credit. The Chancellor of the Exchequer claimed that the closing of the Mints had steadied the exchange; but unless the Government draw they will gain nothing by that. I believe that the steadiness of the exchange is more due to the action of the Indian Government here, in not drawing, than to the closing of the Mints, but, of course, that is a matter of opinion. The Government are accumulating balances which are lying idle in India, while they are piling up debt here. Already they have borrowed £5,000,000 here, while they have £16,000,000 lying idle in India. If they continue this policy by April they will have another £6,000,000 of debt here, and £21,000,000 lying uselss on the other side. The Chancellor of the Exchequer said— If the Indian Government had drawn, as the right hon. Baronet has recommended, the market value of the rupee would probably have been reduced to 1s. 2d., and the loss on the transaction of the year would have been £5,000,000. This is a serious charge, but, in the first place, we are not talking of a year. It is not a permanent Bill, but only one to enable Government to postpone drawing for three or four months when they expect to get a better exchange. Now 1d. on £5,000,000 would be, say, £300,000, from which must be deducted the interest. How does the Chancellor get his £5,000,000? He justifies it by a further statement which I understood to be the words of the Indian Government. They said that— If India had not suspended the free coinage of silver, … it is not improbable that silver might have fallen to 31d. per oz., which would have made the rupee only worth 1s. That would have compelled the Secretary of State to sell during the year bills on India to the amount of Rx. 31,000,000, and would have imposed on the people of India a charge for the exchange of Rx.15,000,000, which would be a charge of £5,800,000 above the provision in the Budget. But that statement does not bear out the Chancellor of the Exchequer. In the first place, the calculation is not made at 1s. 2d. as he states, but at 1s., which makes a great difference. Secondly, it has no reference at all to the question of drawing, but to the closing of the Mints, which is a very different matter. In the third place, the Indian Government say that the price of silver might have fallen to 31¼d., but the present price, notwithstanding the closing of the Mints, is over 32d. Lastly, they do not say that there would have been a loss of £5,000,000 to the people of India, but that the Government would have received £5,000,000 less than the Budget Estimate, which is a very different thing. Practically, if silver falls, the people of India pay less taxes, and of course the income of the Government falls. It is a loss to the Government, but not to the people. The Chancellor of the Exchequer tells us that the Government contemplates the introduction of a gold standard in India. I should like to ask him to give us the opportunity in this House of discussing the matter before this is done? It would, I believe, be a disastrous error. The late Mr. Bagshot, a very high authority, when discussing this question, and after condemning the proposal to close the Mints, said— As usual, however, other cures are suggested, which it is said will be less painful and quicker—one is, that the Indian Government should demonetise silver, and adopt a gold standard. But in this case the remedy would be worse than the disease. And he concludes by saying— That, in his judgment, the best result to the Indian Government from this expedient would be far worse than anything it is now, by letting things take their course. The Chancellor of the Exchequer refers to France, but France has not got a gold standard. Debts are payable in silver to any amount. Those who are responsible for the closing of the Mints must view with surprise and apprehension the immense imports of silver into India. I was surprised to hear the Chancellor of the Exchequer, indeed, deny this, and say that the imports of silver into India are falling. It is no doubt true that in November they were low. But it is very unsafe to take a single month. I believe that they now show a tendency to rise again. But if we take four mouths, from August to November, the amounts were for 1891 £2,000,000; for 1892 £2,800,000; for 1893 £2,500,000; so that though the Mints were closed the amount was £5,000,000 more than 1891, and only £300,000 less than 1892. Moreover, I believe my right hon. Friend will admit that, as I stated last week, there has been a considerable increase in December. But does the amount stated in the Board of Trade comprise the whole? It is stated that a large amount of Austrian silver has gone to India recently. Is this included, or has this amount to be added? Perhaps my right, hon. Friend will kindly tell us when he replies. Those who thought that the closing of the Mints would, I do not say immediately, but within a short time, raise the exchange, did not, I believe, allow sufficiently for three considerations: (1) the amount of rupees hoarded; (2) the effect of the Native Mints; (3) the amount of rupees circulating in other Eastern countries and in Africa. As re- gards the first point, if, as seems probable, the rupees hoarded are being replaced by bullion, it will be a long time before there is any diminution in the circulation. With reference to the Native States, I wish the Under Secretary had given us some information. It would be interesting to know what arrangements have been made with them. Lastly, we must remember that millions of rupees are in circulation outside India. They circulate at a value slightly above that of bullion. The closing of the Mints cannot affect the value in exchange of rupees out of India, and if in India the value of the rupee is raised they will, of course, tend to return, and will for a considerable time keep down the value of the rupee. Sir, as there is some misapprehension on the subject, may I say that I have never advocated the imposition of a' duty on silver per se; but merely maintained that, if the Government have determined artificially to raise the value of the rupee, a duty on silver would be the least objectionable way of doing so? It may seem anomalous, but the whole position is anomalous. I do not, of course, ask the Chancellor of the Exchequer to express any opinion on the subject, but I hope the Government will give it their serious consideration: it might have been an alternative to the closing of the Mints; but that step having been taken, it seems a necessary part of the policy. It is no use closing one door and leaving another open, and at any rate it would give the Government a substantial addition to their revenue. Sir, I do not think we should be justified in opposing this Bill, but the responsibility must rest with the Indian Government. If a rise in exchange is so inevitable, the banks and merchants will certainly take the bills at a fair price. But suppose the course of trade should go against them, suppose the production of silver should increase, and the price should fall, or that we should, unfortunately, have a war. The Government have already staked £5,000,000 on the issue. Surely this is enough. If they go further no doubt they may make a profit, but they are running a terrible risk, and may land us in national disaster.

MR. A. G. H. GIBBS (London)

had Hot the slightest intention of opposing the Motion of the Government, although he felt that in closing the Indian Mints they had embarked upon a very desperate experiment. When the Under Secretary for India came down on Friday and proposed the measure he told them there was nothing unusual or abnormal about it. On Wednesday afternoon the hon. Gentleman had a little looked up his authorities, and he thought he had only found one precedent which he considered sufficient for him, and that precedent was the action of a Conservative Government. The hon. Gentleman, therefore, then said there was nothing very unusual or abnormal about the proposal. If a Conservative Government did once speculate in exchange, then, if they had been told the result of that speculation, it would have been very interesting. However, whether a Conservative Government speculated or not, it did not alter the fact that this was a speculation. The Chancellor of the Exchequer seemed displeased because this was called a speculation, and he repelled the idea that it was a speculation on the ground that he knew the Indian exports would increase, because the time when they naturally increased was approaching, and therefore it was thought the exchange must necessarily rise, which would remove it from the category of a speculation. They saw a good deal of speculations in the City, but he did not think that there was any one who ever entered into a speculation who did not know some circumstance which removed the operation from the category of speculation. If the right hon. Gentleman had got some exclusive information as to the Indian exports, which nobody else had got, that would make it a good speculation; but if he only had got information which was known to everyone else, then it could not be a good speculation. As far as he could see, the action of the Government had not done anything towards putting the balance of trade in a better position. He did not know whether the Manchester people in exporting so largely thought that the exchange would go up, but he was told on good authority that this was not at all the case; but that what had occurred was merely their natural action. The exports from Manchester had been small for some time from other causes, not connected with Manchester, and now they had sent forward these goods, and the bills drawn against them were competing with the Government bills. Again, the action of the Government had certainly not increased the exports from India. The exports of wheat had fallen in the most extraordinary way, and it was believed that the natives were storing their wheat because they would not send it over at this rate of exchange. They had been told that the Government of India anticipated there would be an enormous improvement in their trade with gold-using countries, though they admitted that there was likely to be a falling off with silver-using countries. He gave the Indian Government great credit for seeing that, though they were not right as to the gold-using countries, they had been right in the case of silver-using countries. He would just give one or two figures. The exports from India of cotton twist and yarn to China in September, 1892, were 15,000,000 lbs., of the value of upwards of 52 lakhs and 55,000 rupees. In the corresponding month of this year the amount was 7,900,000 lbs., of a value of over 27 lakhs and 87,000 rupees, or hardly half. This showed that the Indian Government were accurate enough in foreseeing that the trade with silver-using countries would fall off. The Chancellor of the Exchequer laid great stress on the fact that this remedy had been asked for by the Indian Government, who knew all about it. What the Indian Government asked for was bimetallism, and when they were told they could not get that they asked for a remedy which appeared to have every disadvantage its worst enemies ascribed to bimetallism, and none of its advantages. They were told, too, that there was no other way out of the difficulty but this: that they could not raise the money by taxes for political reasons; and the right hon. Gentleman did not appear to think that any great diminution of expenditure would be entered upon, though he (Mr. Gibbs) was not at all certain about that. Anyhow, the only other alternative was, apparently, to have a financial crisis at once, and the way in which the Chancellor of the Exchequer spoke on Wednesday last, saying that unless this Bill was passed India would be in a bankrupt position, astonished him very much.

SIR W. HARCOURT

I took the language of Sir David Barbour, in the speech he made in support of the Bill.

MR. A. GIBBS

said, it might be Sir David Barbour's language; and, if so, he was sorry for it. But when the Chancellor of the Exchequer adopted that language as his own it was a thing very different indeed from language merely coming from even so eminent a person as Sir David Barbour. But they were not going to have any financial crisis now. The credit of the Government of India was good enough to borrow £10,000,000 or a good deal more. But they must remember that if this experiment did not succeed they would have to go on borrowing; there might come a time when the credit of the Government of India might not be sufficient to keep up such a gigantic speculation, and therefore further borrowings would come to an end, and they would have their political and financial crises upon them both at once. This policy might not be unusual or abnormal at all in many parts of the world. This policy of endeavouring to keep the fixed exchange at a certain rate had been often tried by Governments among the Southern American Republics, and the next stage—though it did not come so quickly as this—was to try and raise a sterling loan in the English market. He had no doubt, if the right hon. Gentleman would consult some of these Finance Ministers who used to do these things, he would find many of them roving about different parts of the Continent quite at his disposal, and for a very small remuneration they would show him a great many of these tricks. He did not know whether this loan was to be permanent or temporary. He supposed it was going to be a temporary loan at first, and eventually to slide into a permanent one. He regretted very much the course which the Government had taken, and he earnestly hoped it would prosper.

THE UNDER SECRETARY OF STATE FOR INDIA (Mr. GEORGE RUSSELL, North Beds.)

I only rise to say a word or two on three points upon which a personal appeal has been made to me. One is by the hon. Member who has just sat down. He challenges what I said about our proceeding not being abnormal. I think the hon. Gentleman has perhaps confused two separate speeches or parts of speeches of mine. My action was challenged in two separate respects, and in both of these respects it was stated to have been equally unprecedented, abnormal, and unusual. One was our coming to Parliament and asking for general powers over and above the specific purposes we had in view. With regard to that, so far from being unprecedented, I showed that there were 11 precedents exactly to the point. With regard to the much narrower issue of coming to Parliament for borrowing powers because we had failed temporarily to sell our bills, I only referred to one case, which the hon. Gentleman has cited. My reason for making something of that was because it was the noble Lord himself, the late First Lord of the Admiralty, who challenged our conduct in that particular regard us being abnormal, who happened to be the Minister to whom it fell to do precisely the same thing in 1876. With reference to the questions of the right hon. Baronet the Member for London University, the answer to his first question is, that in the statement about the importation of silver the amount imported from Austria is included, but it is very trifling indeed. With reference to the other question of my right hon. Friend, the Native Mints may undoubtedly be coining all the time, but the coins they put out are not legal tender in the rest of India, and are only current in the immediate vicinity of the Native States.

SIR J. LUBBOCK

was understood to ask whether there was any arrangement with the Native States?

MR. GEORGE RUSSELL

Not generally, only in four cases of comparatively small importance.

MR. COHEN (Islington, E.)

had not risen, any more than any of his right hon. or hon. Friends, to offer any opposition to the Third Reading of this Bill. He should not follow his right hon. Friend below him (Mr. Chaplin) in his disquisition on bimetallism, because it appeared to him they were not there, as practical men, so much to inquire what had been the causes which had produced the results they deplored as to consider what were the remedies which they must apply to get them out of, or tide them over, the difficulty. The Chancellor of the Exchequer, on the Second Reading, told them that the Indian Government thought it probable that the disturbance which had occurred was a temporary one, and that they should deal with it by temporary remedies. It seemed to him, therefore, to be material, and, indeed, essential, to inquire into two things: First, how far was the opinion likely to be correct that the difficulty was a temporary one? That was a pertinent inquiry. And, again, to what extent were the suggested remedies likely to be also temporary? It appeared to him that neither the Under Secretary nor the right hon. Gentleman himself attached sufficient importance to the permanent character of the forces which were at work, and which had produced the difficulties the Indian Government was not now experiencing for the first time, but which had grown and grown till the Indian Government could no longer surmount them. The Under Secretary cited the precedent of Lord Halifax, then Sir Charles Wood, in 1860 and 1861, as closely resembling the action which was now being taken. True it did; but the circumstances which gave rise to that action, instead of closely resembling the present situation, were, as the hon. Gentleman himself explained, not only not similar to the present circumstances, but were as far as possible removed from them. The action in 1860 and 1861 was resorted to to provide the means for Indian railways, and was taken because of an apprehended difficulty that the Indian railways would encounter in raising the money. It was not a question of exchange, or of scarcity of gold as compared with silver; it was a question of credit. The Chancellor of the Exchequer also appeared to make too light of the present situation, because, when he gave the sanction of his high authority to the present proposals, he gave some very interesting figures of exports and imports, which, undoubtedly, told in favour of the course he was advocating; but he absolutely appeared to ignore the forces which were operating in the contrary direction. His right hon. Friend the Member for the University of London had called it, in his opinion rightly, a gigantic experiment. The Chancellor of the Exchequer proposed to describe it as an experiment, but the experiment would fail if the exchange did not. rise; the experiment could only succeed if the exchange did rise. Well, now, of course he admitted—there was no doubt of that—that the course of the exchange, into which it became necessarily very pertinent to inquire, was very much affected by the balance of trade. The figures which the right hon. Gentleman save—which were most interesting—went far to justify his expectations and the universal hope of everybody in this House, and outside it, was that the balance of trade would appreciate the value of the rupee. But that was only one of the factors which bore upon the fluctuation of the exchange. It was not, he should say, the chief factor. He should like to point out one or two considerations, of which the Chancellor of the Exchequer, he was certain, must be aware though he appeared to ignore them, which tended in the opposite direction. First, there was the abstinence, or the alleged abstinence, of the Lancashire merchants to draw for their export of goods in the belief, said the right hon. Gentleman, that the exchange was going to rise. He found it one of the most startling incidents in this Debate, which had not been free from surprises, to see the glee with which the right hon. Gentleman seemed to observe that, besides the accumulations which were being amassed by the postponement of the sale of the bills of the India Council—he seemed positively to rejoice that there were accumulations by merchants up in Liverpool and Lancashire which would compete with and render more impossible the realising of those drafts. And with regard to the accumulations of the Government, they might be quite sure, as the hon. Member for the City of London pointed out, that the Lancashire merchants and still more the merchants and exchange dealers in the City of London very vigilantly watched, not only the amount the Government ought to draw from year to year, but the amount accumulated against them from the unliquidated sterling obligation in this year of 1893. And, lastly, he would come to one most important—perhaps more important than any other element which was operating against this hoped-for and expected balance of trade— namely, the important increase in the sterling debt of India on the London money market. The right hon. Gentleman surely must know that the exchange depended quite as much on the service of the debt in London as it did on the export trade, and the right hon. Gentleman must be aware of what perhaps the House had not perhaps got present to its mind. He had taken the figures from the Parliamentary Papers, 167 and 431. The amount raised by India in London from April, 1892, to September, 1893, amounted to no less than £4,461,000, involving a permanent charge—permanent because it was not in the form of six or 12 months bills—a permanent charge of, at 3 per cent., £140,000. To that might be added the £3,000,000 which had been raised in the form of six months' bills And you thus find there was a charge against India of something like £250,000 of money which had been accumulated in less than two years—in 19 months. He would ask the House, Who could say that this would not continue? And was it not quite clear that by this very measure they were themselves creating—and they will be obliged to continue to create—a force which would neutralise the influence, the beneficial influence, he hoped, of the balance of trade which the right hon. Gentleman expected. And there was one last consideration which must be borne in mind. He did not wish to put this consideration as a pessimist, or as in the least bit indicating the impending bankruptcy of India. But it was unquestioned that, while all the forces—they were very few—to which the right hon. Gentleman referred as benefitting the value of the rupee were matters of expectation, matters of estimate, and matters of speculation about which the right hon. Gentleman might be right, but about which he himself would be the last to dogmatise and be certain he was right —whilst these things were operating in favour of benefitting the rupee, the action of the Lancashire merchants, the accumulation of their own obligations of past years, and the growing and increasing service they had to remit to India—these were not matters of estimate, but were ascertained forces which all worked against the Indian Government. Now, he would like to say just one word on the second point, with which he was about to conclude his remarks. He pointed out this: that it seemed to him necessary to consider not only whether those obligations were likely to be temporary, but also whether their remedies were likely to be likewise temporary. If the Government had desired—and he thought they might take it that the Government did desire—to succeed in this experiment—he would not call it speculation—then, at least, he would press upon the Government, while there was still time, to take care their experiment should be temporary. He did not ask them to declare their intentions. There was nothing which gave him greater satisfaction than the few observations of the right hon. Gentleman, in which he said that he was going to hold his own counsel; he was not going to press for any declaration of the intentions of the Government; but he would ask the right hon. Gentleman to take care that the rule which he was setting down for himself should be observed with a little more care than he (Mr. Cohen) had reason to fear was observed by the authorities in India. He did not know whether his right hon. Friend opposite was correct or was not correct in assuming that there was nothing exceptional or abnormal in the exportation of silver to the other side. But if, as he hoped, there was to be a duty, some day or other—he would not attempt to divine the time— imposed on the importation into India of silver, he did hope that the right hon. Gentleman, if he should be in Office at the time—they could not expect him to hope for that—would take care, if possible, that no leaking out of the intentions of the Government should take place either on this side or the other. He would return for a moment to what he was saying. If the difficulties of the Government were, as the right hon. Gentleman said, temporary, why not make their remedies temporary? Why create capital stock? They knew the right hon. Gentleman had admitted that the precedent of his noble Friend the Member for Middlesex was not particularly tempting. He would not press the right hon. Gentleman to make any engagement to-night, but he did hope that he would bear in mind that, although he had power under this Bill to create capital stock, still, if he were sincerely desirous, as he was sure he was, that his remedies should be as temporary as his difficulties, he would take care that he exercised his powers in a manner which would enable him to arrest his action and liquidate the whole business for good or bad, both of debts which had been created and the assets which had been accumulated on the other side, at any moment he thought it desirable to do so. He did not ask him to pledge himself to the form in which he was going to raise this money—that would be contrary to his canon—but he asked him to bear in mind that it was particularly desirable, as the right hon. Gentleman must be aware from his experience, to make temporary provision of assets to meet what he considers temporary liabilities. And he would only say that he personally should have preferred that the Government had not embarked in this speculation, which, he thought, might more properly have been left to the private adventure of the Lancashire exporters. His hon. Friend the Member for Kingston (Sir E. Temple) told them the other night that when a similar difficulty occurred he collected the gold and sent it home; and the hon. Member for White-chapel (Mr. Montagu), who was an authority on the subject, told them there was as much gold in India as in France. He quite recognised the difficulty of the Indian Government, and hoped nothing he had said was likely to add to the embarrassment of the situation, but he did ask the Chancellor of the Exchequer not to aggravate by his remedies the disease he was trying to cure, and not to give his sanction to any arrangement which would be permanent in character or which would establish a precedent which might be regretted in the long run.

MR. MACFARLANE (Argyll)

said, he desired to say a few words on this subject, having had considerable experience in connection with India. The right hon. Member for Bodmin said that the rise in the value of the rupee seriously affected the natives of India. Well, it might have an important influence on prices; but the great question of exchange did not extend to the remote districts—to the bazaars throughout the country. Even if it were so, however, the right hon. Gentleman forgot that a rise of 1d. in the rupee would be compensated for by a saving in taxation which would about cover the extra charge. A great deal of reproach had been cast upon the Government for having closed the Mints without having immediately affected the affairs of exchange. He thought the Government were to be congratulated that that did not follow, because, if there had been a rush, it would have dislocated all commerce. There had been no appreciable rise; all that the Government had done was to effect a fall in the value. Then they heard of the exports; but the reason why the exports of India were not what they usually were was that this was not the season. This was not the season for grapes, and they were not as plentiful as they otherwise would be, and the same applied to Indian exports. There was one thing that must follow the closing of the Mints, and that was that some day or other, when it may suit the convenience of the Government, a certain Import Duty must be imposed upon silver introduced into India, because as the late Chancellor of the Exchequer (Mr. Goschen) said the other night, there was no closing the front door and leaving the back door open. Silver was now being poured into the country, and it must affect the exchange. It was being poured in in considerable quantities. He might be allowed to correct one small error in the speech of the late Chancellor of the Exchequer. He spoke of the rupee being used by the natives of India as ornaments. There was no such thing. They were never used in that way. When they were used at all they were melted. There was one point that had not been referred to by any of the speakers—it was as to the consequences that might follow. Hon. Gentlemen had spoken of the possible bankruptcy of the Indian Government. He could not conceive anything of the sort while this country was solvent. Was it conceivable that they, as Governors of that great Dependency, would allow the Indian Government to be insolvent? It was impossible while there was £1 in the City of London. He thought it Would be an advantage to the Indian Government if they formally recognised the actual liabilities they had involved themselves in, and made these loans Imperial. They had been contracted, and nobody denied it. They might save £1,000,000 sterling if they did that. Well, he had at this moment a Motion on the Paper for the purpose of moving for a Commission to inquire into the expenditure regarding the Revenues of India.

SIR W. HARCOURT

In India also?

MR. MACFARLANE

said, yes, if the right hon. Gentleman liked. There was an impression that there had been some change. The Revenue of India was a heavy charge. He did not refer, on this question, to such charges as that of the Opium Commission, which were not very large, and applied only to small things; but the Debt of India was a growing Debt, and it had been growing for a great many years. He did not suppose he could bring on his Motion this Session; but he hoped next Session —if they were ever to have another, and his hon. Friend on the other side of the House thought not—the Government would be prepared to give favourable consideration to the matter. He said that the Government of India cost us £36,000 a year on one item alone; there was another item, a charge of £48,000 by the Banks of England and Ireland for managing Indian loans. That was a most unreasonable charge—

SIR W. HARCOURT

No; it is not £48,000.

MR. MACFARLANE

No; £43,000. That was the point. It was the question of the home charges that he wanted referred to this Commission. They were growing, as he had said. Since 1886 the Debt of India had increased by £40,000,000. That was a very serious matter. It was a matter to be considered. He had no word to say against this Bill. It was a necessity. He did not understand the Chancellor of the Exchequer to give this as a permanent loan. If the exchange rose temporarily, that would engage his attention. But hon. Gentlemen had assumed that this would be a permanent loan. He believed that by imposing a duty on silver the Government could raise all that would be necessary. He begged to say that he would support the Bill.

SIR J. GORST (Cambridge University)

Mr. Deputy Speaker, I want to say just a few words in order to vindicate-the Government of India against the charge of increasing their expenditure which the Chancellor of the Exchequer has made on the authority of a pamphlet he has read. The statement made by him was that, as compared with the years 1892 and 1893—

SIR W. HARCOURT

I made no statement.

SIR J. GORST

The statement quoted with his approbation. The Chancellor of the Exchequer quoted this pamphlet to show that in the years 1892–93, as compared with 1879–80, though the loss on exchange had increased by only £4,750,000, the total expenditure had been increased by £22,500,000. Now, that is wholly incorrect. The expenditure of India is, in one sense, always increasing; but it is the profitable expenditure on Railways and Canals, which are being opened every year, that has brought up the total, and the profits on which, although they are now set out in the accounts, the right hon. Gentleman has taken no account of. I have now before me the accounts for two years which were prepared by the pamphleteer, and which have been referred to by the right hon. Gentleman the Chancellor of the Exchequer. The accounts, which will be found in the Library—Paper 279 of the Session of 1880—show that the net expenditure of India for the year 1879–80 was Rx.45,490,407, while that for 1892–3 was Rx. 49,435,200. Therefore, it appears that in the latter year the net expenditure had only increased by Rx.4,000,000. Against this, however, must be placed the sum of Rx.4,729,200, occasioned by the loss by exchange, which shows that the net expenditure, instead of increasing, has actually diminished by Rx.750,000.

MR. GOSCHEN (St. George's, Hanover Square)

There was an under- standing that this Debate should be brought to a conclusion about this time (7.30 p.m.), and I hope we may all observe that understanding. After the long speech I made on a recent occasion I certainly do not intend to trouble the House myself with more than the fewest observations at present. But I would wish to say this: that I think the right hon. Gentleman the Chancellor of the Exchequer and the Government of India can scarcely be sorry that this Bill has been thoroughly debated. The Chancellor of the Exchequer and the Government of India have had the advantage of some very able speeches indeed setting out the policy of that Government. The hon. Baronet the Member for the Kingston Division of Surrey (Sir R. Temple) took one line and argued with great ability, and the right hon. Gentleman the Member for Bodmin has explained the position of Lord Herschell's Committee. On the other hand, I think it important for the Government at home, and the Government of India, and the various interests concerned, that all the great dangers and complexities that surround the matter should have been debated and threshed out in the House of Commons. Notwithstanding the late period of the Session, this Debate has not been a waste of time—we on this side certainly have not intended it to be such, and I think the right hon. Gentleman the Chancellor of the Exchequer will agree that it has not been a waste of time. I owe the right hon. Gentleman the Member for Bodmin an apology for having conveyed to his mind the impression that I held the Committee of which he was a member responsible for having been blind to the fact that the rupee might not rise. I admit that my observations might bear that construction, and I wish to withdraw any possible blame that might appear to attach to the Committee. But I would point out that it appeared to me to be part of the plan of the Indian Government that a gold standard should be established. That standard was to be fixed at 1s. 4d., so far as it would be called a standard at all.

SIR W. HARCOURT

The Committee fixed it.

MR. GOSCHEN

The right hon. Gentleman admits that the Committee fixed that point in order to prevent a rise above that line. I did not understand my right hon. Friend to admit that they fixed that with reference to the introduction of a gold standard. They did, believe, expect the exchange to rise to 1s. 4d., and they clearly indicated that a gold standard—to which Sir David Barbour made special reference— was to be hoped for. We seem far from that point now, and the remedy suggested by my right hon. Friend behind me, that gold should be exported from India to pay the debts of India, shows that we are extremely far from any progress in the direction of a gold standard. The other part of the experiment must stand by itself; but so far as a gold standard is concerned, I do not see that we are approaching it, nor do I expect that we should get up to 1s. 4d. rapidly. I will now say a few words on the important point that has been discussed in every part of the House—namely, the question of the Import Duty on silver, The right hon. Gentleman the Member for Bodmin asked the Chancellor of the Exchequer what his views were on the subject. I must confess I agree with the Chancellor of the Exchequer in demur- ring to answer the question from the point of view of any speculation which it might create. It is a matter on which, naturally, the mouths of the Government are closed, whilst those of other people are not closed. He would be a reckless speculator who would argue from anything that has fallen from this side of the House that the question of Import Duties has been settled one way or the other. It has been suggested that the export of silver to India is based on some idea possibly arising in India of the early imposition of a Silver Duty. Well, if the Government of India had that in their mind it would be their duty to make up their mind upon it without a moment's delay, and act upon their decision, and not leave so extremely dangerous an idea to float, it may be for months, amongst the business community. It is a matter that ought to be dealt with at once, if it is to be dealt with at all. If there is that speculation it is marring the experiment of the Indian Government itself, and, therefore, although I do not expect the Chancellor of the Exchequer to say one single word with regard to the probability, I think it right to refer to the matter in the way in which I have referred to it. Personally, I must express surprise at having heard an Import Duty upon silver advocated. I can quite see that such a course may be necessary for the success of the experiment that has been entered upon, because, when once artificial measures are embarked on, one artificial measure is obliged to be followed by others in order to make such a course of policy a success. But of this I am sure: that if those who advocate the imposition of this duty will reflect, they will see that it is not by artificial measures that they will be able to remedy the present state of things. I think that it is highly probable that an Import Duty upon silver would greatly aggravate some of the difficulties which exist. I am bound to state my opinion on it as others have stated theirs. And that brings me to one of the last observations I will make— namely, that during the whole of the Debate the defenders of the action of the Government—and I think I must include the defenders of the Committee—have not dealt sufficiently with the effect of the closing of the Indian Mints on other branches of trade besides the trade of India. It is contended that the trade of many other parts of the world is jeopardised by this arrangement, and I mention it now because it is clear that the imposition of an Import Duty on silver would aggravate that part of the question, and make it still more difficult in India to compete with China and Japan, and other silver-using countries. If, therefore, such a step is in contemplation, I hope the Chancellor of the Exchequer will not think that there is an agreement upon the matter. I regret that the right hon. Gentleman the Chancellor of the Exchequer dealt in the way he did with the speech of my right hon. Friend the Member for Sleaford. I think that from the point of view of my right hon. Friend it was a most able speech. He has thoroughly mastered the arguments on both sides of the question, and I think it was scarcely fair of the Chancellor of the Exchequer to treat my right hon. Friend as he did in saying that he knew better than the Committee or the Indian Government, or the Government of the Queen. We all put forward our views and arguments with as much force as we can, and I must say that I think the speech of my right hon. Friend, especially considering how it was supported by chapter and verse, deserved better treatment at the hands of the Chancellor of the Exchequer. The Chancellor of the Exchequer has got such an immense regard for the Government of India that he finds fault with the right hon. Gentleman for attacking it. Has he himself not attacked it just now? Has he not attacked its expenditure? He took a statement in a pamphlet reflecting seriously upon the expenditure in India. He quoted it to the House in mistake, because it was gross expenditure and not net expenditure, and on that he fastened a kind of attack on the Indian Government for their general expenditure. I must say my right hon. Friend the Member for Sleaford examined the facts and figures more closely than the Chancellor of the Exchequer examined them when he made this attack on the Indian Government. That attack has been answered by my right hon. Friend the Member for the University of Cambridge; but, of course, if the Indian Government can economise they ought to do so, and partly in that way meet the difficulty which has arisen. But I expect it is not by any generalities in this House that they could be induced to pursue that course. The responsibilities resting on the Indian Government at the present time are immense. We are going to read this Bill a third time. I confess that I part with the Bill with some misgivings, but, at the same time, I hope that it may meet the occasion for which it is introduced, and be more successful than the precedent of 1876, which was quoted by the Chancellor of the Exchequer without examination as to whether it had or had not succeeded in its object. I do not know whether the Government have gained or lost by it; but it cannot be called successful, because a portion of the Debt in respect of which the loan of 1876 was authorised has had to be made permanent. I hope that on this occasion no portion of the Debt will be made permanent, and that in six months' time it will be possible for the right hon. Gentleman to tell the House that the forecast of the Government has been correct, and that by the measure they have adopted they have not only staved off this great difficulty for the moment, but that they have paved the way for a more satisfactory course of Indian finance in the future.

Question put, and agreed to.

Bill read the third time, and passed.