COMMITTEE.

HC Deb 16 August 1894 vol 28 cc1271-350

Considered in Committee.

(In the Committee.)

* THE SECRETARY OF STATE FOR INDIA (Mr. H. H. FOWLER,) Wolverhampton, E.

There is a difference between the modes of presenting the English and the Indian Budgets. The English Budget deals with the income and expenditure of the year which has closed? and the estimated income and expenditure of the future year. But that has not boon the practice with reference to the Indian Budget, nor can we alter that fact. Although the last financial year ended on March 31, 1894, accounts have to be collected and examined from upwards of 1,000 treasuries and sub-treasuries, from 500 civil and military districts, and from all the Railway Companies, all the Municipalities, and all the District Boards. These accounts have all to be checked, and involve many transactions, all of which have to be examined and audited before the accounts for the year can be finally closed; the effect of this is that, although the financial year closed in March, the real position of that financial year cannot be ascertained until the end of the calendar year—namely, December 31. Hence we have this practice: that in considering the Indian Budget we consider three years—the year the accounts of which have been closed and audited, the revised Estimates of the last financial year, and the Budget proposals of the coming year. Therefore, I ask the Committee to-night to consider the income and expenditure for the year ending March 31, 1893, which is now finally closed. I will then say a very few words on the Estimates for the year ending March 31, 1894; and next submit to the Committee the proposals of the Indian Government with reference to the income and expenditure of the current financial year, which will end on March 31, 1895. I deal, therefore, first with the closed year of 1893. The gross income of that year was Rx.90,172,000. I leave out the figures below 1,000 for the sake of simplicity. The expenditure of the year was Rx.91,005,000, which closed, therefore, with a deficit of Rx.833,412. Those are very large figures, ninety millions of revenue, ninety millions of expenditure, and I have observed a tendency in speeches and also in literature to describe the taxation of India as representing something like Rx.90,000,000, and the expenditure of India as equalling that very large figure. This gross revenue and expenditure are very different things from the real revenue and real expenditure of India. In the gross revenue are included the entire receipts, and in the gross expenditure the entire expenditure of the whole railway system of India, the whole of the canal system and of the irrigation works, and a variety of other items which have no connection, on the one hand, with taxation, or, on the other hand, with Government expenditure as we understand it here. Some of the large undertakings I have mentioned are carried on at a profit, and some at a loss, by the Government of India. We will, therefore, pass at once from gross revenue to net revenue, and from gross expenditure to net expenditure. The Government of India regards net expenditure upon very much the same lines on which this country for a great many years regarded it—namely, it deducts the cost of collection from the revenue. I believe it was my right hon. Friend the Member for Midlothian who altered that practice, and introduced as an item of expenditure in this country the cost of collectiong the revenue. That is a practice which I think is a sound and economical one. I think that the collection of revenue is as much a part of the expenditure of the Government as any other expenditure in which it indulges, and perhaps there is often as much room for economical criticism in reference to expenses of collection as to any other question. In the Return of Net Income and Expenditure for 10 years that I have presented to the House I have not allowed that deduction; I have there treated the produce of the main heads of revenue as the net income of India; but now have further to reduce that net income by the cost of collection. Therefore, in the year just passed there is a discrepancy between the two statements of something like Rx.8,000,000 or Rx.9,000,000, the cost of collection. I thought it would very much confuse the Committee if I endeavoured to introduce a new plan, and therefore I have followed the plan of my predecessors, and it is followed in the statements of the Government of India, and in my Explanatory Memorandum in dealing with the net revenue and net expenditure. I wish the Committee to understand that net revenue is after deducting the cost of collection, and that net expenditure does not include the cost of collection. Treating in this manner the figures of the net income and net expenditure, the nut revenue of India in the year 1893 was Rx.51,606,000. The estimate which was made when the Budget was produced for that year was Rx.49,582,000, showing an in crease of revenue of something like Rx.2,024,000. In considering this revenue I should like to deal with the revenue of India in detail, and I think it is better to deal with it on the figures of 1893; there is little variation in 1894, and there is not much variation in our estimate for 1895. I think it will promote our convenience if Intake whatever remarks I have to make upon the revenue of India upon this closed account of 1893. This revenue of Rx.51,606,000 arises from four sources, but all these sources are not taxation. India, like England, has a tax revenue and a non-tax revenue, and the Rx.51,606,000 must not, cannot, and ought not to be taken as any estimate of the taxation of the people of India, as I shall endeavour to show a little further on. These four sources are—first, the land revenue, with which I associate the sum raised from the working of the forests and the tributes from the native States; secondly, opium; thirdly, pure taxation: and to these I have added, in my 10 years' statement, a fourth, the commercial services, some of which, certainly in years past, have been carried on at a very considerable profit. I am sorry to say that, owing to a cause I shall have to refer to presently —namely, the depreciation in the value of the rupee—that profit has been turned into a debit charge. But, as in this country, the Post Office, the Telegraph, the Mint, and various other services, we find generally produce a profit; there they sometimes produce a profit and sometimes a loss; but, at all events, they form a distinct item of revenue. The first item of the revenue is the land revenue, which in 1893 produced Rx.20,914,000. There are also profits on forests, Rx.724,000, and tributes, Rx.790,000. The first question I have to ask myself is whether, in estimating the burden of taxation in India, we are to include this sum of Rx.22,428,000 net, which, after deducting assignments, is Rx.2,5,719,000 gross; whether we are to regard that as part of the taxation of the people, or as a revenue which is not derived from taxation properly so-called. A great deal of the calculations which are made with reference to the taxation of India will depend upon the category in which this very large sum is placed. I gathered from the remarks of the hon. Member for Flintshire in the Debate yesterday, that he inclines to the view that this is an item of taxation, and not to be included as a non-tax revenue. The hon. Member for Banffshire stated yesterday that upon this question I gave the official view, that I looked through official spectacles, and presented to the House the views which were given to me. I am going to quote two authorities as to the proper position of this land revenue. They certainly are authorities of the first rank and standing in any question of political economy, and they are also two statesmen well known to have a very great sympathy with the bulk of the people of India, and who would not, I am sure, have strained a point as against any view which should be taken in favour of the people as against the Government. The two authorities I am going to quote are Mr. John Stuart Mill and Mr. Fawcett, and I think the Committee will admit they are authorities who can speak with decision upon a question of this sort. Mr. Mill said— A large portion of the revenue of India consists of the rent of land. So far as this resource extends in any country, the public necessities of the country may be said to be provided for at no expense to the people at large. Where the original right of the State to the land of the country has been reserved, am! its natural— but no more than natural—rents made available to meet the public expenditure, the people-may lie said to be so far untaxed; because the Government only takes from them as a landlord.… It is of course, essential that the demand of revenue should be kept within the limits of a fair rent. Under the native Govern- ments, and in the earlier periods of our own, this limit was often exceeded. But, under the British rule, in every instance in which the fact of excessive assessment was proved by large outstanding balances and increased difficulty of realisation, the Government has, when the fact was ascertained, taken measures for reducing the assessment. Mr. Fawcett, writing a great many years after Mill, says— The Government in India exercises over a great portion of the soil the same rights of pro perty as those which an English landlord exercises over his own estate. The Government in India takes the place of individual landlords, and cultivators of the soil rent their land from Government instead of from private land holders… As far as the cultivators of the soil are concerned, it can be no matter of consequence whatever to them whether they pay a Land Tax to the Government or whether they pay rent to private landholders. Hence a Land Tax is no harder upon the cultivator, nor does his impost cause any loss to the rest of the community. It therefore follows that a Land Tax, so long as it does not exceed a rack-rent, cannot increase the price of products raised from land, for those who grow products would not sell them cheaper, if they paid rent to a private landlord instead of paying the same amount to the Government in the form of a Land Tax. A land tax consequently differs from all other taxes, for it possesses the excellent quality of providing a large revenue for the State without diminishing the wealth of any class of the community. Those, therefore, are completely in error —and I recommend this to my hon. Friend behind me— who quote the aggregate amount of taxation which is raised in India in order to prove how heavily the people of that country are taxed. At least £20,000,000 per annum is obtained in India by the Land Tax, but it would be as unreasonable to consider this amount as a burden laid upon the people, as it would be to consider that the whole rent which is paid to English landlords in this country is an impost levied on the cultivators of the soil. In India they nationalised the land centuries ago. The land belongs to the State, and the cultivators of the land pay a certain rent in respect of their tenancies. Whether that rent is an excessive rent or a moderate rent is, of course, a question on which discussion may arise, and on which different opinions may he expressed. Putting it generally, there are 'two principal assessments in India—the permanent settlement which was made 100 years ago by Lord Cornwallis in Bengal, and which then and for ever fixed the sum the tenants were to pay, and temporary settlements made once in 30 years which have prevailed for a long series of years, and under which the conditions of the laud are considered, the cultivated area is ascertained, the price of pro- duce is duly recorded, and the rent is estimated for a period of 30 years. No increase of rent is allowed on improvements made by the tenant himself or improvements arising from expenditure of private money. With regard to the settlement in Bengal, that settlement was fixed 100 years ago at about £3,250,000, and that represented a fair rent then to be paid for the land and its produce. The gross annual rental now received by the landlord is nearly £15,000,000. Hardly any of this increase is due to the action of the zemindars. It has arisen from the increased population, from the industry of the ryots, from the rise in prices, and to a great extent from the money expended by the State for the roads and railways. Now, Sir, the House will see what the position of the Government would be if that settlement had never been made. That large unearned increase of many millions has not gone into the pockets of the cultivator of the soil, but has been received by the zemindars. No advantage has been derived by the ryots from the increased value of the land. That is a system which, as the hon. Member for Kingston has pointed out, is indefensible and is a great loss to the people of India. The Government of India are, I think, to be congratulated that in three-fourths of the districts of India that system does not now prevail. The position of affairs in Bengal has been for years a serious injustice — I might use a stronger word—to the tenants. The tenants have been rack-rented; the zemindars have paid the rent to which I alluded just now to the Government, and have done pretty much what they liked as to the mode of dealing with their tenants. The protection given to tenants in other parts of India practically ceased to exist in Bengal. Inquiry after inquiry by Governor General after Governor General took place upon the question, and eventually the Bengal Tenancy Act was passed in 1885, which recognised the rights of the tenants so far as the s future was concerned. The Bill was very much upon the lines of Bills, referring to Irish tenants. The measure was passed into law eight or nine years ago, and it is in carrying out that measure, and in completing the Cadastral I Survey of a part of Bengal—namely, I Behar—that difficulty has arisen. The difficulty has, however, I think, been greatly exaggerated, and I think we may expect that a decision will be arrived at before long which will give satisfaction both to the tenants of Behar and to the zemindars. The Government have taken upon themselves a larger share of the cost of the survey than was originally contemplated, and I do not believe that any further complaints will now be made. But before I pass from Behar I will give a singular illustration of the unwisdom of this settlement. In Behar, where the land revenue was settled on the lowest scale 100 years ago, and where it now falls at the rate of about 10 annas per acre of cultivated land, the routs paid by the cultivators are higher, the pressure on the ryots is heavier, and the condition of the smaller ryots is poorer, than they are in other Provinces where the land revenue is periodically re-settled, and where the average incidence per acre is from 30 to 35 annas. Passing from this local question, I may say generally that the instructions to the officers of the Government are what I mentioned yesterday, that they are to apportion rents with justice and with moderation. I will now give the House figures showing how the amount of the revenue bears upon the condition of the people, taking India as a whole. The gross area of British India now under cultivation is estimated at 196,000,000 acres, and the gross rent paid to the Government in 1891–95 at Rx.25,703,600. Of this cultivated area nearly 13 per cent, bears two or more crops a year. No pasture or grass land is reckoned as cultivated. The total land revenue (Rx.25,703,000) on the total area of cultivated laud — apart from fallows and grass lands—falls at an average rate of 1. 31 rupees per cultivated acre all over India. The average incidence of laud revenue varies in the different Provinces from 0. 43 of a rupee per cultivated acre in the Central Provinces to 2. 99 (or say 3) rupees per acre in Burma. In special tracts and villages in arid parts of the Deccan, or stony tracts in the Central Provinces, the land revenue is as low as two annas (one-eighth of a rupee) per acre; whereas in town lots in the Calcutta suburbs the rate may sometimes go as high as 40 rupees per acre. The gross value of all the crops is estimated to be Rx.313,500,000 a year. The laud revenue represents 8 per cent, of this value. Some authorities put the value of the crops higher, and estimate the total land revenue at 6 per cent, of the gross yield. But the figure taken above is moderate and safe. This estimate takes no account of grass and pasture lands, or of the 75,500,000 head of greater cattle and 30,500,000 head of lesser cattle. The rent is entirely raised upon arable or agricultural land. As compared with the gross value of the crops in India, this revenue cannot be considered excessive. The next item of revenue which I submit to the House as coming within the non-tax revenue is the revenue derived from opium. I am not now going to deal with the merits or demerits of this opium question. The whole question is being considered by a competent and impartial Royal Commission, and I think that both in India and in England the Report of that Commission will be awaited with a great deal of interest, as we shall then have before us the facts of that complicated controversy upon which we shall be able perhaps to form a correct opinion. Speaking now simply as the Finance Minister, I have to tell the House that in 1893 the gross revenue from opium produced Rx.7,993,000. In the preceding year it produced Rx.8,012,000, there being therefore a decrease. I said just now that that was not a tax revenue falling upon the people of India. It is a tax falling upon people who buy the opium from India. The tax upon opium consumed in India forms part of the Excise revenue, and forms no part of the opium revenue. The particular revenue from opium arises from two sources: the taxation of opium which is produced in the native States, and which, passing through Bombay, is charged with a certain pass duty, and the profit which accrues to the Indian Government from the monopoly which they have in the manufacture of opium. Now I come to what I call taxation in the strict sense of the word, and I first take the taxation in regard to salt. It was discussed yesterday, and I am not going to quarrel with its description as a severe tax. That tax produced in 1893 Rx.8,167,000 net. Now, this duty has been raised in the past history of India on all salt, either imported into the country or manufactured in India. There was a great variety in the rates which prevailed, but they eventually settled down to 2 rupees for every 821bs. of salt. But in 1888, owing to financial exigencies, the taxation was raised to 2½ rupees upon every 821bs. At that time great fear was expressed that the imposition of this duty would tend to decrease the consumption, which it was said — and I quite agree—would be a great calamity to the people. If the result of that taxation bad been to produce such a consequence, it would, in my opinion, have been much to be deprecated. Now, the figures are as follows: —In 1888, when the duty was raised from 2 rupees to 2½ rupees, the consumption in India was 31,474,000 maunds; in the following year, 33,486,000; in 1890, 33,722,000; in the next year, 34,851,000; and in the year which I am now discussing, 35,451,000. In the last 10 years there has been an increase in the consumption of 18 per cent., whilst the population of India has only advanced 11 per cent. Now, this consumption works out at 10¾lbs. per head. It varies in different Provinces, in some being as much as 18¾lbs. per head, and in some so low as 81bs. per head, but as showing the actual burden of the tax upon the people of India I take the average consumption at l0¾lbs. per head. Taking the average Indian family at five members the taxation would fall at the rate of 1½ rupees per annum per family, or five annas per head. Do not let me be misunderstood as in any way taking an optimistic view of the tax. Nothing would please me better than to be able to tell the House that the Indian Government were in a position to abolish this tax. I think it would be a very great boon to the people of India to get rid of this tax altogether, but, at the same time, however strong our feeling may be, we must not forget that there is no tax in India upon tobacco or sugar, and that this is practically the only tax which the Indian peasant need pay, unless he indulges in spirits and narcotics. This is practically the only tax levied upon a large proportion of the people of India, and I think we may congratulate ourselves on the encouraging fact that the consumption of salt has not decreased, but has increased. Well, the next item is that coming under the head of stamps. That is very much the same class of taxation as the Chancellor of the Exchequer is familiar with here. This item produced some Ex.4,254,000 net, a very slight increase upon the preceding year. I may observe here that Death Duties, Estate Duties, and Legacy Duties in India are a mine of future revenue still unexplored. The next item is Excise. The Excise Duty in India is raised by duties upon and licences to sell intoxicating liquors. My hon. Friend the Member for Flintshire complained very strongly of the working of the Excise Duties. He made some very strong charges against the collectors of this revenue in India as to the mode in which the tax was collected. Well, Sir, Drink Duties are looked at from two points of view—one from the point of view of the Chancellor of the Exchequer, and one from the moralist's point of view. I think the desire of every right-minded man is that this revenue should be as high as possible in order to check consumption, and the difficult dividing line of excessive or not sufficient taxation is where smuggling would begin and greater evils would follow. This revenue has considerably increased in the course of the last few years. In 1889 it reached Ex.4,679,000, and now it is Ex.5,210,000. I am informed that this increase has arisen from improved Excise administration. The amount of taxation has very much increased in the last few years, and there has been a great reduction in the use of illicit intoxicants. The licences—and the bulk of the Revenue comes from them—are for spirits made, spirits imported, certain fermented drinks, opium, and narcotics. Ten years ago the total number of shops of all kinds licensed for alcohol and opium was 115,637. Last year the total licences were 102,991, showing a decrease of something like 12,000. The drink bill of the United Kingdom gives a total revenue of £35,000,000 from a population of 39,000,000. This is practically a drink revenue 55^ times greater per head of population than the Revenue raised in India. The number of licences has been, as I have shown already, reduced, and, whereas we find that in England there is a shop licensed to sell intoxicating liquors for every 166 of the population, there is in India a licensed shop to sell these liquors and for opium for every 2,148 of the population. I very much wish my hon. Friend the Member for Cumberland was here, that he might see that, in the darkness of India, there are some gleams of light which he would like to see extended to England. With reference to my hon. Friend's statement as to the policy of the Excise collectors in raising this revenue, and the policy of the Government of India, I can only repeat to the House Lord Cross's Despatch upon this question, which expresses the views of the Home Government, and I believe the views of the Indian Government. He says— I lay down this principle—that any extension of the habit of drinking among the Indian populations is to be discouraged; that the tax on spirits and liquors should be as high as may be possible without giving rise to illicit methods of making and selling liquors; and that, subject to these considerations, a maximum Revenue should be raised from a minimum consumption of intoxicating liquors. My hon. Friend stated yesterday that he believed that the collectors of this class of revenue were promoted or were degraded according to the amount they received from the population. Well, I have made inquiries into this mutter, and I am informed by the India Office that they have no record of any case of a collector having been punished or degraded by reason of bringing in a decreased Excise Revenue. On the contrary, those collectors where the consumption is restricted are the collectors approved by the Government and promoted. I think my hon. Friend, upon consideration, will see that there is no foundation for the charge which, no doubt, he made under a false impression. While talking upon this temperance question, I am rather tempted to make one allusion to our European subjects in India as distinct from the people of India. Of course, the people in whom we are most anxious to encourage temperate habits are the soldiers, to whom drink is the greatest temptation and the greatest ruin. Now, that very distinguished officer, Sir George White, now Commander-in-Chief in India, has just been making a speech dealing with this question. He called the attention of the public to the fact that 22,000 men now belong to the Army Temperance Society, and he worked out these very interesting figures: that out of 1,150 regimental Courts Martial which sat in India last year only 39 sat to try members of the Army Temperance Society; and that if the members of the Society had their fair share of military offences they would have contributed 796 more offenders than they actually did to the total number tried by Court Martial In 1893. Sir George White went on to show how very much the health of the Army in India was improved by abstention from alcoholic liquors, and that the Returns from the hospitals proved this to be the case. I hope I have explained that there is no reason to fear that any stimulus to excessive consumption of intoxicants is given.

MR. A. O'CONNOR (Donegal, E.)

I shall be glad if the right hon. Gentleman can tell mo whether the licences are not sold by auction?

* MR. H. H. FOWLER

I am not able to answer that question offhand. The next item is the Customs. Last year they were practically a little less, but not to an amount worth noticing. This year they produce Rx.1,418,000 net. These duties are on arms, liquors, opium, and petroleum, and there is an Export Duty on rice. Practically, the Export Duty on rice is no taxation on the people of India., because it is paid by the consumers. It is the same as that levied in Siam and Cochin China. The Income Tax last year produced Rx.1,640,000 net as against Rx.1,608,000 in the preceding year. That tax has been represented as a very safe index of the poverty of India. My hon. Friend told the House what 1d. would produce in India, and what it would produce in England. Of course, the disproportion is something appalling, oven if you throw out of consideration the accumulated wealth of England, and simply treat the two countries on parallel Hues. But the incidence of this taxation in India and England is widely different, and from one you cannot draw a conclusion as to the other. In India the tax is paid by a limited class of the population. Practically it is paid on salaries, pensions, Companies' income, and, of course, on the income of ordinary trades and professions. But the great trade of India—the trade by which India lives, from which it draws the bulk of its income, and upon which depends entirely its prosperity—is the trade of agriculture. There is no Income Tax on the ownership of land, on the occupation of land, or on the sale of the produce of the laud. When you strike out that enormous item you see that you cannot draw a parallel with reference to England. Again, when an Englishman saves money he invests it, and it becomes an Income Tax-bearing property. But those hoarded millions in India—hoards of gold and silver of which the amount is not known, and of which there are no reliable statistics, except those as to the amount which has been absorbed—those hoards which must represent some hundreds of millions sterling, pay no Income Tax. Upon these grounds I reject the idea that any comparison can be drawn between England and India. The next item is Provincial Hates. The House will recollect that these rates are collected with and by the same agency as the Imperial Revenue. They are, after being collected, re-apportioned to the Provincial Authorities, and spent by them. They all tend to swell the amount of the general taxation of the country; but in contrasting the taxation of India with England you would have to add a great proportion of the local taxation to the English total. Last year these provincial rates produced Ex. 3,643,000, which shows a slight increase, but nothing abnormal. The last item of taxation is the registration on the transfer of land, which produced the small amount of Ex.216,000. These are the items which I have described to the House as taxation revenue. The amount in the year just closed was Rx.24,355,000, as against Rx.23,868,000 in the preceding year, or an increase of Ex.487,000, practically Ex.500,000. The commercial services form the last item I shall mention. I shall have to say something about railways when dealing with expenditure, but I may say now that there is mo income from railways, but a very-large debit charge. They were worked at a very considerable profit, but the debenture payments and the interest upon share capital have to be remitted to England, and the cost of exchange turns the profit into a loss. So far as the Post Office is concerned, last year it produced Rx.1,489,000 gross; the Telegraphs Rx.938,000, and the Mints Rx.310,000. The upshot of these statistics is that the burden of the taxation upon the people of India for the year 1893 is something like Rx.25,787,000—I have not deducted from it the cost of collection—and this gives a taxation per head of the population of one rupee two annas and six pies. The estimated net expenditure of the Budget for 1892–3 was Rx.49,435,200 as against an estimated net revenue of Rx.49,581,800, showing an estimated surplus of Rx.146,600. That estimated surplus, however, turned out to be non-existent, and the re- sult of a balance between the actual revenue and the actual expenditure was a deficiency of Rx.833,412, due to a very large extent to the fall in the rate of exchange. The net revenue shows an increase of Rx.2,023,881, which was duo in a great measure to the large augmentation of the net receipts from opium; but there was also a satisfactory improvement under other heads-But the increase of expenditure has wiped out the anticipated surplus and left a net deficit. Of the increase of expenditure by Rx.3,004,000 beyond the sum estimated in the Budget, nearly Rx.2,000,000 arises from exchange, leaving only Rx.1,026,000 to be explained under the various items which appear in the Statement the Committee have before them. The Budget of 1893 was based on a rate of exchange of Is. 4d., and the rate realised was rather lower than Is. 3d., so the House will see at once where a great deal of the loss occurred. The Budget Estimate of 1893–4, as revised down to the present time, shows a net revenue of Ex.50,253,000: a net expenditure of Rx.52,046,000, and a deficit of Rx.1,792,800. That is only Rx.197,700 worse than the original Budget Estimate, which estimated a deficit of Rx.1,595,100. There has been a reduction in opium, a reduction in salt revenue, and a reduction in the rates; but, on the other hand, there has been an increase in the Land Revenue, in Stamps, in Excise, and a small increase in assessed taxes. Although the revenue was more, the expenditure was also more, and that made the net deficiency more than was expected by Rx. 197,000. That is not a very satisfactory statement for 1894. But that is not the Budget now before the House, and it is not necessary that I should now go through it in detail. Notwithstanding that there were moderate increases of revenue and considerable reductions of expenditure in the year 1894, and the rate of taxation was in no way altered, the deficit of the preceding year, which was Rx.833,000, has become Rx.1,792,800, and I think I am right in saying that that deficit represents a further loss from the fall in the exchange value of the rupee. I come now, Mr. Mellor, to what is the more legitimate part of the Budget Statement—the statement for the forthcoming year, 1895. I have just told the House that the net expenditure for 1894 was Rx.52,046,000, or, in round figures, Rx.52,000,000. The rate of exchange for that year was a little above 1s. 2½d. In the Budget for this year it was taken in India at Is. 2d., and this reduction in the gold value of the rupee involves an increase of expenditure of Ex.1,052,600, which, owing to a slight increase in the sterling expenditure, is raised to Rx.1,053,000; and therefore, assuming the expenditure at the same rate as it was last year, instead of the Budget continuing at Rx.52,046,000, we have to deal with an expenditure of Rx.53,099,000. There are various increases and decreases in the revenue and expenditure, but they are all of small amount, and I will not trouble you with them. The result is, that I have to deal with an expenditure of Rx.53,321,000; against which I take the same basis of revenue as last year, and, allowing only for a reduction of Rx.449,000, we have a deficit of Rx.3,517,000 this year. The Committee will bear in mind that for 1893 the deficit was Rx.833,000; in 1894 Rx.1,793,000, and for 1895 it is Rx.3,517,000. The question is, how can we meet that deficit? What can we do in the way of reducing expenditure? I presume that the first duty and legitimate function of the Finance Department of a Government, when they have to face a deficit of this character, is to see what they can do in the way of reducing expenditure. They must ask themselves whether they are bound to keep up such a largo expenditure, and whether they cannot in any way reduce that expenditure in order to enable them to meet the deficit. Now I have to touch upon another thorny subject, and I must trouble the Committee with a little explanation. A discussion was raised by hon. Members yesterday upon what was called the Famine Insurance Fund. If ever words were intended to conceal the real operations of a Department, the words "Famine Insurance Fund" were successful for that purpose. The Committee must understand there is no such thing as a "Famine Insurance Fund" at all. It does not exist, and never has existed. Therefore, when complaints are made that the Government of India have appropriated money, which is sacredly set apart for such a purpose, to increase the ordinary Revenue, all I can say is that they are entirely unfounded. There are many authorities on this subject. I have here in detail the speeches which were made when this fund was started. I have got a summary of those speeches made by the distinguished author of the scheme himself, I will endeavour to state it in a sentence or two for the benefit of the Committee, and hon. Members will then form their own judgments as to whether my statement is correct or not. Li the year when this scheme was proposed to the Indian Council by Sir John Strachey, who was then Finance Minister, the Government had come to the conclusion that the cost of a famine coming once in 10 years represented something like Rx. 15,000,000. That calamity involved, of course, the raising by loan of a very large sum of money in order to meet that exceptional expenditure. Sir John Strachey's scheme was this: that the Budget in India should contemplate an annual surplus, or what we should call in this country a Sinking Fund, of Rx. 1,500,000, and that this fund should be devoted in the first instance to the relief of any actual famine expenditure incurred in that year; and, in the next place, that any further sum should be directly expended in the construction of unproductive railways—I mean unproductive from a commercial point of view, but works calculated to protect the country from famine—and, lastly, for the reduction of existing debt, or avoidance of debt otherwise about to be incurred, so as to form a setoff against the borrowing that might be expected in a year when famine arose. Let me read you what Sir John Strachey, the highest authority on this question, says: — This policy of insurance against famine so simple in its nature has been constantly misunderstood. It has been stated that: a separate fund was constituted into which certain revenues were paid, which could only be drawn out for specified purposes. No such idea was ever entertained. The Famine Insurance Fund of which people have often talked never existed. The intention was nothing more than the annual application of surplus revenue to the extent of Rx.l,500,000 for the purposes I have described. Thus, whereas the Government of India had year by year been borrowing money for their railway and other works, it was not necessary that the Rx. 1,500,000 should be applied in reduction of the debt, and that another Rx. 1,500,000 should be borrowed: the one was simply a set-off against to the other. What has been done under this Famine Insurance Fund? Let me refer you to page 11 of my Explanatory Statement. This fund has been in operation since the year 1882, and during this period of 14 years there has been spent in famine relief Rx.304,409; upon construction of protective irrigation works Rx.1,776,863; upon construction of protective railways there has been charged under famine relief and insurance Rx. 5,482,943, and charged under revenue railway account Rx.3,186,902; and for reduction or avoidance of debt Rx.5,327,299. Therefore, even allowing for a deduction, which I am going to mention immediately, Rx.16,000,000 has been appropriated out of the income of India during the last 14 years for the purpose of preventing famine. There is one other authority I should like to quote on this question, and that is the present Lieutenant Governor of Bengal, who was himself Secretary of the Famine Commission, and who, next to Sir John Strachey, knew most about it, perhaps, of any of the men in India who had the management of it. This gentleman knows how the money was spent, and this year he, in dealing with this case, made this strong statement— The calculations made by the Famine Commission showed that the provision of 20,000 miles of railway would suffice to ensure the means of sure and speedy transport of food into every part of India that is liable to be afflicted with famine. He proceeded to say— By the operation of this system 4,896 miles of protective railway for the purposes of insurance against famine have been constructed, and we have in 15 years carried out almost all the schemes held to be necessary for the protection of the country against famine. Speaking with such authority as attaches to me as Secretary to that Commission, I do not hesitate to say that the only considerable spot in India on which I could now lay my finger as both liable to severe famine and insufficiently protected against it, is Orissa.… When the East Coast railway is finished, I believe that the work of railway extension, with the special object of famine protection, will be completed. Whether those opinions be sound or unsound, hon. Members will admit that, coming from Sir Charles Elliott, the Lieutenant Governor of Bengal, they come from a very high authority. When the Government of India are charged with having misappropriated funds intended for one purpose to another, and of having been guilty of most reprehensible conduct, I think hon. Members will say that I have proved that this is not the case. The Famine Fund is a surplus, and you cannot deal with a surplus until you have a surplus. This year there is no surplus revenue in India. There is no surplus of Rx.1,500,000. Therefore, if the Government had intended this year to appropriate this Rx.1,500,000, which Sir Charles Elliott says is not needed, we should not have been able to do that without putting on additional taxation.

* SIR W. WEDDERBURN

May I ask the right hon. Gentleman whether there was not for 1892–93 an amount of Rx.1,686,000, which were collected from certain assessed taxes which were specially raised for the purposes of this famine insurance?

* MR. H. H. FOWLER

My hon. Friend can discuss that when I have done my statement. I cannot admit his premises at all. This criticism which was raised yesterday the hon. Gentleman can raise again if he likes. What I have to deal with is that there is an expenditure at this moment of Rx.3,500,000 more than the revenue. Therefore, the first thing which the Finance Minister has said is, "I will stop this expenditure this year." I am sorry that that has had to be done. I should like these protective works to be carried still further; I should have liked the debt to have been paid off. The Indian Government, will provide for certain irrigation works which they know to be necessary, and they will also pay the net charge on certain protective railways, and the aggregate of these provisions will be Rx,423,800. The reduction in the amount to be expended under the head of Famine Relief and Insurance this year is, therefore, Rx.1,083,300. The next reductions are Rx.188,000 in military works, Rx.263,000 in civil works, and in special defence works Rx.135,000. The Indian Government have further called upon the Provincial Administrations to submit to a reduction of their balances. This is rather a complicated question; but, if the Committee will allow me, I will state the figures in one or two sums. I think it will be sufficient for the purposes of this Debate. In the scheme of decentralisation which is now carried on in India large portions of the Revenue are handed over to the Local Authorities, who are responsible for a large portion of the expenditure of the country. About 25 per cent, of the gross expenditure is now managed by the Local Authorities. The Indian Government requires all these Local Authorities to have a minimum balance. This is a wise precaution. It is to prevent extravagance and to prevent works being undertaken which the Local Authorities have not the funds to defray. They have asked the Local Authorities this year to hand over from their treasuries a sum of Rx.405,000; but the latter will still have after the appropriation Rx.2,343,000,orauexeessofRx.l,2o0,000 beyond the figure which is required as a minimum balance. Therefore, I think the Indian Finance Minister is justified in saying that the Indian Provinces must share with the Imperial Treasury the heavy burden of this terrible deficit. After all these economies, the Exchequer will be left with a deficit of Rx 1,442,000. That deficit can only be met by additional taxation, and it was decided that a Customs Duty of 5 per cent, should be levied on imports into India, with the exception of cotton goods. These duties were estimated to produce Rx.1,140,000, leaving a final deficit of Rx.302,000 for the current year. I am aware that a good number of people are of opinion that the Government ought not to have interfered with the original intention of the Indian Authorities to levy a duty on all imports into India without any exception; and that the exception of cotton goods is one which cannot be justified. We have heard, both in this House and also in another place, that this is felt to be a very great injustice by the people of India. ["Hear, hear!" from the Opposition Benches.] I should like to ask, Who is going to pay the taxes on these imports? The people of India, the consumers in India, and no one else. If I construe rightly what is passing in the minds of persons who have spoken and written on this question, it amounts to this: that this is a tax which would have been paid by the people of Lancashire, and that no corresponding burden would be paid by the people in India. Whether Import Duties are right or wrong, whatever duty you levy on cotton goods must inevitably be paid by the people who wear these cotton goods in India. The tax would therefore be a tax upon the people of India, and not upon the Lancashire manufacturer. It may, of course, affect the amount of imports by raising the price of cotton goods; but, as a matter of fact, the duty will be paid by the consumer. The one complaint of the people of Lancashire prior to 1879 was against protective duties being levied on their goods in favour of the native manufacturer, and Lord Salisbury in his Despatch on this | question said— It is impossible to believe that under these conditions the duty can be permanently maintained. The entire acceptance of the system of Free Trade by England is incompatible with the continuance of an exception apparently so marked. Parliament, when its attention is drawn to the matter, will not allow the only remnant of Protection within the direct jurisdiction of the English Government to be a protective duty which, so far as it operates at all, is hostile to English manufacturers. Again, at a later date Lord Salisbury said— The Import Duty on cotton manufactures is, on general principles, liable to objection as tending to operate as a protective duty in favour of the native manufacturer. The removal of this duty is of material importance both to India and to England. This House has by solemn Resolution declared that it will not sanction a protective duty on cotton goods. Therefore the position I have taken up is that the imposition of such a duty is a step which must not be taken until the House has had some opportunity of discussing the question. But, if this [duty is paid by the people of India, what is the position of the Government? We say that, if you are going to tax the people of India, the product of that tax must go into the treasuries of India, and that you must not tax the people of India to put money into the pockets of the manufacturers of Bombay. The broad principle of protective duties is this: that the native manufacturer raises his prices to within an appreciable distance below the protective duty, so as to have an additional profit to put into his own pocket at the expense of the consumer, and at the expense of the taxpayer. This Government is not influenced by the Lancashire vote. I repudiate on behalf of the English Government on both sides of the House the imputation that they would place the Lancashire vote before their policy on matters affecting the interests of India. Questions of this sort must be decided on higher grounds. Speaking for myself and my predecessor, Lord Kimberley, I say that our sole motive has been to prevent the imposition of a protective duty which would inflict a burden on the consumer in India, without a corresponding addition to the revenue of India. I have said all along, and I say now that, if the manufacturers of India are prepared to submit to a countervailing duty which will destroy the element of protection, I do not see why the Import Duty should not be imposed. I know that there are difficulties in this question; I know certain descriptions of goods are made in Lancashire and not made in India, while others are made in India and not in Lancashire; but, if there be any necessity for increasing the taxation of India, I see no reason why this tax could not be fairly and justly imposed, and at the same time deprived of any protective character, so that it shall go into the Treasury of India and not into the pockets of the manufacturers. Then no injustice would be done to the English manufacturer on the one hand or to the Indian consumer on the other. That is all I have to say on the estimated Revenue for 1891–5. The estimated expenditure of next year, after making the deductions to which I have referred, is Rx.51,245,400. The principal items in round figures are: — Interest, Rx.3,755,000; Civil Departments, Rx.13,347,000; Miscellaneous Civil Charges, Rx.4,771,000; Railway Revenue Account, Rx.2,130,000; Buildings, Roads, and Irrigation, Rx.5,306,000; Army Services and Special Defence Works, Rx.23,102,000, the net total being, as I have said, Rx.51,245,400. I want now to call attention to one fact, and that is, that of this heavy expenditure Rx.12,523,100 are due entirely to loss on exchange. I have given, on page 12 of my Explanatory Statement, a Table showing the amount of net sterling expenditure in England in recent years, the average rate at which remittances from India have been effected, and the loss on exchange. From that it appears that, going back 10 years, the loss on exchange was Rx.3,500,000. It has now risen to Rx. 12,500,000, and every decrease of a penny in the value of the rupee means an additional charge of Rx.2,400,000. There are one or two other items of expenditure with which I should like to deal, chiefly with reference to the Army and home charges. Great complaint has been made by several of my hon. Friends of the increase in the military expenditure. After the statement I made yesterday that a Committee will be appointed to examine the question of expenditure, it would not be prudent of me to go into a discussion which the House could only tarry on upon imperfect data. There has been a very large increase in military expenditure in India. During the last 10 years we have increased the Army in India by 10,000 European and 20,000 Native soldiers. I could tell the House, item by item, if there were time, what has been the actual expenditure; but, without going into all the details of what has been expended, I think that the House will find in the enormous sum paid for exchange, in the normal increase in ordinary expenditure, and in the addition to the Army, an explanation of the very hugely increased expenditure. With reference to home charges, as far as my experience at the India Office is concerned, though it is a short one, I find that there is as strict a scrutiny of expenditure in India, as of expenditure at home. Some hon. Member said yesterday that by a stroke of my pen I could spend £1,000,000. I could do nothing of the kind. I cannot spend £10 by a stroke of my pen. That is the one thing the Secretary of State cannot do; he cannot spend Is. without the consent of the majority of his Council. He has no power to override his Council in that matter. I can assure the House that we have put our foot resolutely down against any increased expenditure. I lately sent a strong Despatch to the Government of India protesting against any proposal for increasing salaries or establishments. We are face to face with this enormous deficit, and it is our duty to cut down expenditure its rigidly as if the same state of things arose in Downing Street. There was last year, apart from exchange, a reduction of Rx.102,000, and in 1893–4 a further reduction of Rx.424,000 in expenditure on purely military purposes. I have one word to say on the debt. The closing of the Mint and the cessation of the sale of bills compelled the Government of India to borrow money in this country for the purpose of meeting current expenditure, and in round figures we raised £1,386,000 on debentures, we raised £6,000,000 on hills, of which we have already paid off £4,000,000, and we created new Stock to the amount of £6,000,000 Three per 1 Cents. That is practically an increase in the debt of £9,386,000 in the year. That was not, however, a real increase of debt to that amount. It was debt tem- porarily borrowed in this country as against money lying in the Treasury of India, and it is not fair to consider that without having some regard to the balances in India. The cash balances in India in April, 1893, amounted to fix. 15,000,000. On March 1, 1894, they had increased to Rx.26,000,000. There would, no doubt, have been a loss in the transmission of that money to England, and the debt was created because it was considered unwise so to remit it. But against the liability there is a corresponding deposit in India. I will just state the exact position of the Debt at the present time. The Debt in England is £114,114,000. The Debt in India is Rx. 124,114,000. I was asked yesterday, "Why don't you borrow in silver? "Well, more than half the debt of India is a silver debt. The debt consists partly of the war debt, to which a fearful amount was added during the Mutiny, and partly of the amount due to railways and irrigation. What are our assets against that debt? The debt in India is Rx. 124,000,000, and our assets Rx.147,000,000. Thus there is actually in India a surplus of assets over liabilities. In England the Debt is £114,000,000, and the assets £65,000,000, so that there is an excess of liability in England of £49,000,000, and the net result is that there is an uncovered debt of something like Rx.25,500,000. Now, Sir, when it is considered that we are dealing with a poor country, with an enormous military and Imperial expenditure, and with a vast outlay on railways and irrigation works, I venture to say that that is not unsatisfactory. I doubt whether there is any country in Europe showing anything approaching to such an encouraging state of affairs. The next point is with reference to the closing of the Mints. That step was taken in consequence of the great depreciation in the value of the rupee and the financial difficulty in which I the Government of India was placed. It was taken upon the advice of a Committee composed of the most competent men that could be appointed to investigate such a question, who recommended the Government at home not to refuse the proposal of the Government of India to suspend the coinage of silver. The effect of that step was, in the first instance, to very much reduce the price of silver. It also very much affected the exports and imports. It reduced exports and stimulated imports. It is believed that the repeal of the Sherman Act would have produced a catastrophe of the greatest magnitude if the Mints had remained open. Others may say that if the Mints had not been closed there would not have been that fall in the price of silver. That is, of course, a question of the might-have-beens, and what we have to deal with are the facts of the case. I may remind the Committee of the effect of the closing of the Mints upon the sale of bills for the 30 weeks from January 31,1894. If those bills had been sold at the silver price they would have produced £1,820,000 sterling less than they have produced, and the deficit would be so much more. We were told in the Debates at the commencement of the Session that the effect of this step would be to dislocate trade. Well, what has been the effect of this step on the trade of India? During the first quarter, from July to September, the export of merchandise went down Rx.646,000 below the average of the previous five years. The imports of merchandise enormously increased; the import of silver increased, the gold import decreased, and the result was that for that quarter the balance of net exports was Rx.3,046,000 less than the average of five years. From October to December—and the Committee must remember that the sale of Council bills had been virtually suspended in August, and there were still hardly any sales— there was a decrease in the balance of trade of Rx.3,537,000. At the end of January the Secretary of State resumed the sale of bills, and the moment that was done the tide turned, and in the quarter from January to March the decrease was only Rx.1,755,000. But when we come to the quarter just closed, from April to June, the first quarter during which the experiment has been fairly tried, and during which there has been no suspension in the sale of Council bills, the normal state of things was resumed. The exports of merchandise during that quarter amounted to Rx.30,268,000, as against an average of Rx.28,848,000; and the surplus exports, including treasure, were Rx.5,020,000 above the average. He would be a very bold man who would dogmatise on the difficult question of the currency of India and the question of the closing of the Mints, but these are the facts which I sub me to the Committee. I think it is too soon yet to form any judgment on the subject, and I think the experiment has not ret been fully tried. I wish to state publicly, however, that we have no intention of re-opening the Mints for the coinage of silver. We mean the experiment to be carried out to the end, and, so far as it has proceeded, we see no reason to be alarmed. The great work of Irrigation is proceeding satisfactorily. The total capital sum expended up to the close of the year 1891–92 was Rx.28,321,000; in 1892–93, Rx.602,000; in 1893–94, Rx.770,000; and we estimate to expend in 1894–95 Rx.616,000, which will make the total expenditure up to that date Rx.30,309,000. The percentage of net revenue last year on the capital outlay was exactly 5 per cent. The receipts of the Post Office for last year were Ex.1,488,000; the expenditure Ex.1,518,000. The extension of Post Office business is proceeding very rapidly. The number of letters and post cards passing through the Post Office in India last year was 311,000,000; of newspapers, 26,600,000; of parcels, 2,170,000; and of book and pattern packets, 12,149,000. The general correspondence Returns, of which these are a summary, show an increase of over 12,500,000 of articles carried by post last year as compared with the preceding year. Of this increase nearly 4,500,000 were due to letters, and 7,000,000 to post cards. The telegraph returns are equally satisfactory. The total capital outlay to the end of last year was Ex.5,434,000, and the percentage of net revenue on the capital outlay was 4–46 per cent. The Indian railways are the one subject on which I will now trouble the Committee, as I feel the greatest interest in them. We have now 18,000 miles of railway open. I know some of my friends are very much dissatisfied with the progress of the railways. So am I. I think nothing is wanted more in India, so far as constructive works are concerned, than a very large increase of railway communication. Such an increase of railway communication will be a great boon to all classes. The capital outlay up to the end of the year on the Indian railways is Ex.233,000,000. The number of passengers carried last year was 135,000,000, the number of tons of goods cerried 28,000,000, the gross receipts Rx.23,800,000,; the working expenses Rx.11,200,000, the net receipts Rx.12,659,032, and the percentage of net receipts on capital cost 5'44. That includes a large amount of unproductive capital for military and other purposes. While, however, the railways gave in India a return of about 5½ per cent, on their capital cost, the expense of paying in England the interest in gold is so heavy that the result of the Railway Revenue Account is to impose a considerable addition to the Imperial expenditure. In 1892 this additional net charge was only Rx.316,000; in 1893 it rose to Rx.1,847,000; in 1894 it fell to Rx.1,597,000, and the estimate for the present year is a net charge of Rx.2,130,000. The trade results for the year are satisfactory. The total foreign trade of India in 1892 was Rx.196,000,000; in 1893 Rx.197,000,000–1 mean exports and imports; and in 1894, Rx.206,000,000. Upon the whole, I think the Budget that I have had to give to the Committee is a Budget which, although it has some very depressing features, has some very encouraging features. Yesterday I was asked not to take a pessimistic view. I hope I do not, and I likewise hope I do not take an unfairly optimistic view. The great difficulty is the depreciation of silver. Two-thirds of the trade of India is with gold-using countries; and I think that sooner or later—perhaps the sooner the better— India must come to have a gold standard. As a matter of fact, the trade of India with England and all gold-using countries is on a gold basis. I think, upon the whole, apart from the question of exchange, the general position of Indian finance, both in commerce, in public works, and in all its special interests, is encouraging. My speech has been necessarily confined to the material progress of the country, though I could say a good deal upon its moral progress, which has been very great. On the whole, I submit these Estimates to the Committee with confidence, and I thank the Committee for the kindness and endurance with which they have listened to this most unduly extended speech, and I conclude by submitting the usual Resolution.

Motion made, and Question proposed, That it appears, by the Accounts laid before this House, that the Total Revenue of India for the year ending the 31st day of March, 1893, was Rx.90,172.438; that the Total Expenditure in India and in England charged against the Revenue was Rx.91,005,850: that there was an excess of Expenditure over Revenue of Rx.833,412; and that the Capital Outlay on Railways and Irrigation Works was Rx.3,986,290." —(Mr. Secretary Fowler.)

* SIR C. W. DILKE (Gloucester, Forest of Dean)

said, he was sure the Committee would feel that no endurance had been displayed by those who had sat through the statement of his right hon. Friend. They all had expected that his right hon. Friend would apply to Indian finance that clearness of head which he had shown in dealing with English finance, and especially with local finance, and certainly those who had sat through his speech had been rewarded by the absolute clearness with which it had been marked. The question would be very widely asked in India, if not in this country, what was the exact meaning of the promise the Secretary of State gave yesterday to inquire into the expenditure of India? The right hon. Gentleman had objected, and very naturally, to a general fishing inquiry into the whole administration of India, and had said the responsibility for the policy pursued in India must rest upon the Government. So strongly did he (Sir C. Dilke) feel that to be the case that he would have more confidence if his right hon. Friend told the Committee that he was going to institute such an inquiry in his own person, with a view to making up his own mind as to the expenditure of India. He would have more faith in the result of that inquiry than in that of any inquiry by a Committee of the House. He knew that Committees of the House of Commons were apt to produce a large amount of excellent evidence that nobody ever read and recommendations that wore not acted upon. It would be asked in India what this Committee was to do, and the question was one which deserved an answer. Some of his friends and some people in India had suggested that important economies might be effected, and that an absolute improvement in the government of India might lie brought about by getting rid of the special Governments of Madras and Bombay and replacing them by Lieutenant Governors, who were sufficient for Bengal, the North-West Provinces, and the Punjaub. Were the Committee to have power to inquire into expenditure upon such heads as these, which could not be inquired into without laying bare the whole foundations of policy pursued in India? There were other very much smaller questions, which were nevertheless very large questions of policy, that might come before the Committee. There was no necessity to pay for a church establishment for civil purposes in India, and he would like to know whether questions of that description were to lie within the scope of the inquiry? If so, that raised the question of policy, and the same question would arise in the discussion of the other matters to which he had referred. His right hon. Friend the Indian Secretary alluded to the admirable results obtained in Mysore under native Government, a Government which might be called Parliamentary Government, the only example which existed in India. Would it be in the power of the Committee to take evidence upon such questions as the extension to different parts of India of similar systems of Government under local administration? But to take another instance which the Secretary for India quoted, that of the military expenditure. How far was this Committee to have power to impure into that branch of the expenditure of India? A document had been submitted to the House by his hon. Friends behind him—a document with which, on this point of military expenditure, he could not agree. But would the Committee have power to inquire whether the military expenditure was necesary or not? There were people who thought the expenditure unnecessary, and their opinions were largely shared by great numbers of people in India and in this country, and who really thought in any inquiry of this kind the whole question of the military expenditure should be considered. He himself was rather one of those who believed that it was impossible to economise under the present system, but that it might be possible to do so by changing the military system, and making it at the same time more efficient. But if the inquiry was to go into matters of this kind it would lie one of enormous magnitude, going into the whole foundations of English policy in India, and be of such a nature that, he would prefer to see it conducted by the right hon. Gentleman himself.

MR. CHAPLIN

Sir, I must express my hearty concurrence with the opinion expressed by several hon. Gentlemen that the Committee has listened with the greatest interest to the able and singularly lucid statement of the right hon. Gentleman the Secretary for India. I venture also to think that the Committee have gathered from that statement a feeling of something more than interest; they have had great satisfaction, in the opinion of the right hon. Gentleman, that the financial position of India at the present moment is not so difficult as it was apprehended some time ago it might likely be in. The gist of the right hon. Gentleman's statement was that there was a deficit of Rx.800,000 in 1893, a deficit of Rx.1,700,000 in 1894, and in 1895 a deficit of no less than Rx.3,000,000, which by various expedients the right hon. Gentleman has succeeded in reducing to something like Rx.300,000. The right hon. Gentleman appeared to be of opinion that, apart from the question of exchange, the financial position of India was not altogether unsatisfactory. But surely, Sir, it is the question of exchange which lies at the very root of financial difficulties in India at the present time. That opinion has been expressed from year to year in the clearest and most emphatic terms by persons thoroughly competent to express an opinion on the subject, and yet you do nothing to cure what lies at the root of the whole difficulty—namely, the fall in the price of silver. I, for one, am not able to share in the expectations of the right hon. Gentleman as to the financial position of India in the future. The right hon. Gentleman gave the Committee interesting information with regard to the recent sale of Council bills, and he reminded us that no great period has elapsed since he found himself confronted with this difficulty: that lie was unable to sell these Council bills at all. Happily, that is not the case at present. The improvement which we are glad to recognise in that respect appears to me to he mainly due to two or three circumstances, upon some of which the right hon. Gentleman did not dwell at all, and to others to which be only referred in the most partial manner. In the last few months during which the Council bills have been selling was embraced the busy season of the year. The Government have had the advantage of what is called the export season, which, I suppose, is hardly yet completed. It is during this season that exports are expected to increase, and, as a matter of fact, they always do increase. In addition to this, there is another circumstance which the right hon. Gentleman mentioned, but upon which he only dwelt for a moment, and that is that during the last few months there have been exports of gold from India to England which have been unusually and abnormally largo. In addition to this, I know it is held by many people engaged in business, and who are competent to discuss opinions on this subject, that the war which has unfortunately broken out between China and Japan has probably had some effect tending in the same direction. Be that as it may, there happily remains the fact that the Government have been able to sell bills at price, and to that extent they are to be congratulated in having escaped, at all events for a time, from what threatened at one time to be a very grave disaster as one of the first results of their policy in closing the Mints. These great exports of gold, in my judgment, area very important factor in the question at the present time, and a factor which was not foreseen by anyone, and which certainly was neither foreseen nor contemplated by the Government at the time they adopted the policy which they have pursued. This is a very important and remarkable fact, and deserves the careful consideration of the Committee. For what I find is this: that while in 1893 there were not imports of gold into India to the extent of 1,88,000 tens of rupees, for the first six months of the present year there have been net exports of gold from India to no less an extent than 3,001,000 tens of rupees, and that great and abnormal export of gold from India is increasing.

* MR. H. H. FOWLER

The net export of gold from India for the first quarter of the present year, from January to March, was Rx.515.000. In the next quarter, ending 1st July, it was Rx.1,919,000, so that I believe the right hon. Gentleman is half-a-million in excess.

MR. CHAPLIN

According to my figures, and I venture to think they are reliable, the export of gold from India to 1st July, 1894, was 3,001,000 tens of rupees, and in the mouth of July alone it was 567,000 tens of rupees. However, this is a matter which can easily be cleared up from sources with regard to which there can be no mistake. But whether the right hon. Gentleman is right or I am right it diminishes by very I little the important fact to which I am calling attention. This great export of gold appears to be a matter of extreme importance from whatever point of view it may be regarded. And for this reason: The Committee must remember that the admitted object of the policy of Her Majesty's Government in closing the; Mints in India was to establish a gold standard in that country. But in order to make that standard effective it is obvious to everyone that there must be a vast stock of gold remaining in the country. The question, therefore, arises at once, Are these exports likely to continue in the future or are they not? Because, if they are going to continue, it is quite obvious that the establishment of a gold standard in that country becomes a matter of most extreme difficulty, if not absolutely hopeless and impossible. If, on the other hand, these great exports of gold are going lo cease, what is going to happen? We say that the total exports from India pro tanto are going to diminish; the market for the sale of bills will be proportionately limited and reduced, and you will again be placed in the same position which you occupied not many months ago—namely, you will again be in danger of a collapse of your policy of closing the Mints. It is a very curious fact in connection with this question that it, looks as if the first stop of the Government in the financial policy they adopted in India—namely, the closing of the Mints—was saved from disaster by circumstances which were particularly unforeseen by them at the time they adopted that policy; and what is still more curious than that perhaps is this: that this very circumstance which saved them from disaster at the time, if it continues will render hopeless and impossible the main object of the policy which they had in view—namely, the establishment of a gold standard in that country. The whole position, to my mind, is one of the greatest interest, and I hope the right hon. Gentleman will not think I am not justified in asking two or three questions upon this point. The first question I would ask is this: Has the right hon. Gentleman any information whatever which he could give the House as to the source from which these; abnormal exports of gold are being derived at the present time? Does he expect, or is he able to form any expecta- tion as to whether they are likely to continue or to cease in the future? That is the important point, and it leads me to put this further inquiry: If these exports of gold should continue, is it still the intention of the Government to adhere to their policy of establishing a gold standard in India? If that is so, where do they propose to get the gold which would be absolutely necessary to effect it? If, on the other hand, these exports should cease, are we to understand that the policy enumerated tonight, that the Government will not interfere in any way with the closing of the Mints, is still to bold good? If that is so, and if in that case the market for the sale of your bills is seriously affected, bow does the Government propose to restore their These, financial equilibrium in India? I think, are legitimate inquiries which we are entitled to make on this occasion, and to which I believe the Committee will await with interest the response of the Government. While I am upon the question of exports from India, there is another inquiry which I desire to make of the Government. This question of exports was discussed, in more or less detail, last year. The right hon. Gentleman may recollect that my right hon. Friend the Member for St. George's (Mr. Goschen), who, unhappily, is not present to-day, took part in those Debates, and he put to the Chancellor of the Exchequer a question the pertinence of which will be obvious to everybody to-day. The Chancellor of the Exchequer in the speech which he had made just before hail pointed out that in the difficult position in which the Government found themselves placed—I have his very words here—the Government were looking for an alteration in the exports from India and a consequent demand for Council bills; and he said also, that if the exports became much larger in the next few months that would lead to the sale of bills. Thereupon my right hon. Friend the Member for St. George's put to the Chancellor of the Exchequer this question— Can you reasonably expect that in the next few months exportation will so increase that it will not merely prevent such a thing as has now happened happening next year, but will enable you to clear of the arrears? To that the Chancellor of the Exchequer replied— I am able to give an answer to that question which I think will be satisfactory. and then he proceeded to show the grounds upon which he expected that these results would follow. Now, what the Committee would like to know is this: Do the Government still adhere to that opinion which was expressed by the Chancellor of the Exchequer last year? And I ask the question for this reason— you must remember that when you came to Parliament last year with a Bill by which you asked the House of Commons to give further borrowing powers to the Government of India to the extent of £10,000,000, yon then gave us an assurance that the loan was to be a temporary loan, and was to be in no sense whatever regarded as a transaction of a permanent character. Is that still the view of the Government? Is that £10,000,000 to be a temporary loan, or is it now to be of the nature of a permanent loan? If it is to be of the nature of a permanent loan, we may fairly ask the Government to explain to us how it is that they came to mislead Parliament so entirely on the subject last year. Now, with the permission of the House, I propose to turn for a few moments to another subject. The right hon. Gentleman pointed in the course of his speech to the fact that the deficit in the present year was great, and he gave us reasons for holding the opinion which most of us share, that when the Government found themselves placed in this position of difficulty and confronted by a great deficit, it was their duty to make all legitimate reductions that were in their power. But I venture to say that on this point a great deal depends on what may be considered legitimate or illegitimate. And how have the reductions been effected in the present ease? I gather from the speech of the right hon. Gentleman that they have been effected by the use of the funds intended for what is called famine insurance, by the abandonment of public works, by reduction sin military expenditure, and by other expedients which appear to me likely to be injurious to the progress of India. Only yesterday the right hon. Gentleman boasted to the House of the immense development which had been made in the construction of railways in India in the last 30 years. He will be the first to admit that it is of enormous importance to the future welfare of the coun- I try that that development should be continued. Well, I should like to ask, in view of the reductions that are now being made—in view of the use to which the funds for famine insurance and other funds are applied—what is the amount of railways he proposes to construct in India during the present year, or are no railways at all to be constructed?

MR. H. H. FOWLER

No.

MR. CHAPLIN

I understand that some railway works are to be constructed. But I assume that they will be of the most limited description. Therefore, we should like to know how the mileage of the railways that are to be constructed during the present year compares with the mileage of railways made in the past year or with the ordinary average of mileage? Again, the right hon. Gentleman yesterday referred to the great advantages of improved sanitation. He pointed to how much had been done in this respect in India, and he did so with great pride. But when I heard him do so my mind at once reverted to a paragraph in one of the Blue Books which had been presented within the last two or three days. The paragraph occurs in a speech delivered by Sir Griffith Evans, speaking in Council on March 24th, 1894, in respect to certain reductions. Sir Griffith said— The barracks required in Upper Burmah will not be built; the sanitary measures required for the Army in India will not be carried out. and, worst of all, the proposed improved arrangements for water supply for the troops all over India must stand over. This means preventible sickness and preventible death among our troops, and the dreadful scourge of enteric fever is to run its course unchecked. Well, that is rather a serious consideration. That is a consideration to which I wish to direct the attention of this Committee, and which ought to create serious misgivings in our minds as to whether all these reductions by which this equilibrium, or apparent equilibrium, is to be obtained are wise and: legitimate. Again, I understand that there has been a very considerable reduction in the outlay on road sand public I buildings. But on these and other matters I do not wish to trespass too long on the time of the Committee. I wish next to say a few words on the encroachment on the Famine Fund. I will not argue the vexed question of the original purpose and object of the Famine Fund. I will only say this—that by many eminent authorities the views of the right hon. Gentleman are not shared, and that the right hon. Gentleman has raised a question of very considerable controversy. But what I wish especially to point out is that these proceedings have been undertaken in order to reduce the deficit of the present year. But that is a desperate expedient, and it is impossible that such an expedient can be resorted to in future years. I think that Ave must feel ourselves entitled to ask for further information from the Government as to what they contemplate doing when these resources cannot be looked to? The Finance Minister of India himself has expressed the strongest views on this point. I ask the permission of the Committee to read a single paragraph from his statement for 1894–5, which has also been laid on the Table of this House. It deals with those very questions which have been put before us to-night, and it seems to me shows that the Finance Minister takes a somewhat different view from the right hon. Gentleman as to the expediency of resorting to this means of meeting a financial difficulty. he says— The means which we have adopted in our Budget Estimates of nearly balancing our revenue and expenditure are means which will hardly be available a second time. It is at some risk that we suspend even for one year the provision of a crore or a crore and a-half, which we shall certainly require if a famine season comes on us. We cannot call our financial position safe till we find ourselves again with that crore to the good. The 40 lakhs also which we obtain from the Provincial Governments exhaust for the time the source to relief from temporary difficulties. A year hence we shall certainly have to reconsider our position. Well, Sir, if that is so, we are entitled to make some inquiries of the Government as to what other expedients they are looking to in the future? We are entitled to make inquiries from the Government as to what will be done in the future. How are you going to meet the difficulties in which you will be placed in the future, and from which, as far as one can judge of the financial position, there can be no escape? The Member for Aberdeenshire (Mr. Buchanan) has placed a Notice on the Paper, from which it appears clear that he is in no difficulty on the subject. He says impose duties on cotton goods. He asks the House to pass a Resolution giving full power and authority to impose duties on cotton, and upon goods coming from Lancashire into India, at any time that the Government think it advisable to do so. Well, I am bound to make this admission, that having once made a departure from your principles, having once resorted to the expedient of the imposition of these kinds of ditties, I see neither sense nor reason nor logic in exempting particular articles from these duties. I see the less excuse in this case, for the duties, if imposed already, would have saved you from any deficit at all, and would, indeed, have secured you a surplus. Neither do I see, in regard to another article, why—unless your object is to deal another blow at silver and still further increase the disparity between the two metals—I say I do not see why, if you should tax silver in your new Import Duties, you are to refrain from imposing a duty likewise upon gold. But apart from that question, and speaking for the moment only as far as the Cotton Duties are concerned, although I have expressed the opinion which I have just uttered, it is none the less deplorable to my mind that we should be driven by the financial policy you have adopted to consider expedients so injurious to our industries at home. It emphasises very strongly the straits to which hon. Gentlemen belonging to the Party opposite are driven in order to support their policy of closing the Mints—that they, who have always been Free Traders and have been the most ardent disciples of Mr. Cobden and the worshippers of his fetish, should now be the first to urge on the Government Protection, and Protection moreover of a character by which they would impose duties on the chief manufactures of their own country. I think it will also be well to bear in mind that this proposal is made at a time when probably the industries in the North of England have seldom or never been less prosperous than now. I rather hope that the workers—the producers and artizans of the North of England—will take note of this: that they will remember, when the time comes, that it was from a Member of the Party who, above all, profess to be their friends—though I am bound to say that I think that to a great extent their action has been limited to professions—that it was from a Member of this Party that the first attempts were made to aim a blow at them, and the industries by which they live. The injury is all the greater, because the workers and industries of Lancashire, as of India, are suffering at the present time from one common cause. There is no doubt of the injury which the fall in silver has inflicted on India. And as to Lancashire ask any manufacturer, and he will tell you that there is no doubt as to the injury it has inflicted on him. But how have they been met? Whenever this question has been raised in the House or out of it—so far as I am aware—by any Representative of the industries in the North of England or by anyone else in this House, it has been met by nothing but sneers, jibes, and taunts on the part of the Chancellor of the Exchequer. But there remains the fact, however much he may sneer at it, that this question of the fall in silver is a question which lies at the very root of all our difficulties in India, and of the manufacturing depression in Lancashire. Lancashire, then, has a two-fold cause of complaint and apprehension. In the first place, the Government have contemptuously ignored the representations of Lancashire. In the second place, they would suffer greatly if the policy recommended by the Member for Aberdeenshire were attempted, for then the Government, in order to efface the consequences which have been brought upon them by their policy, would be striking a blow at the special industries of the premier manufacturing county in this country. I must say that the time for making this proposal on the part of the hon. Member has been well selected. I do not know whether he intends to press his Motion, or whether he will even have the opportunity of doing so, but he must know that this is a time when on so important a proposal there is no fair representation of the House of Commons. If I may presume to offer any advice whatever on this subject to the Committee or to any of my hon. Friends, I would say that I think that they would do well to reserve to themselves absolute freedom of action and opinion upon this most important point. What the Government may think it right to do on this question I do not know. The right hon. Gentleman (Mr. H. H. Fowler) has carefully abstained from taking any line whatever upon it to-night. For my part, if I were called on to express my own opinion I should express my deep regret that Her Majesty's Government should have thought it fitting, and found it to be their duty, to adopt a financial policy in India which has seemed to any hon. Member to render necessary a step so injurious to some of the industries of their own country—a step, moreover, which, once taken, may have to be extended. For once the resource is adopted for the purpose of Revenue of imposing Import Duties in India you will naturally be driven to make them higher and higher, as your necessities increase, and in that way they may be fraught with consequences of the gravest character to English industries. However, that is a matter which it is for the Government to decide, and for which the full responsibility must rest on them, and them alone.

SIR J. KITSON (York, W.R., Colne Valley)

desired to offer a few observations in reference to that part of the statement of the Secretary of State which concerned the construction and extension of railways in India. As he much regretted to observe, the rate of progress of endowed new railway lines in India which had been so slow in the past was not likely at present to be accelerated. Indeed, from the figures placed before the Committee it would appear that in the year 1894–5 the rate would be materially slackened. He ventured to ask the indulgence of the Committee, because he took up this question as manager of a large industrial undertaking giving employment to many workmen who would receive employment of a beneficial character if public works of this nature were pressed forward. He saw in India a reasonable opportunity of finding that employment of which they were sadly in want. In the course of a long experience extended, as regarded his own firm, to over half a century, he had seen the market in England for railway material existing, first in England alone, open out into France, Germany, and the Continent generally, but now, alas this was absolutely closed to this country. But, happily, new markets were developed in South America, in our Colonies, and in India, and in these latter (India and the Colonies) at the present time there was the only hope for the extension of the iron, steel, and engineering trades of this country. The House had frequently been occupied, and particularly quite recently, in consideration of proposals having for their object restriction of the hours of labour, and the one reasonable argument put forward for their adoption was the plea that thereby work would be more evenly divided among those who lived by their labour. He did not doubt the sincere desire of those who sought by drastic methods to diminish the ranks of the unemployed, but it was not too much to ask the I louse to consider whether there could not be found, through public works of a useful and remunerative character, fields of employment at home and abroad in possessions such as our great Empire of India. We are responsible for the provision of efficient transport service in India, and when it was borne in mind that in that Empire we controlled the destinies of nearly one-fifth of the computed population of the globe, it must be admitted that the simple statement of the mileage of railways in India in contrast to the vast population gave an impression that it was wholly inadequate for the service of such a teeming population. There was a strong conviction that the obstacles which impeded its more rapid development were raised by the Government in India and not by the Home administration. The present Secretary of State, as was very well known by association and descent, as well as by knowledge of the position, was bound to be on the side of those who would more rapidly extend the railway' system of India: but what did he propose in the statement he had just made as to the outlay on the construction of State railways in the coming financial year? For State railways in 1894–5, the estimated outlay was Rx.3,477,400. The expenditure for 1893–4 amounted to Rx.4,104,500, so that the proposed expenditure on State railways showed a reduction of Rx.630,100. True, there was an increase in the outlay by Guaranteed Companies to the amount of Rx.369,400, but there still remained au actual reduction of estimated expenditure in 1894–5 of Rx.260,700. The proposed outlay on construction was Rx.3,474,400, and that on the Guaranteed Companies' lines Rx.1,393,400, making a total of Ex.4,867,800, or, taking the rupee at fourteen pence, £2,839,550 sterling. The outlay upon new railway works and extensions in England, where the railway system was practically complete, was last year £25,000,000 sterling, and over the four previous years the average outlay for the extension and development of the existing system in Eng- land was £20,000,000 sterling, a total of £80,000,000 having been laid out in four years. Contrasted with the figures of the Indian proposals, at any rate, the latter could not be considered prodigal; and, indeed, he thought them parsimonious and far behind the necessities of the country. The total mileage of Indian railways open at the end of 1893 was 18,345 miles, the length sanctioned in that year 636 miles, and the total length sanctioned for 1891 was only 136 miles. The right hon. Gentleman stated that the not receipts amounted to 5–44. The Committee bad been told there had been a loss on the working of railways in India, but that loss was entirely owing to the rate of exchange, and so far was there from there being a loss on the working of the railways in India that he would not hesitate to provide a syndicate that would be prepared to give the Government of India not less than £200,000,000 or £250,000,000 sterling for the railways and take the loss on exchange. He invited the Committee to note the comparison of 18,455 miles of railway open in India with 174,784 miles in the United States. In India there was a length of 1 1/10 miles of railway for each 100 square miles of area; in the United States there were six miles for each 100 square miles. In the United States the percentage was six miles for each 1,000; and there was 10 times the mileage in the United States for area, and 45 times the provision for each 10,000 of population. In Russia, sparsely populated as it was, there was twice the provision in Russia in Europe, and in Russia in Asia 20 times the mileage to the population compared with India. He would remind the Committee that at this moment Russia was pressing forward its railway construction. Five thousand miles of railway were being constructed to connect Siberia with the Pacific coast. It was not necessary to demonstrate the paramount necessity of more railways for India, as it had been admitted by the right hon. Gentleman the Secretary for India. In his speech yesterday he said— I do not know a better test of the improvement of a country than railways. Nothing has been more important than the improvement effected by the railway administration in India, and the construction of the railways has been a great source of prosperity to the country, and a most important cause of its increased wealth. The right hon. Gentleman gave some statistics of the advance of wages in India, which in the last 10 or 15 years amounted to 16½ per cent. He might tell them that wherever railways were constructed the wages of artisans in contact with the railways invariably doubled, if not increasing to even a larger extent. Therefore, there was no dispute as to the necessity of railways. The question was, how was the money to be obtained? Competent authorities showed that 20,000 miles of railway were required. It was not necessary to indicate the districts or directions in which they should be made, because thousands of miles of railways had been surveyed and sanctioned by the Government of India which were not yet constructed. Lord Ripon, who was an authority upon this subject, sanctioned more miles of railway than any Governor General of late years, and he had often stated to him (Sir J. Kitson) in conversation bow strongly he was impressed with the need for more railways in India. He gathered that the block was somewhere in India. He remembered a friend of his of high position in the Indian railway world telling him of a certain Indian railway scheme which had been before the Indian authorities for some years. When the noble Lord the Member for Paddington came into Office the matter was explained to him, and after careful consideration ho sent a peremptory message to India which brought about a settlement in a few weeks. The scheme was at once prosecuted and was now in operation. That was the Indian Midland system. He had the greatest confidence in the right hon. Gentleman the Secretary for India; he thought, indeed, he might say that he had more confidence in him than in the noble Lord the Member for Paddington, and he believed that this matter was in very strong hands. The most economical method of providing capital was for the Government of India to borrow the money, because it could borrow at a low rate of interest; but it would appear from the statement made by the right hon. Gentleman that this was a method which was closed for the present. But there were other methods by which the hoards of treasure which they heard recounted yesterday as existing in India could be drawn upon if the native bankers and financial agents were approached in a businesslike manner. He knew of some tramway schemes, the capital for which had been provided by Indian bankers. If, then, the Government could not borrow largely, the bankers and financial agents would undertake the construction of railways provided that businesslike terms were offered to them. Of course, the Indian Government might propose such hard terms as to check and discourage enterprise. As a fact, he knew of many Indian projects which had been checked by attempts at driving hard bargains. The general interest of India ought not to be sacrificed to the timidity and the slothfulness of a Department. The times were very favourable for the undertaking and the prosecution of great public works and railway construction. Cheap money, cheap material, and unemployed labour were at the service of those who could offer fair terms, and the Secretary of State could render invaluable service both to England and to India by advancing these undertakings, which would provide profitable employment for thousands who were loudly calling for and urgently in need of it.

SIR W. HOULDSWORTH (Manchester, N. W.)

said, the Committee would recognise that the statement which they had listened to that evening was one of exceptional interest, and exceedingly important, and he was sure they were very much indebted to the Secretary of State for India for the very clear and interesting manner in which he had put the facts before them. He thought that his statement differed in one respect from many of the previous statements made on the Indian Budget in that House, because it was apparent that it not only dealt with the finances of India, but with many important questions connected with the commerce and industries of both India and England. Under these circumstances, he greatly regretted that these important questions, in all their ramifications and details, had been relegated to the end of the Session, and he thought they had cause for complaint, for in the early weeks of the Session the Chancellor of the Exchequer promised a day on which Indian finances should be discussed. He did not say that that promise had been deliberately unfulfilled—it might have been that circumstances were too strong for the right hon. Gentleman — but in the position in which Indian finances and everything connected with Indian affairs wore placed at present, it would have been most desirable that they should have had a day set apart entirely for the discussion of Indian questions, apart altogether from the ordinary discussion upon the Budget, because it was evident from the statement they had heard, taken in connection with various interesting Blue Books that they had had placed in their hands, embraced many important matters, and not only important, but absolutely new, departures in policy on the part of the Indian and Home Governments. They had the closing of the Mints, the imposition of Import Duties, the discussions in the Legislative Council, and the threatened Cotton Duty. He only proposed to deal with one or two of these questions; and, first, he would say a few words upon the closing of tin; Mints. They were told that this step was still in an experimental stage. He did not know how long-that stage was to continue. Already it had existed for over 12 months, and, though the Government might say that they had not all the material to come to a final decision as to whether the experiment had been successful or not, there were several conclusions that might be arrived at even at present. He did not wish to appear hostile with regard to the closing of the Mints, but that policy had been universally condemned by all the authorities, not excluding even the Indian Government and the Herschell Committee, and he did not think the Government would have adopted it except as a policy of despair. There was evidence that there were other remedies for the position in which they were placed, and it was only failing these that they put this proposal to the Government. The same proposal was made in 1889, and the Government on that side of the House absolutely declined to allow the Indian Government to adopt it; and they did so because they believed it would be injurious and detrimental to the people of India. Therefore, the present Government were bound to show very strong reason for the closing of the Mints. One of the conclusions they could already draw from the experiment was that, if it succeeded in maintaining the rupee and in raising the value of the rupee as compared with the sovereign, the effect would be to injure very seriously indeed the export trade of India. They had this remarkable testimony from the Consul at Shanghai, who stated that in the quarter immediately following the closing of the Indian Mints the exports fell one-half from what they were in the corresponding quarter of the previous year. He did not think that that was denied by the Secretary for India. Then with regard to Manchester goods, the fall in silver which had resulted from the closing of the Indian Mints produced this effect —that the exports from Lancashire to China and the East were absolutely reduced in one year to one-half. He knew that the right hon. Gentleman and his advisers were perfectly prepared for a considerable dislocation of trade, but he could not agree that that would be temporary. It seemed to him that as long as there was a gap between the gold value of the rupee and the gold value of silver there must be that dislocation of trade and prevention of exports from India to the far East. Coming now to the question of Import Duties, he submitted that that was a most serious departure from the true principles of Free Trade, and from the principles upon which he thought commercial legislation ought to be based. He knew it was thought that Free Trade principles would be maintained if they took care not to impose duties of a protective character. He did not think that that was the full extent of Free Trade principles. The apostles of Free Trade held the wider view that there should be the freest possible exchange between the nations of the world without any interference by duties of any kind whatever. It appeared to him that the Import Duties which had already been placed upon goods going into India were protective. There were no countervailing Excise Duties It might be said that these articles on which there were duties were not produced in India: but that was not the fact with many of the articles, for woollen and silk goods and many other of the articles on which there were duties were manufactured to a greater or less extent in India. He would go further, and say that, even if they were not manu- factured there now, bow did they know that putting the 5 per cent, duty on these articles would not at once encourage and stimulate their manufacture in India and bring them into competition with our own industries? Indeed, such an event was extremely likely, and the tax upon tea in England was not at all analogous, for tea could not be grown in this country. Therefore, with regard to the proposed Cotton Duty, the Secretary for India could not trust entirely to the argument about countervailing duties, because he had already thrown that over with regard to a number of articles on which there was now a duty. The extension of industries in India during the last 10 or 15 years had been enormous, and he believed that the movement in these industries which completed with our own had been stimulated by the fall in silver. In 1882 the present Duke of Devonshire stated that there was no country in the world where it was less desirable to raise a duty on cotton goods than in India. He added that it was desirable, in the interests of India, that its foreign trade should be increased, and then declared that the policy and the action of the Government in India in taking off the duty on cotton was sound and wise, and that it had been adopted not in deference to any political pressure or exigency, but deliberately in the interests of the people of India. He would like to say a few words on the subject of the Cotton Duties, which were, it was true, only threatened. He thought he understood the right hon. Gentleman the Secretary for India to say he feared the necessity would arise in which they might have to be imposed. He was quite prepared to admit that, when they had embarked on this policy of Import Duties in order to fill up a gap which had been caused by the loss on exchange, he confessed it might turn out to be difficult to defend the exemption of cotton goods. He believed there were arguments which could be used, and which no doubt would be used as to this matter before the right hon. Gentleman let the blow fall. He would, however, suggest that in the first place this was a very large industry. It was, he thought, nearly one-half of the whole of the imports into India, and it was also a very large industry in one important part of this country. There was a second suggestion he would like to make, and that was that it existed at present on a very large scale in India itself, which differentiated it no doubt from those which he had referred to, although he thought it would be found that they were increasing. There was another point, and that was that already, even without the operation of any Import Duties, the trade of Lancashire, both with India and the far East, had been seriously injured during the last 20' years. He should like to give the figures of the exports of cotton yarn to the far East from 1881 to 1892, and to compare them with the growth of exports from India to the same places —China, Hong Kong, and Japan. He found that, while the exports of cotton yarn from England to those places had fallen off from £47,000,000 in 1881 to £31,000,000 in 1892, the exports from India to China, Hong Kong, and Japan, had increased from £25,000,000 in 1881 to £178,000,000 in 1892, showing that there had been a complete displacement of the export trade from England to the far East in favour of India. He could give other proof, but ho did not think it was necessary, because he did not think it was denied that by the bonus which India had received by the fall in silver she had been enabled to take the place of Lancashire. Objection was taken to the word "bonus," and he confessed he did not like it himself; but undoubtedly it was a fact that the trade between India and the far East being on a silver basis, and not being touched, had increased to an enormous extent, while, owing to the difference in exchange between this country and the far East, and silver-using countries, our trade had been very much diminished. The right hon. Gentleman had indicated more than once that he would not think of imposing these Cotton Duties unless he could rob them of their protective character. He assumed that the right hon. Gentleman was trusting to the imposition of countervailing duties in India in order to avoid any suspicion of protection. It appeared to him that that was a very doubtful, if practical, policy. While it might result in protecting them in Lancashire from unfair competition from the Indian manufacturer, they were going at one blow to do an injury both to Lancashire trade and to the manufacturing industries in India. It was, as the right hon. Gentleman had pointed out, the consumer who would pay this Import Duly, and, of course, if he had to pay the Import Duty he would, in all probability, consume less. That was the natural tendency, and the effect would be that, although they might keep the Indian manufacturer and the Lancashire manufacturer on a par, they would pro tanto destroy the trade of both, and thus commit a grievous injury. He would like to point out that these duties were abolished not because of their protective character, but because, as many authorities stated at the time, they believed they were unjust, and detrimental to trade, both in regard to the people of India and of this country. Those who could look upon this matter in cold blood, as it were, at the time when the Resolutions of that House dealing with these duties were passed, and apart from many questions which surrounded them to-day, had no hesitation in saying that these Cotton Duties, and, lie thought, all the Import Duties, were detrimental to the interests of the people of both countries, and they had, in fact, been condemned by all the great authorities both in India and in that House. He believed that no one was less desirous of putting on Import Duties of any kind than the present Secretary of State for India if he could possibly avoid it, and he perfectly trusted him when he said that he would not impose them unless the necessities were, in his opinion, so great as to force it to be done. The justification for the imposition of Import Duties was, as was bluntly stated by the Indian Finance Minister, "We want money; and money we must have, in some way or another." There was no question as to the cause of the deficit which India had to face. The deficit was entirely accounted for by the loss in exchange, and he asked the right hon. Gentleman whether the proper way was not to deal with the evil directly, and not fill up a gap which occurred every year and increased every year with anything that the Government of India could lay its hands upon. He should be sorry to lead the Committee into a bi-metallic discussion, but he thought he was entitled to ask him to look into this question and see if there were not other methods by which this loss could be avoided, and at the same I time these very objectionable means of raising revenue by Import Duties could also be avoided. He asked whether the right hon. Gentleman would not deal directly with this evil, and not merely fill up a gap that occurred every year and increased every year, by temporary arrangements. The establishment of a par between silver and gold by International Agreement amongst the nations had always been the remedy which the Indian Government from their experience and authority had presented to the Home Government, and he doubted very much whether there was a single member of the Indian Government or any official either at home or in India who was not prepared to support that, and say it was the true and right remedy, and they had no doubt whatever that it would be successful. He denied that the necessity for the imposition of these Cotton Duties had arisen. There was the remedy which had been pointed out over and over again by the Indian Government, and which could be applied, and it was only the-determination of the Home Government which stood in the way of any International Agreement. Once they had got the value of gold and silver established on a permanent basis, they would be able I to relieve themselves of their difficulties, and England and India would both benefit. He hoped the Government would, before the next Budget Statement, consider this question even more carefully than they had done in the past.

* MR. BUCHANAN (Aberdeen, E.)

said, that with regard to the Committee to be appointed next Session, there was one subject which ho hoped would be included in the financial matters to be referred to it—namely, the apportionment of the expenditure between this country and India. It had been a source of constant complaint for many years past that India was unfairly treated where there was a joint financial responsibility with this country. India was saddled with half the expenses of the Opium Commission, and India was saddled with these expenses, without, as he understood, having any power to resist the expenditure. But there were other depart- ments in which India had made com- I plaints through her Ministers and those who had had charge of her Military Forces. The Member for Oxford stated that changes were made in our military system at home which entailed large expenditure in India, and while India was not consulted in regard to these changes, India, had to pay her share of these expenses. In a Blue Book dealing with the question of Home Charges there was a Despatch of 1889, which set out a Table showing that during a period extending from 1864 to 1882, no less a sum than £880,000 per annum was added to the military expenditure in India by charges imposed upon her by changes in the military system at home, and in regard to which she was not consulted, and her interests were not considered. That he held to be alone a suitable subject for inquiry by a Committee of that House, and he hoped it would be included in the Reference to the Committee which the right hon. Gentleman said he was going to appoint next Session. He desired to say a few words upon one point which had been discussed —namely, the question of the exception of the Cotton Duties from the Tariff Bill which was recently passed by the Indian Government. In the very able and attractive statement laid before them this evening by the Secretary of State for India, the right hon. Gentleman dealt with this purely as an economical question. When he dealt with this matter he rather felt that the account which the right hon. Gentleman gave to this House of the history of the question was not quite the same as that set before them in the Blue Books in their hands. But passing that by, what he did not think the right hon. Gentleman laid sufficient stress upon was that it was not merely an economic question, but a question of great financial and political importance as well. He dealt with it purely as a financial question. He (Mr. Buchanan) did not feel that he was at all capable of arguing an economic question of this sort with his right hon. Friend, but to his mind a considerable part of the case had been stated by the hon. Baronet opposite. A Tariff Bill had been imposed by the Government of India, which had been sanctioned by Her Majesty's Government. It in- cluded a very great variety of articles. That Tariff Bill was proposed by the Government of India, and was sent home to this country for approval. It met with the unanimous support of the Government of India. It met with the unanimous support of the Council of India, and it was Lord Kimberley and the Cabinet of this country who said to the Government of India, "You may pass your Tariff Bill, and you may include in it anything you like except cotton." It was the exemption of this one article from the Tariff Bill, which was sanctioned by the Government of India, that he thought upon financial and political grounds they had good reason to complain of.

MR. H. H. FOWLER

said, no Bill proposed any duty upon cotton. Telegraphic communications passed before the Bill was introduced.

* MR. BUCHANAN

said, he was not aware of the actual procedure, but substantially the Government of India proposed, as he understood, an all-round Import Duty of 5 per cent., or that was what they wished, and the Government in this country said, in effect, "You may have an all-round duty of 5 per cent., so long as you do not include cotton in that all-round duty." As to the protective character of this duty, as the hon. Member for Manchester had pointed out, where an Import Duty was imposed on articles manufactured in that country, that duty was of necessity protective in its character, and so far as the duty fell upon imported articles such as were manufactured in India it was protective. Statements of Sir E. Baring and of Sir A. Lyall, one of the Members of the Council, had been quoted, and the necessities of India were said to be so great that the Government had to cast the net far and wide, including many items that were not in the Tariff of 1875. Anyhow, if the protective nature of it vitiated the proposal to put a duty upon cotton goods, so did it vitiate the proposal so far as it referred to any goods produced within the limits of India. Another argument adduced by the right hon. Gentleman was the Resolution of the House of 1879, and he was rather astonished at this when he remembered what took place yesterday. The Government which paid so little attention to a Resolution of 15 months ago were inclined to pay much more attention to a Resolution of a long past Parliament of 15 years ago. But he did not wish to make too much of that, and would not argue upon it. Surely the right hon. Gentleman would recognise the responsibility of the Government of to-day, and would not shelter himself under the Resolution of 1879? He did not believe the right hon. Gentleman would desire to do so; responsibility must rest on the Secretary of State and Her Majesty's Government. In a few words, he gave his version of the question as it appeared from the Blue Books from the financial and political point of view. Here was a case of a proposal unanimously made by the Government of India, sanctioned by the Secretary of State in Council, disallowed by Her Majesty's Government. That in itself was a very serious political fact. These apparent conflicts, for perhaps they were more apparent than real, between the Secretary of State and the Government in India, were often very much exaggerated, and he had no wish to assist in the exaggeration, but here was a difference of opinion, and strong action by the Secretary of State overruling the opinion of the Government on a distinctly Indian matter. What was the financial position in which the Government of India found itself? Roughly speaking, as he gathered from the Blue Book and the right hon. Gentleman's statement, there was a deficit of about Rx.3,500,000, and how was this to be met? In the first place, by a suspension of the Famine Grant, the deficit was reduced by Rx.1,000,000. So far as he understood the matter, he entirely agreed with the right hon. Gentleman that the Famine Grant was to be provided out of the surplus revenue, and if there was no surplus there could be no such special grant. To meet the Rx.2,50O,OO0 remaining the Government of India said there must be new taxation and that the only source of such taxation was an Import Duty. They wanted to impose a 5 per cent, duty all round, and that would have met their requirements, about half the required amount being realised from cotton goods and the remainder from other items. In that way, with an equal Import Duty all round, the deficit would have been met. But according to the Blue Book the deficit had not been met—there was still a deficit of Rx.310,000, and as the right hon. Gentleman said, all depended upon taking the rupee at 14d., and it had fallen 1d. [Cries of "No!"] At all events, the proposals in the Budget had in view a deficit, not a surplus; while with the Import Duty there would have been a surplus, or at any rate the financial exigencies of the present year would be I met. What was substituted for the proposed Cotton Duty? The right hon. Gentleman glided gently over this matter. Economies were to be rigidly enforced: there was a saving of Rx.370,000 odd in buildings and roads—I Rx.194,000 on the military side, and Rx.176,000 on the civil side. A Member of the Council said— We have practically cut out every work from the civil side of the expenditure to which we were not absolutely committed. The result, as had been said by a distinguished Member of the Council, would be the arrest of all development. Then, as to military expenditure another Member, Sir Griffith Evans, was reported to have said in Council— The barracks in Upper Burma are not to be built, the sanitary measures required for the Army in India will not be carried out, and, worst of all, the proposals for the improvement of the water supply for the troops must stand over. This means preventible sickness and death among the troops, and the dreadful scourge of enteric fever will run its course unchecked. This was the statement of a non-official Member of the Council, and in language almost as strong the military Member of the Council said the result meant practically the undertaking of no new works, the neglect of repairs to roads and buildings, and the almost complete stoppage of all sanitary improvements. A serious statement for the responsible military Member of the Council to make, and this gave the Committee some idea of the cost to be paid for the exemption of cotton goods from this new tariff. Besides enforcing economies in this way, the Government of India had been obliged, owing to the exemption imposed upon them, to call on Local Governments for contributions to the amount of Rx 410,000, though, as the right hon. Gentleman said, they would still have a balance to their credit. But Mr. Westland's language showed that he took a very serious view of what he was obliged to do; he was most unwilling, he said, to have recourse to this method, which would mean, for a time, the stoppage of all administrative improvements, and take the heart out of local administrators. The Government were unable to adopt and carry through the only satisfactory means for relieving them from their financial pressure, and to the course pursued there were political objections. It did not tend to the stability or strength of the Government I of India when there could be read in the Blue Books statements such as were made in the discussions in Council. One after another, distinguished Members of the Council declared opinions entirely opposed to the proposal for which they were obliged to vote, and Mr. Weston himself said that, so far as the merits of the question were concerned, he was disposed to agree with the opponents of the I Bill, and not with those who supported it. This was hardly a fair position, if it could be avoided, in which to put Members of the Government of India. There was strong evidence displayed in the Blue Book, as well as in newspaper accounts of the discussions, as to the feeling in India on the subject. Statements were made by both official and non-official Members of the Council of India of the most serious character; that never in their experience had their been such an unanimous feeling of dissatisfaction as to the course pursued by the Supreme Government as there had been on this subject. Of course one would naturally discount the strength of irresponsible statements made under such circumstances, but, making all allowances, there was disclosed considerable, and he was disposed to think justifiable, dissatisfaction at the conduct pursued by Her Majesty's; Government. So much as regarded the past. One point upon which his hon. Friend had dwelt was that upon which he would say a word. Of course, all would regret and deplore the necessity which compelled the Government of India to impose Import Duties at all. It was a necessity of the financial position, and it could only be hoped that improvement in the financial position would enable a remission to be made. But the more the regret the greater the difficulty of defending the exemption of cotton goods. The Secretary of State said the matter must remain over for another year; that the decision of the Government was final for the present year.

MR. H. H. FOWLER

said, that was not quite what he said.

* MR. BUCHANAN

said, no, that was his account of it. He did not attribute the words to his right hon. Friend, but ho assumed that in substance his right hon. Friend had said what, of course, had been said in another place on this subject: that if it should be found necessary to include cotton goods, then there must be provision made for countervailing Excise. He dwelt upon that, and he would not discuss the matter in opposition to his right hon. Friend; but ho would like to point out that, from statements made in regard to the rivalry between Lancashire and India in cotton manufactures, it would appear that only in a limited field did such rivalry exist. The statement had been made and not denied that it was only over 6 per cent, of cotton goods that there was competition between India and Lancashire.

MR. H. H. FOWLER

I do not admit it.

MR. BUCHANAN

said, it had been stated and not with authority denied.

MR. H. H. FOWLER

It is in dispute.

* MR. BUCHANAN

would not pin himself to a figure, but at all events it was but a small proportion of the manufacture as to which the two commodities came into rivalry. The statement of Mr. Weston was that, while Lancashire occupied a wide area without competition, it was only in a very limited field that the Indian mills competed with Lancashire trade. Whatever the extent of the overlapping might be, if there was to be an imposition of a countervailing Excise it should only apply to those goods in which there was this direct competition. With great satisfaction the Committee must have heard the speech of the hon. Member for Manchester on the subject. No doubt there was a widely prevailing idea—and he was bound to say not without considerable justification—that it was due to pressure from Lancashire that the duty had not been allowed to be imposed. For that unfortunate impression Manchester merchants were to blame, for undoubtedly there had been some exceedingly strong statements made by those gentlemen. He had a selection from which he would not quote, but certainly representations in very strong language indeed were made to Lord Kimberley. But the hon. Baronet had discussed the matter in a rational spirit, and at the Manchester Chamber of Commerce on Monday it was discussed in a moderate and temperate manner. One gentleman said— It is of the first importance to convince the people of India that whatever happens we desire to act towards them in the strictest justice, and not from the point of view of our own interest. We must regard this matter from a higher point of view than that of our local trade. This was sounding the proper note on the subject, but if an idea in the other direction obtained among the people of India he did not think the people of India, were to blame for it, because there had been justification. But allowing all that to pass, and looking to the discussion in the future—for he had little doubt that it must come up for discussion again—he hoped it would continue to be discussed in a fair spirit, and that in the endeavour to arrive at a settlement all would show not only a desire to do justice to our own people, but would act up to the ideal that in all these discussions the governing consideration of each and all should be the welfare of the whole people of India.

MR. HOLLAND (Salford, N.)

thanked the hon. Member for Manchester for disabusing the minds of Members of the Committee of the idea generally prevailing, and often given expression to, that it was in some sort of dread of the effect on the votes of Lancashire that induced Lord Kimberley to exempt cotton goods from Indian Import Duties. Those gentlemen who took that view, basing it on what took place at the reception of the deputation by Lord Kimberley, must first ignore the sequence of events and deny the almanac, because, as a matter of fact, the decision of Lord Kimberley to exempt those goods was taken long before the deputation so often referred to waited upon him. The hon. Member who had just spoken said the competition between Lancashire and Indian products extended over a very limited area, and was confined to a very few towns. Knowing something of the trade, he was prepared to admit that the competition was now limited to a narrow range, but how long would it remain so limited were this 5 per cent. Import Duty imposed? At once there would be encouragement to extend that area, and concerns now limited to the production of the more common goods would, under the influence of the 5 percent, protection, rapidly enlarge their range of operation, and before long there would be serious competition with Lancashire in a new and wider field. From the Blue Book he could quote Reports showing how without a protective duty this competition was increasing, as, for example, there was no doubt that, looking at the course of trade over a series of years, the competition of the Indian mills in Manchester goods was growing, the mills gradually beginning to make the medium class of goods which formed the bulk of the imports, and they were also beginning to bleach and dye their goods. This without any Import Duty, so that there was every probability that the competition would be extended over a much wider area it' this duty were to be imposed. Many Members seemed anxious to know why this exceptional treatment had been granted to cotton goods. There was a history attaching to this question. Such duties wore once in existence, and it was only after a long and stubborn fight that, 12 years ago, they were swept away. History had proved that the action Manchester took on that occasion was no selfish action, and that its interest was in no sense hostile to that of India, and the result showed that the line Lancashire took conduced to the benefit of India. He could appeal with confidence to Members of the House and ask, who was it gained most by the removal of the duties in 1882? and lie was sure the reply would be not England—though, of course, England had gained—but India was the chief trainer. There was an idea abroad in India that she had been wronged in some way in the matter by the exemption of cotton from duty, an unfortunate idea, which ought to be dispelled at any cost. He knew Lancashire intimately, and might almost say that if a plan could be devised which at once would have the advantage of yielding the required funds for the Indian Exchequer, and at the same time put the manufacturers of India on the same footing as the manufacturers of England, Lancashire would not have a word to say in opposition to a proposition of that kind. Another consideration entitled the cotton trade to some exceptional treatment, its enormous extent forming, as it did, 50 per cent. of the imports into India. This was an extensive field in which production would be fostered and engendered by this duty, and if the effect of the duty should be to stimulate manufacturers in India to erect new mills, the removal of the duty would not remove the injury to Lancashire, for the mills would remain and the protected competition of India with Lancashire trade would continue. The hon. Member for Manchester had dwelt on the difficulties that in his view existed to the imposition of countervailing Excise Duties. The opinion of the Bombay spinners had been quoted, and they to a man—there being one exception—were opposed to these Excise Duties. So it was found that the Lancashire spinners were opposed to these Excise Duties. He could quote an opinion that would have great weight with the hon. Baronet. Sir John Stringer in 1881–2 declared that no protective duty should exist unless a countervailing Excise Duty was imposed along with them. For his part, he commended the action of the Government, and believed that in taking the course they had the Government had said to India that all the evils of protection would result by these duties; that the interests of the Empire would be sacrificed, and at the same time some injustice would be done to Lancashire. It was their duty as statesmen to look all round the question and take account of all parts of the Empire. They admitted that the welfare and interests of India had claims for first attention, and it was important the idea should not get abroad that India was regarded, to use an Americanism, as a mere dumping ground for English goods. The welfare of India was the first consideration with those who ruled that Empire, but he was altogether unwilling to believe that our statesmen were so bankrupt of resources that they were unable to suggest a plan of raising the revenue for the assistance of the Indian Exchequer without at the same time inflicting an injury upon a large industry in this country. He believed in this matter the views of Lancashire were not impracticable views. They admitted readily that the Indian Government was placed in a position of great difficulty, and were anxious to do what they could to assist the Government. If more money must imperatively be raised, he knew there were many men in Lancashire who would be content to have Import Duties imposed provided there were these countervailing; Excise Duties levied at the same time. He knew the position of the cotton trade was in a somewhat hard case at the present time, but that was not the ground and basis of their appeal; and in asking for the consideration of the Government he felt sure they need not plead the necessity of their cause, but the justice of their case.

* SIR G. CHESNEY (Oxford)

said, the statement of the right hon. Gentleman the Secretary of State for India naturally opened out a very large field of subjects which those who knew anything of India took an interest in. Many of these subjects had been dealt with by hon. Gentlemen around him; therefore, in the extremely brief observations he should make, he would address himself simply to one of the many points contained in the right hon. Gentleman's Statement which had not yet been referred to— namely, the railway policy. The loss that appeared upon the railway accounts, he thought, was due mainly to the way in which the accounts were presented; he said this without meaning to reflect upon the admirable way in which the Indian accounts generally were prepared; but he meant that in bringing the railway accounts into the finance accounts in the way in which it was now done by the Indian Authorities they were attempting an impossible task of combining the railway system with the general accounts of the revenue and expenditure of the year, including the class of transactions involved in a great commercial concern. Bringing the gross railway charges into the accounts was very misleading. The right hon. Gentleman had said the accounts now presented showed about Rx.92,000,00 on each side of the account, and from that the right hon. Gentleman proceeded to deduct various very large receipts in order to arrive at the net revenue and expenditure. The right hon. Gentleman might have added that of these disfiguring elements the railway transactions were the largest of all, and these to a large extent were misleading, because, as the Committee were aware, the Government were the largest owners of railways, the next largest owners being Guaranteed Companies. In dealing with the second class, the guaranteed railways, all that was brought into the account was the actual net receipts. On the other hand, in the case of the Government railways, the whole gross receipts were brought in, and, on the other side, was shown the traffic receipts and working expenses. Considering that hardly a year passed that the Government did not sell or buy a railway or that a railway did not change hands, it was evident that this way of showing the accounts was calculated to produce great confusion and make it extremely difficult to ascertain the real position of the Government, and he therefore would suggest that an effort should be made to separate their railway transactions from the ordinary Budget accounts, and to deal with the former as what they really are— commercial accounts. With respect to the general result, as the accounts stood now they showed a loss; but he believed this loss was more apparent than real, because the Government was not only paying interest upon the guaranteed loan, but they were taking the very prudent step of buying up these guaranteed lines altogether by means of annuities. A very large part of the expenditure, therefore, was expenditure of a temporary character, and in respect of which, in a few years, the Government would come into possession of a magnificent property. Therefore, although the Government now had a deficit, a considerable part of the expenditure would not occur again. That was one point he wished to call attention to. In the next place, the Government, had thrown into hotch-potch all the railways; but it was well-known that a considerable part of the railway system consisted of military lines on the frontier, which were made for military purposes solely, and which never could, and never would, bring in any appreciable revenue. He did not mean to say they were not economical works. On the contrary; if the Army was called into operation beyond the frontier, the completion of these railways would prevent the expenditure of millions of pounds which had to be incurred in the last war beyond the frontier. But it was surely a mistake to mix up all this purely military work with what were really the commercial undertakings—the other Indian railways. If they were kept separate it would reduce the cost of the railways by a, very large figure. It was important to tear in mind that in the further extension of the railway system was to be found the one source of relief from the present financial embarrassment. The earlier railways, indeed, were loaded with the cost—the extravagant cost—of construction, which had occurred in the first instance due to want of experience and to mismanagement. Railway construction formerly cost very much more than it does now. In the next place, those earlier railways were loaded with a high rate of guarantee that would never occur again. The Government guaranteed 5 per cent, on the line in gold, and, in order to pay that, the line must make a return of 10 per cent, in silver, which was a very heavy loading indeed. They had to remember that in future, if they guaranteed at all, it would not be necessary to give a higher rate than 3 per cent., and in the next place that it was extremely improbable that silver would take another and a further fall of 50 per cent., and, therefore, even if they gave guarantees in gold, they would not again be loading the account with a heavy loss, because he thought it was reasonable to suppose the loss by exchange had reached its lowest and worst stage. With regard to railway enterprise, he was glad to hear the right hon. Gentleman express so strong an opinion upon the useful effect of railways, as he (Sir G. Chesney) believed that nothing would do so much good for India as railways. The right hon. Gentleman had only been a short time in the position he now held; but he was bound to say that so far the action of the India Office, and the steps that had been taken lately, had not been of that happy character to encourage the employment of English capital in Indian railways. There had been a reaction against the guarantee system, but from guarantees the Government had now gone into the other extreme of apparently offering no inducement to English capitalists to put their money into Indian railways. The railways in India would be subject to a degree of control which railways in this country were not; and, on the other hand, they were not to receive that definite assistance which he thought was absolutely necessary to secure the confidence of the English investor, and lead to that rapid extension of railways that was so desirable in the interests of India. Quite recently there was a project for a valuable railway in the North-West Province, a railway that would be valuable both to the interests of India and of this country, but the correspondence respecting it had taken longer than the time that would have been necessary to complete the line, and in the end the proposal was so weighted with conditions, qualifications, and complications of all sorts that it was absolutely impossible for any projector to put it before the investing public. Ho would defy anyone not an expert in railway matters to know what was the real proposal of the Government in regard to it, yet the line was most urgently required in the interests of the country.

* MR. EVERETT (Suffolk, Woodbridge)

said, that though there was again presented to them a deficit in the Indian Revenue, there was one bright side to the Budget. They were told yesterday that India was overwhelmingly an agricultural country, that the great bulk of the people of India obtained their living by the occupation of tilling the land. It was a gratifying fact to note that whilst all over the rest of the world at the present time a bitter cry was going up of agricultural distress, that was not the case with regard to India, the agriculture of that country, from all the Reports they had received, being in a flourishing condition. It was a green oasis in the general waste. The explanation was exceedingly simple. India had been spared that terrible and continued fall in prices which had been the principal cause of agricultural distress in England, the Colonies, and the United States. The fortunate cultivators of the soil in India had enjoyed the inestimable blessing of a stable standard. Their obligations remained to-day substantially the same as they were 20 years ago. They could meet them with the same amount of produce. It was all very well to talk of the fall of the rupee and the depreciation of silver; but anyone who would carefully look into the actual facts must, he was sure, be convinced that silver had really not fallen in value at all in these last 20 years. The purchasing power of an ounce of silver was now as great as it was 20 years ago. He supposed there was no more sound and reliable statistician than Dr. Giffen, and in an admirable essay he wrote in 1888 he showed, that, so far from silver having fallen during recent years, it had a little appreciated. The farmer in India to-day received the same amount of silver money for his produce that he received before. Therefore, while in this country and the colonies farmers were groaning under distress, the happy cultivators of the soil in India were going on their way in fair prosperity. According to Mr. Westland's figures, dealing with a period of 16 years, in all those years the Revenue of India had increased, and yet they had this singular fact: that with a constantly and steadily increasing Revenue India was constantly in financial difficulties. The explanation of this was to be found in the one word "exchange." He need not dwell upon that matter now, because the right hon. Gentleman below him had expatiated upon it, and admitted it to the full in his speech; and the speeches of the Viceroy and of his Council in India as given in the Blue Book were full of it, too. Exchange, and exchange alone, they said, was the cause, the only cause, of their continual deficiency. The fact in regard to India was that it was a mortgaged farm, and mortgaged unhappily in gold. And as gold was steadily mounting in value, India, like all other similarly mortgaged persons or countries, found the real weight of its debt continually increasing. She had to buy gold with produce, and, as the value of the metal increased, had to give more and more produce in order to obtain the same quantity of it. The growing exports of India were not so much an indication of her prosperity as of the growing weight of her indebtedness. Until the Home Government opened its eyes to the great central fact that it was not silver which had fallen in value, but gold, which had risen, they would never successfully grapple with the Indian financial difficulty. That was the key to the position. The fact that gold had risen in value was clear and obvious, testified by evidence of every kind. If they took any group of commodities at their wholesale prices, and measured gold by that standard, they would find that 63 sovereigns would purchase as much as 100 sovereigns would 20 years ago; gold as measured by commodities had risen 50 per cent.; but silver, tested in the same way, showed no change of purchasing power, showing that the movement had been, not in the silver, but in the gold. They were deceived by old prejudices and superficial appearances, just as in former times the theologians were who held that the earth stood still, and that the phenomena of day and night was caused by the movement of the sun. An accurate observation of the facts showed conclusively that it was gold which was going up — not silver, which was going down—and this explained why India had to keep sending more and more of its commodities to meet its indebtedness. The steward of the rich man in the parable told his lord's debtor, who owed 100 measures of wheat, to take his bill and write fourscore. They had told India to take her bill and write 150. They had been more unjust than the unjust steward. The Home Government had refused to recognise the real cause of this exchange difficulty, and had wrapped itself up in its blind gold prejudices. It reminded him of the old Methodist hymn in which the unregenerate sinner is pictured— Wrapped up in self-conceit and pride, 'I shall have peace at last,' he cried. But the Government, like the sinner, have; not found peace, nor would they while they founded themselves on the false belief that gold continued stable and that it was the silver that changed. The Government, instead of finding peace, had been driven into trying to do something. And what had they done? They had tampered with the standard of India in the interest of creditors and against the interest of the toiling masses. By purely artificial means they had laid heavier burdens upon those who had to buy their money with their produce and their labour. They had based prices and obligations fixed in money in India not upon the natural product of the precious metal, but upon the arbitrary will of the Government, and they had taken in hand the responsible and odious task of limiting the supply of the money of the people. Mr. Westland, in his Budget Statement, said that the central fact of the financial history of the country in the last year was the closing of the Mints; and, without intending to speak in any disrespectful terms, he (Mr. Everett) should like, in plain language, to call attention to what had been done by the closing of the Mints. First, look at the folly of it; or, if that were too strong, the lack of wisdom of it! Here was a prosperous country with an increasing Revenue, but the Government wanted more Revenue. What did they do? They actually cut off the supply of money out of which their Revenue came. Was there ever such a policy? Folly was written in large letters across the very face of such a plan. The result was, that they created a scarcity; they made a famine of money whore before they had plenty, and for freedom, with all its blessings, they substituted restriction. Look at the cruelty of it, too, to the producers in that country, who had to pay their debts and taxes with their produce! By artificially raising the value of money the Government increased the difficulty to these poor people of getting it, and thus rendered their position harder and worse than it was before. If the right hon. Gentleman would read the fifth chapter of the Book of Exodus he would find a picture of what he and the Government wore doing. They had taken Pharaoh as their model. There had been in the past history of this am other countries profligate Kings who had sought to enrich themselves at the expense of their subjects by debasing the coin of the realm at their Mints and pocketing the profit of such debasement. And now, in the 19th century, in this enlightened country they had—he was going to say a profligate Government; but he would rather say a Government which had broken loose from all sound reason and honesty— who were trying to enrich themselves at the expense of their subjects, not by debasing the coin of the realm, but by artificially raising its value. And he believed, as between the two, in an agricultural nation, they harmed the country more by artificially limiting and raising the value of the coin than the Kings did by debasing it and putting the profit of such debasement in their pockets. The Kings robbed creditors, but lightened the taxes. You rob the toiling millions—the producers—by lowering the money value of their produce, and you raise the burden of the taxes. You are worse really than the profligate Kings. Look at the confusion, too, that has been created by the closing of the Mints. Twenty years ago there was only one "money" in India, and the world. Silver and gold were one. Foreign Governments, by tampering with the currency in 1873, created two "moneys" This had led to all manner of difficulties, and now by the extraordinary action which you have taken there are three "moneys" instead of two. This was not all; for in the Blue Books which had been issued respecting India, there was the possibility indicated of a fourth money—namely, the native rupees coined in the native States —which the Blue Book stated were more easy to imitate than the others, so that in the artificial difference they had created between silver and the rupee the Government had introduced a great temptation to forgo these native coins. And it was stated in the Blue Book that there were beginning to be detected signs of difference in value in circulation as between the native and the English rupees. Instead, therefore, of going back to one money, the Government had actually multiplied fourfold the evils and confusion of the money world. Worse than that, what had been done, so far as he could see, was perfectly useless. The Government would fail in the object they sought to attain, and, having mistaken the disease, their attempted remedy would only make things worse. It was like giving brandy to a patient in a raging fever. They had closed one of the great markets of the world against silver, and opened up a new source of demand for gold. What other effect could that have than to widen still further the great gulf between the two, and so to open still wider what the Council in India described as "the yawning gulf of their gold obligations"? It must be borne in mind to understand the position that the movement had been in gold and not in silver; and in creating this new demand for gold — the metal which was already moving up fast— they had pushed its value up higher still. This was shown by the further fall in silver as measured by gold. It had fallen 25 per cent, further since the Mints were closed, or, to speak more accurately, gold had risen by that much more, and prices of produce here had fallen in proportion. And he felt sure from what they had seen already, and from the natural consequences of raising the demand for an already appreciating metal, that the effect of trying to put India on a gold standard must be to aggravate still further every feature of the disease under which they already suffered. The course the Government were pursuing would make debt more onerous than ever, would lower prices, and would place the agriculturists in India in the same difficulties as those under which the agriculturists in England and other gold standard countries were labouring; it would complete, too, the ruin of the latter. There was once painted a series of pictures entitled "The Rake's Progress," which attained considerable fame in this country. The course taken by the Government since they had dealt with this question seemed to him very comparable to the different stages in the rake's downward progress. First of all, they were blind to the actual facts, and refused to believe that it was gold which had gone wrong, contending falsely that it was the silver. Then they tampered with the silver standard; that was the second stage. The third was running into debt; they had to come to Parliament to borrow more money. The fourth was misappropriation of other's money—they were driven to the misappropriation of the Famine and Provincial Funds. The fifth stage was that a stop was put to all further improvement in the country, the money intended for this purpose having been taken. The sixth and last stage, thus far, was that Free Trade had been abandoned, and the disciples of Cobden, the members of the great Liberal Party, had to give their consent to the imposition of duties in India. The last, the gallows, scene would come in due course. They were going contrary to everything that they had previously taught. They had talked against tampering with the currency, and they had tampered with it; against misappropriation, and they had been guilty of it; against putting on duties at the ports, and yet they had now done it. The closing of the Mints had been followed by the closing of the ports. They had tried artificially to raise the value of money in the country, and now they were going artificially to try and raise the value of the goods that went into the country, and they were driven by their necessities to tax the common necessaries of the people — even the light they burned at night and the agricultural implements that went into the country. Oh, the humiliation and the shame of it! When people read that—the English Government, and especially a Liberal Government, had been reduced to do this—it would produce that kind of shame in the beholders which the Babylonian people must have felt when they saw their great King, Nebuchadnezzar, reduced to going on all-fours and eating grass like an ox. This figure was used by a member of the Indian Council in his speech. Humiliation had been inflicted upon the Government of this country by the course they had pursued, and even now they were not at the bottom of the valley, for the Blue Book stated that there was no confidence felt that they wore out of the difficulty. Even during the last two days, whilst this discussion had been proceeding, there were signs that the rupee was going to fall still further, or, in other words, that gold was still increasing in value. He recognised the great ability, sterling honesty, and integrity of character of the right hon. Gentleman who now presided over the India Office, and he would make an appeal to him. At school sometimes, a boy said what was a lie, and being challenged two courses became open to him —either to confess, or to lie it out. It appeared to him, looking at the course the Government had taken in this matter, they had not, indeed, told a lie, but that they had planted themselves upon absolutely false ground. They might be said to have had a lie in their right hand, and every step they had had to take in consequence had only plunged them deeper into the morass. Would the right hon. Gentleman bring his great powers of mind to bear on the question? If he would look into the facts and figures, he would see that the movement had been in gold and not in silver, and that consequently what was wanted was to lessen the demand for gold, not to increase it. He was sure the right hon. Gentleman was familiar with that interesting book, The Pilgrim's Progress. On a certain occasion the pilgrims, through wandering into Bye Path Meadow, got into Giant Despair's dungeon and suffered a great deal there, until a light broke in upon the mind of one of them, who said he had in his bosom a key that would open any doors in that loathsome dungeon. It was the key of Promise, which ho took out, and which opened the locks that had kept them confined. Such a key was within the reach of his right hon. Friend. If the Government would realise how the facts really lay, would retrace their steps and enter into negotiations with other nations who, lie was quite sure, would meet them half way, and so restore the old free use of both the precious metals by International agreement, they would soon find themselves out of the Giant Despair's dungeon of ever-falling exchange, and in the green meadows on their way to some happier and better place. He was convinced the movement had been in gold, not in silver, and there would be no remedy for Indian finance or for depressed agriculture at home unless something was done to lessen the continual appreciation of gold and to bring back again the old, free, and equal use of the two precious metals.

SIR A. SCOBLE (Hackney, Central)

said, he should like to add a few words to what he said yesterday about Import Duties. He listened with great attention to what was said by the Secretary of State on the subject, and he must say that it appeared to him that the right hon. Gentleman did not make out a good case in defence of the course which the Government had pursued. The Government claimed to be consistent in their policy, but they might be said to have thrown over Free Trade and adopted Protection in regard to every other article excepting cotton goods and the precious metals, and therefore he did not see how the defence which the right hon. Gentleman had put forward could be maintained. The right hon. Gentleman said that these duties would fall on the consumer. This was, no doubt, the case, and the right hon. Gentleman proposed to get over the difficulty by putting a countervailing Excise Duty on the same class of goods when produced in the country. It did not matter what the proportions might be, but the Committee must know that the finer class of goods worn by the people of India were imported from England, and the coarser kinds were made in India itself. Therefore, instead of establishing a tax which would only fall on the wealthier classes, what the right hon. Gentleman proposed to do was to establish a law which would fall on the poorer classes. That being so, he did not see where the benefit to the consumer came in under the arrangement. The right hon. Gentleman should bear in mind that the area of taxation in India was comparatively small, and that its limit had practically been already reached. The right hon. Gentleman spoke with a certain degree of hopefulness of establishing in India something of the nature of the Death Duties, which had recently been instituted in this country.

MR. H. H. FOWLER

Oh, no.

SIR A. SCOBLE

Well, at all events, he said that there was nothing corresponding to Death Duties at present in India, and he (Sir A. Scoble) from that, perhaps wrongly, inferred that it was in the mind of the right hon. Gentleman, as a field of taxation which had not yet been entered upon. Ho regretted to say that it had been entered upon. A duty was levied on all grants of probate or letters of administration, which, however, were only required to be taken out by those subject to English laws. With regard to the vast mass of the population who were under Hindu or Mahomedan law, if they wanted the assistance of the Courts to recover debts due from persons deceased, they had to get a certificate for the collection of those debts upon which in like manner the Probate Duty was levied. As to the Salt Tax, he agreed with the right hon. Gentleman when he said that he did not think that any statesman would endeavour to increase this tax. He, indeed, agreed with the right hon. Gentle- man in the hope that before long this tax would be considerably diminished. It was very desirable that, as this was a time of peace, it should be diminished. In point of fact, the Salt Tax was the one tax which could be relied upon in the event of any great war in which India was involved. It should be a resource in case of emergency, but, unfortunately, at the present time it was as high as it was possible to make it. But, without dwelling any further on this part of the proposals of the Government, he should like to express the extreme satisfaction with which he heard the right hon. Gentleman speak of the necessity and the advantage of railway extension in India. There was a great tract of the country which was not at present occupied by railways, and it might be difficult to obtain English capital for the construction of railways in those parts if they had not the guarantee of the Government. He should advise the Government to extend the system of guarantees, and he also believed that the Government might well and profitably employ the very large cash balances they now had in making some of these railways in districts which were entirely without such accommodation, and where it was necessary that railways should be made in order to complete the chain of communication throughout the country. One other observation he should like to make in respect to what fell from the right hon. Gentleman the Member for the Forest of Dean (Sir C. Dilke) in regard to the Committee which the right hon. Gentleman promised yesterday. It seemed to him that an inquiry into the expenditure of India really came to this: that it was an inquiry into the whole administration. Such an inquiry would be a great deal too wide if that would not terminate in any reasonable time. It must necessarily be spread over one or two Parliaments, and by the time that its labours were terminated the subject would be stale and the labours of the Committee almost thrown away. He believed, however, that a limited inquiry would be of service, especially a limited inquiry into the financial relations between India and England. An inquiry so limited would, he thought, tend to get rid of some injustices with which India was at present afflicted, and would clear up many misapprehensions which prevailed largely in the minds of the educated natives of India. Such an inquiry might not only be useful, but be completed in a reasonable time. There were other matters which he would like to speak about; but ho would not take up time, as older Members wished to speak. He must, however, express his sense of admiration of the clear exposition of the finances of India which the right hon. Gentleman had given, and still more of the determination which the right hon. Gentleman had shown to grapple with some of the more immediate difficulties which were threatening the Government of India at the present time.

* SIR W. WEDDERBURN (Banffshire)

said, that he desired to thank his right hon. Friend the Secretary of State for having granted a Parliamentary Committee of Inquiry. It was not all that had been asked for, but it was a step in the right direction, and considering his high reputation as a financier it seemed appropriate that the first step should be a financial one. He trusted that the Committee would be made so strong, both in numbers and in the selection of members, and that the Reference would be so comprehensive, that real benefit would accrue to India. He feared, however, that the tone of the speech just delivered by the Secretary of State would cause profound disappointment in India. It appeared to him that his right hon. Friend had abandoned the judicial attitude which the Secretary of State should maintain, and had constituted himself the spokesman and apologist of the official views of which they complained. They all knew that there were two sides to these questions. There was the view taken by the people of India, and there was the official Anglo-Indian view. The case for the officials was put before the Secretary of State by the India Office, and by the London Press, and by official Representatives on the other side of the House. But what chance had the people of India of getting a hearing? Responsible public associations in India had forcibly stated their case, which was diametrically opposed to the official case. And he had made a detailed representation to the Secretary of State on the subject. He was glad to say that that representation had received no small support from Members of that House. But in his speech the right hon. Gentleman had not deigned even to notice that representation or the facts, figures, and arguments which it contained. Listening to the speech, no one would have guessed that the Secretary of State had before him any case at all for the people of India. The right hon. Gentleman's speeches were pure official optimism. He merely stated the official case, and blessed it altogether. His right hon. Friend had complained that he had called him the tool of the Indian Council. He did not think he had used that word. But he desired to explain, that he did not regard his right hon. Friend as a willing tool, but as an unconscious victim of his surroundings in the India Office, a sufferer from the bad political atmosphere in which his work was carried on. They often read how a stout working man, being lowered into an old disused well, was overcome by the fumes of carbonic acid gas. And the same sort of thing happened to every Liberal Secretary of State whom they sent to the India Office. His right hon. Friend was quite unconscious of this, but this unconsciousness was the most dangerous part of the whole business. He believed that scientific men had invented an instrument which would test the air and give warning in such cases. And he thought he could provide his right hon. Friend with a similar safeguard. The test was to be found in the cheers that he received in that House, and in the quarter from which they proceeded. During his two speeches the right hon. Gentleman had received continuous cheers from the Tory Benches, while silence reigned among his own supporters. And a Liberal Minister, instead of being gratified, should be warned that there must be something radically wrong when he thus received the enthusiastic approval of his political opponents. Proceeding to notice points in the Financial Statement the hon. Gentleman expressed his astonishment that the Secretary of State should declare that there was no Famine Insurance Fund, and that there had never been one. He did not know under what technical plea this statement could be justified. The fact was, that special new taxes were imposed for the express purpose of famine insurance. To quote the words of the Finance Minister, Sir John Strachey, the proceeds of these now taxes were to be expended for the purpose of providing what ho called an insurance against famine, and for no other purpose whatever. Was that not a Famine Insurance Fund? Sir John Strachey called it a sacred trust. And if the proceeds of the taxes were not paid into a separate account in the name of trustees it was simply to avoid inconvenience in book-keeping. Being-appealed to, the Viceroy, Lord Lytton, minuted to the following effect:— The sole justification for the increased taxation which has just been imposed upon the people of India for the purpose of insuring this Empire against the worst calamities of future famine, so far as an insurance can now be practically provided, is the pledge we have given that a sum not less than £1,500,000 sterling, which exceeds the amount of the additional contributions obtained from the people for this purpose shall be annually applied to it. The people, grown shy by sad experience, still doubted, and were severely rebuked by Lord Lytton. He again declared that the sole purpose of the additional taxation was to preserve from famine, and he said that to insinuate the contrary was to insinuate a calumny. What now was being done? The special taxes were still being levied, producing annually about Rx.1,750,000, and the Government proposed to apply these proceeds to increase official salaries. The right hon. Gentleman might call these transactions by such technical name as he liked, but the people of India considered that a distinct pledge had been broken, and that a great injustice had been done. He desired now to notice one or two points in the Financial Statement. Mr. Westland, as Finance Minister, had declared that exchange, and exchange only, was the cause of the present deficit. And the Secretary of State appeared to endorse this view; also Mr. Westland maintained that the increased cost of exchange exceeded the increase of net revenue. He (Sir W. Wedderburn) ventured to differ entirely from both these conclusions. To ascertain the facts he had taken a period of 10 years, dating back to the happy time when Lord Ripon and Sir Evelyn Baring (now Lord Cromer) were in charge of the finances, when there was a balance to the good, and when taxes were remitted. Comparing that time with the present it appeared that the increased annual cost of exchange was now about Rx.6,000,000, whereas the increased net revenue was Rx.8,500,000, showing an excess of Rx.2,500,000. Or taking the aggregate of 10 years the total excess was Rx.18,500,000, so that the expansion of revenue was enough to pay for the cost of exchange twice over. The real cause of the financial difficulty was the excessive unreproductive expenditure upon the Military and Civil Services. In all other departments, including those most beneficial to the people, the reductions had been very large. As compared with 10 years ago, the saving amounted to Rx.4,644,683, which exceeded the cost in exchange for those departments by Rx.873,602. On the other hand, instead of reductions, the Military and Civil Services cost Rx.8,854,346 a year more than they did 10 years ago; and this, together with Rx.3,322,786, the exchange connected with those Services, came to the great total of Rx.12,177,132, which swallowed up the surplus inherited from Lord Ripon, Rx.722,622, the whole increase of net revenue, Rx.9,604,871, and the savings in other departments, Rx.873,602, and in addition produced a deficit of Rx.976,637. All these figures had, on behalf of the people of India, been carefully placed before the right hon. Gentleman the Secretary of State; but, as already observed, he had not considered it necessary even to refer to these contentions in the statement lie had just laid before the Committee. Another point to which he took strong exception in the right hon. Gentleman's speech was his statement that land revenue in India was not a tax upon the people, but only a share of the rent. This was, no doubt, the theory, but the practice was very different. He would beg to commend to his right hon. Friend the perusal of certain Minutes recorded in the Indian Council, which he would find at p. 134 of Appendix I. of the Famine Commission Report. These Minutes related to a proposal of Lord Hobart to stop all enhancements of the Land Revenue in the Madras Presidency. It there appears that the instruc- tion of Sir Charles Wood was that I the land revenue should not exceed one half of the free rent. But it was admitted that this was a "mere paper instruction." Sir Bartle Frere, than whom there was not a better practical authority on this point, stated that the State demand rarely if ever fulfilled the requirements of the India Office instruction, and that with the exception of a very few localities, infinitesimally small, a true Land Tax was practically unknown. As regards the Bombay Presidency, he said that the assessment came under three classes. First, a Land Tax fixed more or less arbitrarily; second, a full rent leaving nothing to the cultivator but the wages of his labour and the interest on his capital; and, third, a rent and something more trenching on the wages of labour or the profits of capital. To those three classes Sir Louis Mallet added yet another, where the land yielded no rent at all, and the assessment was taken wholly from that portion of the crop which represented the wages of I labour. When his right hon. Friend had leisure to read the Famine Commission Report, the Report of the Dekkhan Riots Commission, and the Debates in Council regarding the Dekkhan Agriculturists Relief Act, he would doubtless modify very materially his views regarding the Indian cultivator's burdens and condition. The right hon. Gentleman had said that the cultivator's improvements were not taxed. How did he account for the enhancements in the Panwell Taluka which had been brought to his notice by a question in the House? An instance had been given where a cultivator's I assessment bad been raised from 4 rupees to 45 rupees. Was the difference the in crease in the value of the land apart from the cultivator's industry? He would give the right hon. Gentleman a clue which he might follow up. Let him inquire what "Pot-Kharab" means in the Bombay Presidency, and he will find that these enhancements are upon reclamations and improvements within the cultivator's holding which he was encouraged to make by the promise that they would not be taxed. The right hon. Gentleman was very indignant because the Member for Flintshire said that there was corruption among the Settlement officers, but if he will inquire he will find that one main excuse for these enhancements was the alleged frauds on the part of the officials who made the original settlements. The objection taken to the military expenditure was one of policy more than account. He, in agreement with the right hon. Gentleman the Member for the Forest of Dean, did not grudge money for the true defence and safety of India. But what he objected to was the policy of aggression upon our weaker neighbours, a policy equally unjust and dangerous. India was surrounded by a frontier of sterile-mountainous regions, inhabited by wild tribes. This constituted a natural rampart, like a thorny hedge, and it was perfect folly either to penetrate into that hedge or to destroy it. This policy of aggression was foreseen and denounced in the Viceroy's Council by Mr. Ilbert and Sir Auckland Colvin when the first great addition of 30,000 men was made to our Army with reference to the attack on Burma. These gentlemen said this increased force would be used for purposes of aggression, and not of defence, and this prophecy had come true. For purposes of defence in India, an efficient Regular Force was no doubt required, but the true safety of the country depended upon this force being backed by a full treasury and a contented people. Another important question was the fair distribution of the military burden between India and Great Britain. The conquest of Upper Burma was undertaken purely for supposed Imperial interests, and it was a burning shame that the whole expense had been placed upon the Indian taxpayer, who was entirely opposed to the whole business. During the last eight years a charge of some £12,500,000 had fallen upon India on account of Upper Burma, and it appeared likely that this charge would continue at the rate of about £1,500,000 annually. With such treatment was it to be wondered at that India was in financial difficulty? Among the remedies now required, one of the most important was a fair distribution of military expenditure between India and this country. Then there seemed no good reason why the Military and Civil expenditure should not be brought to the figure it stood at in 1884–5, during the happy time of Lord Ripon. The compensation to the Services should be suspended until the finances could afford this indulgence. And as regarded the future, care and economy would be insured if only £5 of the salary of the Secretary of State for India were put upon the Imperial Estimates. What did Mr. Disraeli say on this point? Have the people of England ever cared one jot about Indian reform? No, they have not; and for this very simple reason—that the people of England do not pay for India; because so long as Indian finance is separated from English finance, and so long as the people of England do not pay in consequence of misgovernment in India, so long, depend upon it, they will not care for Indian reform. This was a formidable indictment against our national honesty and unselfishness. He trusted his right hon. Friend would do his best to convince the people of India that their welfare was his first object.

* MR. H. H. FOWLER

It is now close on midnight, and, this being the third day that the question of Indian Finance has been under discussion, I think it will not be unreasonable to ask the Committee to close the Debate and let this interesting conversation come to an end. I regret that I cannot review at length the various criticisms, many of them very interesting and valuable, which have been made upon my statement. I trespassed upon the time of the Committee at great length at an early period of the evening, and not even for the sake of answering the objections which have been raised do I think I am justified in asking the Committee to undergo the weariness of listening to me again; but I can assure hon. Gentlemen who have spoken that the suggestions they have thrown out will not be lost sight of. Two or three of the questions which have been put to me, however, I will at once reply to. My right hon. Friend the Member for the Forest of Dean put a very direct and pertinent question as to the nature of the inquiry which has been promised for next year. I thought I had made it perfectly clear that it would be most undesirable to have a Select Committee to inquire into the policy of the administration of India. The Government have no intention of the sort. My right hon. Friend put to me the question as to whether the Committee should deal with the position of the Council and the Secretary of State. I may make that clear—certainly not. That is a question for hon. Members to bring before this House—it is a question of policy. The Committee is to inquire into the various items of expenditure solely from a financial point of view, and to see how the money is spent. There are various points which would come before the Committee for inquiry from the financial point of view, as to whether expenditure is excessive, the expenses of administration, and that much vexed question, the apportionment of charges paid here and in India. But I warn the Committee, and I warn my hon. Friends who are so desirous that these questions should be raised, that the responsibility of the inquiry must be with those who desire it. There are those who think that India pays too little, and there are friends of India who think she pays too much, and the result may be disappointing to either side. I express no opinion, for I have not had time to make investigation, but the Committee may report that the Chancellor of the Exchequer is entitled to a larger contribution from India than India pays, and, if so, it will not be upon my head the blame will rest for reopening this difficult and complicated question. Various points have been raised by the right hon. Gentleman the Member for the Forest of Dean as to the character and extent of the inquiry, but do not let him be under any delusion. We propose a Committee of a purely financial character, to deal with financial questions, and not to deal with questions of policy and general administration. My hon. Friend who has just sat down complains that I have not answered the Memorandum he sent to me. That Memorandum has been carefully considered in the India Office, and I have a complete reply to most of the various points raised in it; but when addressing to the Committee a three hours' speech on finance I thought it would be unnecessary to go into disputable questions in which I could not probably have convinced my hon. Friend, and he could not have convinced me. The hon. Member for Colne Valley (Sir J. Kitson) spoke with reference to the railway system. He made an interesting speech at an unfortunate hour in a this House, and his speech was worthy the attention of a much larger audience. His views were re-echoed by subsequent speakers, and all I can say is that I absolutely sympathise with the desire of the hon. Member for an extension of the railway system in India. I recognise that we cannot extend the guarantee system, and what we have to do is to encourage private capital to invest in the construction of railways in India. There is a controversy now going on between the Government of India and those who are interested in Railway Companies as to terms, and all I am at liberty to state is that at the present time the whole question is under the immediate consideration of the Government of India to see what modifications may be introduced into the terms of which several Members have complained. Into the field of bi-metallism I will not at this hour attempt to enter, and I hope Members who have devoted time to that will not complain if I do not attempt a reply. I can only say that we shall proceed with the experiment we are trying—that of closing the Mints. An hon. Member near me thinks the experiment has been an absolute failure, and he has criticised it in strong language, but at all events we have acted upon the opinion of those most competent to give advice; we attach importance to the judgment of experts on the subject, and we see no reason to doubt the wisdom of the policy we have adopted. I hope the Committee will be satisfied with this Debate, which, extended over three days upon various Indian matters, has been full of interest. I hope the increased interest taken in Indian matters will he productive of good results, that the criticisms made will be considered by those upon whom responsibility devolves to determine whether proposals shall be carried out, and that in any event the discussion we have had may tend to the advantage of India.

Question put, and agreed to. Resolved, That it appears, by the Accounts laid before this House, that the Total Revenue of India for the year ending the 31st day of March 1893 was Rx.90,172,438; that the Total Expenditure in India and in England charged against the Revenue was Rx.91,005,850; that there was an excess of Expenditure over Revenue of Rx.833,412: and that the Capital Outlay on Railways and Irrigation Works was Rx.3,986,290.

Resolution to be reported To-morrow.