EAST INDIA REVENUE ACCOUNTS.

HC Deb 04 September 1895 vol 36 cc1695-740

Considered in Committee.

Mr. J. W. LOWTHER in the Chair.

(In the Committee).

Question again 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 1894 was Rx.90,565,214; that the Total Expenditure in India and in England charged against the Revenue was Rx.92,112,212; that there was an excess of Expenditure over Revenue of Rx.1,546,998; and that the Capital Outlay on Railways and Irrigation Works was Rx.3,621,252.

* THE SECRETARY OF STATE FOR INDIA (Lord GEORGE HAMILTON,) Middlesex, Ealing

said: Those conversant with Indian finance are aware that the annual statement which the India Office has to make, refers to three financial years and not two. The revenue and expenditure accounts now under the consideration of the Committee relate to the years 1893–4, 1894–5, and 1895–6. The figures of the first year are those of the closed account, those of the second year are in the closing stage, and those of the third year are estimates alone. I propose to take throughout the net revenue and expenditure, and to revert to the old form as contained in the accounts of the Indian Government for some time past. My right hon. Friend and predecessor, amongst other great qualities, is a high expert in these questions of accounts. While he was at the Treasury he introduced great improvements in the annual returns presented to Parliament. While my right hon. Friend was at the India Office he endeavoured to classify the revenue and expenditure of India on the same principles. But one or two small alterations have to be made in the accounts of the Indian Government this year; and until these are complete I do not propose to deal with the matter. But I hope we shall settle all these small matters of detail before the close of the financial year. For the present I propose to take the statement of net revenue and expenditure as contained in the accounts before the Committee, which show deductions for cost of collection in respect of all the principal heads of revenue; while on the expenditure side departmental receipts are deducted from gross expenditure. In 1893–4 we find a net revenue of Rx. 50,328,000, and a net expenditure of Rx. 51,875,000, showing a deficit of Rx. 1,547,000. This is better by Rx. 245,800 than the deficit as estimated last year of Rx. 1,792,800. The revenue is better by Rx. 74,900, and the expenditure is less by Rx. 170,900. I now come to the revised Estimate for the year 1894–5; and the finance of the year is worthy of close attention. The preparations of the estimates of expenditure and revenue took place in a period of great financial depression. The exchange in the preceding year had been taken in the revised Estimate at 14.6d. per rupee. The amount realised was 14.5466d. per rupee. But there were indications that the exchange value of the rupee was likely to fall; therefore the Indian Government were compelled to estimate their transactions for the ensuing year at a lower rate than that at which they had taken it in the preceding year. Every variation of one-tenth of a penny in the exchange value of the rupee makes a difference of about 22 lakhs to the Indian revenue or expenditure, as the case may be. Therefore the Indian Government, having to provide a considerable additional sum to meet the further fall in the exchange, were compelled to look around to find how they could balance revenue and expenditure. They had in their judgment almost exhausted the resources of taxation, and so they proposed certain reductions of expenditure. They reduced the Imperial expenditure on Civil Works by Rx. 130,000, and on Military Works by Rx. 150,000. They further obtained assistance from the provincial Governments to the extent of Rx. 405,000 and suspended the operation of the Famine Insurance Fund to the extent of Rx. l,076,200, and they imposed import duties on most articles of trade, estimated to produce Rx.1,140,000 net. In this way they were able to reduce, their deficit to Rx. 301,900. The revenue for 1894–5 was taken at Rx. 50,943,500; and the expenditure at Rx. 51,245,400. But the exchange fell heavily in the earlier months of the financial year, so that the exchange value of the rupee was depreciated from 14d. to 12⅓ 7/2d. The Indian Government were therefore compelled to look about for some additions to their revenue, the reductions of expenditure being exhausted. They were compelled to have recourse to the only tax available, and the right hon. Gentleman, after full consideration, gave his assent to cotton goods being included in the Customs duties, and the inclusion of cotton goods in such duties was estimated to yield Rx. 354,100. The Excise was estimated to yield Rx. l2,500, so that the addition to the revenue, according to the estimate, after allowing for refunds, was Rx. 359,100. But the fall in the value of the rupee had added an expenditure far exceeding that amount, so that, unless there was an improvement in the revenue, there was the prospect of having to face a deficit far in excess of that which was originally estimated. I am glad, however, to be able to give a better account of the revenue than was then anticipated. The revised figures show an increase in the revenue of Rx. 2,794,800. The net expenditure is only increased by Rx. l,502,400. The revised figures, therefore, are Rx. l,292,400 better than the Estimate of last year, and this improvement has enabled the Indian Government to turn their estimated deficit of Rx. 301,900 into a surplus of Rx. 990,500. ["Hear, hear!"] I pointed out that the expenditure is increased by Rx. l,502,400. The charge for exchange on net sterling expenditure, in addition to that originally estimated by the Government for this year, has amounted to Rx. l,806,700, so that, apart from that, there would have been a reduction of net Imperial expenditure of over Rx.300,000. I wish the Committee to bear this fact prominently in mind, that right throughout the statement I have to make, the one difficulty with which the Indian Government have to contend is the fall in exchange—it has a blighting and withering influence in every direction. ["Hear, hear!"] The main source of the improvement of which I have spoken will be found in the Railway Revenue Account, which, though on the whole showing an additional charge on Imperial account of Rx.313,300, was, apart from exchange, better by Rx.395,500. There was a net reduction on the Army expenditure of Rx.259,400, and under other heads of expenditure of Rx.47,400. In the middle of the financial year a most successful conversion of the debt was made, for which I beg to offer my congratulations to my predecessor. The Four per cent. Rupee Loan was converted into a debt bearing interest at 3½ per cent., but there was a certain necessary expenditure attending this conversion which increased the estimated expenditure of the year by Rx. 301,000. This increase, however, will bring a more than corresponding gain in subsequent years in the diminution of the interest which hereafter will have to be paid. Turning to the revenue side, part of the large increase is due to opium. The year 1894–5 was the sixth consecutive bad year, and the worst of the six. The price consequently rose, and it ultimately attained the figure in December of Rs. 1,480, in January Rs. 1,523, and in February Rs. 1,540, which is the highest price known since 1871. This rise in the price of opium enabled the Indian Government to raise the duty on the Malwa opium. There was also a reduction in the expenditure, so that the net revenue was better, so far as opium was concerned, by Rx. l,537,300. The next head of revenue which shows a marked improvement is the Customs. The new Customs Bill was imposed at the close of 1893–4. In the Budget for 1894–5, credit was taken for an addition through the Customs Duties of Rx. l,270,000, including Rx. 100,000 on imports of silver. In the revised Estimate the new duties are taken at Rx. l,733,000, including Rx. 355,000 from silver, a gain over the Budget of Rx.463,000. The improvement on articles paying the old rates of duty was Rx. 100,600, and the inclusion in the Customs Duties of cotton goods brought in during the last three months of the year a further increase of Rx. 354,000. Rx. 12,500 was obtained from the Excise on yarns, and the charges for collection were less than had been estimated by Rx. 22,000. The final result is an improvement, so far as the net Customs revenue is concerned, of Rx. 952,100. In addition to these two great sources of improvement—opium and Customs—the net revenue was enhanced under Excise by Rx. 203,600, and under stamps, assessed taxes, forest, and other heads, by Rx. 216,100. On the other hand, there was a falling off in the land revenue, owing to the postponement of collection, especially in the North-West Provinces, of Rx. 114,300. I am glad, however, to say that I have received further accounts which indicate what the final results of the year will be, and these accounts show a still further improvement. The net revenue is expected to be Rx. 7,000 better than the revised Estimate, and the net expenditure is reduced by Rx. 232,500. There is, therefore, every probability that the surplus for the year will amount to Rx. 1,230,000. [Cheers.] I think this result is very satisfactory. Now, the bills sold last year amounted to Rx. 30,970,000 and it realised £16,905,102. I am sorry to say that, although this is by far the largest amount of bills which have ever been sold, owing to the great fall in the valne of the rupee it has not realised the largest amount in gold, for in 1881–2 Rx. 22,211,000 realised £18,412,429. I think there are four distinctive features in connection with the finance of 1894–5, the year with which I am dealing. The deficit has been converted into a considerable surplus under the most depressed conditions yet known in connection with exchange; there has been the largest sale of bills upon India; the credit for borrowing purposes is raised to a higher point than has ever before been attained; and the last, but I am afraid not the least, feature is the imposition of Import Duties upon cotton goods. I now come to the Budget Estimate for 1895–6, taking as my basis the deficit in the Budget for 1894–5 of Rx. 301,900. The additional charge for exchange was estimated at Rx. 2,503,700. There was certain exceptional relief obtained, as I have explained, in 1894–5 by the contributions of the Provincial Governments and by cutting down the expenditure on Civil and Military Works, which it was not proposed to renew; it amounted to Rx. 685,000. There was an additional charge in connection with the cultivation of opium amounting to Rx. 460,000, and there was a certain preliminary expenditure connected with the Chitral expedition which amounted to Rx. 150,000, The Indian Government also decided to increase the pay of the Sepoy to Rs. 9 a month, adding for 1895–6 Rx. 180,000. That will give great satisfaction to a body of men who have, on every occasion on which they have been asked to take part in any military expedition, greatly distinguished themselves. ["Hear, hear!"] Therefore, the excess of expenditure for which the Indian Government had to provide is Rx. 4,280,600. Against this they reckoned on the following improvements:—Saving of interest by conversion of debt, Rx. 422,000, and by discharge of debt not at present replaced, Rx. 102,800; increase from General Customs Duties, Rx. 427,900; cotton import and Excise Duties, Rx. 1,455,000, making a total improvement from Customs of Rx. 1,882,900. There was an estimated improvement in General Revenues of Rx. 1,919,100 making a grand total of Rx. 4,326,800 which gives the small surplus of Rx. 46,200. Since then we have had information as to the estimated expenditure in connection with the Chitral expedition and the occupation of Chitral, and other charges which have cropped up in the interval. The increase of expenditure on the Chitral expedition is estimated at Rx. 2,210,000; Chitral occupation, Rx. 200,000; and other charges connected with other departments, Rx. 160,000, making a total estimated increase of expenditure of Rx. 2,570,000. On the other hand, there is a saving on opium payments of Rx. 800,000, making, therefore, a net increase of expenditure of Rx. 1,770,000, There is an increase of revenue of Rx. 510,000, showing a net deterioration of Rx. 1,260,000. According to these figures, including the previous estimated surplus, the deficit will be Rx. 1,213,800. I am glad to say that the exchange has been a less heavy drain upon the Indian Exchequer than was anticipated, and there are various signs of improvement in certain portions of the Indian revenue. I am, therefore, sanguine that before the year closes we shall arrive at a much closer approximation between income and expenditure than these figures indicate. Taking a view of the last three years, we have these facts brought before us. We started in the first year with a considerable deficit, in the second year we converted that deficit into a surplus, and in the third year, though we have a deficit, it is entirely due to unexpected very large military operations; while there can be very little doubt that a considerable part of the military operations will be paid for out of the revenue of the year. ["Hear, hear!"] I think the position is distinctly better than it was three years ago, but it is still not free from anxiety, Indian finance requiring close vigilance and supervision. I have dealt with the figures of the last three years. The embarrassments and difficulties with which the Government have had to contend during the last three years have naturally been the subject of much criticism, and they have had many accusations brought against them. There is an impression that the financial embarrassments of the Indian Government are largely due to there being no effective supervision over their expenditure, and that these embarrassments were only natural, inasmuch as the control of Indian expenditure was entirely vested in the official element in the Government. It was assumed that if you could associate with the officials an elective or representative element, the effect of that amalgamation would be to increase the stringency of financial supervision and produce economy where extravagance now reigns. I want to test, by the latest authentic returns, the accuracy of this allegation. Is it true or is it not that the Indian Government are extravagant and do not sufficiently supervise the expenditure under their charge, and is it likely, taking experience afforded by the circumstances of the expenditure of other countries, that you would improve and strengthen the financial control over the expenditure of India by associating an elective or representative element with the Indian Government? I propose, for the purpose of answering these two questions, to take the returns of the last decade and to look first at the return which relates to the Imperial expenditure of Great Britain. Here the elective and representative element have greater control over expenditure than probably in any other country in the world, and if these elements can produce economy and a reduction of expenditure anywhere you would imagine it was in this House. The Army and Navy expenditure of Great Britain in 1884–5 was £30,561,000, and in 1894–5 £35,143,563. The expenditure on Civil Service and education 10 years ago was £11,000,000; it has now risen to £15,810,000, and, therefore, under these two heads alone, the expenditure, which is entirely under the control of this House, has been increased in the last decade by £9,390,000. I contrast this with the expenditure of the Indian Government. The Indian Government are in a position of much greater difficulty than the Government here. During that period they have had an increase of territory. Burma has been annexed, and various other small portions adjacent to the frontier of other parts of the Empire. The increase of population during that period has been no less than 33,000,000, and of this 23,000,000 is contained in territory directly administered by the Indian Government; therefore, one would assume that, having so very large an increase of area to administer and, having thus had, as a matter of policy, to meet the necessity of adding largely to the Army, the increase of expenditure during this decade would naturally be higher in comparison than that of the Imperial Government. The net expenditure for 1884–5 of the Indian Government was Rx. 41,907,813, and in 1894–5 Rx. 52,74 7,800, showing an increase of Rx. 10,839,987. Now, part of the expenditure is under the control of the Indian Government, but there are certain charges which are not. That which is not under their control is the increased expenditure caused by exchange. The increased charge for exchange during the decade was Rx. 11,156,304, which is greater than the absolute increase of the whole net expenditure by Rx. 316,317. In other words, the Indian Government—although they have had to administer a much larger territory during that period, although 20,000 additional Native soldiers have had to be added to the Native Army and 10,000 Europeans to the British Army—have been able adequately to carry on all these additional duties at a less cost than 10 years ago. [Cheers.] I say that is a very remarkable performance. If any Political Party in this country were able to discharge their financial duties as adequately, the feat would be advertised from one end of the country to the other, and if there was an Election it would be the standpoint from which the Political Party associated with such financial feats would have appealed to the country. And surely, Sir, if performances such as this in our own country would be entitled to praise, ought we to deny our countrymen at the other end of the world a similar meed of praise when they have accomplished such results? [Cheers.] I think I have effectually disproved the allegation that the embarrassments of the Indian Government are due to inefficient control over their expenditure. ["Hear, hear!"] I now turn to the other side of the account—namely, the Revenue Account. The increase of Revenue in the period with which I am dealing is Rx. 12,216,933. Is that due to the heavy, crushing taxation which has been imposed on India? Excluding the Customs, the bulk of which is certainly not paid by the native population, there has only been imposed in that period additional taxation to the amount of Rx. 2,940,000. In 1882, a large remission of taxation took place. That year is anterior to the decade I have chosen, but if you take the amount of the taxation remitted in 1882 and balance that against all the taxation which has been imposed since, you will find that the two amounts nearly balance one another; and, in fact, the only additional taxation from 1882 which has been imposed upon India is that in connection with the Customs Duty of last year. I have looked through the proceeds of the various taxes which have been imposed, and I am bound to say there is only one tax which does seem to press more heavily on the Indian people. That is the Salt Tax, which was raised in 1888. The consumption of salt seems to be an unfailing gauge as to the condition of the ryots throughout the country. The increase in the consumption of salt steadily increased up to 1892–3, and then there was a falling-off of 4 per cent. In 1894–5 there was a recovery of 2 per cent., and, so far as statistics are available at the present month, there are symptoms that that recovery is continuous. At the same time I shall watch the Salt Tax, which certainly seems to have reached the maximum limit, with the view, if possible, of taking an early opportunity of reducing it. Sir James Westland, the present Finance Minister, expressed his opinion before the Select Committee of 1884, that the normal improvement of the financial position of India might be estimated at about 41 lakhs annually. Taking the period with which I have dealt, I think we may fairly say that a large portion of that increase is due to the normal growth of the revenue, and not to increased taxation. The further question has been asked—Does India pay her way? I propose to answer that by again investigating the figures supplied to us by the decade to which I have already alluded. Taking that decade, I find that there are six years of surplus and four years of deficit. The net result of the ten years is a surplus of Rx. 1,000,000. But against that I am bound to say there is a circumstance which must be taken into account. During that time there has been a certain amount of debt raised in this country, and whenever a debt is raised for the purpose of meeting the annual obligations through inability to sell bills, the money so raised does benefit the year of the expenditure, and in a manner which cannot be brought to account, because, by diminishing the number of rupees that would otherwise be sold, it advances the price of those that are sold. The amount of the debt which was incurred in this period through the failure of the sale of bills amounts to £9,386,000, and I expect if we trace the exact effect of that sum in India we should find it probably rather more than counterbalanced the surplus of Rx. 1,000,000 to which I have alluded. Anyhow, during this period of exceptional embarrassment India has practically paid her way. [Cheers.] She has done more. The right hon. Gentleman, my predecessor in Office, on more than one occasion called attention be the fact that probably no civilised country in the world contains so satisfactory a balance-sheet of liabilities and assets. If we take the assets and liabilities, we find that in India, including railways, irrigation works, loans to municipalities, and existing cash balances, India has assets amounting to Rx. 149,542,000. Against that she has only debts and obligations amounting to Rx. 122,951,000, showing an excess of assets over liabilities of Rx. 26,591,000. On the other hand, in England she has a considerable sterling debt. Her liabilities here are £116,006,000 of debt. Against that she has purchased railways which cost £59,236,000; there are advances to railway companies £5,409,000, and a cash balance of £2,446,000, showing an excess of liabilities over assets in this country of £48,915,000. When we think of the size of the continent that the Indian Government administer, I think that is a most satisfactory balance-sheet. [Cheers.] I have dealt with the bright side of Indian finance, and now take the dark side. I come to the question of exchange. I do not know if it is known to the general public that for more than 20 years—that is, from 1850 to 1870—the average exchangeable value of the rupee was 2s., and that in 1873–4 the rupee began to fall in value, owing to the breaking down of the Latin Union and the demonetisation of silver by the German Government. Now two decades have elapsed since then. At the commencement of 1876–7 the exchange value of the rupee was 1s. 9½d.; at the close of the decade it was 1s. 7¼d., a considerable decline; but at the commencement of the next decade we commenced with silver at 1s. 6¼d. and we ended with silver at 1s. l¼d. The Committee will therefore see that the fall in the price of silver has increased during the last decade in a greater proportion than in the previous decade. I have noticed in certain journals and among certain individuals a tendency to maintain that this very heavy fall in silver is beneficial to India. I see it stated in a very able paper, the Statist, that on the whole this fall was beneficial even to the Government of India. They sum up the position thus:— The Government has not been injured, in spite of all the talk about loss by exchange; for if the burden of the foreign obligations of the Government has been increased, the ability of the taxpayers to bear the burden has been correspondingly increased also. That is a broad assertion. I do not think anybody can make that assertion until he knows what the cost to the taxpayer has been. Now, has any hon. Gentleman, even the most optimistic, realised what the strain on the Indian revenue is by the constant fall in the price of silver and in the exchange value of the rupee? In 1884–5 the total charge on the revenue of India for meeting its obligations in London was a charge amounting to 8 per cent. of the total net revenue of the country, the amount being Rx. 3,535,900. Last year that amount rose to Rx. 14,751,600. The revenue has largely increased in the interval, but the increased number of rupees which the Indian Government have to remit to meet their obligations absorbs 27 per cent. of the total net Imperial revenue. ["Hear, hear!"] The net exports of merchandise in 1884–5 amounted to Rx. 27,552,200; in 1894–5 they were Rx. 35,412,600. Therefore, there is only an increase in value of net exports of eight million tens of rupees during that period, while the charge for exchange on the Indian Government has increased by upwards of 11 millons. But if it be such a benefit to India, this constant fall in the price of silver, why have all these Committees been appointed to investigate the subject? Why have all these remedies been suggested? A very important Committee sat two or three years ago, and the adoption of their main proposal caused a divergence between the exchange value of the rupee and the current price of silver. Undoubtedly their plan succeeded. From the moment the mints were closed the exchange value of the rupee has separated itself from the current price of silver, the difference at the present time being something like 2d. per rupee. At the same time I cannot quite admit that this is entirely satisfactory, because it must be remembered that by closing the mints in India you diminish the price of silver all over the world. After all, this proposal is at best a makeshift. Simultaneously with the closing of the mints in India certain movements of treasure have taken place which are worthy of notice. The net imports of treasure into India in the year before the mints were closed amounted to Rx. 10,051,000. The amount of silver coined at Calcutta and Bombay in that year was Rx. 12,612,000. In the middle of the next year the mints were closed, but the import of treasure had not then ceased, and it amounted to Rx. 14,361,064, while the amount of silver coined in Calcutta and Bombay was Rx. 4,902,000. In 1894–5 the mints altogether ceased to coin, and for the first time there is a great falling-off in the import of treasure, which only amounts to Rx. 1,355,000. Simultaneously with this there is a movement which shows that more rupees are coming into circulation. There is a curious institution called the rupee census, a subject to which Mr. Harrison has paid special attention, and he came to the conclusion last year that there had been a smaller return of old rupees into circulation than was supposed; but this year there is evidence of a distinct expansion of the circulation of old rupees, and he estimates this at about three crores. Assuming that to be correct, of course its effect on the currency is the same as if the mints during this year had coined that amount. The average coinage of the mints has ranged from 3½ to 13 crores of rupees, the average being 8¼ crores. I have now finished the part of my statement which relates to exchange. I have not ventured to enter into the controversial matter which this subject is calculated to provoke, but I think hon. Members will feel that we ought not to be satisfied with the present position of affairs, and that we cannot look upon any policy which is a mere makeshift as a permanent and satisfactory one. There is one branch of Indian finance to which I think sufficient attention in previous statements has not been directed, and to which I believe my right hon. friend opposite (Sir H. Fowler) intended to devote a large portion of his speech had he remained in office, and that is Provincial Finance. Now Provincial Finance does not correspond to anything known in this country as Local Finance. The Indian Government may, from this point of view, be described as a federal system, which does not correspond to the financial constitution of this country. Up to 1871 it was the custom for all the Imperial Revenue collected to be paid into a Central Fund; and the local Governments drew on that Fund for their administrative wants. This arrangement was very unsatisfactory, because the object of every provincial Government was to got as much as possible out of the Central Fund, and the object of the central Government was to try and check these demands. Lord Mayo, in 1870, acting on the advice of Sir John Strachey, issued a Minute, by which he largely decentralised this system, giving to the provincial Governments a fixed grant, with power to apply it as they wished to the various administrative services. He handed over to them gaols, registration, police, education, medical services, printing, roads, miscellaneous public improvements, and civil buildings. The experiment answered admirably. In 1877–8 Sir John Strachey was Finance Minister. He was face to face with a very heavy deficit. There had been a series of bad years; the Revenue was largely contracted and the expenditure augmented, and he had to suggest ways and means by which to meet the financial embarrassment. He made a very elaborate Budget, which was much discussed at the time, and was hotly contested in this House. His proposal was further to develop decentralisation, and give to the various Governments the management of, and responsibility for, land revenue, excise, stamps, general administration, and law and justice. He also gave them a further interest in connection with the disbursement of certain revenues, and made up a Scheme by which the surplus or deficit over certain specified amounts should be divided between the provincial Governments and the Imperial Government. In addition, he gave them control over public works and the revenue in connection with canals. This system was further developed in 1882–3. I attach very great importance to this work of decentralisation. I believe it is capable of almost indefinite expansion, and in course of time may solve some of the problems connected with the extension of local government in India. ["Hear, hear!"] I may just mention one incident connected with it which personally affected myself. The last occasion on which I had the honour of introducing the Indian Budget was in 1877; and it had reference to these proposals of Sir John Strachey. At that time party feeling ran very high on the Eastern Question, and it was announced that Mr. Fawcett would move a series of resolutions condemning the proposals wholesale. I was informed, too, that he had enlisted the services of no less a person than Mr. Gladstone, and I confess I contemplated with considerable alarm the idea of being demolished by that great financier, who had intimated his intention of taking part in the Debate. But I was quite sure that the main proposals which underlay Sir John Strachey's Budget would appeal to the financial conscience of Mr. Gladstone, and I felt that, if I could do anything like adequate justice to my case, I should be able to make some impression upon him. I had the satisfaction of seeing that as the Government case was unfolded he became more and more interested in it. He ceased taking notes, and towards the close of the statement which I had to make he tore up his notes and walked out of the House. Next day I had the satisfaction of receiving a message from him to say that, although he did not approve of a good many of the Government proposals, in this principle of devolution he saw so sound a financial principle that he was determined in no way to oppose its adoption. [Cheers.] I mention this because it is somewhat remarkable that two such distinguished men as Sir John Strachey and Mr. Gladstone, from different parts of the world, should both see that in the development of this system we could find remedies for the over-centralised Government in India. Both these remarkable men retired from public life this year, Sir John Strachey after 50 years of admirable service in India. I doubt whether there is any man, however distinguished, who has done more to develop the material condition of India than Sir John Strachey. He has been the trusted adviser of several Viceroys and several Secretaries of State, and I am sure all who have ever been brought into contact with him will feel, should any emergency arise, the lack of that intellectual grip, keen insight, thoroughness of purpose, and indomitable courage which ever characterised Sir John Strachey. Sir John Strachey also initiated the Famine Fund. I was responsible for the first statement made in connection with that Fund, but its purpose has been very much misunderstood. His object was to try and provide a surplus revenue to meet the contingency of famine then constantly recurring. But he never proposed to maintain that for all time to come this Famine Insurance Fund was to be devoted to purposes which, however important in themselves, it might be necessary to postpone for want of the necessary income in unfavourable years. During the last 15 years no less than Rx. 16,500,000 have been devoted to the purposes of famine insurance, and inasmuch as the maximum contemplated was Rx. 22,500,000, I think we may congratulate ourselves that during this trying period we have been able to realise no less than 70 per cent. of the beneficent intentions of this fund. In association with this development of provincial finance and the establishment of the Famine Insurance Fund, Sir John Strachey did much to develop public works, and especially railways; and therefore, taking the date of the Budget of 1878, arid comparing it with the present time, there are some very satisfactory results to note. At that time there were 8,200 miles of railway in India; now there are 18,974 miles. At that time the average of working expenses to gross earnings was 49 per cent.; now it is 46 per cent. [Cheers.] The percentage of net earnings to capital at that time was 4.52 per cent.; now it is 5.69 per cent. The telegraphs show an equally satisfactory expansion. As regards irrigation, at that time there were estimated to be about 6,341 miles of main canals; now there are 12,470 miles. The distributaries were then estimated to be 15,825 miles; now they are 26,120 miles. But with this increase of the irrigated area, there has been a decrease in the profits; the percentage of net revenue on capital outlay, which was then 5.9 per cent., having fallen now to 4.8 per cent. I have always felt, as regards irrigation, that you could not extend wholesale irrigation all over India without taking into consideration the rainfall of each respective province. The rainfall varies very much in India, and is heavier as a rule in the more thickly-populated districts. In normal years irrigation works would be of little use in these districts. It has always seemed to me that the right method of meeting the risk of famine in these districts is not by irrigation, but by extending the railroads, and I believe that is the principle which the Indian Government have adopted. Various reports laid before the House show that there is a very wide scope for the employment of capital in India in almost every form of industrial undertaking, and railway extension is, in my judgment, an essential preliminary to the encouragement of such enterprises. Undoubtedly, the original guarantee system under which we began the construction of railways was an extravagant system. But if railways are to be promoted by private enterprise on the present basis of a rebate, the question at once arises of the proportion of through traffic receipts the new lines should have. That is a very complicated question. The Indian Government and the India Office in recent years tried to lay down principles by which there should be an equitable division of this through traffic between existing lines and new branch lines. The result is that the profits or dividends which a new railway under this system are likely to earn are very difficult, in the first instance, to ascertain; and it is still more difficult for the ordinary investor exactly to ascertain the return he will get upon his capital. My belief is that we shall have to go back to some limited form of guarantee, giving these enterprises an interest in developing the railroad which they manage. It seems to me that at the present moment what the investor and the money market like is the certainty of a small return with a prospective increment. If we work in that direction we shall be able to create a stock in which trustees can invest. I attach the greatest importance to the extension and development of railroads, and I know my predecessor did so, too. And certainly, so long as we have the evils of a falling exchange to contend with, the development of the railway system is the best antidote to that evil. I thank the Committee for the attention with which they have listened to my speech. ["Hear, hear!"] It is a good many years since I last had the honour of laying a statement of this kind before the House, but I am bound to say, having looked into the facts with a perfectly open mind, and having examined most of the statistics which in any way indicate moral or material progress, it seems to me that in the main India has greatly improved during this period of 18 years. We have certain difficulties to deal with; but, after all, the same old difficulties that existed many years back—falling exchange, increased military establishments, frontier complications, and the increasing desire amongst certain classes in India to participate in the government of their own country—still exist. These are difficulties which we have always had, and which, so far as I can see, we are likely to have for a long time to come—difficulties which do not lend themselves to any immediate or any final solution. But I am glad to say that we have during this period contrived to eliminate, to a large extent, from our difficulties the terrible old evil of famine. Whether that be due to the accident of a long series of beneficent harvests, or to the precautions which the Indian Government have taken, I cannot say. But certainly, in the last 12 years neither Indian revenue nor Indian expenditure has largely suffered from famine. But there is always one difficulty—a difficulty quite as great and even more subtle than any I have enumerated—which always will attend Indian administration, and that is the attitude which any new House of Commons may assume upon Indian questions. The position of the Indian Government is truly anomalous. We have established at the other end of the world a great Government, and given it control over something like one-sixth of the human race. We have invested the head of that Government with all the pomp and paraphernalia of an omnipotent and of a final authority. Few monarchs have greater power, or are surrounded with greater pomp. And yet there is not a single detail in the administration of that continent, and not one iota of the policy of the Indian Government, which may not at any moment be called in question and reversed by an elective assembly sitting thousands of miles from the seat of action. The whole fabric of the Indian Government is based on an Act of Parliament. We wish to infuse into the Indian Government what we may call the elements of progress, of stability, and continuity, and yet we are forced by our political institutions to subject that Government to the wishes of any ephemeral majority that the electoral whim of the moment may create. These difficulties have been avoided in the past by the moderation and discretion with which this House individually and collectively has made use of this absolute power; and I have very much mistaken the character of this new House of Commons if I did not believe that the discretion will still continue. [Cheers.] We shall have to discuss some difficult Indian questions. Last night we discussed perhaps the thorniest and most difficult of all, and I noticed with great pleasure the moderation of the speeches and the discretion which every one, no matter from what side he spoke, exercised in the Debate. I am confident that the fact that India is not represented will not operate to her disadvantage in this House. The very knowledge that she is so unrepresented will give her a moral claim on the mind of everybody who may speak on Indian questions. We can never forget that the strength of our rule in India consists in this—that we hold and govern India not for own advantage, but for the benefit of the peoples of India. That consideration will, I am sure, be present to the mind of every Member of this House in every discussion in which he may take part and in every decision at which we may arrive in relation to India. [Cheers.]

MR. JAMES KENYON (Bury)

said he was sure that in Lancashire the statement of the noble Lord would be received with the greatest satisfaction, and would be regarded as a harbinger of better things for India. He congratulated the noble Lord on having saved Rx.500,000 by the reduction of interest, and he hoped further steps would be taken in the same direction. He, however, rose specially to point out that the figures given in relation to the cotton duties confirmed the view which Lancashire Members had taken that, as at present levied these duties gave a most decided protection to India. He had had some experience of deputations to Secretaries for India. He remembered forming one of a deputation from Lancashire which waited upon Lord Kimberley in connection with the extension of railways in India. There was one remark made by Lord Kimberley on that occasion, which was particularly impressed upon his mind. The House would probably remember that those import duties were placed on cotton goods about 20 years ago and removed by a Conservative Government. The subject of the cotton duties was mentioned at this particular deputation, and Lord Kimberley then said that he viewed with horror the idea of replacing them. Before the duties were levied on the 1st of January last, the then Secretary of State for India (Sir Henry Fowler) was asked to receive a deputation upon the subject from the Lancashire master cotton spinners and the representatives of the operatives, but he replied that there was no necessity for receiving such a deputation. At that time, and indeed ever since, they in Lancashire thought that there was very great necessity indeed to receive a deputation, and he was extremely sorry that Sir H. Fowler did not allow them to see him and place these matters fairly before him. When he told hon. Members that the decrease in the shipments of cotton cloth to India during the first six months of this year amounted to over 300,000,000 yards, they would be able to form some idea of the extent of the business with India in which Lancashire was concerned.

SIR H. FOWLER

As compared with what period?

MR. KENYON

As compared with the previous year.

SIR H. FOWLER

How about 1893?

MR. KENYON

That was the year of the great cotton strike, and I do not think you can very well make any fair comparison with that year.

SIR H. FOWLER

Then 1892?

MR. KENYON

said, he would give the right hon. Gentleman another reason for taking 1894. In that year the price of cotton was lower than it had ever been in the memory of this generation, and that accounted in a great measure for the large shipments which were made to India and to other parts of the world. He, himself, had practical experience of this business, He was a small trader, but in his way he sent fair quantities of these goods to India, and in that year he took advantage of the low price of his raw material to ship as much as he could. He noticed that during last night's Debate on these duties the right hon. Gentleman the Member for Wolverhampton shook his head whenever the idea of the Indian manufacturer being protected was mentioned. That was particularly the case, he thought, when the hon. Member for Stockport (Mr. G. Whiteley) stated that the Indian manufacturer paid only upon 60 per cent. of the total value of the cloth. He could give the right hon. Gentleman figures out of his own business. There was a cloth in which they did a large and regular business—a cloth which was well known in Calcutta, in Delhi, and Rangoon, and, in fact, all over India, and, if the House would bear with him, he would give the exact figures. The cost of the yarn in that cloth was 8s. 4½d.; the cost of the size was 3d.; the cost of weaving (that was for wages alone) was 2s. 6½d., and the other manufacturing expenses were 2s. 4d.; the cost of finishing was 2s. 3d. and cost of shipping was 1s. 2d. The total cost was therefore 16s. 4d. The duty on the cloth at 5 per cent. was 17s. 9d., or, with the exchange at 1s. l½d., 8 rupees. The same cloth made in India with the same weight of yarn would have to pay a duty on 9s. 7½d., so that while the Lancashire manufacturer was paying a duty on 16s. 4d. the Indian manufacturer would pay on 9s. 7½d. only. Therefore, the Indian manufacturer got a protective duty in this case of 6½d. a piece. Those were actual statistics taken from a business going on every month. He had himself paid £700 or £800 duty since the 1st of January last. Those were actual facts which were at the disposal either of the Secretary of State for India or of Sir H. Fowler. This was not a picked or an isolated case, and he thought it conclusively proved that the Indian manufacturer was protected, and very well protected. Then there was the matter of the coarse yarns. It was an unfortunate thing for them in Lancashire that those duties wore put on on the 1st of January this year, when the price of cotton was lower than anyone could remember in the present generation, because at that time there might have been a fair competition with the Indian millowners on their own ground. He was sorry to say that their business in Lancashire was a declining business. It was not prospering or progressing in the way it ought to do, and he thought that in these circumstances they deserved fair and reasonable consideration at the hands of the Indian Government. Take, on the other hand, the Blue Book which had been published during the last two or three weeks, and which gave the amount of progress in India. From the statement in that Blue Book they found that in 1888 there were 89 cotton mills in India, and that in 1894 this number had increased to 136. In six years, therefore, they had an increase of 47 mills, or fully 50 per cent. The number of spindles, too, had increased from 2,190,000 to 3,500,000, and the workpeople employed had increased from 72,000 to 130,000. The other day he read an account of one of the mills in India (it was true it was one of the largest concerns) in which they made the magnificent sum of £70,000 in 1894. Lancashire would be wild with delight if they could make a tenth part of that sum at the present time. Another proof of the prosperity of the cotton trade in India was furnished by the statement which had been published by the joint committee of the Manchester Association of Spinners and Manufacturers and the trades unions. In that statement they gave a list of 63 Indian cotton mills. They gave the price of the stock twelve months ago and the price of the mill stock now, and the increase in the value of the shares during the last twelve months amounted to a sum of £800,000. This was an enormous increase, and it showed, he thought, conclusively, that the Bombay millowners considered that they had a very good thing. He would like to say that he believed that the right hon. Member for Wolverhampton was deceived in the matter of these duties. He thought that right hon. Gentleman was led astray by the powerful Bombay Millowners' Association, who, he expected, were looking well after themselves, and by the representations which were made to him from other quarters. In these circumstances, he regretted very much that the right hon. Gentleman did not see some one from Lancashire who could have laid a statement before him which might have induced him to change his mind. He had mentioned some facts with regard to the prosperity of India. He now wished to mention a fact as indicating the condition of the Oldham mills and the mills in Lancashire generally. He thought it was a well-known fact to those hon. Members who took any interest in business matters, that the Oldham mills for ten years past had not paid 2¾ per cent. or more than 3 per cent., and it was a common saying in that part of the country that a man had much better put his money into the Post Office Savings Bank than invest it in the cotton trade. It was a miserable affair when a great trade like the cotton industry got into such a condition, and he appealed to the noble Lord, especially after the encouraging statement he had presented to the House, to take into his serious consideration whether he could not abolish these duties entirely, and let them be as they had been for the last twenty years, a Free Trade country, and able to compete fairly with India without being handicapped by these duties. When he heard the noble Lord speak of the Surplus, the thought occurred to him, why could not the Indian Government have done without the cotton duties altogether? They hoped they would not have a Chitral every year, and, perhaps, the noble Lord, when he had paid off his Chitral bills, would be able to abolish these duties. He certainly hoped he would. He appealed to the Secretary of State, not only on behalf of his own constituents, but on behalf of Lancashire generally, to remove this burden and this obstacle to Free Trade. They were all Free Traders in Lancashire, and they wanted Free Trade carried out in India. They did not want Lancashire to be favoured. All they wanted was to be put on the same level with their Indian competitors, and if the Secretary of State could not see his way to abolish these duties altogether, he hoped the whole law would, at any rate, put the two countries on exactly the same footing. They wished all success to India, but at the same time they wanted to be treated with justice, and he hoped the noble Lord would see to this as quickly as he possibly could. The Secretary of State had spoken of the desirability of developing the country with railways. He hoped that would be done, but perhaps he might be allowed to say that in India they did not know how to make railways at a proper speed. The noble Lord had said, with a feeling of pride, that there were now 18,000 miles of railways in India, but if a nation on the other side of the Atlantic had had to deal with India for the last 50 years they would have had, not 18,000, but 180,000 miles of railways. The policy enunciated by the Secretary of State for the Colonies would be most welcome news to every business man in the House. The right hon. Gentleman had spoken of the family funds being used for the development of the family estates, and he sincerely trusted that that idea would not stop at the door of the Colonial Office, but would go on to the India Office. He trusted the noble Lord would take advantage of the present state of the money market, when there was a complete glut of money and when investors were begging to have their money invested in some safe thing, to borrow money at an almost nominal rate for the purpose of developing the railway system in India. He was sure he was echoing the feelings of every Lancashire Member when he wished every prosperity to India and every success to the noble Lord who now filled the position of Secretary of State. [Cheers.]

SIR HENRY FOWLER (Wolverhampton, E.)

I wish to make only two or three remarks arising out of the lucid statement the noble Lord has made. I congratulate him on his return, after an interval of 20 years, to his own sphere of duty at the India Office, and on his presenting the financial statement to the House as Secretary of State. ["Hear, hear!"] I think the clearness and statesmanlike manner of his exposition will commend itself to the consideration of the House. ["Hear, hear!"] There are one or two questions on which I should like to say a word or two, and the first is the question of the exchange. I think the figures the noble Lord gave cannot be challenged. I agree with him that the real financial difficulty at the present time is the enormous increase in the burden arising from exchange. I am glad to see that during the currency of the financial year that burden does not appear to have been so heavy as I anticipated at the time I made my last financial statement. The price that the Secretary of State has been receiving for his bills during the last three months is a very encouraging sign. A matter about which I was very much exercised when I was in office was the mode in which these bills are sold. I was not satisfied that the Indian Government got the full market price for what they had to sell. The Secretary of State is the only seller of the commodity, and there is only a limited number of buyers; and, whether right or wrong, I arrived at the conclusion that the buyers had a good deal to do with fixing the price which was offered. Had I been in office I should have devoted a considerable amount of further attention to the question, with a view to ascertaining whether some better mode of selling bills could not be devised. I know that the question is beset with difficulties, and possibly in the first instance it may be advisable to appoint a Departmental Committee to consider the question. Then, with reference to the debt, the noble Lord was quite accurate in what he said, and I will only make one addition to that. He alluded to the increase in the debt borrowed, during the last few years, for the purpose of meeting the deficits in expenditure, and I think he said that it amounted to something like £9,000,000; but he will recollect that there was a large increase in the balance in the Indian Treasury which, of course, was not remitted, and therefore, although the increase in the debt was a very large sum, against that must be set off the money not remitted. Then the noble Lord made some very just remarks with reference to the salt tax. I would commend to the hon. Member who has just sat down what the noble Lord said on that question. I venture to predict this—that, whoever sits on that side of the table, and whoever is responsible for the finances of India, and from whatever Party he is drawn, whenever the time comes when he may be in the happy position of possessing such a surplus as may enable him to propose a reduction in the burdens of the people of India, the very first burden he will have to consider, with a view to its reduction, will be the salt tax, ["Hear, hear!"] which is such a heavy burden on the population of India, and produces, at the present time, a revenue of £8,000,000. Then I also agree with what the noble Lord said with reference to railways. My desire was in every way to encourage the promotion and construction of railways, and I think that the noble Lord is on the right lines with reference to the necessity for small guarantees. I certainly think we ought to increase our State enterprises, and even to encourage private enterprise to come into the market. The railways in India form a part of the Public Works Department, and there is a member of Council set apart to attend to public works, but he changes every five years. The consequence is that so soon as a great Indian administrator has thoroughly mastered the principles of railway policy in India, he ceases to hold office and a new man has to begin again. I was myself of opinion that it would be very desirable to have a change in that Department, and it appeared to me that what was wanted in India was a general railway manager, someone not unlike the managers of our own great railway companies, a man perfectly familiar with all the details not only of railway finance, but of railway management; and I think it is well worth the consideration of the India Office whether it would not be wise to endeavour to make some change in that Department in the way of having an officer set apart to superintend railway matters. I was very glad to hear the noble Lord's remarks with regard to Provincial finance. A great deal of the additional expenditure in India arises in that Department, and where outlay is sometimes complained of, I do not say unjustly, but, perhaps, not with perfect accuracy, a great deal of that outlay is made by Provincial Governments. With reference to home charges, a Commission is now sitting to investigate that matter, and I would venture to express the hope that the result of that inquiry may be to diminish the heavy pressure of home charges on Indian finance and to carry out the opinion already expressed by former Secretaries of State, like the Duke of Argyll, as well as by former Viceroys, as to the excessive nature of the demands made on the Indian Exchequer with reference to home charges. The noble Lord paid a very just tribute of respect to the eminent services of Sir John Strachey. ["Hear, hear!"] When I tell the House that he went out to India as an East India cadet something more than half a century ago, that he has filled nearly every office in the Civil Service, rising from the lowest to the very highest, having at one time been acting Viceroy, that in every Department he has carried on affairs with the greatest ability, that the financiers of India are greatly indebted to him, and that everybody who is interested in India is also much indebted to him for his charming book on India, I think everybody will agree in the tribute the noble Lord has very properly paid to that eminent servant of the Crown. ["Hear, hear!"] It may be said that I take an ignorant, optimistic view of the finances of India, but I am glad to find that my view has the high sanction of the noble Lord, who has returned to the India Office after an interval of 20 years. He had acquaintance with Indian finance in 1874–80, he finds what it is to-day, and I am glad to find that, from his long experience, he is able in the House of Commons to endorse the views expressed by myself 12 months ago. Whatever our opinion may be as to whether India is economically or extravagantly governed, I hope there will always be, as there always has been in this House, a determination on Indian questions to make the interests of India supreme. ["Hear, hear!"] On no other grounds can we hold that Empire. I do not believe that any House of Commons which fairly represents the opinion of the English people will depart from that principle, or will refuse to render support to the Government of India when they believe that they are carrying out their difficult and onerous duties loyally, with a due regard to those matters in which the interests of the people of India can be separated from the interests of the people of this country. ["Hear, hear!"]

SIR W. WEDDERBURN (Banffshire)

said no doubt by Act of Parliament it was required that a financial statement should be placed on the Table by the middle of May, but the fact was that was never done. He did not complain on that account of the present Government. He had rather to thank the Leader of the House for not attempting to take the Budget last night. He was glad to hear some of the sentiments expressed by the noble Lord. He stated that his principle was that India should be administered for the benefit of India. The noble Lord also stated that he should hold the balance steadily and firmly as between all contending interests. The holding the balance firmly was a very difficult thing indeed, and the noble Lord would need all his determination to do so, because they must remember that there were two very antagonistic views on Indian subjects. On the one hand there was the European official view of all questions, and on the other hand there was the general public opinion of the Indian people. On the official side there was all that power to which the noble Lord referred. They were always in power; they had complete authority over every question. What was the position of the people of India? They had been referred to as being dumb, and it was very difficult to have their views placed before the country. One of the complaints made by those who criticised the Indian Government was that the revenue was spent at far too high a figure on military matters. What was the reason of the military element being so strongly represented on the Council of the Viceroy? They did not say that the money was wrongly spent, but they said that the whole standard of expenditure in India was more than the country could afford. The hon. Member spoke next of the loss on exchange; but that was not the principal cause of the present difficulty. They said that the military policy was the cause of it. It was quite clear that over the loss by exchange there was very little control at all. The military expenditure was at the bottom it. The figures which had been prepared showed that the increase in the military expenditure in six years reached Rx. 5,429,000, and this, added to other items, made a total increase of expenditure of Rx. 10,500,000 in the period named. The increase in revenue was Rx. 5,000,000, and that was not obtained without inflicting great hardship upon the people. It meant a further turning of the screw, a more rigid and severe collection of the revenue. Something had been said about the pressure on the people of the salt tax. Any severity in the collection of the tax would add much hardship. Then there was the increase in the land revenue. Complaints were made as to the excessive enhancement of the revenue. The rent of small holdings had been raised to an enormous extent, as much as tenfold at one stroke. That had been done all over the country, and it was producing a feeling of dissatisfaction and unrest which was of the most dangerous kind. He hoped this matter would receive very careful attention. A hearing should be given to the complaints that were being made, and the mere assurance of local officials should not satisfy the Secretary of State. Three millions more had to be raised by the new taxation. Hon. Members from Lancashire should clearly understand that the extra three millions which had been obtained by the import duties had directly been raised in order to fill up this vacuum of three millions for the increase of civil and military expenditure. A good deal of our differences arose from the difference in the way of estimating and bringing the various items to account. He believed that the figures in his own statement and in the Government financial statement were exactly the same; but, in the public interest and for the benefit of India, and, also, he thought, for the benefit of the people of this country, he had brought to bear as careful a criticism as possible in the preparation of these accounts, and he had placed upon the Notice Paper a proposed Amendment to the present Resolution. He thought it very important that the outside public should enforce their claim of looking very carefully into these accounts and seeing that the matter was really put before them in a clear and popular form. It was very difficult to understand these accounts at the very best, and the question of the debt which was raised in his proposed Amendment was very important indeed. It required a very expert knowledge properly to allocate different amounts between three different headings. An item of expenditure might either be put down as current expenditure; it might find its way into ordinary debt; or, it might be put aside as a debt on capital account, invested in public works of a reproductive kind. Very great care should be exercised as regards the allocation of any item; and any confusion that might arise amongst these three headings might lead to considerable misunderstanding. The particular item to which he had addressed his Amendment on the Paper, would be found at page 82 of the Financial Statement. In column three of that statement, would be found the permanent debt incurred during the year 1893–4. It would there be seen that there was the figure 4,043,311, but nothing was stated as to what that figure was. He asked the noble Lord what that figure was, because it would be found that that amount had been made up out of several different items. In these financial statements the debt of India was shown under two forms: the debt in India, which was shown in tens of rupees, and the debt in England, which was shown in pounds sterling. The new debt incurred in India during the year 1893–4 was set down at Rx. 3,719,000, and during that year Rx. 1,110,000 of debt was discharged, leaving the amount of new debt incurred during that year at Rx. 2,609,000. The new debt which India incurred in England during the year 1893–4 was set down at £2,686,000; during that year £1,251,000 of debt was discharged, leaving the new amount of debt incurred here £1,435,000. These two items together produced the figure of 4,043,311 to which he had referred. What was it? It was mixed pounds and tens of rupees; possibly a bi-metallic currency of a novel kind. [Laughter.] He, therefore, asserted that this item of 4,043,311 was inaccurate and misleading, and it was, in fact, a very important matter. He had taken the trouble to deal with it, both in a private communication to the noble Lord, and also in tabular form. The figure must be either pounds sterling or tens of rupees; if tens of rupees, then it was quite evident that something must be added in order to bring the £ sterling to the denomination of Rx. He had done that, and the proper amount would be to add the £ sterling, plus the exchange; and, putting the exchange according to what it stood at when the debt was incurred, instead of 4,043,311, it made Rx. 4,950,000. On the other hand, if they were pounds sterling, the rupees must be reduced to that denomination, and then the item would be about £3,000,000. A very great discrepancy, therefore, arose. He believed that the intention of the financial statement was that the item should be tens of rupees; but, if not, then the public, and not only the public but the Indian Government itself, had been misled; and to prove this, he would refer to a statement at page 94 of the financial paper. The noble Lord would find, at page 95, this same item of 4,043,311, and these were tens of rupees. The reason why this matter was so important was because it affected the credit and position of the Indian Government whether an increase or a decrease was made in the ordinary debt, or whether an increase or a decrease was made upon the reproductive capital. He would also point out to the noble Lord that, apparently, credit was taken in these accounts for this distinction, and he would refer to page 80, at the foot of which appeared an item not charged to revenue. That amount, the total of which purported to be expenditure upon reproductive public works, amounted to a total of 3,621,000. He presumed that it was intended to set that amount off against the debt of 4,043,311. But, if this were the case, it made a very great difference whether the amount were Rx. 4,043,000, or Rx. 4,950,000; and he would ask the noble Lord to state what had become of the difference. The same doctrine must, he contended, be applied to the whole debt. It was very desirable that the public should be encouraged to look into the question of Indian Accounts. They were like the shareholders in a big concern, and they were entitled to have the accounts so presented that they could understand the whole effect of them very easily. As to the Famine Fund, if the noble Lord would look again into its history, he would find that special taxes were levied and allocated for the maintenance of the fund, and when Lord Lytton was questioned with respect to its permanence, he most indignantly repudiated the idea of its being touched. As to compensation to the Services for loss by exchange, the people of India were willing that those who served them should have fair and reasonable remuneration; but they complained of the indiscriminate nature of the compensation given. The man who entered the Service when the rupee was at 1s. 6d. was reasonably disappointed when it fell to 1s. 1d.; but the man who entered the Service when the rupee was at the lower figure had no right to complain. The difficulties of the Government of India were not primarily due to the loss by exchange, and the Government of India had not any claim to treat the fall as a decree of Providence, against which it was useless to contend. The fall in the rupee should be met by corresponding economies. The proportions of extra expenditure fairly debatable to loss on the exchange as compared with that debitable to increased civil and military expenditure was as two to three. A great additional expenditure would be involved by the maintenance of the road to Chitral; and there seemed every probability that some such item of expenditure would appear every year. In the 10 years before this "forward" military policy was undertaken— namely, 1874–84—the total expenditure on these small frontier wars was only Rx.161,000. In the next 10 years the expenditure had risen to Rx.4,925,877. That was about half-a-million of tens of rupees every year on frontier expeditions. The subsidies to border tribes were increasingly heavy. As to interfering with the Government of India, he hoped the noble Lord would exercise his own judgment, and decide clearly on the merits of the case, and would not be too much swayed by men who pushed their opinions most honestly, but who were immensely prejudiced by their professional relations and desire for distinction. The accounts of the Indian Government were, on the whole, extremely good accounts; but the policy of expenditure was what he complained about. The Indian Government should first find what revenue was available, and should then regulate the expenditure accordingly. With regard to railways, there was a general tendency to ask the right hon. Gentleman to increase the expenditure on railways; and there, again, he hoped the noble Lord would hold the balance firmly. There were many powerful interests in this country concerned in pushing the railways in India, such, for instance, as those who supplied the machinery, the rails, and the stores. There was one direction in which large economies could be effected by the Government of India, without in the least degree affecting the efficiency of the administration, except, indeed, to improve it. He referred to the increasing employment of natives in the service of their own country. The natives were willing to accept smaller salaries than foreigners. It was, no doubt, true that there were certain appointments which must be held by Europeans in India, but he thought that the number might be limited. The proposal to decentralise and develop the system of provincial financial administration met with his most cordial approval, as he believed that that was a direction in which economy would be attained. It was quite evident that in a great country like India the form of taxation in one part was not suitable to another part. One of the most unfortunate results of the present financial difficulties was that the balances belonging to the different Provincial Governments had been swept into the Imperial Treasury. Those balances represented the economy of the different provinces, and it was a great disaster to local progress and development that they should be spent upon frontier expeditions. He suggested that if the salary of the Secretary of State for India were placed upon the British Estimates it would bring the interest of the House of Commons to bear on the question of Indian expenditure. It was most important that the Secretary of State should know the opinion of the people of India, for whose interests, however, no Member was responsible. He would ask the right hon. Gentleman, therefore, to learn what the Indian opinion was, as he felt certain that the safety of the Empire would be better attained by increasing their contentment, and by lightening taxes, by giving money for purposes of education and sanitation, and the small improvements that the people required. The people of India had no wish that the Russians should come into India, and with a sympathetic administration the condition of the country would be enormously improved, and ultimately India might be made so prosperous that her trade would be larger than all the rest of the world. He concluded by moving, as an Amendment at the end of the Question, the words— But it is to be regretted that these accounts are inaccurate and misleading as regards the net amount of public debt incurred.

* MR. T. R. BUCHANAN (Aberdeenshire, E.)

observed that his hon. Friend the Member for Banffshire had dealt at length with the various questions affecting India, and everyone who knew the hon. Member as he did, would know that his heart was entirely single in his desire to see the reforms he had advocated carried out. He should like to say a few words touching some of these reforms.

* THE CHAIRMAN (interposing)

observed that the hon. Member could not discuss the general question, but must confine his observations to the particular point dealt with by the Amendment now before the Committee.

* MR. BUCHANAN

The hon. Baronet in his speech was allowed to deal with a variety of other matters.

* THE CHAIRMAN

He made a speech dealing with a variety of other matters, but he concluded by moving an Amendment, and that Amendment having been put from the Chair, the discussion must now be confined to the subject-matter of the Amendment.

* MR. BUCHANAN

replied that he had no observations to add on the specific subject dealt with by the Amendment.

On the return of the CHAIRMAN, after the usual interval,

* LORD GEORGE HAMILTON,

in reply to the question raised by the hon. Member for Banffshire, said,—whether one agreed with the view of that hon. Member or not, one could not doubt that in his conduct he was actuated by a sincere desire to improve the condition of the mass of the people of India. ["Hear, hear!"] The hon. Member, in his speech, dealt with a number of topics, but he spent most of his time in discoursing on the way in which certain accounts were presented to Parliament. The hon. Gentleman was a Member of the Royal Commission on the Administration of the Expenditure of India, and he would suggest to him that the question of the necessity of altering the form of these accounts on the lines indicated by the hon. Baronet, was one which could be much better dealt with inside that Commission. The hon. Member had raised various complicated questions, and it was almost impossible for anyone, even the highest trained expert, to deal with the minute matters contained in an account covering a hundred pages. One of the difficulties about the Indian Government was that their revenues were in silver. They had a rupee revenue, and certain obligations in gold and certain in silver. When an obligation in gold was replaced or renewed by a similar obligation in gold there was no object in bringing in the exchange. But where a gold obligation was replaced by a silver obligation, then the exchange would come in and, vice versâ, if a silver obligation was replaced by a gold obligation then the question of exchange would again come in. This was the principle adopted in the Accounts. He did not think it was possible in any particular form more accurately to convey the position of these obligations than in that adopted by the Indian Government. If any better plan could be formulated the hon. Member could bring it forward in the Commission of which he was a member. He would now pass to the general questions which the hon. Member had raised.

* The CHAIRMAN

observed that it would be out of order to discuss the general question until this particular Amendment had been disposed of.

SIR W. WEDDERBURN

intimated that after what the noble Lord had said as to the form of the accounts he did not wish to press his Amendment. It appeared to be a matter as to which there was some doubt, and he hoped the experts would look into it.

Amendment, by leave, withdrawn.

* Mr. BUCHANAN

agreed with the noble Lord that the question of the form of accounts was a fit matter for the investigation of the Commission which had been referred to. He did not altogether agree with what had been said by the hon. Member for Banffshire as to the functions of this House with regard to the control over the Government and administration of India. His own general opinion was that the less the House interfered with the details of the government of India the better. ["Hear, hear!"] He was sorry that the hon. Member seemed rather to deprecate the great extension of railways in India, because he thoroughly believed there was no way in which they could better develop the resources of India and prevent the recurrence of famine than by an extension and improvement of the railway system. He wished to know from the Secretary for India whether, in view of the fact that Indian Finance had turned out better than was expected, the military and other works which had been interrupted last year in consequence of financial pressure, would now be proceeded with, and that the provincial balances would not be drawn upon in future. He hoped that with better financial prospects, those useful works would again be undertaken and carried through. As one who had no interest, commercial or political, in the question of the Indian Cotton Duties, he should like to say that there were hon. Members like himself, and very many electors in the country who looked upon these duties purely as a political question affecting the Government of India. These import duties, as they well knew, were imposed by the Government of India as a financial necessity; and as the only, or at all events the least burdensome, way out of their difficulties. The Government of India were unanimous on the subject. He was gratified to observe that the noble Lord, in the Chitral Debate, relied largely on the fact that the Government of India were unanimous in recommending the occupation of Chitral. And although he was expressing disagreement with the right hon. Member for Wolverhampton and those who sat on his own side of the House, he was bound to say that he agreed with the noble Lord rather than the right hon. Member for Wolverhampton on that subject. He thought the rule laid down by the noble Lord yesterday, in regard to frontier policy, should also be carefully observed in the matter of the Import Duties. He heard with some satisfaction the speech made by the noble Lord last night, because it was useless to disguise the fact that his speech of last February made some, both here and in India, somewhat anxious as to the line the present Government might take upon this question. They were much reassured by the statement of the noble Lord. They would view with very great jealousy indeed, any evidence that the Secretary of State or the Home Government was putting any kind of pressure on the Government of India to adopt a line of policy with regard to finance or any other matters, that was not wholly or principally actuated by the interests and the welfare of India and that alone.

MR. W. J. GALLOWAY (Manchester, S.W.),

in rising to address the House for the first time, craved that generous indulgence which the House never refused to a new Member. He desired to endorse what fell from the hon. Member for Bury in the earlier part of the Debate. He maintained that no adequate reason had been advanced for the imposition of the cotton duties. No necessity whatever had been made out for those duties being imposed. In his financial statement the noble Lord told them that the total amount received from the Import Duties was Rx. 300,000, and that the amount received from Excise Duties was somewhere about Rx. 13,000. These figures demonstrated beyond all doubt that the duties had acted to the detriment of the manufacturers in this country, and to the advantage of the manufacturers in India. The late Secretary of State laid it down, in consenting to the imposition of the duties, that he should require that they should not be protective, and that an equivalent in Excise Duties should be imposed on all goods manufactured in India. He submitted that the figures adduced by the noble Lord showed conclusively that the promise of the right hon. Gentleman had not been carried out, and he could only hope that in the course of the present year the noble Lord would see his way to remove those duties, or at all events to remove the injustice from which Lancashire at the present moment suffered. In Lancashire it was believed that the difficulties in Indian Finance were due almost entirely to the fluctuations in exchange, but during the last 12 months the rate of exchange has been steadier than during the previous nine years. For his own part he believed they had touched bottom in this matter, and that in future they would not see those violent fluctuations in the value of silver which had occurred during the last few years. All that Lancashire asked for was fair play. They asked that they should be treated in exactly the same way, neither better nor worse, than the Indian manufacturer, and he hoped the noble Lord would see his way to doing something to alleviate the distress which existed in Lancashire owing to so many mills being closed. Referring to the visit of the Shahzada to this country, he asked the noble Lord to state in next year's Budget the cost of that visit under a separate head, instead of including it, as he was afraid was usually the case with such items, under the head of miscellaneous expenses.

THE FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,) Manchester, E.

My hon. Friend, who has made in very clear and forcible language his first contribution to our Debates, is the last of many speakers who have risen to place the cause of Lancashire before the House and the country. I think it will be felt by all impartial auditors that, considering the condition of the cotton trade in Lancashire, considering the lively interest which is felt by their constituents in the condition of that trade, and considering how vitally is bound up with the prosperity of that trade, I was going to say the continuance of Lancashire as a great manufacturing centre, I think it will be felt by every impartial auditor that these gentlemen have not approached this question with heat, but have endeavoured to discuss it with temperance, and have shown an appreciation of the difficulties of India, as well as of the position of Lancashire. It appears to me that the general principles which ought to animate the Government of this country and the Government of India in matters of this kind are not very difficult to arrive at. The difficulty is, not in determining what the principles should be, but how these principles should be applied; and I think it a most extraordinary statement to assert, as the hon. Member for Aberdeenshire asserted, that the Government of India are never to have any regard whatever for the interests of members of the same Empire living outside the borders of that Empire. I do not hold that view. I believe the British Empire is one great organisation existing for the benefit of its members in whatever part of the world they may live; and it appears to me to be as extreme and untrue a statement to say that the Indian Government is never to have regard to the interests of England, as to say that the English Government is never to have regard to the interests of India. It is evident that both the Government of India and the Government of England are bound to consider, not merely their own interests, but the interests of the vast Empire of which they are both members. But, though I think that correction of the hon. Member's statement is a necessary correction—though I think it ought to be made, and that it is merely a false sentimentality which prevents its being made and recognised—I do also think that the great and overwhelming power possessed by this House, and the fact that this House is constituted of men who directly represent, not India, but constituencies in this country, should make us, and ought to make us, and I hope always will make us, particularly anxious, in dealing with these questions, that we do not allow the special interests of our constituencies to override the broader interests of the Empire; and I do not think there is any set of men more anxious, even under difficult circumstances, to recognise that principle than the Members for Lancashire. While those are the general principles that ought to animate us, you are liable to enter into the region of controversial detail when you come to their application; and yet, on this particular occasion, it seems to me that there is less controversy than might be supposed between the two sides of the House. I cannot make out that the right hon. Gentleman the late Secretary of State for India differs in any important particular either from my noble Friend or from the other Gentlemen who sit on this side of the House. He found it necessary to impose a Customs duty in India. He stated, in terms as explicit as terms could be, that that Customs duty was not an excuse for a Protective duty, and was not to be made an excuse for a Protective duty. He laid it down in language quite unmistakable in its import that, if the Customs duty should have a Protective character, then the general system of taxation must be so modified by putting on a countervailing Excise duty that that Protective character must be wholly eliminated. That gives that fair play to Lancashire which Lancashire asks for—[Cheers]—and I think that both the country at large and Lancashire in particular may trust my noble Friend to carry out a policy which is not his only as distinguished from the policy of the right hon. Gentleman opposite, but is a policy which has been declared and accepted by both Parties alike in this House and in this country. ["Hear, hear!"] I go further, and say that I confidently expect that in that policy, in which both Parties in this country are agreed, they will find a cordial co-operation from the Government of India, who have to work out the details so many miles away. [Cheers.] I do not wish to enter into the very difficult and complicated controversy, on which I hold a very strong opinion, but which is only indirectly bound up with this subject. But I am obliged—after what fell from the hon. Member for Aberdeenshire, who laid it down as a principle never to be departed from that the Indian Government are to be allowed an absolutely free hand to manage their own financial operations—to remind him that the Indian Government have over and over again implored to be allowed to modify their currency system in the direction of a bi-metallic ratio, and have never been allowed to do so by the Government of this country. That may be right, or it may be wrong; but it shows that the financial freedom for which the hon. Gentleman pleads has never yet been granted to the Government of India. I hope that the time may come when these import duties may be done away with; when the financial position of India will render such a step possible, as it is desirable, both in the interests of the Indian consumer and the Lancashire producer. I do not know that we can look forward to that time until probably there is some reversion to the relations between the value of the Indian rupee and the British sovereign, and I should greatly fear that, until something in the direction of currency reform can be accomplished, we shall find it very difficult in India to do without something in the direction of these Customs duties. Till that day comes, as I earnestly hope it may, we shall have to content ourselves with insisting that such Customs duties as have to be imposed shall not be allowed to carry with them as an indirect consequence undue or exceptional favour to the Indian manufacturer. ["Hear, hear!"]

* MR. B. L. COHEN (Islington, E.)

joined in congratulating the noble Lord on the interesting statement he had made. He would only say, in comment on the observations of the hon. Member for Banffshire, that he had been answered by anticipation by the noble Lord, who pointed out that while the expenditure in this country had increased during the last decade by £9,500,000, in India it would positively have decreased had it not been for the operation of the Exchange, for which the Indian Government could not be held responsible. That gratifying comparison was an evidence not only of the admirable organisation throughout the whole Indian Empire, but also that these military operations had never been undertaken without good reason being established in the minds of those responsible for the government of India, and without careful economy in their management. He passed to the first of the subjects to which he desired to draw attention, namely, what the late Secretary of State referred to as the unsatisfactory way in which the Indian Council sold its drafts. The right hon. Gentleman told the Committee that it had been his intention to alter the present system, and he felt convinced that the noble Lord would carry out that intention. He had no experience or knowledge of the arrangements in operation for the sale or purchase of Indian Council drafts, but he could speak with considerable experience of the combinations which had been made for the purchase of Colonial Stock which had been offered for tender at the Bank of England. He was not prepared with any specific scheme whereby the India Office could make sure of securing the best prices, but he thought that the Department would do well to bring their arrangements more into harmony with the arrangements which would be made by any ordinary banking firm having to draw upon their correspondents. The noble Lord in his opinion had resolved upon the right method of dealing with the Indian railway guarantees. The system under which the guarantees were given in old and recent times did not appeal to the common sense of a business man. He supposed when a guarantee of 5 per cent. was given it was found that the capital could not be raised unless that interest was given, but such a sum was more than sufficient return to investors who had in addition a reversionary interest in any future prosperity of the undertakings. He hoped, if the shareholder was to have a reversionary interest in the success of an undertaking in the future, as he thought he ought, that the guarantee would be so reduced as not to give more than a sufficient return to the investor. If it was decided that there was to be no reversionary interest, then, and then only, should the guarantee be for the whole amount which was found to be necessary for the creation of the capital. There was a much bigger problem than this, to which he hoped that the noble Lord's attention would be given during the Recess. He referred to the conditions under which capital was raised with the guarantee of the Secretary of State in Council. Had not the time arrived when such capital ought to be created with the Imperial guarantee in lieu of the guarantee of the Indian Government. It was difficult to compute what would have been the difference to the Indian Exchequer if all the capital raised during the 50 years with the guarantee of the Secretary of State had been raised with the guarantee of the Imperial Exchequer. It was not easy to make the computation, and it was, of course, impossible to alter what had taken place. But he should like to explain how matters stood now. The Indian Government debt in this country at present was about 121 millions sterling, including the 13 millions issued for redeeming annuities. The capital of the Indian railways amounted in ordinary stock to about 61 millions, and in debenture stock to over 12 millions. To this there had to be added annuities of £1,135,000 a year, which he capitalised at between 35 and 40 millions. Thus, altogether, they were dealing with a debt of £229,000,000. If this money had been secured under an Imperial guarantee, the amount payable by India in interest would have been enormously reduced. The difference between the credit of the Indian Government and the British Government was, however, smaller now than when that capital was created, so if the Government were to adopt his view the gain to the Indian Exchequer would now be less than it would have been if the change, had been effected in past times. To the Imperial Exchequer the change would not cause a difference of a shilling. It was time that the fiction of the difference between the guarantee of the Indian Exchequer and the guarantee of the Imperial Exchequer should cease. Indian 3 per cent. stock now stood at about 109, and British 2½ per cent. stock was at 106. Why should not the Indian Government have the advantage of the superiority of credit—in his judgment unmerited superiority—which attached to an Imperial guarantee? It would probably be said by some hon. Members that the British Exchequer was not responsible for the financial obligations of India. No doubt it was not responsible legally, but the risk, of guaranteeing this debtor could not be considered seriously—certainly the risk was not regarded seriously in the City. Indian Government stock was at this moment a Parliamentary security in which trustees could invest. Possibly it might be urged against him that this course would be a precedent which the colonies would wish to take advantage of. He answered that objection by saying that there was not one single respect in which the debt of India and colonial debts were identical or even similar. Whilst our colonies were self-governed, India could not do a single thing without the sanction of the Secretary of State in Council and of that House. Indian Government stock was, therefore, subject to Parliamentary control, and he held that it was the duty of this country to act in aid of the Indian Exchequer in respect of the large creations of debt which would have to be made and were being made every year by means of debentures which had to be renewed. This would not impose on the Imperial Exchequer one farthing of pecuniary liability and would enormously and for ever reduce the burdens on the Indian Exchequer.

MR. W. E. M. TOMLINSON (Preston)

said, that the Committee of Lancashire manufacturers had hoped for a slightly more sympathetic statement than they had received. No doubt it was the intention of the noble Lord to see that absolute fairness was observed in the matter of the countervailing duties, but he wished him to understand that, from the point of view of the Lancashire manufacturers, no attempt to remedy the protective effect of the Import Duties by an Excise Duty would do. Lancashire would never be satisfied until the remission of these duties was brought about altogether. Although he quite agreed that the remission of the Salt Tax was a desirable thing, he hoped that the suggestion of the right hon. Gentleman the late Secretary of State that it should have precedence would not find favour. He would ask his right hon. Friend to give an assurance that the Lancashire Committee should have a full opportunity of considering the reply which he received from the Government of India to their Memorial.

* LORD GEORGE HAMILTON

thanked the right hon. Gentleman opposite for the kind way in which he had spoken of his statement, and assured him that the various suggestions he had made should have his careful attention. With regard to the suggestion that some improvement in the method of selling Indian Bills should be effected, he believed it was possible to introduce some improvements, but it was a difficult question. As to the visit of the Shahzada, the expenses would be brought into the accounts of the present year. He did not think the amount would be as large as the original estimate, and it was only right to say that every private entertainment given by the Shahzada would be paid out of his own private purse. With regard to what had been said by the hon. Member for Banffshire, he was quite prepared to consider any reasonable proposition the hon. Gentleman might put before him in reference to the Government of India; but what he wished to point out was, that if the hon. Gentleman wished to call attention to any defect in the administration in India, it would be better for him to confine himself to one particular point, and not to indulge in a general diatribe against the whole administration of that country. He agreed with the hon. Gentleman that the utmost consideration should be paid to the wishes of the people of India, but when the hon. Gentleman got up and said he wished to speak on behalf of the people of India, he demurred altogether to that phraseology. He did not in the least dispute the excellent motives of the particular body of which the hon. Gentleman was one of the representatives, but he denied altogether that the body represented the great mass of the people of India. ["Hear, hear!"] As to the suggestion of his hon. Friend behind him that there should be an Imperial guarantee of the Indian debt, that was not a new proposal. It was made many years ago, but there seemed to him to be an absolutely insuperable objection to any general guarantee of that kind. The Indian Government ought to have as much independence as it was possible to give them. Could that independence be secured if behind that Government there was an Imperial guarantee? ["Hear, hear!"] If such a condition of things existed and the country possessed a Commander-in-Chief who desired to embark in large military operations, what a splendid opportunity he would have of doing so with an Imperial guarantee at his back. These were not the only objections. If there was an Imperial guarantee attached to the debt of India, that very fact would give every Member of the House of Commons an inherent and almost necessary right to interfere with the Indian Government in such a way as would make it absolutely impossible to work the machine. His belief was that it was far better to keep the debt separate. It might be now and then desirable for the House to assist the Indian revenue, as had been done before, but in that case let it be done by a money grant. Unless the two accounts were kept separate it would be almost impossible to impress on the Indian Government that sense of responsibility for the administration of their own affairs which was so desirable. ["Hear, hear!"] He thanked the Committee for the kind manner in which they had received his statement, and he was glad to find that on the great mass of Indian questions there was not a very wide difference of opinion between Members in different parts of the House; and he would do his best during his tenure of office to try and maintain that kindly and cordial feeling which had characterised the Debate. [Cheers.]

MR. TOMLINSON

said the noble Lord had not answered his question.

* LORD GEORGE HAMILTON

said, the memorial referred to had gone out to India, but the dispatch to be sent with it would not go for a day or two. A deputation from Lancashire sought to see him some time back, and he told them that there would be no advantage in seeing them at that particular time. He told them, however, that if they wished to discuss the matter some months later he should be glad to meet them. To that promise he adhered, and that would answer the hon. Member's question.

Original 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 1894, was Rx. 90,565,214; that the Total Expenditure in India and in England charged against the Revenue was Rx. 92,112,212; that there was an Excess of Expenditure over Revenue of Rx. 1,546,998, and that the Capital Outlay on Railways and Irrigation Works was Rx. 3,621,252.

Resolution to be reported.