HC Deb 13 August 1896 vol 44 cc758-811

Order for Committee thereupon read.

Motion made and Question proposed, "That Mr. Speaker do now leave the Chair."


I think it will be for the general convenience of the House if I make my statement relating to the finances of India before you, Sir, leave the Chair. In taking this course I am following several precedents which occurred in former years, when the Secretary of State found himself in a position similar to that which I occupy. On the notice Paper there are three Amendments which, though all relating to matters of importance, are purely academic in character, and as the House has met for the purpose of discussing Indian finance I think it will be more convenient to devote ourselves to that purpose than to wait for the Motions on the Paper. When last year I had the honour of making a Statement on behalf of the Indian Government, I was able to lay before the House a Statement which I think was in most respects more satisfactory than up to that time had been thought to be possible. I accompanied that Statement with an indication that, in my private opinion, signs were not wanting to show that during the ensuing months there would be a further improvement in Indian finance. I am glad that anticipation has been more than realised, and the figures and Statement I am about to make would be eminently satisfactory if they could only be detached from the unfortunate consequences of erratic exchange; but, unfortunately, right through this statement every year the fluctuations of exchange value have left their mark on the finance of the year. I wish to impress this fact on the House. They must discount the favourable character of the figures which I lay before them in the knowledge that a large proportion of the figures are based on a valuation which is necessarily shifting. There is a technical matter to dispose of before I enter into a detailed examination of the accounts. The form of the account adopted in the explanatory memorandum laid on the Table of the House is based on the accounts which my predecessor prepared in the belief that a return of net income and net expenditure could be made to give a clearer idea of the actual financial position than can be gathered from the old gross returns, which under statute have to be laid on the Table of the House. The tables in the explanatory memorandum are prepared on that basis, but it will be seen that for the most part they are divided between Imperial and provincial trans actions. In order to stimulate an interest in the development of income the Provincial Governments are allowed to share in the revenue in certain proportions, varying according to the particular head, and they have to meet therefrom the expenditure under specified heads in certain proportions. If their revenue exceeds their expenditure, they are allowed to add the surplus to their balances, which are available for expenditure in subsequent years. On the other hand, if their revenue falls short of their expenditure, they must make the deficiency good out of their balances. Thus, the provincial receipts and charges exactly balance one another, and, while it may be of interest under any particular head to examine the total receipt or charge, the improvement or deterioration of the surplus and of the general financial position depends alone on the extent to which the Imperial Accounts are affected. The first year I have to deal with is the closing of the accounts of the year 1894–5. Sir-James Westland originally estimated for a deficiency of Rx.301,900, but I am glad to say that the accounts show a surplus of Rx.693,110. But it is satisfactory to note that the real improvement is considerably greater. In the course of this year a material addition was made to the charges by bringing up the Famine Insurance Grant to a higher point than that at which it originally stood. Those conversant with Indian finance know that it was established by Sir John Strachey in 1881, and it amounted to a sum of Rx.1,500,000 annually to be put on one side out of revenue for the purposes of famine, and he fixed upon the figure of Rx.1,500,000 in the following manner. He took the total expenditure upon famine during the past ten years and divided it by ten. I am glad to say that from that time until now we have not had a single serious famine to deal with in India, and the Government came to the conclusion that, looking to the fact that the danger from famine had largely diminished, they might fix the Famine Insurance Grant at Rx. 1,000,000. This grant under financial exigency has been largely reduced, and the amount originally taken in the estimates of this year was only Rx.445,000. The difference of Rx.555,000 has to be added to the surplus, and, taking these two together, the total surplus as against deficiency is Rx.1,248,110. There has been apparently a remarkable improvement in reveuue of Rx.2,823,096 on the original estimate. But an examination of the figures shows that they are not so satisfactory. Rx.1,569,000 is due to an improvement in opium. The other item which has contributed to the increase of revenue was Rx.941,000 in Customs, mainly due to the taxation which had been imposed at the beginning of the year. The increase of expenditure was Rx.1,828,000, but the whole of this is more than accounted for by the loss on exchange—namely, Rx.2,121,468. If in this increased expenditure is included the additional sum added for the Famine Insurance Grant, we find that the Government of India have accomplished the remarkable feat of keeping within their original estimate by Rx. 848,000. It is often said in certain quarters that an improved system of control by Parliament over Indian finance could be introduced. I hold the contrary view, believing that the financial control exercised over expenditure in India as it now is, is more efficacious than any control that could be exercised in this country would be. I do not remember any occasion here when the Treasury have been able to save £800,000 on their original estimates. The rupee for 1894–5 was taken in the estimate at 14d. and it realised 13.1d. and this involved a charge of 212 lakhs in addition to the sum originally provided. The total charge amounted to Rx. 14,615,300, or more than 24 per cent. of the total net expenditure of the Indian Government. The next year 1895–6 is a very remarkable financial year, and I hope marks the commencement of a new financial era. The Indian Government budgeted originally for a surplus of Rx. 46,200, but they only obtained this surplus by much scraping and paring. They cut down the grants originally made for the local governments by Rx. 405,000, and they only placed Ex. 470,000 to the credit of the Famine Insurance Grant. Since that Estimate was made much has happened. There has been the successful expedition to Chitral, which entailed an unexpected charge of 164 lakhs upon the revenues of India. Then the Government have increased their Famine Insurance Grant by 53 lakhs of rupees; they have revised the Indian Cotton Duties, which entailed a loss of about 28 lakhs of rupees, and they have repaid to provincial governments 40 lakhs of rupees. They therefore have had to meet an additional expenditure of Rx. 2,850,000, and yet, I am glad to say, the revised Estimates showed a surplus of Rx. 905, 200, and the gross accounts show an even better surplus—namely, Rx. 1,604,000. Let us examine this remarkable improvement in the financial condition of the Indian Government, because it is desirable to see how far that improvement is due to permanent and reliable causes, and how far it is due to incidents which are ephemeral and accidental. The revenue shows an increase of Rx. 1,405,300, but again opium absorbs a great amount of that increase—namely Rx. 874,000. The remaining Rx. 531,000 is due to a general advance under most heads of revenue. Against that must be put the amount of the Cotton Duties, by the remission of which the Government will lose in an ordinary year Rx. 495,000. When we examine these figures we see that there is a very small margin of revenue upon which the Government can rely to provide for any fiscal reform or increased expenditure. I am glad to say that in 1895–6 the Indian Government have again shown signs of a remarkable frugality and control. The total increase of expenditure at the close of the year, including all these large sums which I have mentioned, is only Rx. 500,000, or 50 lakhs, as against charges incurred of 285 lakhs, showing an improvement of 235 lakhs. This is due to two causes. The exchange, estimated at 13.09, realised 13.68, so that there was an improvement of Rx. 1,665,600, and this saving in exchange almost exactly balanced the cost of the Chitral expedition. There was also a saving of Rx. 624,100 on the ordinary expenditure of the Army, and there was a further saving in other branches of expenditure amounting to Rx. 60,300. These two figures taken together account largely for the remarkable improvement in the financial position, to which I have called attention. Thus we see in one year a loss in exchange very largely diminished by a saving in expenditure, and in the next year we see a gain in exchange greatly enhanced by further savings so as to cover very large unexpected disbursements. Here I must interpose a few observations upon the subject, of Cotton Duties. When those duties were imposed, my predecessor in office imposed them on a certain condition—namely, that the duties were in no sense to be protective, and he undertook, should there be any vestige of protection about them, to take steps for their removal. When I succeeded the right hon. Gentleman I had to look into the matter, and it appeared to me that there was an infringement of the condition. It became clear that we must either tax all imported cotton on yarn value or tax all cloth in India on its full value. We arrived at the conclusion that it would be most inadvisable to draw a hard-and-fast line in respect of various qualities of goods and yarns and to say, on the one side there shall be a duty and on the other side there shall be no duty. The House can hardly realise the extraordinary ingenuity which manufacturers show in keeping within a line of exemption. A deputation on this subject produced certain figures which are so extraordinary that I should like to call attention to them. The passage to which I refer is found on page 199 of the Blue-book on the Cotton Duties:— In the six months of 1878, when the first change was made admitting some classes of goods duty free, our exports to India were 9,000,000 yards of duty-free goods, and 358,000,000 yards of goods paying duty. The following year, although the larger measure was only introduced in March, in the six months following March the duty-free goods were 99,000,000 yards, and the duty-payable goods 323,000,000 yards, and in the corresponding six months of 1880 the duty-free goods were 360,000,000 yards; those on which the duty was paid were 164,000,000 yards, and the revenue from Cotton Duties, which was £200,000 in 1878, was reduced to £81,000. The arrangements that I have made have been attacked somewhat unfairly in certain quarters. My desire was to put the industries dealt with on a footing of perfect equality, and I claim that we have succeeded in doing that. Now I come to the Budget of 1896–7; but before I deal with the figures I should mention that there are two decisions which have been arrived at by the Indian Government which have absorbed a considerable sum in addition to the ordinary expenditure, as compared with the expenditure of the preceding year. The Famine Insurance Grant we determined to raise to Rx. 1,000,000, and that entailed on the revenue of this year an extra charge of Rx. 473,000 over and above the Budget Estimate of the preceding year. But we further came to an important decision with reference to the Army. Those who have read the Debate on the Indian Financial Statement in the Legislative Chamber of Calcutta will find there a most interesting and valuable speech by General Sir Henry Bracken-bury as to the efficiency of the Indian Army; and especial importance, I think, attaches to that statement, as he is probably of all living authorities, the best acquainted with the conditions of foreign service. He has made that a special object of study, and was for many years the efficient and capable head of the Intelligence Branch of the War Office. ["Hear, hear!"] He gives in the highest terms his opinion of the efficiency of the native Army—[cheers]—and gives a number of details showing the extraordinary improvement that has been made in recent years in organisation and powers of mobilisation. He also calls attention to the great economy in administration. But Sir Henry Brackenbury's speech reveals, at the same time, certain defects as regards power of mobilisation, and for some time past the Indian Government have pressed on us the desirability of allowing them to add largely to the reserve, and especially in connection with camels. Camels are very delicate animals and require special handling, and it has been found that when a large number of them are bought a very large proportion of them die in consequence of those attending them not being acquainted with their habits. Therefore, we have provided for a reserve depôt for camels. We have also allowed for a reserve of 1,000 horses to be established in addition to those already in reserve. This will greatly increase the mobilising power of the Indian Government; but I will say at once that the India Council would not have agreed to this expenditure if it had not been of opinion that the native Army was fit to go anywhere and to meet any troops in the world. [Cheers.] In respect of these two matters, then, we start with a debit of Rx. 968,700. Exchange is taken at 13.75d., as against 13.1d. for the preceding year, and that gives a reduction in the charge on that account of Rx. 1,665,000. There are various other improvements and fallings off in the revenue, but after taking them into consideration we get a total improvement of Rx. 1,770,200, including Rx.46,200, thesurplus of the previous year. On the other hand, there is an increase in expenditure amounting to Rx. 338,400, which is almost entirely due to the very low estimate taken on account of the railway revenue. For some reason or other for the last few months the returns of the railroads have not been as satisfactory as we could wish, and in the circumstances we thought we were justified in taking a very low estimate. Deducting Rx. 338,400 increased expenditure from the improvement in revenue of Rx. 1,770,200, that leaves an improvement of Rx. 1,431,800 and if the special expenditure to which I have referred, of Rx. 968,700, is deducted from that amount, we get an estimated surplus of Rx. 463,100 for the present year. ["Hear, hear!"] I think I can congratulate the House on the fact that for the first time since 1891, the Secretary of State for India is able to show a surplus for each year, and that which makes those surpluses more satisfactory is the fact that they are honest surpluses, and the total expenditure in this country for the last two years has been defrayed without a loan. Whenever loans are raised in this country they affect exchange in two ways—namely, by diminishing the amount of bills on India, and by their being sold at a higher rate. From 1888–9 to 1893–4, inclusive, loans have been raised in this country in order to meet the liabilities of the Secretary of State in this country, but I am glad to say that in the three years to which I am alluding, we have been meeting the whole of our obligations without having recourse to a loan. ["Hear, hear!"] It is also satisfactory to note how the improvement has progressed. Taking the last four years, we started in 1893–4 with a deficit of Rx 1,546,998. In 1894–5 we had a surplus of Rx. 693,000, in 1895–6 a surplus of Rx. 1,604,000, and this year we have, estimated, a surplus of Rx. 463,000. This improvement in Indian finance has greatly improved the borrowing power of the Indian Government, and the credit of the Indian Government to-day stands in an unparalleled position. Taking the credit of India in England, in 1889 the Government congratulated themselves on being able to raise a 4 per cent. loan at just below par. In 1893 they were able to raise a 3½ per cent loan which realised 96.21, and this year we made the experiment of raising a 3 per cent. loan in England, and it was covered three times over and taken up at 103⅛. Now, Sir, if the statement I have made had been made by a Chancellor of the Exchequer with regard to this country, it would have seemed of so satisfactory a character that the general verdict would have been that a remission of taxation was almost certain to take place in subsequent years. If India were similarly situated to this country such might be the case; but, unfortunately, it is not. Therefore, I must warn the House against drawing any false inferences from what I have said. India differs from this country in two essential particulars. It is not self-contained as to expenditure; and, secondly, the Indian Government, unlike the British Government, is not in possession of any reserve of taxation either direct or indirect. The obligations in gold, which year by year have to be met, mainly arise in connection with home charges, and there is no possibility of their being diminished. But that is by no means the greatest difficulty with which we now have to deal. Without almost any warning the charges in connection with exchange which we have to meet are subject to sudden fluctuations, and therefore the abruptness of the fall and the magnitude of the charge so imposed constitute a double financial difficulty with which India has now to contend. The fall in the value of the rupee of one-tenth of a penny causes a loss of 22 lakhs; or, in other words, a fall in exchange of a penny means a loss in the revenue of the year of 220 lakhs of rupees. The experiment of closing the mints for the purpose of improving exchange was an artificial makeshift; but, at the same time, it has succeeded in doing that which its promoters anticipated—namely, it has caused a divergence between the exchange value of the rupee and the price of silver; but, although it has done that, still the market price of silver is the dominant factor in the exchange value of the rupee. Influences so widespread, cross currents so mixed, production so curiously controlled, political, commercial, and monetary interests so intermingled affect Indian finances to such a degree that it is impossible to foretell what is going to happen from the premonitory symptoms. Taking the surplus of exports over imports, and the relative exchange values, it will be found from the explanatory memorandum that in 1893–4, when the exports were 4,057,000 tens of rupees under the imports, the exchange value was 14.547d.; the next year, when there was a considerable surplus of exports over imports, it was 13.101d.; and in 1895–6, when there was only a slight balance in favour of exports, it was 13.680d. Therefore, in each year, the exchange value of the rupee operated in exactly the reverse direction from that which might have been anticipated. What I wish to impress upon the House, therefore, is that, owing to the speculative and gambling character of the exchange value of the rupee, the Indian Finance Minister finds it almost impossible for him to foretell how it will operate in any particular financial year, and the expenditure can only be met by a margin of revenue or by financial or taxable reserves capable of immediate realisation. In these circumstances, we have to ask ourselves what taxable resources we have that are not now in operation. Of direct taxes there are absolutely none. The Income Tax is small and cannot be raised, and it is impossible to impose a Succession Duty. The only indirect taxation which is in our hands consists of the Salt and Customs Duties. The Salt Duty cannot be put higher, because it is higher now than one could wish it to be. ["Hear, hear!"] Indirect taxes upon articles of great consumption cannot be varied from year to year, like the Income Tax, to meet the variation of charges; still less can they be abolished and then re-imposed without causing general confusion in trade. Therefore, I may point out to the House that until the Indian Government can see its way more clearly in the future it cannot afford to part with any existing sources of revenue, although I am hopeful that revision and amendment of existing rates may not be outside our capabilities. ["Hear, hear!"] I lay these views before the House in the interests of sound finance and of those great producing trades and industries to which uncertainty as to the future and a constant variation of taxation is most galling and injurious. There has been during recent years a development of two important portions of Indian policy, one external, the other wholly internal, but both bearing on Indian finance. In past years there has been an expenditure on frontier wars and upon punitive expeditions largely due to want of demarcation between ourselves and neighbouring responsible Powers. In view of the character of the frontier tribes and of the country, it is of the greatest importance that the spheres of influence of the different Powers should be known, respected, and protected. There are on our Indian frontiers six such Powers—namely, Siam, France, China, Russia, Afghanistan, and Persia. The frontiers between India and some of these Powers have been demarcated. I trust that the demarcation of the Indian frontiers will enable expenditure to be reduced and will inaugurate an era of more peaceful policy than has prevailed during recent years. With regard to Chitral, it was only the other day that we sent a number of troops up to that place, and during their march there was a heavy fall of rain, by which the bridges were broken and the road impeded; 4,000 men of the Khan of Dir were employed in repairing the bridges and the road, and the agreement entered into was loyally carried out. The camps were guarded by them, and, I am glad to say, the relations between our officers and troops and the tribes are steadily improving. What has occurred there may happen elsewhere. ["Hear, hear!"] I may say that the Chitral expedition had done an immense deal of good, because all along the route that our troops took, the wild tribes that bordered it have been civilised to a large degree, and the frontier has become settled. ["Hear, hear!"] The second movement to which I have alluded is that which relates to the construction of Indian railways. In this respect I have followed the policy that was laid down by the right hon. Gentleman my predecessor in office. During the past year we have been able to make a substantial improvement in the means of railway communication by encouraging the construction of branch or feeder lines. We have also come to a definite conclusion to give a direct guarantee to those lines. The second matter which I looked into was the amount of capital annually given to main lines, and I thought that we might legitimately largely increase the amount devoted to that purpose. Hon. Members who have the memorandum will see the amount devoted to irrigation and railways during the past three years. The sum amounts in 1894–5 to Rx. 6,637,944; in 1895–6, to Rx.6,890,700; and in the present year to Rx. 11,550,600. [Cheers.] Including the expenditure by companies here, I think the outlay will exceed 12 crores in 1896–7, and this high rate will be practically maintained for three years. It will also interest the right hon. Gentleman to know that we have arrived at a new decision as regards the means for supplying these funds. Of course it was desirable to keep down our obligations as much as possible and to have recourse to the loan market in India first. We came to the conclusion that for the future the Indian Government should raise all money to be borrowed in India, and advance it to the companies, and by that means we take care that the loan market in India is always exhausted before recourse is had to a foreign loan. Then the third change which is about to be made is that there should be an annual conference in India of the chief railway officers presided over by the Viceroy, in order that they may thoroughly consider all the proposals that come up before them. It seems to me that in the past our policy has been too piecemeal. Proposals were constantly coming in with reference to some particular line, and it was absolutely impossible for the Indian Government or the India Office to express an opinion upon it until it had been considered in connection with others, and also in connection with the amount of money available. I believe that if the practice is once established of having this annual conference it will insure that every line sanctioned shall be part and parcel of a carefully considered scheme and system. I think, moreover, that it will fit in with the views of the promoters of railways, because they will know that they have to send in their schemes by a certain time, and that if they are not in by that time they will probably not be accepted. The return on railroads is satisfactory. In 1893–4 the percentage of net receipts on lines in operation (independent of exchange) was 5.49; in 1891 it was 5.72, and in 1895 it was 5.82. The new mileage open in 1894–5 was 360, and in. 1895–6 821. The new mileage sanctioned in 1894–5 was 651, and in 1895–6 it was 2,415. [Cheers.] Our experience as regards railroads in India is that the Indian Government have brought their Construction Department to such a point of ability that they can construct railroads more easily than private companies; on the other hand, private companies can, as a rule, more effectively work the lines. It is very desirable that railway enterprise should be largely developed in Burma, and we have recently entered into an agreement with the Burmese Railway Company by which they have undertaken to work the lines and provide the necessary capital for various feeders and extensions which from time to time will be necessary. I saw a statement in one of the newspapers that we had entered into an arrangement for the purpose of selling our interest in the lines; no such idea ever entered our heads. We have retained full control as to the rates and other conditions on which the lines may be worked. In looking at the question of railroads, I am glad to see that they have tended enormously to increase the amount of exports during the last ten years, and have not only increased exports, but have also multiplied the staple commodities in India, so that India is no longer dependent on two or three staple productions. Looking to the other side of the balance-sheet, to see how far British trade and industry have benefited by this increase, I think, on the whole, that it may be said that British goods have obtained their full share, with one notable exception, which is, I think, worthy of the attention of the House. There are two forms in which steel and iron are imported into India—in the shape of rails or railway material, and in bars or bulk. This country practically monopolises the imports of railway material, but I think this is rather due to the fact that the policy of the Government is to give some preference to home production. But when we come to steel and iron in bulk, there is a remarkable shrinkage in British imports into India. Twelve years ago we had 97 per cent. of the total imports of iron and steel into India, but according to the last return our percentage has shrunk to 56 per cent., while Belgium has risen during these years from 2½ per cent. to 39 per cent. These figures are those of iron and steel in bulk. Now, I think there are some persons who maintain that foreign competition is a bogey, but here is clear and distinct evidence that in regard to a manufacture of which we had practically the monopoly, we are gradually being ousted. I commend this to the attention of both masters and men, because if we get ousted from a favourable market such as India in a matter of this kind, I think it is clear that in a short time we may also find that we may be similarly neglected for other countries as regards the import of railway materials. I have to thank the House for the attention with which they have listened to the various topics on which I have dwelt. ["Hear, hear!"] No one, I think, ever commenced a statement in connection with Indian finance without being impressed with the immense range of subjects with which he has to deal, and also by the multiplicity and complexity of the questions on which he is asked to give off-hand an opinion. I do not think that anybody who ever held the post I have the honour to occupy has not appreciated the assistance of outside advice, opinion, or even criticism; but whilst I welcome advice and do not repel criticism, I cannot help feeling that there is a tendency in certain quarters at the present moment to somewhat unduly disparage the benefits of British rule in India. Since I have been at the India Office I have made a point of reading the translations of native newspapers which are sent home, and I think there is no improvement in their tone; on the contrary, I think they now discuss many matters with much more acerbity, indulge in more general depreciation of the benefits of our rule, and are more apt to draw wholesale indictments against us than was the custom 20 years back. If that is the case I think a very grave responsibility rests with anybody who encourages that feeling by perhaps attaching undue importance to the infinitesimal drawbacks of the effects of our rule and ignoring its infinite benefits. [Cheers.] For ours, and for all Governments which exercise an administration over composite races, absolute perfection is not the standard; the standard is the comparative merit of the Government that is in existence with the Government which it superseded or the Government which might supersede it. If those who criticise our rule in India could only have a very short taste of the rule which it superseded they would, for generations to come, bless the Government. [Cheers.] I was reading the other day accounts of the improvements which have taken place by the acquisition of the territories in Upper Burmah, and the change that has taken place there is extraordinary. Ton years ago, outside Mandalay the government of the country was one of wholesale misrule. The hill tribes desolated the plains, thousands of cultivators annually migrated, dacoity in many parts was supreme, and outside the capital there was not a mile of road or a decent public building. There were no ordered law courts, and corruption and blackmail were the only methods of administration known. Now, what is the position? An efficient police has been established; law courts subject to regular laws have been opened; violent crime has decreased from 3,408 in 1888 to 232 in 1894. The garrison has been reduced by more than a half, the hill tribes are pacified and quiet, emigrants are flocking back, cultivation is everywhere increasing; and, notwithstanding the abolition of internal customs, the revenue has risen from 65 lakhs to 114 lakhs. ["Hear, hear!"] Such are some of the advantages which British rule has conferred on the native populations which have come under its power. I quite admit that there are many questions in regard to which I can only lend a ready ear to the suggestions or advice of persons who have experience or who are competent to give it. Between European races and the vast population of India there are racial, religious, and social differences, and it is enormously difficult to graft European ideas of progress and reform upon primitive customs or upon old Eastern traditions, and all these difficulties result in a labyrinth of complex and contradictory problems such as, I suppose, no other Government in the world has to deal with. I think no one can pretend that through all these questions he can see light, even if he can frame principles for his guidance or exactly describe his goal. On all these questions there must be wide differences of opinion, but still there are certain principles on which we can all agree. A sense of external security, of inward quiet, of internal improvement, high credit, a flourishing exchequer, and a capable and impartial Administration—these are elements by which, I believe, despite difficulties of race, religion, and custom, the prosperity and consolidation of this vast population can be effected, and their loyalty and goodwill obtained. I venture, on behalf of these three years to claim that they have done their fair share towards the realisation of these results.

*SIR W. WEDDERBURN (Banffshire)

said he was hopeless of any benefit arising from the Indian Budget Debate under the present system. Intricate accounts involving an expenditure of nearly Rx. 100,000,000 were placed upon the Table, and the House had no guidance in deciding whether the explanations of the Secretary of State were satisfactory or otherwise. The difficulty of the case was increased by the fact that the Secretary of State's explanatory statement had only been two days in the hands of Members. Under such circumstances it was impossible that in the course of few hours any profitable discussion could take place regarding Indian finance. He therefore asked the indulgence of the House in order that he might place before it an humble suggestion having for its object to obtain, in future years, a more systematic and effectual scrutiny of Indian accounts. The Amendment that stood in his name was as follows:—To leave out from the word "That," to the end of the Question, in order to add instead thereof the words— With a view to the effectual discharge of its existing duty in respect of the finances of India, this House is of opinion that the East India Accounts should each year he examined and reported on by a Select Committee of the House, thus mutatis mutandis assimilating the practice as regards Indian Accounts to that followed, by means of the Public Accounts Committee, in respect of the Accounts of the United Kingdom. It appeared to him that this was a simple proposal, and at the same time a moderate one. It proposed no new duty, and only indicated the way in which an existing and accepted duty might be properly performed. It merely proposed that in dealing with Indian finances they should exercise the same reasonable care that they exercised with regard to their own. A trustee was required to give as careful attention to trust funds as to his own property. But in the present case there was a painful contrast between the promptitude and rigour with which the House looked after its own finances and the indifference with which it treated those of India. For weeks all items of British expenditure were minutely debated, while the complete control of Parliament was secured by the action of the Public Accounts Committee. On the other hand, one day at the fag end of the Session was grudgingly given to Indian finance, and no steps were taken to make the Parliamentary control anything but illusory. It was a bad object-lesson for India, which complained that they neither gave her a voice in her own affairs, nor would attend to them themselves. The British system of control had gradually perfected itself since the passing of the Exchequer Audit Act of 1866, and in the Report of the Public Accounts Committee for the current year, testimony was borne to the great benefits arising from the arrangements now in force. Referring to the excellent services of Sir C. Ryan, the retiring Comptroller and Accountant General, the Report reviewed the past history of the Committee, and noticed— the admirable results, as evidenced by the public accounts, of the arrangement introduced by the Exchequer and Audit Departments Act of 1866. The striking contrast from the point of view of financial regularity between the period antecedent and the period subsequent to that Measure, shows it to have been, in its peculiar field, an epoch-making Statute. It appeared that in the first nine years after the passing of the Act, the financial irregularities brought to light averaged 25 yearly, but during the nine years up to 1894–5 this was reduced to two yearly, and during the last two years all irregularities had ceased. But the Committee pointed out that the improvement was greater than that shown by mere statistics. An examination of the Auditor's Reports will show what the experience of our Committee confirms—namely, a remarkable diminution of controversy on first principles, and the disappearance, to a great degree, of impatience of scrutiny—it sure and honourable testimony to the value of the work. If such solid benefits arose from the labours of a, Select Committee of the House in dealing with British accounts, why should not the same benefits, mutatis mutandis be extended to India? Of course, the system of Indian finance differed from that of the United Kingdom, but he believed that if a Committee was appointed an arrangement could be devised adapted to the requirements of Indian methods. He felt confident that to accomplish this was not beyond the wit of the noble Lord the Secretary of State, who would thus remove the reproach of neglecting the golden rule. It would be for the wisdom of Parliament to decide how best the Committee could do its work, so as to secure for the House a reasonable understanding of Indian finance and a reasonable control over this most important Department of Imperial affairs. For the moment the rise of exchange, over which we had no control, had saved the Indian Exchequer from its most serious difficulties. A fall in exchange, over which we equally had no control, would plunge the Indian Treasury into its former embarrassments, and he would remind the House that financial embarrassment in India meant increased taxation, and perhaps a demand on the Imperial Treasury. The control over British finance, now so smoothly worked by the Public Accounts Committee, had not been devised in a day, but had been gradually perfected by experience. He noticed that the system had first been applied to the Navy so long ago as 1832, to the Army in 1847, and it was not until 1866 that it was extended to all grants in Supply. Similarly, if the House should be pleased to appoint a Committee, he had no doubt that such Committee, with characteristic British business capacity, would work out for itself a practical method of performing its duties towards the House. They would look to the noble Lord, who had long experience of Indian affairs in the House, for guidance in this important matter. But having himself given much thought to this subject, he might perhaps be allowed to make a practical suggestion as to the direction in which such a Committee might most advantageously work. He would suggest that the principal materials for the labours of the Committee might be provided by a special report on the financial condition of India, supplied each year by the Government of India, such report being based on the Debates on the Indian Budget in the Viceroy's Council. The House was aware that the Council contained a certain proportion of non-official members, nominated by the Viceroy, and under Lord Cross's Act of 1892, certain public bodies were allowed to recommend a few members for nomination, thus giving voice to a certain extent to outside public opinion on Indian finance. The Debates, therefore, in the Viceroy's Legislative Council would give the Committee valuable and definite matter for consideration, and if, under the Viceroy's rules of business the non-official members were invited to move amendments and divide upon them, distinct issues would be provided for the Committee to examine and report upon to the House. The proposed annual report of the Government of India would, of course, come through the India Office with the views of the Secretary of State in Council, and it would be received early in the Session, so that the Select Committee would have abundant leisure for its consideration, and it might be hoped that the influence of an important Committee of this kind would induce the Government of the day to bring on the Debate on Indian finance at a reasonably early period of the Session. Such was a brief outline of his scheme, which he would gladly lay more in detail before the noble Lord. In answer to his question in the House a few days ago, the noble Lord expressed an opinion unfavourable to the appointment of a Select Committee on Indian Finance, but he thought this unfavourable opinion was in great measure based upon a misunderstanding of the proposal, a very natural misunderstanding, as, in the limits of a question the particulars of the proposal could not be set forth. The two main objections raised by the noble Lord were that the proposed Inquiry would seriously interfere with administrative work in India, and would entail large expense. No doubt these objections were based on the assumption that it was proposed rigidly to follow the procedure of the Public Accounts Committee, and make the duty mainly one of Appropriation Audit. As above explained, that was not the intention of the present proposal. No doubt there was in India an Appropriation Audit, but it was one entirely different in character and effect from that in England. In England the Appropriation Audit was of the highest possible importance, being the machinery by which Parliament exercised its financial control over the Executive, and especially the Treasury. In India the Appropriation Audit was merely an arrangement by which the Executive controlled its subordinate Departments; it was of little use, and of no constitutional importance whatever. As it was not proposed that the Committee should carry out an Appropriation Audit for India, the difficulty suggested by the noble Lord disappeared, because departmental officers would not be called from their administrative duties in India, and no expense would be incurred. He would no longer detain the House. It was for the House to decide how a difficult but manifest and admitted duty to India could best be performed. No one considered that the present state of things was creditable. It might not be possible to do complete justice to India in this matter, but that was not a reason for doing nothing; they might make an effort and do their best. No one could do more than that

*MR. H. J. WILSON (York, W.R., Holmfirth)

, in seconding the Amendment, remarked that the noble Lord the Secretary of State himself could hardly regard the circumstances in which the Indian Budget was considered in this House as satisfactory. The noble Lord's speech was listened to during a considerable portion of it by 12 Members on the Government side and nine on the Opposition. How could it be expected that those voluminous details could be mastered and digested in the time at present at their disposal? Whether the particular propositions referred to in the speech of his hon. Friend were practicable or not, he did not feel himself competent to express an opinion. He only desired to urge that something or other should be done.

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

said that the first thing which struck him in considering this Motion was the extraordinary want of connection between the suggested remedy and the alleged grievance. It was true that the Memorandum of the Secretary of State had only been in the hands of hon. Members for two or three days, but he had read that statement with very little interest. Nearly all its contents were familiar to him from the document which had been in the hands of hon. Members for two or three months—namely, the financial statement of the Indian Government. This statement had been in their hands since June 24th. It seemed to him that the hon. Member was proposing to substitute a faulty, certainly an imperfect, system of audit of accounts for a system which was almost ideally perfect, and for as clear and businesslike a statement as any private or public body had ever examined. ["Hear, hear!"] He did not believe that the acceptance of any such arrangement as had been suggested would favour the better examination of the finances of India. He thought that the hon. Baronet would acknowledge that the Public Accounts Committee had no control over the expenditure of this country, and the assimilation of the system to India could not in any way control or vary the expenditure by a rupee. He believed, therefore, that any deviation from the form in which the accounts of India were now presented would be to render more obscure that which was, in his judgment, already quite clear. ["Hear, hear!"]

*SIR HENBY FOWLER (Wolverhampton, E.)

said he was surprised to hear the hon. Baronet say that there was a mass of figures thrown on the Table of the House without anything to guide the House with reference to their meaning.


I did not say that. I said there was no guidance to enable the House to decide whether the explanations of the Secretary of State on behalf of the Executive were satisfactory or otherwise.


said he did not understand the hon. Baronet to say so. He thought, however, that the last speaker had given a true answer to that criticism—namely, that the House had a clear, complete, and elaborate statement presented to it nearly three months ago, and that statement contained not only a lucid explanation of the finances of India by Sir James Westland, one of the most distinguished Finance Ministers India had known, but the Debate of the Indian Legislative Council, and the criticism by distinguished native members of the Council as well as Anglo-Indian members, on the various finance proposals of the Government. The hon. Baronet said that the House had no control, as in dealing with the finances of this country in Committee of Supply, over the expenditure of India. No; nor was it a part of the Government of India that the House should control the expenditure of India in the same way as it controlled the expenditure in Great Britain. The House had by legislation delegated to two other bodies the administration of the finances of India, only reserving to itself supreme and final authority. The hon. Member had urged the House to adopt the precedent of the Public Accounts Committee. That Committee was for audit, and not for control. He would quote the Standing Order under which the Public Accounts Committee acted:— That there shall be a. Standing Committee, to be designated the Committee of Public Accounts, for the examination of accounts, showing the appropriation of sums granted by Parliament to meet the public expenditure. The Public Accounts Committee had no more control over the expenditure of this country than they had over the expenditure of the London and Northwestern Railway Company. The theory of our system was that every Parliamentary Vote must be placed by the Treasury under the control of a Department responsible for the proper application of the money. The regular appropriation of the accounts must be prepared in the Department; the accounts must be audited, and the Auditor General reported his observations to the Committee on Public Accounts, but there was in no sense a Committee controlling the expenditure. Was this new Committee of the hon. Baronet to be, so to say, the Auditor General of Indian Accounts? There were more than a thousand accounting treasuries in India, and those accounts could not be audited here. The audit must take place in India, and nowhere else. The noble Lord had told the House how complete and satisfactory was the control of expenditure in India, and that it was quite as effective as the control of the expenditure here. Complaint had been made that but few hon. Members came to listen to the Debate on the Indian Budget, but, short of enforcing penalties for non-attendance, hon. Members could not be compelled to attend these Debates unless they were so disposed. When, however, questions arose in the House affecting the administration, the policy, or the interests of India, the House was scarcely ever more crowded than on these occasions. It was not fair to represent to the people of India, therefore, that the present small attendance always characterised Indian Debates, or that it was to serve as any gauge by which to measure the interest taken by the House of Commons in Indian affairs. [Cheers.] Was this Committee to be a more Committee of audit, or was it to deal with questions of policy? Did the hon. Baronet moan that the policy of the Government of India should be referred to this Committee? Apparently that was what he intended, because he spoke of this Committee as a Court of appeal from the Legislative Council of India. To constitute such a Committee as that would not be in accordance with the Constitution. But there was already a Committee which acted as a Court of appeal from the Legislative Council of India, from the Viceroy's Council, and from the Council in Whitehall, and that Committee was the Cabinet of the Queen representing the majority of the House of Commons. ["Hear, hear!"] The proposal that a Committee of the House of Commons should undertake the control of the whole expenditure of India and of the policy of the Indian Government was a proposal which the House would not entertain, and which, if adopted, would be resented both in Great Britain and India. If to the responsibilities already resting upon the House they were to add responsibility for the details of Indian Government, the machinery of Parliament would inevitably break down under the weight imposed upon it. But in recent times the House had shown no unwillingness to listen to any well-founded complaint relating to Indian Administration, taxation, or finance. The House had discussed in the last two years as questions of Imperial importance, upon which the fate of a Ministry might hang, the competitive examination for the Civil Service, the Cotton Duties, the Opium question, the retention of Chitral, and the charges for the Indian Troops sent to Suakin. On some of these subjects the House agreed with the Government of India, and on others it differed; but in each case the House recognised its Imperial duties, and discharged them in a manner which represented the convictions of the majority of the people of this country. It was his opinion that in constituting such a Committee as was proposed and transferring to it the duties which belonged to the Secretary of State and the Government they would be adopting a plan which would give no satisfaction in India and which would cause great expense. ["Hear, hear!"]


did not believe that there was any ground for making an attack upon the system of administering Indian finance. In fact, he thought the appointment of any Committee would only result in eliciting facts in favour of the Government of India in this regard. That, however, was not the last word that had to be said on the matter, because Governments were not based upon scientific principles only, but depended in large measure upon the consent of the governed. They must always take into consideration the necessity of securing for their Government the support of the people. The opponents of this Motion failed to take into consideration that popular support might be obtained if some such scheme as the hon. Baronet proposed were adopted. Lord Randolph Churchill, who was a very remarkable Secretary of State for India, and left a very great name, was always in favour of some system of Committee in that House with regard to the Government of India. The same could be said of the late Mr. Fawcett. As regards the principle of inquiry, whether regular, or whether only occasional, he did not think that the point was settled by the speeches that had been delivered. As he had said, there was a great deal that could be said in support of the Motion of his hon. Friend, but he would ask his hon. Friend and his supporters what they meant by their Motion? Did they intend that questions of policy should be brought before this Committee? He did not himself think that it would be a fitting body before which to bring matters of policy. There was, however, a great deal to be said for the view of Lord Randolph Churchill and Mr. Fawcett in favour of occasional inquiry by that House into questions involving the policy of the Government of India. But there was a great deal to be said against an annual and lasting inquiry by a Committee of that House, that would involve the policy of the Government of India. That would be a disturbing cause and would do harm and unsettle the finances of the Indian Government, and undermine the authority of the Legislative Council in Calcutta. Let them consider for a moment the weakest point of our rule, viz., that they had to rely, in dealing with the people, upon Native police, and that those police were not as satisfactory officers as they might be. Was the Committee which the hon. Baronet proposed to consider, under the cloak of finance, the re-organisation of the whole system of criminal administration in India and of police in India? Take another question. The home charges of India had been reduced by the manufacture of military stores in that country. India had saved money in that way, and the process might no doubt be carried further. Was a Committee of this kind to consider that question continuously year by year? He thought it would be impossible for it to do so, for they would fail to get men of the qualifications necessary to carry such inquiries on year after year. In fact, this would virtually amount to assuming a portion of the responsibility of the actual government of India. Therefore he did not think that his hon. Friend would suggest that questions of policy of that kind ought to be submitted to a Committee of the House, although he agreed that from time to time, examination by that House of questions affecting India was desirable. Then came the question whether, with these limitations it would be wise to have a Finance Accounts Committee, a Public Accounts Committee on the finances of India. Agreeing as he did, absolutely with the view that the financial system of India was a good one, he did believe it would be a good thing that the inquiry which they pretended to make in the House with a very thin attendance at the end of the Session, should be made by an annually appointed Committee of the House; but he would give that Committee no power over the Government of India. He believed that would be a better and more popular form of dealing with the accounts of the Government of India than the control they pretended to exercise in the House on the last day but one of the Session.


rose to call attention to the remarks made by a very high English military authority with regard to the troops of India.


The hon. and gallant Member must reserve his remarks on that subject until the main question is put again.


said he was bound to say that he disagreed with everything the hon. Baronet the Member for Banffshire had said. He had had a good deal of experience of these Committees, and he found that in proportion as the numbers of a Committee were increased the quorum had to be diminished. He asserted that it was no use whatever to appoint a select Committee to inquire generally into Indian finance. The finances of India constituted a very large question, and he was convinced it would be almost impossible to bring the Members of a Committee of this kind together in sufficient numbers and sufficiently often to enable them to report with effect on a general question of such importance. He could not help thinking that what the hon. Baronet wished was to appoint a Committee, nominally to investigate accounts, but in reality to interfere with the expenditure policy, with which he did not agree. A more mischievous proposal he could not conceive. We had an Indian Government, of which we could control the policy in the House of Commons, and the House of Commons, if they disapproved of that policy, could express their opinion upon it; but to try and make that policy futile, by checking expenditure which was necessary to give it effect, was a mad suggestion. The hon. Baronet also seemed to think that the more the House interfered with Indian finance the more economy would be promoted; but that was certainly not his view. Then the hon. Baronet the Member for the Forest of Dean spoke on one or two questions on which inquiry might be judicious—questions connected with native manufacture.


I said I could not support any proposal for an annual or permanent Committee to consider any question of policy.


said he could understand the propriety, and even the necessity, of appointing a Select Committee to inquire into some definite subject; but, surely, of all the instruments for that purpose, the most inconvenient would be a Committee of Accounts. In the circumstances, he hoped the hon. Baronet the Member for Banffshire would not press his Motion.

*MR. M. M. BHOWNAGGREE (Bethnal Green, N.E.)

thought it was not the intention of the hon. Baronet, so far as be understood it, to have any sort of controlling Committee whatever. A sort of feeling did prevail, no doubt, both in this country and in India, that the statement of the accounts of India which was submitted to the House at the end of every Session was not listened to by a sufficient number of Members to satisfy the people of India that an interest was really taken by the House in their affairs. Whether that feeling was right or wrong he was not prepared to say, but, after listening to the elaborate and eloquent speech of the right hon. Gentleman the late Secretary of State for India, he believed that the notion founded on that supposition would be to a certain extent dispelled. The purpose for which he rose was simply to ask the hon. Baronet opposite not to press his Motion to a Division. He believed such a Division would do more harm than good. If hon. Members were to be convinced that the accounts of India should be submitted to and attended to by a Committee of the House with advantage, they ought to have time to deliberate on the way in which that end was to be secured; but to bring forward a Motion of this importance, and to ask the House to decide upon it at once, would only lead to one result, and that was that the House would not listen to any future proposal in favour of submitting the Indian Budget to the House at a time when there was a fuller attendance.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes, 110: Noes, 30.—(Division List, 419.)

MR. HERBERT ROBERTS (Denbighshire, W.)

said that he understood that he would not be in order in bringing forward the Motion of which he had given notice, namely— That, in the opinion of this House, it is desirable to revise the arrangements under which political control is exercised over Indian Princes and Chiefs, and especially to provide that in future no deprivation or penalty shall he imposed upon an Indian Prince or Chief on the ground of maladministration or misconduct until the fact of such maladministration or misconduct shall have been established before a public and independent tribunal. It was, he thought, most important that in the interest of the continuance of satisfactory relations between the Indian Government and the Indian people, that it should be made plain that the Indian Princes and Chiefs would not be interfered with, would not be punished or deprived of their ruling powers without an adequate and fair trial. He would not encroach one hair's breath upon the essential condition of British rule in India, namely the right and obligation of the Indian Government to depose or punish those Princes or Chiefs when charges of misconduct or misgovernment were proved, but he contended that before action was taken by the Government in that direction, the men should have an opportunity of stating their case before an impartial tribunal. The foundation of the policy he advocated was to be found in the Proclamation of '58, for in that Proclamation the Queen said to the Princes of India, "We will respect the rights, dignity, and honour of the Native Princes as our own." From that day to this the Native rulers had shown their appreciation of the confidence reposed in them, and they had shown loyalty to us by helping us with money and troops in time of our need. There were precedents which proved that the Indian Government had taken the course he desired. For instance, when charges of misgovernment were brought against the Gaekwar of Baroda in 1875, a Commission, consisting of three English Judges and three Natives, were appointed to inquire into them. The same pledge which was given in the Proclamation of '58 was given at the historical assembly at Delhi, but in his belief, and in the opinion of a number of those who acted with him, the Government of India had recently violated the spirit of the pledges they had given, and the effect had been to create an impression in the minds of the Native rulers that the policy of the past was not going to be rigidly enforced in future. It might be said that an inquiry was conducted in the case of the Maharajah of Jhalawar, but he could not admit that when charges of misconduct or mismanagement against a Native ruler were inquired into by a political agent, the inquiry could be called an impartial one. Until it was made quite plain that we intended to treat the Native rulers with respect, and intended to carry out our pledges, a very unfavourable impression would exist in their minds, and until that impression was removed there would exist a feeling of dissatisfaction and disquietude which might have serious consequences.

SIR ANDREW SCOBLE (Hackney, Central)

said that the hon. Gentleman opposite was no doubt perfectly right in saying that a well-governed neighbouring native State was a source of strength to the Indian Government as well as of happiness to the population of the State itself. The Government of India fully recognised that fact, and they did their best to insure the good government of all the neighbouring native States. The Governmeent of India, however, interfered with the domestic government of native States with the greatest reluctance, and only in such cases where such interference became absolutely necessary. He could not conceive what tribunal the hon. Member proposed to set up in place of the Government of India, who had always acted most impartially in all cases in which their interference had been necessary. To set up a fresh tribunal of any kind would increase rather than diminish the responsibilities and difficulties of the Indian Government. No doubt proposals of this kind had rather a specious air at first to those who were not intimately acquainted with India, but when they came to be examined into, that speciousness disappeared, and it was soon discovered that it was impossible for them to be carried out practically. ["Hear, hear!"]


had given notice of the following Motion:— That the system of combining executive (revenue and police) with judicial duties in the same officer which at present prevails in India is objectionable in principle, inconvenient in practice, and calculated to shake the confidence of the people in the administration of justice; and that, therefore, in the opinion of this House, it is desirable to revise the system, with the view of effecting a separation of judicial from executive functions. The hon. Member said he had given notice of a Motion upon the subject of the system of combining executive with judicial duties in the same officer, which, owing to the Division on the Amendment of the hon. Baronet the Member for Banffshire, the forms of the House would not permit him to move, and therefore he would only deal with the matter in a general way. In the first place, however, he hoped that he should be permitted to congratulate the noble Lord upon the very interesting and lucid statement he had delivered that evening, in the course of which he had been able to show that the finances of India were in a better state than they had been in for many years. ["Hear, hear!"] He must also congratulate the noble Lord, as representing the Government of India, upon the improved credit which India now enjoyed, both in this country and in India itself. It was also a matter for satisfaction that the demarcation of the Indian frontiers had been proceeded with to so great an extent, thus rendering remote the chances of those expeditions which are a heavy drain upon the Indian Exchequer. He was glad also to hear from the noble Lord that inducements had been held out to Indian capitalists to invest in Indian railways, because he believed that it would not only be an encouragement to Indian investors, but would tend to develop the railway communication of the country by the construction of new lines. He hoped that policy had been pursued in the new arrangement made in connection with the Burmese railways and the contemplated future extensions. He now came to the subject of his Notice of Motion. He might say, in the first place, that all native administrators of the highest capacity admitted that law and justice in India had never been so well administered as they had been under British rule. To say that law and justice were administered in India very much in the same manner as obtained in this country was equivalent to saying that that administration had attained a very high level indeed. ["Hear, hear!"] Every human system, however, had its defects, and there were certain defects in the administration of law and justice in India. That was the fault, not of individuals, but of the system which had been handed down from generation to generation, in fact, ever since the establishment of British rule in India. In the past it was perhaps expedient to allow a combination of judicial with executive functions in the same officer, but now, in more settled times, and with a higher standard of justice before the people of India, he had thought it to be his duty to draw the attention of the noble Lord to the defects in the administration to which he had referred, in the hope that the noble Lord would promise to give due consideration to the subject, and to do his best to remedy the defects inherent in the system which prevailed in India, which was not known here, namely, that in large districts the judicial, revenue and police functions were mixed up among a class of Government officials. He would call the attention of the House to a statement made by a responsible officer, who stated that in extensive and thickly-populated districts he had for years combined in himself the functions of head of the police, head magistrate, head superintendent of prisons, head revenue officer, head tax collector, head of the Treasury Department, head manager of government estates, head engineer, head sanitary officer, and other functions. [Laughter.] This was the statement of an officer occupying a distinguished position under the Government of India, and he could assure the House that it was true. It could easily be seen that when the same person held so many offices the judicial functions which he had to perform would be prejudicially affected, for even the highest men in the service of the Government were human beings, who required a clear head untainted with other considerations for the proper administration of justice. In the districts in India there were three grades of magistrates, known as first, second and third class of magistrates; these were under the chief executive officer of the district, who was called the district officer or collector. The first class of magistrates had power to inflict two years' rigorous imprisonment, and the second and third class had similar powers in a less degree. Under this district officer there were these officers, who were also invested with executive, together with judicial functions, down to the lowest grade, and known as the joint, assistant, and deputy magistrates. Then there were the deputy collectors, and even the sub-deputy collectors. The executive functions all these men had to perform were of a very varied character, and naturally brought them into relationship, and even into conflict, with the inhabitants of the district, and yet in the same district these officers had to perform their duties as Judges. The consequence was that very often preconceived notions in regard to their judicial functions were attributed to them by the public; and whether this was correct or not, it could not be denied that in some cases, if not in many, such a misconception was possible, and that if it occurred it might taint the purity of justice. This had been a vexed question for a century past. In 1793 it engrossed the attention of Lord Cornwallis, who made a regulation that the collectors of revenue who presided over Revenue Boards should be divested of the power of deciding upon what were practically their own acts. In 1860 there was a Police Commission which reported on the organisation of the police, and declared that the judicial and police functions were not to be confounded; and Sir Bartle Frere, in introducing the Act of 1860, expressed the hope that at no distant period this principle for which he was contending would be acted upon throughout India. That principle had been acted upon in some parts of our Indian dominions, but at the same time there were still considerable portions where the collector or the district judge was also the head of the judicial system. This combination of functions had very often led to a miscarriage of justice according to the opinion of the judges of the High Courts in India. Even at the present time, he believed, there was a quarrel on the subject between the High Court of Bengal and certain officers under the Government of Bengal. Many distinguished and weighty names might be adduced in support of this separation of judicial functions for which he was contending, among thorn being those of Lord Hobhouse, Sir Henry Maine, Sir W. W. Hunter, Sir Richard Garth, Sir Raymond West, Sir John Peter Grant, Sir J. Strachey, Sir Lepel Griffin, and two Secretaries of State for India. Lord Kimberley, in a Debate on May 8, 1893, had said:— It is admitted on all hands that it is contrary to right and good principles that the civil and judicial powers should be united in one person, and the difficulty is simply one of expense. Lord Cross had supported this view. Now the objections which had been raised to this separation of functions had either been on the ground of expense or of prestige. He believed, however, that the change could be effected by a division of labour rather than by an increase of officers, so that extra expenditure would not necessarily be involved. It was possible to divide the various functions among the half-dozen assistants who were under the chief of each district, and to divide them in such a way that no assistant would have mixed duties. An old and well-known member of the Bengal Civil Service, Mr. R. C. Dutt, was in favour of this plan, and he had shown, in an admirable scheme, how easily it could be adopted. It was further objected to this reform that, unless the executive officer had judicial functions to perform, he would lose prestige. He himself was one who attached great value to prestige, especially in a country like India; but it should be prestige of the right sort, and not terrorism. The contention really was that every officer should have penal power to enforce his orders. That was not at all necessary, and such power was very likely to be abused. Any officer, European or native, who had the authority of the Government behind him, had quite sufficient prestige. A distinguished member of the Bar in Bengal, Mr. Manmohun Ghose, had prepared a list of 20 cases where abuses of the kind he referred to had occurred. A reform which could be accomplished at such small cost and with so little difficulty ought to be at once put into effect. Of course the present system had the sanction of time, having been handed down from generation to generation; but he had said enough to show that there was need for reform, and at least a case for inquiry. The system must necessarily beget great distrust of the administration of justice; and, as far as the expense of the reform was concerned, even if the objection were sound, that consideration ought not to make the Government of India shrink from taking the necessary steps. The strongest basis of British rule in India—the reason why the people had such confidence in it—was above all the sense of justice with which that administration had inspired them. ["Hear, hear!"] That it was which had made the greatest impression on India in favour of Englishmen, and if that confidence were shaken, the great pillar on which British dominion in India rested would also be shaken. [Cheers.]

On the return of Mr. SPEAKER after the usual interval,


said he trusted the Secretary for India would give his attention to the grievances in connection with the Indian Medical Service, to which he believed the noble Lord's attention had been recently drawn. Graduates of the Medical Schools in India had not had fair play, as they were shut out of important offices and restricted to inferior posts with trivial salaries; and it was believed this was based on racial considerations. Regard to these was inconsistent with the traditions of British rule in India, and the Secretary for India, he was sure, was the last person to attach any importance to racial distinction. ["Hear, hear!"] The Queen, in Her famous proclamation 40 years ago, said that all Her subjects would be treated equally without regard to distinction of caste, colour, or creed. In this connection he also wished to call attention to the compensation allowances given to European officers on account of the difference in the exchange value of money and submit that these allowances under certain conditions ought to he extended to Native officers. Many of them had to go to considerable expense to send their children to this country to be educated to qualify them for the Civil Service, the legal profession, or the higher grades of the medical and engineering professions in India. Native officers, especially in the covenanted Services, should have the same privileges as their European brethren, at least to the extent of the actual remittances they have to make to England. He (Mr. Bhownaggree) did not wish to detain the House, but could not omit to refer to the treatment of the British-Indian subjects in South Africa, notably in the Transvaal, who were precluded by the local legislation in the Transvaal from acquiring and occupying tracts of land within certain limits. The Colonial Secretary had promised to look carefully into the question. Then there was the important question of the exercise of the franchise by British Indians in Natal. The Natal Legislature in April last issued a proclamation excluding all subjects of Her Majesty's Indian Empire from having the power to vote at elections. He did not see why the responsible authorities of the Natal Government should have imposed those restrictions unless they were based purely on considerations of race and colour. He admitted that there were certain social distinctions of race that had to be preserved in every colony and community, but the restrictions he had referred to were not meant to do any good or prevent any impending harm. The Secretary for India was the custodian of the rights and privileges of the Indian subjects of the Queen, and the Secretary of State for the Colonies had a controlling hand over the legislative proceedings of the Colonies, and he hoped both these powerful Ministers would combine to bring about a remedy for the crying evil which had been causing so much irritation throughout our Indian Empire. It was a noble sentiment of the ex-Secretary for India, the right hon. Member for Wolverhampton, that every Member of the House was also "Member for India." (Cheers.) He implored the House, regardless of Party considerations and petty racial feelings, to rise to that sentiment, and as Members for India see that the Indian subjects of the Queen were not deprived of their rightful privileges, and subjected to uncalled-for degradation and humiliation. A few weeks ago his hon. Friend the Member for Battersea took objection to the employment of Lascars on P. and O. steamers. That objection was attributed to race distinction, but he was assured it was not based on racial prejudices. ["Hear, hear!"] He was glad of that. If the hon. Member could come with him to India he would show him Lascars who in physique and skill were the equals of the hon. Member himself; and even as regards their complexion, many of them would not ill compare with the milky whiteness and velvet softness of his own face. [Cheers and laughter.] As far as loyalty was concerned, a more loyal and devoted people than the people of India, especially of the class of Lascars, there could not be found. Whatever distinction of treatment they made, let it be on the score of character and qualification, but never on the score of caste, colour or creed. He fervently hoped once more that the Secretary of State for India, in conjunction with the Secretary for the Colonies, would take steps to remove the great indignity sought to be imposed upon British Indians in South Africa by the Natal Legislature refusing them the elementary right of every British citizen of voting for the candidates of such Legislature. In conclusion, he gratefully acknowledged the complimentary terms in winch the Secretary for India had referred to the Indian Army. He did not believe for a moment that the gallant General (Lord Wolseley), to whom certain words had been attributed on a recent occasion with reference to that Army, attached to them the meaning applied to them; and the noble Lord had done wisely to refer to it in generous terms. ["Hear, hear!"] It was, therefore, due that from his place there he should also disown the sentiment which was uttered on the same occasion with regard to England's connection with India. There was an exclamation used to the effect—it could have been but an exclamation—that the connection of Great Britain had only tended to impose a great and material burden upon India, and that India had, at the same time, contributed to the glory and greatness of England. He should be failing in his duty if he did not take that opportunity, in the name of the people of India, of saying that the connection of Great Britain with that country had been the instrument of conferring manifold benefits upon the people of India, and that if India had contributed in any sense to the greatness and glory of England, she only returned a debt she owed for the many blessings she had received, and to that return Great Britain was thrice welcome. [Loud cheers.]


, as perhaps the only Member of the House who had commanded the native troops of the British power in India, entered his strongest protest against the construction that might possibly be put upon certain words which had fallen from the Commander-in-Chief of the British Army. Nothing was further from that gallant Gentleman's mind than to cast any reflection at all upon the spirit, the courage, or the loyally of the native troops in India. No graver question could be raised than that of the efficiency of the Indian Army. He had the honour of recollecting the British troops in India as far back as 1848, and on and off for nearly half-a century, since that time he had been associated with them both in quarters and in various Fields, and he could safely say that, however great their efficiency and power might have been in former days, there was no period in the illustrious and chequered history of the Indian troops of the British Empire at which they were more efficient and better calculated to servo the purpose for which they were intended—namely the defence of their native county and of British interests there—or were more disciplined, more zealous or more loyal to the core than at the present moment. As to the statement that had fallen from Lord Wolseley, he had since qualified it by stating that there was no more efficient, loyal or more splendid troops in the whole world than the native troops of the British Empire. But he had also said that the Indian Army of 120,000 men, or thereabouts, was composed of races not all of equal martial quality. Those who admired them most would be the first to admit the truth of such a statement. He would undertake to say that, if the opinion of experts such as Sir Henry Brackenbury—whose report, dated the 28th March, on the Indian Army had become a State Paper deserving the study of every man in that House—Sir Donald Stewart, and Lord Roberts—who had been Commanders-in-Chief in India—had been given before a Commission like that on which Lord Wolseley gave evidence the other day, they would have been found to be the first to admit that there were great differences both in the martial qualities and preparedness for war of the various portions of their Indian troops. There were 50,000 of them as competent to be put in the field, if officered by a proper number of Europeans, as were any troops in the whole world. Lord Wolseley never intended to say that he was afraid or would decline to lead these 50,000 picked troops against any troops of any other military Power. This question of the efficiency of the British Army in India, under the circumstances of the day, was of primary importance. He contended that the British Army in India was equal to any contingency to which it might be exposed, and capable of facing any opposing force, if only it had a proper number of European officers to lead the men. That was the great defect in the present system. After the Mutiny it was thought right to reconstitute the Indian Army. In the belief that a few regiments that were called irregular had done well with three British officers, the great mistake was made of reconstituting the whole of the Native Army with three British officers per regiment. Later on a fourth, a fifth, a sixth, a seventh, and an eighth officer were added, but the sooner we dissipated the idea that the whole of the Army in India was properly organised for operations beyond the Indian frontier the sooner we would arrive at a degree of safety which would prevent war. The Native troops were now organised on what he would call a totally inefficient system. The system of three linked battalions was an excellent one as long as each battalion had from 20 to 24 British officers. Was it credible to anyone who had studied the organisations of the great; military Powers of Europe that there were only seven or eight British officers to each Indian native battalion, and that of the three battalions linked together, and there were 40 or 50 of them, the theory was that the one battalion that was to be put into the field was to take with it the 20 officers or so that belonged to the three battalions? He could only characterise this as a "fatal" system. Everyone recollected the disaster that occurred to a portion of the Indian Army in 1879 at Maiwand when it was opposed to an Afghan enemy with a great preponderance of artillery. The defect of which he was speaking was then displayed in a striking way. Two Native regiments had only 10 British officers between them, and in the course of the action five of those officers were killed or wounded, and the whole force crumbled up like a rotten stick. The brigade, under General Burroughs, was defeated, and had to retreat for nearly 60 miles simply because the Native portion was not officered as it ought to have been. He did not wish to say anything to the detriment of the Native troops on that occasion. The 1st Bombay Grenadiers, a regiment with a record of a 140 years, fought gallantly and died side by side with their British comrades, but he did hope we would derive some instruction from that disaster. This was a question the magnitude of which could not be overrated. The taxpayers of Great Britain and the taxpayers of India—the most heavily taxed people in the world—had a right to know whether the money extracted from them for the support of their military power was rightly expended, so that when the occasion arose the soldiers they furnished would be so organised as to maintain the defence of their country in a proper way. He implored the Secretary of State for India to take advantage of the interest that had been excited by the somewhat misunderstood expression of Lord Wolseley to initiate a complete and searching Inquiry as to whether the Native Army in India as now officered by British officers was efficient for its purpose or not. The time might not be far distant when it might be as important to this country that every portion of our Native Army should be as efficient for the purpose of the defence of the frontiers of India as the very pick of the troops of whom Lord Wolseley spoke. A great responsibility rested upon Lord Wolseley. Though Commander-in-Chief of the British Army, he was incidentally responsible for the Army of India, and therefore Members of the House who were inclined to take a somewhat unfavourable view of the utterances of Lord Wolseley should make great allowance for a man in his position, and who had always desired to do that which was for the benefit of his country. They might deplore that the utterances were made on an unfit occasion, and perhaps in an unfit way, but a great basis of serious truth underlaid what Lord Wolseley said. He therefore entreated the noble Lord the Secretary of State for India to institute an Inquiry at once as to whether the Native Army in India was, as to its proportion of British officers, in a secure position. A Commission, presided over by Lord Welby, had sat to inquire into the question of the apportionment of the military charges between India and England. He advised the Leader of the House to let no time elapse before reconstituting that Commission and enlarging its scope, so that it could go into the particular point he had now raised. He himself had served the Queen for half a century and felt that, at the close of his career, he could do no greater service than to raise this great question.


said that earlier in the evening he gave his support in a limited way to the Motion of his hon. Friend (Sir W. Wedderburn). Year after year they had pressed on successive Governments the necessity of providing occasions when Indian topics might receive adequate attention. The question to which he desired to draw the attention of the House was one of great importance to both England and India, and was of too large a character to enter into fully. He referred to the question of the cotton duties, and he wished to allude to it briefly for one purpose only. The noble Lord had briefly referred to the duties in the lucid statement he had made touching the finances of India, and pointed out that the modifications he had been able to introduce into the scheme originally accepted by the right hon. Member for Wolverhampton had, at all events, produced this desirable result—that there was now an equitable system in existence as between the Indian and the English manufacturers. While he cordially acknowledged the good effect of those modifications, he would, on the other hand, ask the noble Lord to remember that in former days he had expressed the opinion that those import duties, in whatever sense they might be regarded, were detrimental to trade, and that he had declared that they ought to he repealed whenever the finances of India would enable it to be done. ["Hear, hear!"] That declaration applied with as much force to the question to-day as it did when it was made, and therefore he hoped that the noble Lord had not forgotten it. He was willing to admit that the present moment might not be the most opportune for raising the subject again, and that it might be well to give time for the recent changes in respect to the duties to settle. But he was anxious, nevertheless, that the subject should be kept in mind. ["Hear, hear!"] A few months ago they were told that great agitation existed in India, and that the manufacturers and people of India were protesting against the changes introduced by the noble Lord; but, after all, very little had been heard of this great agitation. ["Hear, hear!"] They were told that the Indian people were ready even to boycott Lancashire cloth and to adopt the most extreme measures of opposition, but no such thing had yet taken place, and he did not believe it was in prospect. He repeated that having regard to the fiscal changes just made in India, and to the fact that the silver question must be one of considerable anxiety to the people of India, remembering what was taking place in America, the present time might not be the best to raise the subject again. Therefore all he would ask the noble Lord to do was to bear in mind the fact that the question of the Indian Cotton Duties had not been absolutely settled, and that when a good opportunity occurred it would be re-opened. ["Hear, hear!"] The rate of exchange at present, perhaps, was too precarious to enter upon the matter, but if next year the silver question was settled in America, and there was any prospect of the same stability in the course of exchange, he hoped and believed those hon. Members who represented Lancashire would take an early opportunity of again raising the whole matter. It was not a party question—["hear, hear!"]—and it was one in which the interests of the people of India and those of British commerce were alike concerned. ["Hear, hear!"]


thought it was desirable that he should now make an appeal to the House to go into Committee. They had had a very interesting discussion, to which the hon. and gallant Member for Durham and the hon. Member for Bethnal Green had made very important contributions—[cheers]—but that discussion had now run its natural course, and he trusted the House would at once go into Committee, when any financial point might be raised.

Main Question put, and agreed to.

Considered in Committee,—

[Mr. J. W. LOWTHER, CHAIRMAN of WAYS and MEANS, in the Chair.]


said he had to congratulate the noble Lord on the satisfactory statement he had made to the House. He would not say that he entertained any feeling of envy towards him in respect to his position when he recollected how he had himself to be content with an increasing expenditure, a falling revenue, and a falling exchange, but at all events he could not help looking with some feeling of jealous pleasure at the statement the noble Lord had been able to make—that although there was an increasing expenditure yet that there was an increasing revenue, and that a balance on the right side had been carefully maintained, and that the rate of exchange had improved from 1s. 1d. when he was in office to 1s. 2d. since the present financial year commenced. If that fortunate state of things continued it would certainly have a material effect on the finances of India. ["Hear, hear!"] He had always maintained, as the noble Lord had done on that occasion, that the true secret of our financial difficulties in India was the difficulty of exchange, and that the great increase in net Indian expenditure was attributable, in the main, to the enormous loss sustained on exchange. The loss upon exchange during the last few years was given by the noble Lord in his explanatory statement, which showed that while in 1882 the total charge for exchange was Rx. 2,000,000, in 1892 it was Rx. 7,000,000, and in 1896 it was Rx. 13,500,000. This was the real trouble they had to face, and he hoped that the expectations the noble Lord had held out might be realised. He had been much gratified to hear that the frontier difficulties were coming to an end. Our anxiety had been owing not so much to aggressive action on the part of our neighbours in India as to the difficulty of ascertaining and settling what were the true frontier boundaries with neighbouring States, and he was glad that a similar policy to that pursued with regard to the settlement of the boundaries of the Pamirs was being pursued by the present Government in those important matters. It was true that the subject in which perhaps he took the greatest interest when he was in office was that of the extension of railways in India, and he was very pleased to note the advance which the noble Lord had made in this work during the present year. Owing to the financial difficulties created by the loss on exchange the work of railway extension was suspended to a great extent in 1890, and in 1892 and 1893 it reached its lowest ebb. Therefore, it was very satisfactory to learn that the noble Lord had been able to provide by various means upwards of Rx. 12,000,000 for expenditure on the work this year—["hear, hear!"]—for nothing could tend to promote prosperity in India more than a large railway expenditure. ["Hear, hear!"] In the last three years the percentage of net receipts on capital cost had increased from 5½ in 1893 to nearly 6 per cent. in 1895; the number of passengers had increased in the same period from 135 millions to 152 millions, and the amount of merchandise conveyed on the Indian railways had increased from 28,000,000 to 32,000,000 tons. Therefore this increased railway expenditure was a wise one because it was successful. He hoped the noble Lord would continue to pursue this policy, and in doing so he would confer a great boon on the people of India. ["Hear, hear!"] A point on which the noble Lord did not touch, and one to which he wished to refer, was the debt of India. The Indian debt was Ex. 122,000,000, and the sterling debt was £115,000,000. But that was not all the truth of the case, and he wished to call the attention of the Committee to page 23 of the Memorandum of the noble Lord, in which, taking the figures down to March 31, 1896, it was shown that, whereas the debt in India was Rx. 123,000,000, the assets against that debt in India were Rx. 148,000,000. Therefore, they had an actual excess of assets over liabilities of 25½ millions. The debt of India was like the debt of a municipality in England, who incurred a debt to pay for a gas works or to construct a water works or any other reproductive works; and of all reproductive expenditure in India, that on railways and irrigation was certainly the most satisfactory. ["Hear, hear!"] The rupee debt of India was 123 million tens of rupees. Against that, in railways constructed by the State, in irrigation works, in loans to corporations, and in cash balances there was a set-off of 148 millions; showing that, so far as India was concerned, there was a balance to the good of 25½ millions. The sterling debt of India in England was £116,000,000, and the charges, advances to railway companies, and cash on the other side of the account amounted to £68,000,000. Therefore, in England they had an uncovered debt in excess of assets of £47,000,000. If they deducted 25 millions from £47,000,000,'the House would get at what was the real debt of India. He knew of no other country of similar magnitude where the real debt was of the smallness of the real debt of India. There was another point with reference to the taxation of India. He agreed with the noble Lord that the sources of Indian taxation were limited. He did not see that there were many other sources from which he could draw, and that, of course, had a proper restraining effect on Indian taxation. He also agreed with the noble Lord that there was one tax which he ventured to think had the first claim upon the Secretary of State and upon the India Council, and he was sure would have the first claim on the Legislative Council in Calcutta whenever there should be a surplus. That was the Salt Tax. ["Hear, hear!"] The Salt Tax was raised in a special emergency a few years ago. It was raised to a very high percentage, and, like the Income Tax in England, it was a tax which could be raised more readily than any other tax. In a time of, he would not say peace, but of tranquility and of prosperity, he was satisfied it was to the interest of the Indian Exchequer, as well as to the interest of the taxpayer of India, that that tax should be at as low a figure as it reasonably could be. They were told that India was such a heavily-taxed nation. He did not deny the poverty of the Indian people, and he did not deny that the burden of taxation was heavy. At the same time, it was always well they should know what the exact figures were. The burden of taxation, according to the Secretary of State's own statement, was, putting it into English money, 2s 5¼d. per head in 1895; 2s. 6¾d. in 1896; and for 1897 he estimated it at 2s. 6½d. In this calculation he was taking the rupee as worth 2s. The taxation of England was on a very different scale. In England the taxation per head was £2 11s. 8d.; in Scotland, £2 8s. 1d.; and in Ireland, £1 12s. 5d. Those were, no doubt, very wealthy countries compared with India, but nevertheless there was a very great difference between 2s. 5¼d. and the figures he had just given. Again, the noble Lord reminded them of what would happen if the British Government of India was superseded by another Government. He ventured to say there would be an enormous increase in the burden of taxation. [Cheers.] When he heard the economy of the British rule impugned and the expenditure of the British Government styled extravagant, he should like the House to contrast the British expenditure in Madras with the expenditure of the Government of Mysore, which was a native Government, one of the best native Governments, a Government of great ability, of great enterprise, and of great public spirit. He had not the figures before him, but hon. Gentlemen would perhaps take it from him as correct, that the expenditure per head in Mysore; was greater than it was in Madras. He simply made that remark, not as in any way casting the slightest reflection on the expenditure of Mysore, which he believed to be wise and just, but as some indication of the nature of the charges which were spread broadcast with reference to the expenditure of the Indian Government. He thought the Secretary of State would have to contemplate an increase in internal expenditure in India. As time went on, and as the wise demands of Indian civilisation increased, he was satisfied that in all those social, sanitary, educational, and other means of expenditure on which this country and their colonies prided themselves, and which were most happily increasing in India, he was satisfied the Secretary of State would have to increase his outlay. He hoped the House would pardon him if he said a word upon a matter in which he had a personal interest, and on which he had been criticised most severely, and on which his mouth had been closed—namely, the Cotton Duties, and if he also expressed his own opinion as to what was the best mode of carrying out that policy on which the noble Lord and himself, he thought he might say, had been agreed. Nobody, he thought, would contradict the statement that from the very first he always maintained his determination to remove any just complaints that this country could have against these duties, so far as they were protective. The basis of his policy was that there should be no protection. It was admitted eventually, and he was himself convinced, that there was to a slight extent an element of protection in the duties. The Lancashire people contended that exempting local yarns under 20's from excise was unfair to them, and that to tax the cloth at its finished value, whereas the excise duty was only upon yarn value, was also unfair as favouring the local production. He thought the contentions were greatly exaggerated, but as far as the principle was concerned the complaint as to the inequality of the duties on piece goods was made out. He thought the Government of India and the noble Lord and his Council at home were quite right in recognising it. But the question arose—What was the best mode of removing that protection? And there, perhaps, he was rather disposed to part company with the noble Lord. The ablest document he had seen in the Blue-book upon the question was the memorandum of Mr. Campbell, Collector of Land Revenues and Customs at Bombay to the Government of Bombay, and and it was fair and just to that distinguished officer to call the attention of the House to the great ability with which he dealt with the whole case, and although he himself was unable to concur in the conclusion at which Mr. Campbell arrived, he was not surprised that the noble Lord and the Government of India had looked at that conclusion with favour and had practically accepted it. Now, Mr. Campbell pointed out that there were three courses open to the Government, and those three courses were—(1) to tax all cloth and yarns at finished values; (2) to tax all yarns over 20's and all goods containing such yarns and to exempt all cloth and yarns of 20's and under; and (3) to tax all woven goods and exempt all yarns. Now, the collector at Bombay stated that, in his opinion, the only practical alternative was to tax all cloth and exempt all yarns, and that was the view which the Secretary of State had taken. Before the matter came to the consideration of the Legislature in Calcutta the Bombay Government were consulted. That Government, representing as they did a portion of India containing the largest Indian manufacturing interests, were entitled to speak with some weight upon the question. The Bombay Government, in a letter addressed by them in January last to the Government of India, said there were two schemes put forward—namely, that of the Bombay millowners, which was to exempt all imported yarns of 20's and under, and all cloths made from such yarns, and to put them on the same footing as similar local produce, and that the excise should be imposed on the market value of all Indian cloth made from yarns over 20's. That no doubt removed all protection. The proposal of the collector of land revenue was that all yarns should be exempt, and that all cloth should be taxed at its market value. Mr. Campbell raised the point which had great weight, if he might say so, with the noble Lord—namely, the difficulty of the dividing line at 20's. There was one other difficulty connected with this scheme which he should like to notice in passing, which was this, that if you levy a tax exclusively upon woven goods you leave out a very large class of native produce which was made in hand-looms. Under the scheme which the late Government sanctioned the tax was levied on yarn, and, therefore, before ever it reached the hand-loom weaver it had paid the duty, but, of course, if yarns were exempt from duty that industry remained unchecked. What the Bombay Government said was this: The fourth objection is, in the opinion of his Excellency in Council, of considerable importance. There are hereditary, skilled, and generally well-to-do weavers throughout the country who will be materially aided in their competition with the mills by a tax on the cloth produced in the mills from which they are xempt.

That question was very fully discussed. It was discussed at Madras and Cawnpur, where this industry was, perhaps, more extensive than in any other part of India, and the Cotton Chamber at Cawnpur said, This Chamber's views coincide with those expressed" (at Bombay). "Within the last five years two mills at Cawnpur have had to discontinue the weaving of cloth and stop their looms because of their inability to compete with hand-woven cloths. Two-thirds of the cotton cloth production in India was from handlooms and one-third from powerlooms, and the impending legislation proposed to penalise the weaker industry. That view was repeated in a variety of other documents in the Blue-book. He had no idea until he saw these figures that between 6,000,000 and 7,000,000 persons in India were dependent on the handloom industry; and, of course, whether right or wrong, they must not overlook the fact that a large industry in India which must compete, he thought, with Lancashire and with the powerloom mills in India, was exempt from taxation altogether. There was another point raised by the Government of Bombay to which some importance should be attached. It was the serious objection to the taxation of cloths used by the poorer class of consumers. The difficulty of the dividing line was, of course, a question for experts, and he felt great hesitation in expressing an opinion upon it; but he could not shut his eyes to the fact that the illustration which the noble Lord gave as to the marvellous conversion of duty-payable into duty-free cloths which took place in 1878 and 1880 had been dealt with very fully by the Bombay authorities. He thought that the objections with reference to the dividing line were not so strong as were objections to taxing the coarser cloths; and, balancing the two together, he said with hesitation, and with the knowledge of the opinions of the Governments of Bombay and Madras and the various chambers of commerce in India, that his own preference would have been to exempt from duty all yarns below 20's and all cloths made from yarns below 20's, and to have levied a tax on everything above 20's. He thought that this would have removed all element of protection. He admitted that Sir James Westland did not agree with that view; but there was one point which they should not forget in this controversy and which he should like to commend to the attention of the House, to Lancashire and Bombay as well. Sir James Westland said it would be seen that he had throughout dealt with this question on the assumption that the tax, whatever it was, fell on and was paid by the Indian consumer; much of the language held in Manchester would seem to indicate a belief that the tax fell on the producer. But Sir James could hardly believe that this view was seriously accepted by Manchester merchants, and he was quite sure that two years ago they would have rejected it as an economic heresy; this tax was paid, as all Customs and excise taxes were paid, by the consumer sooner or later. It had been with great reluctance that he had been compelled by public considerations to take up the question, but they ought not to overrate and add to difficulties which did not really exist. His object was to make the burden on the Indian consumer as light as possible. If the Indian consumer bought Manchester cloth, he had to pay the Excise duty. His policy was that the poor consumer, who were the coarser cloth, should not pay the duty. The yarns from which his clothing was spun were subject neither to customs nor excise. The decision at which the noble Lord had arrived, by alleging the impossibility of laying down a dividing line, had thrown this tax on all classes of the Indian people.

*COLONEL MELLOR (Lancashire, Radcliffe)

felt bound to say a few words after the statement of the right hon. Gentleman opposite. He thought he might speak with some authority on the matter from his long experience of the textile industry. He thanked the noble Lord, on behalf of all Lancashire, employers and employed, for the steps taken with regard to the import duties. The noble Lord was undoubtedly placed in a very difficult position, and he faced it in a perfectly straightforward manner. He showed a grasp of technical points which certainly surprised a great many people in Lancashire, and he could not have come to a wiser, sounder, and juster decision. As to the difficulty of differentiating between coarse and fine cloths, he might state that in 1878, 1879, and 1880 his firm was largely engaged in manufactures for the Indian market, but a complete change took place in the making of these goods, in consequence of the change of duties. The right hon. Gentleman opposite might rely upon it that, if the plan he favoured was carried out, and there was again a differentiation, Lancashire would once more find means of evading the tax.


suggested that substitute would be a better word than evade.


said he would avail himself of the word substitute. Reference had been made to the protection which the present arrangement afforded the handloom weavers of India. He, for one, thought that Lancashire weavers had nothing to fear from that protection. They did not believe that handloom productions could for any lengthened period compete with power-loom productions. At one time there was an enormous production in Lancashire of hand-loom calico, but it had been displaced by power-loom calico. Hand-loom silk weaving had also almost entirely given way to power-loom weaving, and he believed the same process would come about in time with regard to the Indian products. But if it did not, who would be benefited? The poorest people on earth, to whom they did not begrudge the advantage. He believed these people made very little cloth for the bazaars, and he, for one, would be glad if they derived some little advantage from the change. He agreed that the first tax to be removed in India was the Salt Tax, but when a suitable time did come they hoped and believed the noble Lord would remove as early as possible these duties altogether—at a time when it would be alike advantageous to the finances of India, to the people and manufacturers of India, and to the manufacturers and operatives of Lancashire. The people of Lancashire had been accused of selfishness, but he was sure they did not wish to do anything to injure the people of India. After all, the 7,000,000 of hand loom weavers of India were a small proportion of the 270,000,000 in India, and if they derived any comfort in their miserable lives from the slight protection these duties gave them, by all means let them have it. He thanked the noble Lord sincerely for what he had done in this matter.


thought the noble Lord was quite entitled to congratulation on the Budget he had been able to submit, but at the same time he thought that although the surplus that was shown was very satisfactory for the Treasury, there were certain figures in the account which showed that the condition of affairs was not so satisfactory for the Indian taxpayer. He would specially draw the noble Lord's attention to the peculiar use of two words in these accounts—namely, improvement and deterioration. These two words were used solely from the point of view of the interests of the Treasury. They were used in a sense exactly contrary to the sense in which they would be used if applied to the financial position of India. Under the head of improvement was shown new taxation. New taxation did not improve the financial position of India. It showed a deterioration in the condition of the people. If he drew his savings out of the bank and put them into current expenditure, that was not an improvement in his financial position. Similarly if a shop-keeper took money out of his strong box and put it into his till, that was deterioration, not improvement. Therefore, it was because these accounts looked only to the interests of the Treasury and not to those of the taxpayer, that he contended that in many respects they produced a false impression. He could not, therefore, accept the comparison made in these statements and he would instead give a comparison between two years including a space of 12 years, which would enable the House to see whether the condition of India was improving or not. When the year 1894–5 was compared with the year 1896–7, it would be found that the natural increase of revenue from the development of resources was about Rx.9,000,000, and the saving in the commercial service debt Rx. 1,000,000, making a total improvement of Rx.10,000,000. With regard to deterioration, he found an increase in the land revenue from enhanced assessments of Rx.500,000, new taxation Rx.6,000,000, loss of opium revenue Rx. 1,500,000, increase in civil services Rx. 7,500,000, increase in military services Rx.8,500,000, reduction in Famine Grant Rx. 1,000,000, making a total deterioration of Rx.25,000,000, or after deducting Rx.10,000,000 for improvements, a net deterioration in 12 years of Rx.15,000,000. The right hon. Gentleman the Member for Wolverhampton had laid great stress upon the question of exchange, but as regarded the present rate of exchange, so far from its being a burden now, there was actually an increase of Rx. 1,500,000, so that that bugbear of exchange would no longer be put forward and they might look much more to the constant increase in civil and military expenditure. He thanked the hon. Gentleman the Member for the Radcliffe Division of Lancashire for what he had said about the Salt Tax and the willingness of the people of Lancashire to see the needs of the great masses of the people relieved before the question of Import Duties was touched. He recognised that feeling gratefully, and he only trusted that by careful economy, not only the Salt Tax might be reduced, but the Import Duties entirely abolished. He might mention to the noble Lord the Secretary of State that the figures he had given were given according to the way in which they were used in a very interesting article in the Daily Chronicle that morning, and the statements there were in accordance with the mode of reckoning the expenditure and revenue which had been often placed before the India Office by the British Committee of the Indian National Congress.

MR. KENYON (Bury, Lancashire)

said that the complaint of the people of Lancashire against Indian Cotton Duties had always been that they were levied with injustice. He thought that the people of Lancashire had good reason to complain of the manner in which the right hon. Gentleman the Member for Wolverhampton had treated a deputation from them, which had waited upon him last year. The language of the right hon. Gentleman had rather rankled in the minds of the Lancashire people ever since. It was contended that duties of this kind were always paid by the consumer, but when the duties were unjustly levied, the producers always suffered by it. The right hon. Gentleman the Member for Wolverhampton had referred to the report of Mr. Campbell, Collector of Customs, Bombay, in which he said that— There is more weight, at least in theory and in possibility, in certain of the objections taken by Manchester to the existing excise arrangements than cither the Millowners Association or the Chamber of Commerce admit. He went on to say— That the difficulties in working the proposed exemption of yarns and cloth of 20's and under, and still more in taxing both yarn and cloth of 20's and over, are so grave as to make the proposal to tax cloth and exempt yarn the only practical solution of the question. He further said:— Reduction from 5 to 3½ per cent. takes from the objections all or nearly all of their practical significance. In a Report from Upper India Chamber of Commerce, Cawnpore, there was a remark that bore very importantly upon the question of the supremacy of British Government. The Report stated:— And in finish and dye India cannot at present produce as good drill as England, but the difficulties aro gradually lessening, and the moment Indian weavers and dyers attain the necessary skill, English drills must cease to be imported. The great authority on this question, and the most powerful movers in opposition to English goods, were the Bombay Mill-owners Association. They said that, if the Government were willing, both the English and the Indian manufacturers would be glad to have the duties abolished. They alleged that the Indian industry was penalised on stores, and lastly, and most important of ah, that there must be decided protection given to handlooms. A better authority than, he thought, almost anyone in that House, was the Ahmedabad Millowners Association. Then there was another witness as regarded the handloom weavers, Mr. Playfair, who thought that if it were possible to extend help to this class, it would be but assisting a section of the community which had suffered much by the introduction of powerloom manufactures—a relief which should not be grudged. The hon. Babu Mohiny Mohun Roy thought that this change was not likely to affect the interests of cotton mills to such an extent as to render it objectionable. He thought the House would be satisfied that this arrangement of the noble Lord would not do any harm, and he was quite certain that the course he had taken in reducing the duty was far more equitable than the arrangement they had before.

*MR. J. F. OSWALD (Oldham)

said, as one of the Members representing Lancashire, he had sat out this interesting, animated, and exhilarating Debate on the Indian revenues. [Laughter.] He thought that, as all the Lancashire Members were in a congratulatory mood, he would take the liberty of offering his congratulations also to the noble Lord on the satisfactory basis upon which he had for the present settled the vexed question of the Indian Cotton Duties. The noble Lord had no doubt found this to be a vexed question during the late election last year. It had then been a very vexed question in Lancashire. [Laughter.] He desired to ask the noble Lord whether the full amount authorised to be expended upon railways in India had been expended in the last financial year. If that was not the case, he hoped that the full amount would be expended in future, because his constituents attached the greatest importance to the full development of railways in India for opening up the trade of the country. He hoped, also, that the noble Lord would do all that was possible in pushing forward the construction in India of the railway mileage which had been sanctioned, but not yet completed.


complained of the way in which the Government advertised the sale of Indian Bills, and stated that it enabled those who wished to do so to take advantage of the Indian exchequer.


, who was very imperfectly heard, said the general discussion had been so friendly that he had very little to answer. In regard to the question raised by his hon. Friend who had just spoken, he was assured by his official advisers that the system was as good a one as could be devised, and one of the highest banking authorities in the United Kingdom had also assured him that that was the case. As to railways, it was intended that all the money voted for railways should for the next few years be spent, and not only this year, but the same rate of expenditure would be maintained. The complicated but important matter to which the hon. Member for Bethnal Green had called attention was one to which the Indian Government were giving great attention. The change urged would involve great expenditure, but gradually the Indian Government were working in that direction. As to the tariff which he had substituted for that of the right hon. Member for Wolverhampton in respect of the cotton duties, he did not think there would ever be peace on the question as long as there were differential duties. He reached his conclusions after consultation with the best authorities in this country, and, curiously enough, Sir J. Westland, in India, arrived at just the same conclusion. Various suggestions had been made to secure economy. The Indian Government were doing their work well in controlling expenditure, and while they were doing that, the wisest thing which the House of Commons could do was to leave them alone. [Cheers.]

Main 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 1895 was Rx.95,187,429; that the Total Expenditure in India and in England charged against the Revenue was Rx. 94,494,319; that there was a Surplus of Revenue over Expenditure of Rx.693,110; and that the Capital Outlay on Railways and Irrigation Works not charged against Revenue was Rx.4,446,231.—(The Secretary of State for India.)

Resolution to be reported.