EAST INDIA LOAN.

HC Deb 07 June 1898 vol 58 cc877-942

Considered in Committee.

Mr. J. W. LOWTHER (Cumberland, Penrith),

CHAIRMAN of WAYS and MEANS, in the Chair.]

(In the Committee.)

Motion made and Question proposed— That it is expedient to authorise, the Secretary of State in Council for India to raise in the United Kingdom any sum or sums not exceeding ten millions sterling for the service of the Government of India on the security of the revenue of India, and to make provision in relation thereto."—(The Secretary of State for India.)

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

These Members of the House who are new in Committee and take interest in Indian finance, and who have read the Debate on the Indian financial proposals for the present year are aware that an integral part of those proposals was the raising of a loan in this country, and the fact of the borrowing powers of the Secretary of State being almost exhausted necessitates an appeal to Parliament for the necessary power. I may, at the outset, explain that the loan founded on the resolution I propose to move is connected solely with the ordinary financial and administrative business of the Government of India, and has nothing whatever to do with the currency proposals which, with the assent of the House, have been referred to a Committee for investigation and report. The purposes for which this loan is required can be roughly summed up under three heads. The first object is to redeem obligations of the Secretary of State which were contracted at high rates of interest in past times, and are now approaching maturity. Such obligations are to be discharged and replaced by the issue of debt bearing a lower rate of interest, and. therefore, by this transaction there will be no addition to the total indebtedness of the Government of India; on the contrary, there will be a reduction of the amount of interest payable on the amount of the debt. The second purpose to which this loan is to be applied will be to provide part of the capital funds which are raised for railway extension in India. Every year the Indian Government invests a largo amount of capital in these and other reproductive works; spending as much as it can out of surplus revenue, borrowing as much as it can in India, and when it has exhausted Indian resources conning to the London market. The third purpose associated with the loan is to give a certain reserve resource to the Secretary of State, so that in case of exceptional disturbance in India, in the event of famine or war largely reducing the available revenue at the disposal of the Indian Government find preventing the remittance of sums for the discharge of obligations in this country, the Secretary of State will have something at his disposal to tide him over the difficulty. Such are the objects to which this loan is to be applied. The amount I propose to ask the assent of the House to is 10 millions sterling. That is, I believe, about the usual amount asked for on such occasions as this. In August next debentures amounting to £3,000,000, and bearing interest 3¼ per cent., will mature, and it is proposed to redeem these and replace them by debt bearing a lower rate of interest. In the course of the year a smaller sum, £384,700 Oudh and Rohilkund Debentures at 4 per cent., have matured, and these we shall have to replace by stock bearing lower interest. The total amount required to replace existing obligations is £.3,384,700, and, in addition to this, £2,615,300 will be required to meet other disbursements, including railway capital requirements in this country for India. These two items together make £6,000,000. The home net expenditure of this year is estimated at £16,280,500. We propose to draw upon India to the extant of £16,000,000, and the balance of that sum will be met out of this loan; and the remainder of the sum of £2,615,300, which I have mentioned above, will be available, as I before said, for the advancement and extension of railway construction in India. Therefore the total net amount which will be added to the indebtedness of the Government of India in this country will be £2,615,300, during the current year. Notice will have to be given, to the Money Market that it is our intention to raise this money some time in July, and therefore it is necessary to get the assent of the House to our proposals at an early date. It seems to me, therefore, that, as I shall have to ask the leave of the House to raise this sum of money, it is only reasonable to give the House some indication of the nature of the security on which this loan is to be raised. That necessitates a review of Indian finance, and affords a favourable opportunity to make that statement upon the position of the finances of India during the past few years which is usually made at a later period of the Session.

* MR. MACLEAN (Cardiff,)

Will the noble Lord say what is proposed to be done with the six millions sterling bills raised last year to pay off home charges? Are they going to be renewed?

* THE SECRETARY OF STATE FOR INDIA

Yes, they are going to be renewed.

* MR. MACLEAN

Then this will be additional.

* THE SECRETARY OF STATE FOR INDIA

No, the six millions of bills form part of the amount. But if my honourable Friend will allow me to go on in my own way I will deal with that point subsequently. The accounts made up for 1896–97, the first famine year, show a deficit of Rx.1,705,022, less than the estimate by Rx.281,878. Consequently, our financial position, so far as that year is concerned, is improved by that amount. The revised estimates for 1897–98 indicate a deficit of Rx.5,283,100. In the Debate raised on the Address by the honourable Member for Flint I stated that, according to the latest information, the deficit would be Rx.6,630,000; our position, therefore, is better than was then anticipated by Rx.l,346,900. The Budget for 1898–99 estimates a surplus of Rx.891,400, and if honourable Members will be good enough to total up these three sets of figures, it will be found that they amount to a total deficit of Rx.6,096,722 for those three years. But owing to the exceptional disturbances which occurred during the whole of this period it would be mere waste of time if I were to make the usual analysis and comparison which form a large, part of the annual statement of the Secretary of State for India. Famine, plague, earthquake, and war have caused great disturbance, both on the revenue side and the expenditure side, and I propose to take each of these items in detail and the Committee will see what amount of exceptional expenditure the Indian revenue has had to bear in the past few years and how far India has been able during the past three years to meet this exceptional expenditure without additional taxation. Sir J. Westland in his financial statement included a table of figures showing the cost, direct and indirect, of the famine for the three years, but this table omits the temporary suspension, of revenue which, though perhaps recoverable in future years, is an important loss in years when famine is prevalent. I propose to include these, to debit the year in which the temporary suspension of revenue occurs, and to credit the years in which that temporary suspension is recovered, and I propose also to include for purposes of comparison the amount of the Famine Insurance Fund. For the year 1896–97 the total direct and indirect loss caused to the Indian Exchequer by the famine was Rx.7,514,312. For the year 1897–98 it amounts to the enormous sum of Rx.9,717,900. The original estimates of the Indian Government were much exceeded this year. As the House is aware there are two crops in India—the spring crop and the autumn crop. The Budget statement is made in February, at a time when the Government are in full possession of the crop prospects of Northern India, but they could not accurately estimate what would take place in Madras, Bombay, and the midland portions of India. Rain did not fall at the time at which it usually does, and thus the famine operations were much protracted in those districts, and that accounts for the large increase over the original estimate. For the year 1898–99 the famine expenditure is estimated at Rx.769,700, and, taking the total of the three years together, we get an aggregate of Rx.18,001,912 as the cost of the famine to the Indian Government. It will give the Committee some idea of the dimensions of the famine operations of the Indian Government when I say that the total number of units relieved—a, "unit" being one person relieved one day—amounts in the aggregate to 828,893,000, being an average of 1,814,000 per day for a period of 15 months. The Indian Government were greatly assisted by the contributions which the public benevolence in this and other countries contributed as a supplement to the expenditure of the Indian Government. We have now an account of the manner in which these funds were applied, and we know that no less than 1,250,000 heads of families were relieved by grants of cattle, seed, and implements so as to enable them to pursue their avocations. Some 1,000,000 persons of respectable position who had not recourse to Government aid were fed through charitable, agencies; 1,250,000 persons on relief works were assisted in addition, and, further, provision was made for the maintenance and education of 4,000 orphans whose friends cannot be found. I believe that there never has been raised so large a sum for charitable purposes as that contributed by this country during the past 18 months to the relief of the sufferers by the Indian famine. I was blamed, and certain gentlemen in this House blamed me, because I did not authorise an appeal to be made at an earlier date to the British public. I thought it wise first to be able to accurately state the full dimensions of the famine before such an appeal was made; and, further, I considered it essential that all the details of the scheme by which the funds should be applied should be worked out so that it should be made clear to the public that the fund was not to be used in any way to take the responsibility from the shoulders of the Government. I think I was not wrong in thus delaying the appeal to the public, inasmuch as a larger sum was obtained than was ever the case before, and was administered more efficiently for the purposes of relief than any previous contributions of the same kind. The disaster is the most serious visitation of that character which has occurred during the present century. In many parts of the country there was a famine of wages as well as of food. There was terrible mortality in certain parts of the country, and almost every class of the community was in some way or other affected by it. But if one looks at it from the political and administrative point of view and reflects upon the result of the relief operations, there is much that is satisfactory and gratifying to know. It is admitted on all hands that no Government ever made so great and successful an effort before to combat famine and avert its consequences, and the people in the districts who had the benefit of Government relief and were under Government supervision recognise this fact and are deeply grateful for the assistance so given. On the other hand, the superintending, district, and local officers were brought more personally into contact with the people, and obtained a better knowledge of their idiosyncrasies and peculiarities than they could have done had they been engaged in their ordinary routine work, and I am glad to say that in many parts of the country special ties of sympathy have sprung up between the governors and the governed, productive of reciprocal goodwill, and the joint efforts of both rendered the difficult task of suppressing these evils less difficult than it otherwise would have been. The expenditure upon the plague is, comparatively speaking, small. The figures I am about to give represent only the direct expenditure of the Government, and they do not take into account sums which were spent by local authorities or municipalities. They amount to Rx.23,700 in 1896–7, Rx.284,100 in 1897–98, and Rx.118,100 in 1898–99, making a total of Rx.425,900 expended during this triennial period. We are now at the time of the year when this terrible disease is least effective in its ravages and when it is most easily kept under control; but I am sorry to say there is no use disguising the fact that in spite of the vigilance and exertions of the local authorities the plague has made great ravages during the past six months. Every effort has been made by the Government to prevent its spread; no pains have been spared to reassure the people as to the measures to be adopted for its suppression, and to secure, if possible, their co-operation. Of all the troubles and all the evils which the Indian Government has had to face during the past few years, I feel most apprehension upon this subject of the plague, because it brings the modern sanitary ideas of the West into sharp contact with the ancient customs of the East. On the one hand the Government cannot suffer that the people should be swept off the face of the earth, without making some effort, and, on the other, they must walk warily, lest, in saving the people from themselves, they stir up the fanatical ignorance of the people against the necessities of modern sanitation. The Government has to combat with the traditions of centuries, and the hardest work of the local authorities has been in combating these traditions and securing the co-operation of the people themselves. In many districts they have heartily co-operated, and the joint efforts have, I am glad to say, in many instances been successful. The expenditure in consequence of the damages caused to railways and public buildings by the earthquake amounted in these three years to the sum of Rx.534,000. As regards the exceptional military operations which occurred during this time, in the first year the amount spent upon them was Rx.39,000. In 1897–98 the operations on the North-Western Frontier cost Rx.3,823,000, and the Indian Government have made provision to the extent of Rx. 1,488,000 in the Budget for possible expenditure. We have every reason to hope that this estimate will be largely in excess of any possible expenditure. Taking the total expenditure on military operations up to this time, it amounts in the aggregate to Rx.5,351,000. I think that whatever difference of opinion may prevail on various sides of the House as to the origin of the Frontier disturbances, we all note with, intense satisfaction that the military operations have been completely successful. Sir William Lockhart and his soldiers, in spite of the almost insuperable physical difficulties which they had to overcome, have successfully performed one of the most troublesome tasks ever given to men to undertake. The combination of strength and clemency which has been shown by the Indian Government to the wild border tribes has had a beneficial effect, and I trust that in years to come we shall have comparative tranquillity in these regions. The policy of Her Majesty's Government, which was laid down in a dispatch sent to the Government of India, was, I believe, ap- proved by all sections in this House. It was based on the principles of concentration and conciliation, and I hope that a steady adherence to the principles so laid down will prevent the likelihood of any drain on the Exchequer of India, such as that to which it has just been subjected, for many years to come. If the Committee will follow me in the figures I have laid before them, they will see that during these three years, even, with the exceptional loss to the Indian Exchequer, in consequence of either the direct or indirect action of famine, plague, earthquake, and war, amounting to no less than the enormous sum of Rx.24,312,880, the deficit is only Rx.6,096,722; therefore we have in this triennial period of exceptional disturbance the satisfaction of knowing that no less a sum than Rx.l8,216,185 of the exceptional expenditure has been met by the ordinary revenue without the imposition of any additional taxation. This statement is far more satisfactory than I anticipated it would be possible for me to make a few months ago, and I think it is due to two causes. In the first place, the ordinary revenue has stood the troubles of the past three years exceptionally well. Those who take an interest in the difference between our fiscal system and the fiscal system prevailing in India will know that a much larger proportion of taxation in this country is raised by indirect means than in India, and that here, owing to the greater wealth of the community, we consume a much larger proportion of those taxable articles which, if not included under the head of luxuries, lie in the scale between the luxuries and necessaries of life. The result, there fore, is that the British revenue shows much more elasticity than the Indian, revenue in times of prosperity, but in times of adversity the Indian revenue shows greater stability. That is one of the causes to which the satisfactory balance-sheet for these three years is attributable. But the main cause of this satisfactory statement is due to the steady rise in the exchange value of the rupee during the past few years. I am very anxious to avoid all controversial questions associated in any way with the movement of the rupee. There is always some question or other agitating the community upon which it seems necessary for people to be inflexible and implacable. Theological discussions during the Middle Ages much excited the attention of the community, and the practice of those who obtained a prominent position in any community was to endeavour to establish theological orthodoxy by means of tin rack or the stake. Well, currency questions seem to lead rather to the same position. I have received a good many communications from different person during the last few weeks; they do not agree with me, and I am quite certain that, if they had the power, the stake and the rack are the very least of the penalties to which they would subject me. Therefore what I am now about to say I will make us non-controversial as possible. There is in the Indian accounts for the year the item, "Loss by exchange." I want to make it perfectly clear what that loss by exchange- means. For many years the exchange value of the rupee measured in gold was 2s., and every 10 rupees remitted was equivalent to £1 in gold. As the rupee fell in value it became necessary to put in some adjusting item in order to show the number of rupees over and above the rate of 10 to £1 which were remitted to this country in order to be the equivalent in value of £1. The loss by exchange which is annually included in the accounts of the Government of India includes that number of rupees over and above the rate of 10 to £1 which annually have to be remitted to meet the obligations of the Secretary of State. It consequently follows that the higher the exchange value of the rupee the leas is this item called "loss by exchange"; the lower the rate, the greater the loss. During the last three years the rupee has steadily risen. During my predecessor's tenure of office in the year 1894–95 it fell to 12.7d.; in 1896–97 it rose to an average of 14.4d.; in 1897–98 to 15.3d.; and in 1898–99 the same rate is taken. The total loss by exchange for these three years in the aggregate is estimated at Rx.33,063,999, giving an average loss of Rx.11,000,000 for each year. I perceive in certain quarters an idea, which is very freely promulgated, that a fall in the exchange value of the rupee does not really affect the Indian Government, and this conclusion is arrived at by the following process of reasoning. It is asserted that the aggregate indebtedness of any one community to other communities in the world is discharged by the surplus of the exports of that community over its imports, and, consequently, it is assumed that so long as the export trade of India s good it is immaterial to the Indian Government what is the rate at which they will have to meet their obligations here. I daresay as an abstract proposition it is perfectly true that the general indebtedness of a community is discharged by the surplus of its exports over its imports, but you cannot apply that general abstract principle in concrete to each individual matter. The exports from India do not belong to the Indian Government. The ability or inability of the Indian Government to meet its obligations in this country does not depend on the export trade of India; it depends on the number of rupees it has in its cash balances, and which it can remit to meet its obligations, and the lower the exchange the larger the number of rupees from its cash balances which it has to remit. Consequently the continued fall in the value of the rupee must entail a larger and larger number of rupees being remitted here. There may arrive a period when the Indian Government will be unable to meet its obligations unless it can increase its revenues to a similar extent. That is a self - evident proposition, and I want the Committee just to realise what difference a slight rise in the exchange value of the rupee has done for Indian finance during the critical period of the last three years. I will assume for a minute that the rupee had remained at the figure which it reached during my predecessor's tenure of office—12s. 7d.; though at the present moment the silver value of the rupee is as low as 10.5d. I think, therefore, all will agree that 12.7d. is a reasonable figure at which the rupee might be taken if the Indian Government had done nothing. But if it had remained at that figure the loss by exchange during the past three years would have been Rx.50,250,000, an excess of Rx.17,000,000 over the actual loss that did occur, and the deficits which we should have had to face would have been, not Rx.6,000,000, but Rx.23,000,000, and so far from having a surplus for next year —of which I think there is every reasonable prospect—we should have been face to face with a deficit of Rx.5,750,000. I think it most unfair that an attack should have been made on the Indian Government in this connection. It has been asserted that they have wantonly raised this question of exchange and forced currency proposals on the monetary world. If the Indian Government had stood still and done nothing, I repeat what I have said before, that they would have gradually drifted into a position in which they would not have been able to meet their obligations. I venture to say in that case the same individuals and the same interests which now attack them for having wantonly raised this currency question would have been the first to denounce them then for an attitude of vacillation and ineptitude when they found what enormous, monetary interests were at stake, and that the Secretary of State in Council was unable adequately to meet his obligations. My honourable Friend the Member for Cardiff asked me a question in regard to the six million bills. There is an impression among certain persons that whenever the Secretary of State obtains power to raise a loan of this character he and the Indian Office utilise it for the purpose of manipulating the Exchange. I can assure the Committee that that is an entire delusion. We draw upon the Indian Government as much as their cash balance will allow, and it is only when their cash balances are inadequate to meet our drafts here that we have recourse to raising a loan in this country. The last loan was raised at the close of the year 1893, and if I place before the Committee the application of the proceeds they will perceive very clearly, I think, the procedure which the Secretary of State and the India Office adopt. These loans comprise all the sterling capital over and above the capital raised in India which may be required for railway enterprise, and therefore the figures which I will read out will include all those sums which were applied by the Secretary of State to railway enterprise and were raised in this country. In the first year after the passing of this loan, the year 1894–95, the debt raised was £1,984,000; in the subsequent year, 1895–96, we met the whole of our obligations by drafts from India, and we were able to reduce the debt to the extent of £11,000. The next year, 1896–97, we were able to do better; we met the whole of our obligations, and were also able in the course of our transactions to decrease the debt by £860,000. We then commenced the year 1897–98, which was an exceptional year. Our cash balances in India were reduced to the lowest possible point compatible with safety; we had to meet not only the expenditure caused by the prolongation of the famine, but to provide ways, and means for a great Frontier war, and we were therefore compelled during the last year to raise hero a sum of no less than £8,486,000. That includes the 6,000,000 of bills to which my honourable Friend referred. Whether we should convert those bills into stock or not is a question on which we have not yet come to a decision, but undoubtedly the bills so issued will in future form a permanent part of the Indian debt to this country. Those members of the Committee who have followed these figures will clearly see that in no sense are these loans used for the purpose of manipulating the exchange. Everybody admits the inadvisability of increasing our gold obligations in this country, but owing to very exceptional circumstances we cannot draw to the full extent on India, and we have had recourse to a loan. In every case when we raise money here on loan we know that in practice part of it will be applied to reproductive works in India, and the great bulk of the amount to be borrowed this year will unquestionably be utilised in providing capital for such purposes. If I am not detaining the Committee too long, I should like to take a short review of what the result of our capital expenditure has been during the last 20 years. It is just 20 years since the last great famine terminated, and Sir James Westland very property laid a series of figures before the Committee in Council at Calcutta with reference to that period. There is an impression in many quarters that India did not pay her way during this 20 years. If we exclude war, famine, and special defence works, there has been a surplus of revenue over expenditure of Rx.51,000,000. War has cost Rx.21,200,000, special defence works Rx.4,600,000, famine Rx.8,200,000, making a total of Rx.34,000,000. Therefore there is an absolute balance of revenue over expenditure during that time of Rx. 17,000,000, and 13,500,000 of that surplus has been spent upon railways, leaving a surplus of Rx.3,500,000. That is an immensely satisfactory account, but at the same time I am bound to admit that it would not be so satisfactory if this country had not contributed five millions towards the Afghan war. There is also another fact which it is only right I should lay before the Committee. During the whole of this period we have gone on incurring capital on outlay in this country for reproductive works, which has reduced the amount we should have otherwise had to draw upon the Government of India, and by reducing the amount drawn has raised the exchange at which the diminished amount, was remitted. Now, there has been some little inconsistency in the policy we have adopted in connection with the extension of public works. Shortly after the great famine in 1878 a Select Committee was appointed, of which I was the chairman, and among the members of that Committee was my right honourable Friend the Leader of the House, Mr. Faweett, Sir George Campbell, and a number of other well-known authorities. We arrived at the conclusion then, looking at the comparatively small returns obtained from the railways and the great cost in the construction of the works in India, that it was advisable to limit the capital raised in any one year for the development of reproductive public works. We fixed the limit at £2,500,000. Almost simultaneously there was the Famine Commission, which was composed of very eminent men who had been taking evidence in India, and they arrived at the result—looking at the matter from a very much broader point of view—that it would be a material advantage to India in its direct as well as indirect effects to have a liberal policy of capital expenditure upon the productive works. They considered that it would be advisable to remove this limit of £2,500,000. Another Committee sat in 1884 to reconcile the difference between, these recommendations, and the came to the unanimous conclusion that under the changed conditions of the Government of India, the improved credit of India, and the good returns which the railroads were making, that it was advisable that a larger sum should be raised than £2,500,000. At the same time they laid down as a cardinal principle governing the policy of public works, that they should not be developed to such an extent as would in any way entail the risk of additional taxation. My right honourable Friend my predecessor in office gave great attention to this question, and he proposed to extend and develop the system under which railroads had been constructed in India. I looked into some of the figures which he had before him, and I came to the same conclusion. Some three years ago he suggested that the Government of India should draw out a much larger programme in connection with railway extension; unfortunately the famine broke out at the same time, and we had to provide for that additional expenditure. There has been undoubtedly considerable financial difficulty in providing under these exceptional circumstances for the additional expenditure contemplated. But notwithstanding the fact that this experiment has been carried on under these most disadvantageous and exceptional circumstances, I see no reason whatever for altering my opinion, and I think I can lay certain figures before you which will justify it. Let us see what is the nature of the problem with which we have to deal in India. During the past 20 years, notwithstanding the curtailment caused by famine, the population has, including the population of Burmah, added at the time of the annexation, risen from 192 millions to 230 millions, an increase of 20 per cent. from 1877 to 1897. During the 20 years the increase of the Native States included has been something like 50 millions. Such a population, unless industrial employment as a means of wealth is developed, is an additional pressure on the means of subsistence in many parts of the country. If this increase of population goes on, and if we do nothing to improve and develop the resources of the country, India will become nothing more nor less than a huge congested district. It may be said that the railways after all only affect the well-to-do, and that railway extension is only promoted in the interests of European officials and a few of the well-to-do amongst the India community. But if we take into consideration the people who use those railways and take the growth of the passenger mid other traffic, we shall clearly see that these railways are enormously used by the poorer classes of the country. During the last 20 years the open mileage has risen from 7,323 in 1887 to 20,872 miles in 1897, an increase of 185 per cent. A considerable portion of these railroads were built for strategical purposes, and were not constructed for purely commercial purposes, therefore one would expect that in the return, so far as passengers and goods traffic is concerned, that these strategical railroads would bring down the average. In the last 20 years the increase in the number of passengers is from over 31 millions to 160 millions, an increase of 370 per cent. The number of tons of goods carried has risen from nine millions to 32 millions, which is an increase of 255 per cent. If the railway traffic returns are taken mere or less as a guide of the internal trade of the country as they are in England, the increased railway returns give an indication that affairs are prosperous. If that applies to England it must also apply to India. Then take the telegraph and post office. One finds an extraordinary development, and that in the savings bank department of the Post Office there has been an increase from Rx.2,000,000 to Rx.10,900,000; if we turn to trade, we find the exports have increased from Rx.61,000,000 to Rx.104,000,000, an increase of 70 per cent.; whilst the imports have increased from Rx.35,000,000 to Rx.72,000,000, or an increase of 103 per cent. Gold has been imported during the last 20 years to the extent of Rx.50,000,000, and silver to the extent of Rx.165,000,000. Now comes the most curious phenomenon of all. Last year, which was a year of exceptional pressure, India imported larger amounts of silver and gold than it did in any year before, except one. Now, the figures that I have read clearly indicate that the policy of investing large sums of money annually for the development of railways and irrigation works and other branches of activity in which the Government can legitimately take part has paid well. Sir James West- land, a most cautious and accurate man, calculates that during the past 30 years the Government of India has spent in various forms in railways, irrigation, commercial docks, municipal and agritural improvements no less than Rx.166,000,000, and he estimates that, so far from the capital expenditure having entailed an additional charge on the revenue of India, it has actually paid Rx.500,000 a year more than if the expenditure had not been made. When we turn to the value of the assets of the Indian Government, we find that there is a surplus of Rx.29,000,000, while in England there is an excess of liabilities amounting to £55,500,000. I do not think that any Government could shown, more satisfactory balance-sheet than that which I have indicated, showing that real success has attended the policy of the Government in respect of capital expenditure in India. Now, I think that at once the reflection arises that, if the Government have succeeded in obtaining such remunerative results from their capital expenditure, does not India offer a wonderfully good field for private enterprise and the investment of private capital. We have in that country every qualification for the investment of capital. In India we have a very dense population, frugal and industrious, a prolific soil and an amount of mineral wealth which is at present practically untouched, and one would have thought that private enterprise, and private capital could not go to a better quarter to invest it; but for the last 10 or 12 years it has unfortunately happened that the capital has been coming back from India, instead of more capital being invested there. Now I do not wish to go into any controversial questions, I am only stating facts; but I think I have made out as fair a case as anyone could for the necessity of solving this problem. If people could be assured with any confidence that whatever they sent out to India would, more or less, come back at a higher value, believe it would effect a complete economic and industrial revolution in India. There is another consideration which has been forced upon me recently in connection with this. I think we are all agreed that industrial competition between different communities of the same Empire is good for the Empire, provided that all the communities are able to compete on a fair and equal basis. Now, India does not get the full benefit of her connection with the Empire at large, and a spirit of enmity is raked, which is most injurious to the commercial prosperity of the Empire. we had a marked instance of that in connection with cotton. The Lancashire cotton people thought that the legislation in India would injure the operatives here, and I was compelled to make a slight alteration in their favour, but what has been the result? The cotton trade of India is doing well, whilst the Lancashire cotton trade has never done a greater business than it is doing at the present moment, and so far from there being any bad feeling between Lancashire and India the cotton districts of Lancashire contributed larger sums to the relief of the sufferers in the famine-stricken districts of India than any other similar sized population in the United Kingdom. Now, Sir, the statement I have ventured to make is one which, I think, considering the circumstances under which it is made, is not unsatisfactory. I may be told that it is the outcome of official optimism, and that all persons who hold office take an unduly sanguine view of the position of affairs for which they are themselves responsible. I never can understand why it is the fashion with a certain class of critics to apply the word optimism to Indian officials. The right honourable Gentleman opposite has had some experience of these officials, and so have I, and I should say that if there is any class of men who are not sanguine it is the Indian officials, because they are conscious of the difficulty and magnitude of the rôle they have to maintain. Through the agency of those officials, a perfect revolution has been brought about in the financial system of India, and surely we may well take some pride in the position which we have attained. What has recently been going on in Egypt has been going on in India for many years on a larger scale, and clearly it is right that we should look with some satisfaction upon the financial edifice we have reared in that country. Such satisfaction is in no sense incompatible with the knowledge of troubles which may arise in the future. Nobody who looks at the relations between this country and India can deny that there will always be troubles and risks surrounding our dominion there. There are social and political problems which every decade seems to render more difficult to solve. Sir, the present Viceroy of India is now approaching the last year of his tenure of office; the last year of his rule in India has been associated with more serious difficulties than any period since the Mutiny. Now, I maintain it is not exaggeration to say that if any grave error of judgment had been made, if any false step had been taken, if there had been any vacillation or want of determination shown by the Indian Government, most serious consequences must have ensued. I think there is no subject in Her Majesty's dominions upon whose shoulders has been concentrated so much responsibility as upon the Viceroy of India. He is the personal head of the greatest administrative machinery in the world. He is more or less responsible for the prosperity, progress, well-being, and order of the 300,000,000 of inhabitants of India. That task in itself is a herculean one, but the burden of his work is not in itself so much associated with the immensity of the administrative machinery which he has to maintain as with the complexity of the problems with which he is called upon to deal. Of all the great Indian statesmen who have held high office in that country I think no one has more clearly denned the nature of the difficulties and troubles which surround our rule there than the late Sir Henry Maine. In a celebrated lecture which he delivered upon the government of India he made an appeal to his audience that they should show great consideration and toleration to the Indian officials in the discharge of their duties, for he knew some of the almost superhuman difficulties with which they had to contend, and he summed up the position thus— The general character of this difficulty may be shortly stated. There is a double current of influence playing upon, this remarkable Dominion. One of these currents has its origin in this country, beginning in the strong moral and political convictions of a free people. The other arises in India itself, engendered amidst a dense and dark vegetation of primitive opinion and prejudice, if you please, stubbornly rooted in the débris of the past. As has been truly said, the British rulers of India are like men bound to make their watches keep true time in two longitudes at once. Lord Elgin went out to India a comparatively unknown and untried man; his tenure of office expires at the close of this year, and he will return having been tried in the highest sphere of administrative work and responsibility; he has steered India through most perilous and serious crises, and, to use the phraseology of Sir Henry Maine, he has contrived to make his watch keep true time in two longitudes at once. It has been his misfortune to have to deal with these troublous questions, and thus he has been compelled to postpone various fiscal and agrarian reforms which I know he has much at heart. He has had to bear much hostility, but he has collected all the necessary material for agrarian legislation; and he leaves to his successor a sound system of finance, which I hope will greatly improve the condition of the tillers and the persons who occupy the soil. I believe in the Council Chamber of Calcutta there is a motto above the Chair of State of the Viceroy which shortly describes the quality which I think has been the cause of the establishment of our dominion, not only in India, but in many other parts of the Empire. It is the well-known Latin motto, Mens æqua in arduis, and I think, without exaggeration, it may be truly said that of all the eminent men who have occupied that chair, no one has more unostentatiously or yet more effectually displayed that quality than the Viceroy whose tenure of office is about to terminate.

* MR. S. SMITH (Flintshire)

I am sure we must all be pleased with the encomium which has been passed on the Governor General of India. It is a duty with some of us on this side of the House to criticise the Government of India from time to time, but our criticisms have been made with the purest motives, and have never been intended to in any way depreciate the merit of the work which the Indian Government has performed. No one knows better than myself the extreme difficulties which have to be encountered in carrying on that Government, or the great abilities of the Gentleman who is now at the head of Indian affairs. I wish to associate myself with all that has fallen from the Secretary of State in praise of Lord Elgin and in praise of the very eminent and able men who have the conduct of the Government of India. We sympathise with them in the difficulties they have had to encounter in the last two years, and we know that life has been well nigh unbearable there, and that the Government has been carried on at the cost of the lives of many civil servants. We recognise the success of the Government, who by gigantic efforts have carried through and kept alive some 50 millions of famine stricken people during this terrible crisis. It was a work of great merit. With a view of doing something to prevent the recurrence of what we have surmounted under tremendous difficulties, we should try to lay the foundation of a happier social system among the people. I am afraid the noble Lord has taken too rosy a view; he has told us all that can be said to be favourable to his view, all that is on his side, with great art; he has led us to believe that all is going on well. Those who wish to know the truth of our Indian rule know it is compassed round with most tremendous difficulties, difficulties which are growing greater every year, and this House should look fully in the face the tremendous difficulties which still confront us. I was very glad to hear the Secretary of State for India say that before Lord Elgin left he had in view various schemes for improving the industrial condition of India. The real problem before the rulers of India is to make it the home of a prosperous and contented peasantry. It is a melancholy fact that the masses of India do little more than exist; a great majority of the people sire hopelessly in debt. Mr. A. O. Hume says— Wherever we turn we find agriculturists burthened with debts running on at enormous rates of interest. In some districts, even provinces, the evil is all-absorbing, a whole generation of paupers, hopelessly meshed in the webs of the usurers. Speaking of India generally, Sir William Hunter says— It has been my duty to make inquiries in every province of India as to the interest which money yields. I find that for small loans to the cultivators the old native rate of 37½ per cent. per annum still prevails. Now, I freely admit that the worst of this evil is owing to the unhappy social customs and caste prejudices of the people. Child marriages do more to lower the standard of living in India than all other causes. Sir Henry Maine says truly— India seems likely to experience, more than any society of men, that peculiar trial which follows good government. … In no country will there be probably a severer pressure of population on food. India is the only part of the world in which every single male of the population is married as soon as it is possible for him to be married. The superstitions of the vast majority will not allow animals to be bred or killed for food. Nor will the population emigrate. Such causes of increase in the population and limitation in the supply of food have existed from time immemorial in India. But, till the present century, there were competing cause which impeded their operation. Far the most powerful of these were war, pestilence, and famine. These ancient checks on the growth of the population are losing their maleficent power, and with their disappearance population will fast increase its volume, forcing on the attention of the rulers of India a number of grave problems which have been very imperfectly faced of late years by the economists and statesmen of the West. The over-population of some parts of India is excessive. In some parts of Bengal the population reaches 800 per square mile, living wholly by agriculture. Sir William Hunter truly says— If we allow four persons to each peasant family, we find 24 millions of human beings struggling to live off the produce of 15 million acres, just over half an acre apiece. The Indian soil cannot support that struggle. The remedy is plain. Sir William Hunter says— Natives must equalise the pressure on the soil by distributing themselves more equally over the country. There is plenty of fertile land in India still awaiting the plough. The Indian husbandman must learn to mobilise himself, and to migrate from the overcrowded provinces to the underpeopled ones. These are, in substance, the problems the Government of India has to try to solve. It will be a slow and tedious work; and it needs the concentrated strength of generations of great statesmen. The caste prejudices can only be slowly broken up by the spread of education and enlightenment and Christian ideas. But there are some things which Government must address itself to with far more real earnestness than ever before. The first of these is the hopelessly indebted condition of the Indian peasantry. I admit that going into debt is the very nature of a Hindoo, and his religion requires a son to undertake his father's debts, and this obligation is never shirked; but I complain that our English small debt procedure has given far greater facilities to the money-lender than the old Indian system. It treats a debt as sacred, however exorbitant the rate of interest, and enables the creditor to attach the property of the debtor and make him virtually his slave. The old Indian system left the decision to a Panchayat, or council of five village elders, who could cut down an exorbitant debt and settle it on principles of equity. The usages of a commercial country like England, where every man is trained to stand on his own footing, are utterly unsuited for India, where everything is done by custom and tradition, and the debtors are as helpless as sheep before wolves. We must go back to the old Indian traditions; the cultivator should have something like the homestead law of America, whereby the holding and agricultural implements cannot be attached for debt, and all interest over 9 per cent., or at the outside 12 per cent., per annum should be illegal. I strongly advise the Government to examine most thoroughly the scheme of the honourable Member for Banffshire (Sir William Wedderbum) for the establishment of agricultural banks; and, if this is not practicable, it may be necessary even to go back to the old Hindoo-practice of the Government advancing money at sowing time, to be repaid at harvest with moderate interest. Before this could be done a sort of liquidation or composition of existing debts would be needed to start on a fresh basis. Next, I would say, the miserable yield of the land must be increased by better husbandry; the ryots cultivate as they did 2,000 years ago; the soil is just scratched by the plough, no manure is put into it, and it is always overcropped and in a state of exhaustion, except in the irrigated districts. The assessment only averages one and a half rupees an acre, and yet it presses more heavily on the peasantry than 20s. an acre rent would do here. The Government ought to do more by experimental farms for agricultural education all over India; and above all it should encourage irrigation. Have the Government acted on the excellent Memorandum submitted to them last year by a Committee of this House assisted by trained Indian engineers? I know well that most of India is not suited for river irrigation, and most of the river basins are already irrigated; but nearly all India can be irrigated by wells or tanks, made by the peasants themselves. Do we give sufficient encouragement to the cultivators to construct these? Have they sufficient security that they will keep the fruits of their labours? If they fear that the money-lender will carry off all the fruits, or that the Government will arbitrarily raise the rate of assessment, they will refuse to spend years of labour in making these works. I commend to the Government the admirable Famine Report of 1877. It is full of wise recommendations that have not been acted upon. It ought to be reissued in a cheap form and sent to every Government official in India. Before parting with the subject of the peasantry, I wish to draw attention to the miserable condition of the ryots in the Madras Presidency. This is shown by the enormous number of evictions for non-payment of Government assessment. The House will be astonished to learn that in the 10 years ending 1893 no fewer than 379,000 defaulters were sold up out of a total number of 5,374,000 holdings; that is, about 7 per cent, of the total. This is worse than occurred in Ireland in the darkest days of the Land League. According to an answer I received from the Indian Secretary, these evictions are still going on at the rate of nearly 20,000 a year. There could not be a more decisive condemnation of a system, and it urgently demands a remedy. The assessments in Madras are based upon a false principle, and are altogether too high. The attention of the authorities has been repeatedly called to it, but nothing has been done; and a call on the Indian Secretary to insist on a revaluation and reassessment by the Madras Presidency, so that reasonable security may be afforded to these poor rack-rented peasants. The real difficulty of India is that the provincial governments are starved and cannot obtain sufficient means for local improvements. The money which should be used for such purposes is devoted to army expenditure, which 20 years ago was 16 crores per annum, but has now gone up to 25 crores. This enormous increase is far more than India can bear, and it arises in the main simply because of our jealousy of Russia. Instead of having the money required for industrial improvements, it is drained away on these enormously increasing military charges. This is the result of Imperial and not of Indian policy, and the general feeling in India is that too much is expended in this direction. What is the present condition of things? It is that we have reached an acute stage. The problem we have to deal with is the fact that in at least 30 or 40 years we shall stand face to face with Russia. The next point I wish to emphasise is the great need for economy in the Imperial Government of India. The enormous and increasing military charges of late years have drained away the money that ought to be spent on industrial development. All the provincial governments are starved, and complain that they cannot get sufficient means for local improvements. The North-West Frontier has absorbed 70 crores in the last 20 or 25 years. These 70 crores could have spread well-being over much of India. Let the House remember that a rupee in India counts for as much as one pound in this country. I mean people here have as many pounds of income as they have rupees in India. A rupee of taxation to an Indian peasant means as great a sacrifice as a pound does to an English labourer, yet the North-West Frontier wars absorbed 70 million tens of rupees—a sum which in the eyes of Indians looks as much as 700 millions sterling does to us. The military Budget of India is now 25 crores annually, and this is far more than India can bear. A great part of it is the price we pay from jealousy of Russia; this has added about 10 crores to the military expendi- ture of India. Now the point I wish to bring before the House is how far is it fair that our friction with Russia, springing out of rival policy in China, should lead to n heavy drain on the people of India? It is quite clear that the policy we have embarked on in China means ages of rivalry with Russia. Pekin will take the place of Constantinople. The Ambassadors of the two Powers will be constantly trying to checkmate, each other, and we are, certain to be on the verge of war from time to time. What is our vulnerable point? It is Afghanistan and the Indian Frontier. Russia by attacking Afghanistan can force us to fulfil our pledges to protect the Ameer, and a most difficult and expensive campaign can be at any time forced on us. I wish to ask who is to pay the cost of this war if it should arise? It will be beyond the Indian Frontier. The following guarantee was given by the Government of India Act of 1858— Except for preventing or repelling; actual invasion of Her Majesty's Indian possessions, or under other sudden, and urgent necessity, the revenues of India, shall not, without the consent of both Houses of Parliament, be applicable to defray the expenses of any military operation carried on beyond the external frontiers of such possessions. The Government of India say— We consider nothing but the most extraordinary case of necessity would justify the application of the revenues of India to defray the cost of a military operation carried on beyond the frontiers of India without the consent of both Houses of Parliament. The expenditure charged by England should be limited † by statesmanlike and broad appreciation of the conditions of the two countries. I think it is somewhat doubtful whether the recent Frontier war was not beyond the Indian boundary; and it is doubtful whether it was right to charge it to India without the consent of Parliament. In any case an Anglo-Russian war in Afghanistan, if it ever happens, is really an Imperial not an Indian war, and the cost should be borne by this country. I await with interest the Report of the Commission on Indian expenditure. It is absolutely necessary that we adjust on fair principles the relative expenditure of the two countries. I would like to see the principle laid down, that any expenditure beyond 20 crores annually should be borne by this country, or at least one half of it should be so borne. Such a provision would wonderfully make for peace. It is very dangerous to be able to engage in wars with limited liability. Many honourable Members are placed in a position of great difficulty, because it has been announced that the Indian financial statement will not be made this evening, and in consequence honourable Members are not allowed to put down the usual Motions preparatory to the Speaker leaving the Chair.

* THE SECRETARY OF STATE FOR INDIA

I propose at a later date to make the usual Motion upon which the general questions connected with India can be raised, and the honourable Member will then have power to bring forward any question he chooses. I have, however, stated on a previous occasion that I would have to give some indication, of the financial position of India to-day, raid that I should therefore make my financial statement on the present Motion. In respect, therefore, of the finances of India, the honourable Member will be twice as well off as he would otherwise have been.

* MR. S. SMITH

Honourable Members were under the impression, at any rate, that nothing was to be taken this afternoon except the Loan Bill. Allow me to remark, in conclusion, that the Government have embarked in a most difficult and dangerous operation in changing the money standard of India from silver to gold. I believe it cannot be done without involving great, suffering to large classes in India. It ought not to be done until all classes of the Indian population should have been fully heard. By closing the mints to silver we have forced up the value of the rupee 50 or 60 par cent, above the price of silver; that is, we extract from the taxpayers rupees worth a great deal more than they would have had to pay had we not interfered with the natural laws which were depreciating the Indian currency and giving relief to all the producing industries and the debtor class in India. We are preventing that happening in India, which happened in England when the gold discoveries of California and Australia depreciated the sovereign, raised gold prices, and lightened the burden of debt. We had 20 or 30 years of great prosperity in this country from that cause. India would have had a time of great prosperity from the similar cheapening of silver if we had not artificially stopped it. I know the answer is that the loss on exchange, which was over 15 crores, has fallen to 10½ crores; and but for this change it might have been 20 crores. On the other hand, the lower rupee would have greatly stimulated agriculture and trade, and much, additional revenue would have accrued to the Government. If the account was simply between the Government and the Indian taxpayer, much can be said for the Government policy, but the crux of the situation is that we alter the standard to the disadvantage of the debtor against the creditor. No one can tell what are the debts of the Indian peasantry. Suppose they are 100 crores, we have given the money lender a legal right to a 16d. rupee, instead of a rupee which would now have been at a price between 10d. and 12d. The extreme hardship comes in there. Is it right, by tampering with the currency, to stay the process of emancipation of the peasantry that was going on? If it be unavoidable to adopt the gold standard and raise the rupee, then let there be some compensative advantage given to the debtor class, such as a composition of their debts, and a reduction of the rate of interest; so that the Indian peasantry may take a fresh start. I will add, in conclusion, that India needs a long period of peace, economy, and industrial development. No nation ever had a heavier and more responsible task laid upon it than we have towards that vast and helpless population. We have scarcely skimmed the surface as yet, and there is work awaiting us which will tax our powers for centuries to come.

* MR. MACLEAN

The usual practice in dealing with this Bill is to have the discussion in the last few days of the Session. Then some honourable Member given notice of an Instruction which limits the Debate to one very narrow issue. The greater part of the time allowed for discussing the financial statement is given up to this particular matter, and then the right honourable Gentleman the Secretary of State for War appeals to the House to pass the grant without further Debate. Under the altered arrangement of this year, my honourable Friend opposite, the Member for Flintshire, has had an opportunity, which he has freely enjoyed, of ranging over the whole of the Indian Finance Budget, and has made a very comprehensive and startling suggestion as to the course which ought to be undertaken by the Government. I do not think the proposals which the honourable Member has offered to us could possibly be undertaken by any Government. The honourable Member wants all debts liquidated in India, the rate of interest fixed by law, and a complete revolution made in the whole economic condition of the country. It is sufficient for us to-day to discuss the present state of the account. With regard to the very interesting speech by the noble Lord, in introducing this Resolution, I should like to say a word or two upon the general questions raised in the noble Lord's speech. I entirely agree with him in the praise he has bestowed upon the Indian Government for the way in which it has dealt with the famine. I think that the great body of Indian civilians and military men employed in that work showed excellent judgment, intelligence, and humanity, and that they attained a degree of success in dealing with the famine that is quite unexampled; but I cannot say that I agree with the noble Lord in the somewhat indiscriminate praise which he bestowed upon those who were engaged in the Frontier operations. I refer, not to Sir Bindon Blood's campaign, but to that conducted by Sir William Lockhart. When the noble Lord says that the campaign of Sir W. Lockhart was one of which we ought to speak with great satisfaction as a credit to the country, I am not able to follow him. I noticed that the other day an attack was made on a Russian garrison in Central Asia; and what was the first act of the Russian Government in consequence of that disaster? It has dismissed the military governor who was not prepared for the surprise that took place and allowed it to be carried out. We have had the statement of Lord Roberts that it was the abandonment of the Khyber last year which led to the terrible waste of life and property and credit which we suffered. It is curtain that the Afridi campaign would not have been necessary if the Khyber had been retained. Has anyone been punished for that incomprehensible blunder? Have, we yet cashiered a commissioner or shot a general? Possibly, if we had done so, our affairs would have been better managed in India. I turn now to the financial statement of the noble Lord the Secretary of State for India. It seems to me that through out his statement the noble Lord left out of sight altogether, or only referred to incidentally, what is the main feature of Indian finance. The Secretary of State for India gave the House a review of what had been done during the last 20 years, and spoke in sanguine terms of what Indian financiers are going to do hereafter; but the noble Lord did not tell the House that, whether there in this so-called surplus, or whether there is a deficit, the debt, of India has been constantly increasing year after year for a long period of years. I believe that the permanent debt of India has been increased by £25,000,000 in the last five years; but the question of debt is entirely left out of sight in the figures presented to this House by the Indian Government, and that is why, I think, those figures are so completely misleading. Take the case of last year, when there was an avowed deficit of 5,800,000 tens of rupees. That is said to be a deficit for the year, but the noble Lord acknowledges that the permanent debt has been increased by £6,000,000; therefore, the total deficit, must amount to about 12,000,000 tens of rupees.

* THE SECRETARY OF STATE FOR INDIA

That is mixing up capital account with the ordinary account.

* MR. MACLEAN

I have seen some correspondence in the newspapers lately comparing India with Egypt. The comparison was a very interesting one, but the disadvantage is all on the side of India. The noble Lord one year spoke in terms of disparagement of the House of Commons' finance as compared with the finance of the Government of India, and said the latter was much better than our own; but the noble Lord forgot to take into account the fact that the House of Commons has reduced, debt by literally hundreds of millions sterling in this country; neither did he take into account the large amounts of money transferred to local treasuries for the education of the people and the general bettering of their condition. If you make a real comparison between Egypt and India, you will find that our finance has benefited Egypt, while in India the state of the country, so far as finance is concerned, is constantly retrogressive. Let me point out what is the difference between India, and Egypt. At the present moment Egypt is governed on an extremely prudent and economic system. Rules are laid down that debt cannot be increased, and that expenses in every department must be kept down. The Government has no power to raise fresh money, and if it goes to war, as it has lately, to recover lost provinces, it is not allowed to spend any money, unless it can obtain it by borrowing from England. We have had a statement from the Chancellor of the Exchequer that, in order to carry out the war in the Soudan and go to Khartoum, it would be necessary to come to this House and ask for a large grant. The contrary is the case in India. I may point out, by the way, that Egypt benefits enormously from the immense swarm of tourists who go there every year, and every one of whom takes money in his pocket. These, tourists spread a fertilising stream of sovereigns all over the country. Therefore, I am not surprised that Egypt grows steadily richer and richer, being so prudently and economically governed, and is able to retain money in the country, whereas India cannot do so. The state of India is extremely antagonistic to all that exists in Egypt. Indeed, I should not be exaggerating if I were to say that the financial condition of India at the present moment rather resembles what the condition of Egypt, was under Ismail than what it is under the English officials who at present govern that country. There is no check upon expenditure whatever in India. That is the real weakness of the system. But the noble Lord the Secretary of State for India always, when he is in trouble about a matter of this kind, puts forward the Government of India as a perfectly independent Government, and praises it for its sagacity and prudence, and all the rest of the virtues, which, no doubt, they do possess. But we know, as a matter of fact, that the Government of India has no independent existence whatever. It is a mere instrument in the hands of the Secretary of State, the Council, and the House of Commons. Indeed, Lord Elgin is said to have been so anxious to be guided by the opinion of the Secretary of State upon every matter which he undertook that he was positively afraid to sit down to dinner in the evening without knowing if the Secretary of State wanted him on any business. It is true, as I have shown, that the Indian Government has no independent existence; but, at the same time, it can declare war and cause an expenditure of many millions of money without coming to this House at all. That has been done lately, and I agree with the honourable Member who spoke last that the most important reform that can possibly be introduced into India is to limit the very great military expenditure that has gone on there. This has reached a most alarming extent, and it will ruin the country unless some stoppage is put to it. I also consider that something must be done to reduce the remittances made annually to this country. I am sorry that the Royal Commission appointed to report on this subject two years ago has not yet presented a Report. It is a subject of extreme interest, and we ought to know what, in the opinion of the Commission, are the proportions which this country and India ought to pay towards Imperial expenditure. But what is certain is that, whatever system of currency we may have, India cannot afford to go en paying £16,000,000 a year to England for these home charges. They ought to be reduced—they must be reduced—in some way or other. They have been reduced during the last few years. We have been simply borrowing the money to pay them instead of paying them out of annual expenditure. Well, I should say that a bold step might be taken in that direction if the Government were to find out how those home charges can be permanently reduced. If it is necessary to borrow temporarily in order to pay them off, would it not be better to borrow all at once some large sums, and reduce the annual payments of India to England for a series of years? That would give time for the reproductive works to tell upon the trade and the industry of the country; the revenue would develop at a remarkable rate, and would enable India, after a time, to bear her burdens which are now too heavy for her to bear. The very great burdens which are placed upon India are evident when we consider the position as shown by the figures on the last page of the noble Lord's preliminary statement. There you will find that, the annual exports of India are something like 100 millions sterling, and the imports of merchandise and treasure are so large that the annual surplus of exports over imports is only about 20 millions sterling a year on the average of the last three years. Well, look what India has to pay before she receives any imports back again in return for her exports. She has to pay between 25 and 30 million tens of rupees every year for the home charges alone. But that is not all. Nearly all the great industries of India are in the hands of Englishmen. In all the banks and the great mercantile houses, in a great proportion of the tea plantations throughout the country, and in the mills and factories, a great part of the capital, from one end to the other, is in the hands of Englishmen, who actually remit the profits on their capital to this country. Further, there is a large army of European officers who want to save money and send it home to England; so that it is no exaggeration to say that the amount which India has to remit to this country every year before receiving a penny back again cannot be less than between 40 and 50 million tens of rupees during the year. In fact, India has to send out half of her total export trade without hope of getting anything in return whatever. Therefore we can see that India must be falling into debt more and more every year to- this country, and is becoming a debtor and a poorer country, and that any scheme of currency change based upon the idea that India is a rich country and can retain gold there is not likely to be satisfactorily carried out. Now, I wish that the Government would depart from its usual custom of fixing its attention solely upon the exchange question, as it affects the Government itself. It is the condition of the country which they ought to bear in mind, and the trade out there will never prosper so lung as you have a restricted and artificial system of currency going on there. Look at what has happened lately. Last year there was hardly a hundredweight of wheat exported from India, whereas during the last two or three months, owing to the rising prices in this country, we have, had two or three million hundredweights of wheat exported. There would have been a very large profit indeed from these exports for the grower of wheat, but owing to the high rate of interest and the extreme charges made by the bankers and merchants who finance all the operations of the export trade, it is certain that a very small portion of this profit will reach the grower; it will be all intercepted by the middlemen and the bankers. That is an example of the mischief that is done by restricting the currency and raisins the rate of interest there. I do not know that there is any other matter which I need venture to dwell upon in reference to this subject of the financial accounts. I am quite sure that the noble Lord has only one desire, and that is to benefit India. I do not want to accuse him of having any particular motive, or any wish to further one scheme instead of another. He pointed to me when he said that the Government were not, animated by any motive to bolster up the exchange when they raise money in this country. Well, I do not accuse them of being animated with any motives, but I say, as the noble Lord himself confessed, that the natural effect of raising loans in this country is to keep up an artificial rate of exchange which could not otherwise be maintained. Now, it would be far better to give up all those useless experiments, and trust to the operation of the natural laws which govern the course of trade. I believe in the long run it will be productive of the greatest benefit to India, and the Government itself will benefit by the improved condition of the people.

* SIR H. FOWLER (Wolverhampton, E.)

Mr. Lowther, I will trouble the Committee with very few observations to-night, but I cannot forbear, in the first instance, from expressing my admiration of the lucid manner in which the Secretary of State has made his Statement this evening. I also recognise the noble Lord's appreciation of the manner in which Lord Elgin has discharged the duties of his very troublesome Vice-royalty. As the House knows, I had reason on one or two points to differ from Lord Elgin on grave matters of administration, but that does not in any way disentitle me to express my very strong concurrence in the high language which the noble Lord applied to him. During the time that I had the honour to be in official communication with Lord Elgin, I formed precisely the same opinion of his "equal mind" in difficult circumstances as that to which the noble Lord has alluded, and among the great names which are enrolled on the list of past Viceroys of India, there are few which will stand higher than that of Lord Elgin. This Debate has already evinced a tendency towards the questions now under consideration with respect to the currency of India. Upon that point, however, my mouth is absolutely sealed. I can take no part in, or indicate any opinion upon, the wisdom or the folly of those proposals, for the noble Lord has been good enough to entrust to me the chairmanship of that important Committee, and every member of that Committee has approached the subject with the keenest desire of impartiality and fairness. The best interests of India will, I believe, be paramount in the deliberations of that Committee. We have already taken important evidence, and are devoting a great deal of time and attention to its consideration; and if we fail, to reach the solution of one of the gravest and most perplexing problems submitted to any body of gentlemen to consider in connection with Indian government, the failure will not be one to want of endeavour on our part, but only to our incapacity to deal with the problem set before us. Now, Sir, I will say a word or two upon the financial statement which the noble Lord has made outside the currency question altogether. I cannot follow the honourable Member who has just sat down as to the borrowings which have taken place during the last two or three years, with reference to the current expenditure of India. I do not agree with him that an addition to the money borrowed for reproductive expenditure is a debt in the sense of being a loss. There are assets representing that liability, and it is not like a debt where capital and interest have to be paid out of taxation. Last night an honourable Friend of mine drew for us a lugubrious picture of the position of our local finances, on account of the enormous increase in the local debt; but, to paint his picture accurately, he should have divided the amount of our local debt between productive and non-productive expenditure. If a corporation invests a large sum of money in waterworks, or electric light, or gasworks, or any works of a public character producing profit, that, I submit, would be a wise and judicious expenditure, and the same thing must be remembered with reference to India, though, of course, under somewhat different circumstances. Originally, if the Indian Government had not borrowed in England capital for the construction of railways those railways would never have been made. There was no capital in India which could have provided railways, and, I take it, the same would apply also to canals and to irrigation works. If my honourable Friend the Member for Cardiff will analyse the 25 millions to which he has alluded as having been borrowed from India during the last three or four years, he will find that certainly more than half of that sum has been borrowed for railway or canal purposes. I quite agree that there has been a considerable increase made in the last three years in the permanent debt of India outside the reproductive expenditure. For the years 1897–98 there was borrowed in London £8,379,000 sterling, and the noble Lord himself told us that he contemplates borrowing during the present year £2,616,000 for the extra expenses thrown upon the finances of India owing to the recent events of a disastrous character. Therefore, if these figures are correct, there has practically been an addition of something like 11 millions to the permanent debt of India during the last three years, mainly, of course, on account of famine; and then, again, for military operations on the North-West Frontier, and also for the expenses incurred in London. But I cannot agree with my honourable Friend who has just spoken as to the financial condition of India. The returns show that for a great many years there has been a large excess of income over expenditure, and during the last 20 years the income has completely overbalanced expenditure, one surplus being not less than three and a half millions. I cannot think that the gloomy picture which my honourable Friend has drawn of the financial position of India is justified. I deplore the amount of the home charges—I should like to use a stronger term—and I deplore the action, if the Commission which I had the honour to advise the Queen to appoint with reference to them. I have been out of office for some years, but that Commission has been sitting and sitting, but it has not reported. The noble Lord has promised us again and again the Report of that Commission, but I heard only a few days ago that the draft of that Report had not yet been circulated among the members of the Commission. I must say, with all respect to my friends who constitute that Commission, that there is some debt due from them to the public, to the Government, and to the House of Commons. They ought to complete the inquiry and tell us as early as possible, what the home charges amount to. As my honourable Friend opposite said just now, these home charges amount to something like 15 or 16 millions of money remitted to England in payment of the expenses of the Government of India in England. But when one analyses the payments, he finds that the payments in respect of the management, and the annuities of railways alone, such as the East Indian and other railways the property of the Government of India, will represent next year £8,815,000 of the £16,000,000. It is no drain upon India to pay the interest of debts for reproductive works, as it is paid out of the revenues of the railway receipts, not out of taxation. To say that it is a drain upon India is equivalent to saying that it is a drain upon the travellers of this country to pay the rates and fares which defray the interest on the debt, and the dividends on the shares of the London and North Western Railway Company, or of the Great Western Railway Company. This money remitted for railway purposes from India to England is not paid out of the taxation of India, but out of railway fares which are very low, and the traffic on which is increasing by leaps and bounds every year. Then there are the Army effective charges. That is a point on which, of course, I know a very strong feeling exists that they are too high. But that was one of the points referred to the Commission. The Army effective home charges are over a million sterling—£1,027,000. That does not mean the entire cost of the Indian army. I am only dealing with the money remitted to England. Then, again, there are stores of all kinds which take another million sterling, and there are the non-effective charges and the charges for the Indian Civil Service. I am really very much within the mark when I say that the £16,000,000 remitted to England should be reduced by practically more than one half, in order to arrive at the true sum. Now, Sir, one word about the famine. One thing the noble Lord omitted to mention was the special report of the able Lieutenant Governor of the North-West Provinces, Sir Anthony MacDonnell, who was more responsible for the administration of the famine fund than any other official. I think the mode in which the Indian Government dealt with the famine is one of the best illustrations of administrative ability that either the history of India or of this country records. Taking the figures of the noble Lord as to the millions of people relieved, the admirable manner in which that work was carried out, and the due regard shown to the susceptibilities of the important class just above, the poverty line, people who have to be relieved in a more delicate way than by relief works—the whole of the history in which that was carried through, and the manner in winch food was distributed, and relief works conducted, reflects the greatest credit on the Indian Government and every officer of it, but more especially on Sir Anthony MacDonnell. There is one feature about the famine administration which the House should not forget. There was a great deal of criticism in times gone by about the dimensions and appropriations of the Famine Insurance Fund, but the greatest work that fund effected was the construction of the protective railways—protective not only against war, but against famine. The consequence has been that there has been no part of India, so far as I can learn, where there has been a deficiency of food. The food was where it was wanted. In the last famine there was plenty of food, but there was no means of conveving it to the spots where it was needed, and no expenditure of money at that time could have provided the means. But under the wise administration of the Famine Commission, to which my honourable Friend alluded, the system of protective railways has been carried out at enormous expense—millions have been spent on them—and the result shows that they were wisely devised and administered, and whatever else the Government had to grapple with in the case of this famine they had not to grapple with want of food. I took great interest in watching that, and I observed that prices in the famine districts followed the general market prices owing to the admirable means cf transit for conveying food where it was wanted. One word upon the war on the North-West Frontier. I am not going to reopen the question of the policy of that war. The House has pronounced its judgment upon it, and we must bow to its decision, though still retaining our own opinions. But I congratulate the Government that the war is terminated. As the noble Lord rightly said, gentlemen on this side of the House concur in the policy of the dispatch of December last, and we believe it is the true policy to be carried out. I think, however, that the remarks of my honourable Friend who has just sat down deserve the attention of the noble Lord. I do think, now that the war is over, and that the country has recognised—as it is always ready to recognise—the bravery, the courage, the endurance, and the self-denial of our soldiers; now that the honours and rewards have been distributed, and that there is no question as to the gallantry of our soldiers, it is due to the Army and to the Civil Service of India that there should be an investigation by the noble Lord, or someone on his behalf, into the circumstances under which the war was commenced. I do not venture myself to express an opinion one way or the other. The noble Lord knows that statements have been made with reference to some branches of that question—for instance, the Khyber Pass. There is a difference of opinion in military and civil circles, and I think the noble Lord would be doing the best thing in the interests of India if he has a rigid inquiry into the circumstances which caused that specific outbreak on that part of the North-West Frontier, and also an inquiry which, would at once and for ever set at rest so many of those anonymous stories which are floating about, and which should be properly and officially answered, as to many of the details of that campaign. I am saying this in no spirit either of criticism or attack on any individual, but many Members of this House are aware that severe criticism has been passed as to folly committed at the commencement of that campaign—and statements have also been made in the Press and elsewhere regarding it. All I ask is some investigation—I mean by the noble Lord himself. He is Secretary of State for India and has the confidence of the House of Commons, and the House of Commons will have confidence in any decision he arrives at after having investigated the whole question. I do not wish to trouble the House further in this matter, but I congratulate the noble Lord, notwithstanding the gloomy speech of my honourable Friend the Member for Flint, who has pointed out a number of mistakes in India. Nobody will accuse him of being an optimist under any circumstances. He does not take an optimistic view, but perhaps he acts as a judicious corrective to those taking a too sanguine view. I think the financial position of India is satisfactory at the present time. I think it is satisfactory that, with so small an addition to its debt compared with the expenditure which has been incurred, the Government of India has been able, to deal with such three terrible calamities as war, famine, and plague. The predecessors of the noble Lord adopted a policy which has enabled him by the reduction of many millions in exchange to grapple with and meet this additional expenditure without the imposition of any additional taxation. Whatever else we may differ upon, it is perfectly clear that if the rupee had remained at the exchange figure at which it stood when I left office there must have been a very heavy increase either of debt or of taxation to meet the added expenditure of the last three years. At the same time, I do not underrate the financial difficulties of India so far as its currency and the question of exchange are concerned. I think it would be better that the matter should now be left for full and independent inquiry, and I can assure the House that the Committee over which I have the honour to preside are most desirous to avail themselves of the evidence and experience of all gentlemen competent to give an opinion, totally irrespective of their particular views on Indian taxation, or as to whether they hold mono-metallic or bi-metallic views.

MR. VICARY GIBBS (Herts, St. Albans)

Having regard to the statement of my right honourable Friend the Secretary of State for India, that he considered the majority of the Commission should be commercial men, I think it is unfortunate that he has failed to satisfy London, Manchester, or Glasgow. Of course, I am not for a moment assuming that there is a breach of faith, but he has failed to satisfy the City of London as a whole in the composition of that Committee. However, I do not wish to take advantage of that, and I will refer to another matter that was mentioned by my right honourable Friend, He spoke with great satisfaction of the way the Indian Government had got over the difficulty they were in owing to the fall in the rate of exchange. The whole tone of his speech was that India was prosperous, but in that same speech he mentioned the gigantic loss which the Indian Government would have incurred if she had not taken these steps to raise the rate of exchange; that is to say, that this successfully-managed country would have been face to face with bankruptcy if she had not created an artificial system of coinage, destroyed the automatic currency which existed in the country, and had not made the coinage restricted in amount and inflated in value. Let me show there is another side to the picture. By a calculation of one of the Indian Government's own servants, Mr. Harrison, in his evidence before the Herschell Commission, showed that the accumulated hoards of silver amounted to three thousand millions of rupees. But take the Secretary for India's figures, the action of India's own Government has reduced that amount to 1,800 millions of rupees, or a loss of 1,200 millions of rupees, which, at 1s. 4d. ex-change, represented in English money 80 millions sterling. That is no small cost for the people of India io pay for this policy. I do think that the House should remember what the Indian people have to pay to enable the Government to meet their liabilities. I must also support the statement of the honourable Member for Cardiff as to the increase, in the gold indebtedness of India. But while, the Indian Government is complaining of the increase of their gold debt, under this policy they have increased it at a more rapid ratio than ever it has been increased before. My right honourable Friend has said that India has presented such an excellent field for capital—but how is it that English capital does not get in? The rate of interest in England is extremely low, but in India it is extremely high. The English merchants are not fools. They do not employ their capital in India because of the way in which the Indian Government tamper with the currency. That, Sir, is the reason that capital goes out of India instead of coming in.

* SIR W. WEDDERBURN (Banffshire)

I understand from the explanation given by the noble Lord the Secretary of State for India, that the financial statement he has made to-night is only for the purpose of showing the grounds upon which a sterling loan is now asked for, and that this is not a substitute for the statement he will make in moving the adoption of the formal Resolution on the East India Accounts. On that occasion, I understand we shall, as usual, have the opportunity of discussing general questions on the Motion that the Speaker do leave the Chair.

THE SECRETARY OF STATE FOR INDIA

having signified his assent,

* SIR W. WEDDERBURN

continued: I beg to express my thanks for this arrangement, and on that understanding I shall not on this occasion enter upon the general question of Indian finance, but will confine my remarks to the matters directly affecting the proposed loan. Only before doing so I wish to join my voice to those who expressed admiration of the work done by the Government officers in India in fighting the famine. Nothing better could have been done in mitigating the disaster, but what I wish to impress on the noble Lord is the necessity for taking measures for prevention by improving the condition of the rayat. Those measures can only be framed after careful and minute village to village inquiry, such as I have already often advocated. Coming to the Resolution now before the Committee, I desire to say something about the proposed railway extension from the point of view of the Indian taxpayer. The Indian taxpayer has a very substantial interest in this question, seeing that ins guarantee is to be given to an expenditure of Rx.30,000,000. Also, as the Committee is aware, independent Indian opinion does not always coincide with official opinion. In the present case I am able to state with some confidence the Indian view on this question, because repretative Indian witnesses have been examined before the Royal Commission, of which I have the honour to be a member, and they unanimously are of opinion that, though great benefits have accrued from the building of railways, a pause should now take place on account of the critical condition of Indian finance. The trunk lines have been completed: also the 20,000 miles of protective railways recommended by the Famine Commission, and the supplemental railways may be left to private enterprise or built out of surplus revenue. The further construction of railways from borrowed capital is a luxury which the Indian taxpayer cannot afford so long as he is taxed so crushingly on the necessaries of life, paying 20 pence duty for each pennyworth of salt. This is, I believe, the view held by Sir Auckland Colvin, one of the ablest Finance Minsters we have ever had. Then another reason for Government not undertaking further speculative enterprise in railways is that the railways already constructed have realised not a profit but a loss. I refer to an interesting Government Report on the administration of railways for 1896–97, which at page 16 gives a table showing the profit or loss upon all Government railways constructed since 1858–59. There are three classes of State railways: 1st, guaranteed railways. These have cost over £46,000,000, and have resulted in a loss of Rx.33,000,000; 2nd, State lines worked by the State have cost Rx.90,000,000, and caused a loss of Rx.23,000,000; 3rd, State railways leased by the State have cost Rx.70,000,000, and caused a loss of Rx.7,000,000. To these sums add Rx.6,000,000 of other charges, giving a gross total loss of Rx.70,000,000. From this must be deducted Rx.14,000,000 gain upon the East Indian Railway, leaving a net loss upon the 38 years of Rx.55,000,000. Now it may be asked, it the railways resulted in a loss, and if the people of India did not ask for them, why are they pressed on? I fear that the pressure comes a great deal from capitalists in England who desire a good and safe investment and to supply the plant for railways. For myself, I think irrigation is now the best preservative against famine, and the cost of irrigation works for the most part goes to the people in wages and remains in India. Now I wish to say a few words on a very important point referred to by the honourable Member for Cardiff and the right honourable Member for Wolverhampton, namely, distinction between productive and non-productive public works. I believe I am right in saying that the rule observed by the Government of India is that productive railways may be built with borrowed capital, whereas non-productive works must be built with surplus revenue. Now this distinction is most important, and operations under this rule require to be very strictly scrutinised, for at any time by transferring a large sum from revenue to capital account, or vice versa, a deficit in the Budget can either be extinguished or created. And owing to the complex nature of these public works accounts it is very difficult to exercise this necessary scrutiny. For confusion is very apt to arise in the accounts kept both in pounds sterling and tens of rupees, and divided between productive and non-productive. I would illustrate this by referring to the Finance and Revenue Accounts of 1895–96, which show all the borrowings since 1866, when this system began. The debt created in those 30 years was in round numbers Rx.40,000,000 and £87,000,000, and the amounts spent in productive works was Rx.96,750,000 and £33,500,000, showing a silver excess of Rx.56,750,000 spent, with a gold balance of £53,500,000 not spent on productive works. Now it is here that the India Office makes a misleading operation by mixing up the gold and silver, and setting off the £53,500,000 against the Rx.56,750,000, as though they were of the same denomination, thereby making it appear that they had spent on productive works Rx.3,000,000 more than they had borrowed. In reality the £53,500,000 were equivalent to Rx.73,500,000, so that the real difference was Rx.16,750,000, and adding to this Rx7,000,000 of unfunded debt shows really a sum of Rx.23,750,000 added to the non-productive debt. I should be glad if the noble Lord would explain what has become of these Rx.23,750,000? In any case, it shows how big errors may creep in if accounts are complicated and confused. To prevent such confusion I would suggest that all such sterling loans should be borrowed for a specific stated purpose, and earmarked; and if the expenditure be in rupees the sterling should be converted into rupees at the rate current when the loan is raised. As regards the management of railway finance, I consider it a great misfortune that when the G.I.P. Railway might have been acquired by Government the right was waived, and the Indian witnesses were in favour of Government taking up the guaranteed railways at the first opportunity. In conclusion, I will only gay a word as to the general policy of these gold loans. It is the existence of these sterling loans and the heavy home charges which disorder the Indian exchange and currency. Instead of aggravating these evils by continually adding to these gold debts I would recommend the noble Lord to direct his energies to remove the cause of the mischief. The main remedy lies in the Imperial Exchequer bearing its fair share of Imperial expenses, especially military ones, now unfairly placed upon India. Also much may be done by giving to Indians their fair share in the public service of their own country, in accordance with the Queen's Proclamation. This would help to check the drain of capital from India to England, and make our rule more intelligent and more sympathetic, and therefore safer. The Indians of whom honourable Members have experience do their duty well. The Sikhs and Goorkhas fight on our side as well as the best of our troops; in the competitive examinations, though in a foreign language, Indian candidates sometimes head the lists; Professor Bose has surprised all Europe by his discoveries in science; and my friend Prince Ranjitsinhji has taught us how to play our own national game. Give these men a fair chance in the service of their own country, and I am sure it will tend to the safety, honour, and welfare of the Empire.

* SIR J. LUBBOCK (London University)

The Committed have listened with great interest to the able and lucid statement made by the noble Lord the Secretary of State for India, and I am sure that that satisfaction will be shared by the commercial community in the City of London when it is known that the Committee appointed to inquire into the currency question is to go into the whole question—and to consider not only a gold but a silver standard. We thought at the time that the Committee would probably only inquire into the actual proposals of the Indian Government, and not into any possible alternative, and that the inquiry would not be at all satisfactory unless the silver standard were to be considered as well as the so-called gold standard, which might, I think, be more correctly described as an exchange standard. we now understand that the Committee will inquire into the whole of the question. That is a very important statement, and one which I am sure will be listened to with very great satisfaction by the commercial community generally. We all, without exception, have great confidence in the right honourable Gentleman the Member for Wolvorhampton. My honourable Friend the Member for Cardiff has attached too much importance to the £16,000,000 annually remitted from India to this country for home purposes. This has been spoken of as if it were a sum which was paid by India for the benefit of England. As a matter of fact, £6,000,000 of it is for interest on capital invested in railways. But it must be remembered that India is not the only country which has the advantage of English capital for the construction of railways and other works. Argentina, the United States, and other countries have to pay large sums to this country annually for interest on investments made by English capitalists, and I think it must be admitted on all hands that there is a mutual advantage. And although, perhaps, investors in this country receive a somewhat higher rate of interest—not, I am afraid, quite regularly paid—it would have been impossible for those countries to have developed their internal resources but for the influx of that capital. I will not follow my right honourable Friend the Member for Wolverhampton into the very clear analysis he has made as to these charges, which I think carried conviction to all who heard him, and we ought surely to draw a wide distinction between reproductive and unreproductive loans. My honourable Friend the Member for Cardiff says that it does not mutter for what purpose the money is borrowed. I think it matters a very great deal, because in the one case it is a debt and in the other it is an investment. I have always been disposed to prefer the older system upon which these railways were constructed rather than the one which is now adopted. Under the present system they are made by the Government, and it gives an erroneous impression as to the indebtedness of India, because the investment adds to the total debt of India, and that creates an impression that the country is much more in debt than it really is; whereas if the old system had been followed the capital of these railways would have stood upon, their own basis, and the debt of India would have stood at a much smaller amount. If may seem only a difference of name, but there is in reality a very great difference, because it brings home to the mind what is the amount charged for Frontier wars and other purposes, which may be, no doubt, very necessary, but which do not bring in any revenue, and the amount invested in revenue-bearing securities. There is a second advantage in what I suggest, because as long as you give the public the idea that the Government are responsible for the railways, they will think that all remunerative railways will be made by the Government, and that it is no use for anyone else to think of investing money in Indian railways. In that way, I think that the effect of the present system is really to discourage the construction, of Indian railways. I do not quite follow my honourable Friend the Member for Cardiff in his argument with reference to the comparison between Egypt and India. If I understand him aright, he said that Egypt was more economically managed than India, because the Government of Egypt was more under control than the Government of India; but then he went on to complain that the Viceroy of India could not sit down to dinner without telegraphing to the Secretary of State to know whether he was wanted any more that day or not. I cannot help thinking that the more we leave the responsibility of the Government of India to those who are in the country, and who know what really are the requirements of the country, the better for all concerned, because, after all, that is the form of government which is most likely to conduce to the happiness and prosperity of the people. Coming to the question as to what is the best policy to be pursued with reference to Indian currency, I may say that I quite appreciate the difficulty in which the Indian Government find themselves upon this question. My honourable Friend the, Member for Hertfordshire says that the natives of India find that their silver has been depreciated to the extent of £80,000,000 sterling. I really think that some protest should be made in this House against a statement of that kind, because it is not true thnt the uncoined silver has been depreciated to anything like that extent, but rather that the course which the Government has taken has raised the value of the silver which has been coined. Of course, the closing of the mints has resulted to some extent in the depreciation in the value of the uncoined silver, but it is a very small amount in comparison to the increased value of the coined silver. In fact, the difference between the value of the uncoined silver now, and its value a few years ago, is due almost entirely to the enhanced value of the rupee. That has gone up, whilst the value of uncoined silver has somewhat fallen. There is, of course, this difficulty, that the native who holds uncoined silver, and who requires to utilise it for the purpose of paying his debts, finds that he has to spend a greater quantity of it than he thought would have been necessary. That is a very serious matter, and it is one which I hope will be taken into consideration by the Committee before they make any report upon the currency. At the same time we cannot discuss that at the present moment without going into the whole question of the currency, and I think it is the general feeling of the Committee that we should not enter into that question on the present occasion. My honourable Friend the Member for Banffshire, has made a comparison between the relative importance of railway works and irrigation works, the advantage being, in his opinion, very much on the side of the latter. I confess that I do not quite follow his arguments. Surely no one can say in the abstract that railways are better than irrigation works, or that irrigation works are better than railways. You must consider each of them on their merits, and see which is most likely to be for the benefit of the country. There can, of course, be no question whatever as to the great value which irrigation works have been to India, but when my honourable Friend says that irrigation works have done more for India in the prevention of famines than railways, I would ask him to consider this: that, while irrigation works may, no doubt, tend to do away with famine in their own immediate locality, what has been the great evil in India has been that you have often had local famine in one part, and splendid crops in another part, but no means of taking the superabundant crops of the one district to the starving people of the other. Therefore I think it may be fairly said that the great Indian railways have done as much, if not more, to check famine than the irrigation works. I hope, therefore, that the Government will continue to develop the railway system in India. My honourable Friend, with his usual care and acquaintance with the subject, has given us some very interesting statistics, but everybody who has studied the subject of the development of railways knows that when you first open a railway it is only under the most favourable circumstances that it pays its way at the outset, but gradually it develops, and" that many a line which has lost money for a time eventually becomes extremely prosperous. For my own part I cannot doubt that the railways in India are a very valuable investment, and if some of them may not be doing well at the present time, I venture to say that before many years have elapsed they will be found—I am speaking of railways as a whole—not only to be a great benefit to the people of India, but also to be good investments themselves. It has been said that the noble. Lord has been optimistic in his speech. Well, I cannot attempt to express an opinion on that point, but I may say that I have listened to the speech with great satisfaction, and even if he has been somewhat optimistic, I think he has fairly shown to the Committee and to the country that there is no reason whatever to despair of the finance of India, but that, on the other hand, fair process will be made. There is every reason to believe not only that India will be fully able to pay her way, but that the financial position is a strong one, and one winch will improve as time goes on.

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

Mr. Lowther, I think the remarks of the right honourable Gentleman who has just addressed us will meet, with the general approval of the Committee. I willingly take this opportunity to join him and previous speakers in congratulating the noble Lord the Secretary of State for India upon the financial statement he has laid before the Committee this afternoon. But before I further proceed upon this subject may I venture to express the hope that the fresh arrangement made this year with regard to the discussion of the Indian Hudget will be continued in future? There has been a complaint existing for many years, and I believe it has taken firm root in the minds of the people of India, that the one occasion in the Session upon which Indian subject have a chance of being considered fairly and at some length is generally hurried over because it occurs at the very end of the Session. On that occasion questions regarding the material and moral welfare of India are apt, as my honourable Friend the Member for Cardiff remarked, to be mixed up with one or two issues incidental to the main subject; and those questions which bear substantially upon the moral and material well-being of the people will never have a chance, of being adequately considered at sufficient length, and with that amount of attention which they deserve, in the limited time hitherto placed at our disposal by the House. The attendance on this side of the House to-night shows the advantage of the new arrangement, but I am sorry to see the state of the Benches opposite. It has often been pressed upon the people of India that there are 140 or 150 Radical. Members of this House who are always on the alert to advance their most intimate interests. Yet here, on this one occasion of the year when questions bearing upon the real welfare of India may be discussed, as I maintain they ought to be discussed, free from the pressure and taint of Party spirit, the. benches on the opposite side are practically empty. I notice this fact to prove to the people of India, how the interest of the two political parties in their welfare is misrepresented to them by some of their so-called friends. I trust that those honourable Members who profess to have, with more or less zeal, taken the affairs of India under their special care, and that the Nationalist Members, who last year professed an extremely lively interest ire events out there, and openly declared that they would be prepared to go through the length and breadth of the country to arouse sympathy for their fellow subjects in India, will in future be brought to redeem the pledges they have made. Now, Mr. Lowther, as has been remarked, during the past year India has passed through a continuance, of those disasters which bewail more than two years ago. The drought of 1896 brought the famine in Northern and Southern India in an acute form; the plague was intensified in Western India, the earthquake played havoc with valuable property, including railways, in Eastern India; and last, but not least, the North-West Frontier War was another great disaster from which India has had to suffer. They show their effect upon the Estimates. I think there is little doubt that 50 per cent., addition in the estimated cost of famine expenditure made a big hole in the reserve which the Finance Minister promises; but it is satisfactory to contemplate, from the calculations which he puts forward, that the £:3,800,000 spent upon the Frontier War would have been paid from the Exchequer of India itself if it had not had to meet this additional casual expense of a famine. The method in which the India authorities have managed their finances during a period of such enormous difficulties is a matter which I have no hesitation in saying redounds to their credit, and gives proof of their great administrative ability. Attempts have been made, however, by one or two speakers, as usual, to find fault with some of the main features of their policy, with which I am unable to agree. For example, certain remarks have been made in the course of the evening as to the inexpediency of further constructing railways at a cost which, in the opinion of some people, seems to inflict an additional burden upon the resources of India. The right honourable Gentleman who addressed the House last effectively replied to the remarks, and I think he conclusively showed that, although railways may not be profitable concerns at the very commencement of their existence, still, after they have had a period—the necessary period—for their development, they are likely to show profitable results, and eventually, so far from becoming a burden upon the finances of India, would prove a profitable investment. But, Mr. Lowther, the system of railways as pursued in India, and which has been styled by some as the Forward policy in railways, has other advantages besides the mere consideration of profitable or unprofitable investment. Railways are not merely means of necessary transport in times of famine, but they actually carry with them a moral and material development of the country which cannot be too highly valued. They bring under cultivation, in the first place, large areas which for want of railways would remain in future uncultivated as they have remained for generations. They bring in their train education of a sort that India needs most by creating a tendency among her different communities which are separated by restrictions of caste and custom which we do not understand here, to bring them together in their ways of life, in their modes of thought, and in other multifarious respects, which alone can lead to a development of the resources of the country, and to their eventual progress and prosperity. An honourable Member opposite declared that the evidence given by certain native witnesses before the Royal Commission voiced the views of the whole native population of India against the construction of railways. It was urged that those native witnesses were representatives of the native population, and were sent by them. I absolutely and entirely deny that. They were sent by no bodies of intelligent or responsible native gentlemen, much less by the whole community.

* SIR W. WEDDERBURN

I am sorry to interrupt. They were sent by the Government of India and the local government as being representative witnesses.

* SIR M. M. BHOWNAGGREE

They were sent in this way. The Royal Commission were persuaded to ask for an expression of native opinion upon the questions that were before them. Thereupon the Government of India was asked to send some witnesses, and the Government of India, by an error of judgment, which I hope will not be repeated, instead of asking non-political bodies like chambers of commerce in the different provinces, went to native political bodies of an infinitesimal description, of which the membership can scarcely be counted by a few hundreds. These bodies naturally nominated certain persons from among those who usually guide them. All credit to them for launching upon an expedition for which they were scarcely fitted. It showed immense pluck on their part. One of them was a schoolmaster, another was a clerk in a mill office, and a third was a leader writer on a native paper. Those were the sort of people who gave utterance to fantastic opinions which amused us here, but disgusted the people of India. The Report of the Royal Commission will, I trust, in pursuance of the strong appeal made by the right honourable Gentleman the Member for Wolverhampton, be presented without further delay, and then we shall see more of this sort of evidence. This is the only way in which the so-called down-trodden people of India had an opportunity of expressing their views before the Royal Commission and the British public. I must ask the House to disabuse its mind of the impression sought now and again to be created by the random utterances of one or two Indian gentlemen who are occasionally sent out by so-called political bodies. Now, Mr. Lowther, although I congratulate the noble Lord and the Government of India upon the extremely satisfactory Budget they have presented, under difficult circumstances, I cannot refrain from thinking that a great deal of educational work in future lies upon the Government of India. I do not mean educational work in the sense of writing essays, or reciting long passages from English poets. The educational work that lies before the Government of India, which has been so long neglected, is to train the people to the work of the industrial and material resources of the country. A great deal was said in the course of that discussion, and in previous years, with regard to the poverty of India. As to that condition of poverty there is absolutely no doubt. As occasions have served and circumstances permitted, this or that act of the Government has been brought forward and held up to the people of India by those who would wittingly or unwittingly mislead them as contributing to that poverty. It has been represented to them that India can never retrieve her fallen fortunes unless she is freed from the yoke of foreign domination. All those are considerations which have an intimate bearing on the future, of the people of India, and they cannot be discussed in the little time during which I desire to occupy the attention of the House in this Debate. But while I think that certain Gentlemen on the opposite side of the House do well to sympathise with the poverty of the people of India, while their moral sympathy is of great value. I do believe that not only have they failed to promote any useful purpose, but that they have been instrumental in withholding from the people of India the consideration of those matters upon which, after all, national progress and prosperity mainly depend. British rule has not contributed to the causes of the poverty of India. British domination is a blessing compared with the dominations which have prevailed from, the beginning of the recorded history of the country; and luckily it is a domination not within the power of the people to get free from. In brief, the people of India ought not to be made discontented; they ought rather to be made to realise their position, and to recognise that, with all its drawbacks, the present régime is a period of peace, wherein they have leisure, and opportunities to think out the more effectual ways and means of developing the material resources which Nature has endowed their country with. Tell them that this result can be achieved, not merely by book education—by only turning her sons into barristers, doctors, and professional men, platform orators, and newspaper leader writers. That is a state of things which has kept the country poor so far. I am as much in favour of giving the people book education as anyone else, but the education they receive should not end in turning them into mere spouters and writers, but should be directed into the channels which lead to a healthy national growth. I may say that both those who affect to be in active sympathy with them on the one hand, and the Government of India on the other, have failed to point out these lessons to them. I do not deny that the Government of India have so far carried out that system of education which came first as a great boon to India in 1854. The Government of India have fallen short in this, that they have withheld from the people the opportunities for developing those industrial pursuits which in the present state of India's needs should be the outcome of the education that is given to her people. An impetus towards that end ought to be given by the Government by new methods of instruction, and, if necessary, by State aid. In order to show that the force of this suggestion has been officially recognised, I will read a passage from the speech of the noble Lord the Secretary for India in his last Budget speech— It is forty years since the administration of India passed to the direct control of the Crown, and the retrospect of work accomplished in the time is, on the whole, pleasant and gratifying. We have dealt most successfully with the difficulties we then inherited, and the India of to-day compared with the India of forty years back has made enormous strides of advance in all the outward essentials of Western civilisation. The troubles ahead are not in what we inherited, but in what we of our own free will created. Under the ægis of peace and order the population is increasing with unprecedented rapidity. … Can we open out for this annual host of new mouths fresh avenues of employment and self-support? Whilst we have protected the physique we have also endeavoured to cultivate the intellect of India. An elaborate system of education has been established, culminating in universities, through which thousands of young natives yearly obtain degrees in philosophy and literature, but without any subsequent prospect of livelihood, save at the Bar or in connection with the Press. We have established codes of law and procedure far simpler and more expeditious than those in force in this country, and under their influence India is rapidly becoming the most litigious country in the world. Is it possible to so alter the current and tendency of the education we give as to associate it with objects of a practical and technical character, by which India's latent resources might be developed, her industries multiplied, and her productive power extended? Can we not make it the ambition of the rising generation to so educate themselves as to be able to do something to benefit the community to which they belong, rather than devote most of their energy to abuse of the Government which has educated and is protecting them? These are some of the problems ahead of us, and though the year 1897 may in some senses be looked upon as a year of misfortune, it will not be without its salutary lessons if it teaches us to consider and grapple with these subjects in no spirit of reaction or haste, but with the sole consideration as to what India's true interests demand and what the overwhelming mass of the people want. Now, Sir, that is a statesmanlike expression of views on the all-important subject on which I have dwelt; and I trust that when the noble Lord has his mind free from the anxiety of those misfortunes which have now lasted too long, and when the demons of pestilence and famine have disappeared from India, he will devote his energies towards developing the means whereby the desired end, so well enunciated by him, can be secured. You have now prepared a fair field for that work; see that others do not sow tares. There have been difficulties in the past, and there might be a ruder awakening some time in the future, unless a radical measure on the lines I am advocating is undertaken as a great national work of Indian statesmanship. I know that there are immense difficulties in the performance of that work, and you will have a great cry against it from India by those people whose voice is generally heard against all real reform; but the few statesmen of this country have a duty to perform, and they must not shirk it. It will have to be performed some day. The question is whether India should be ruled by the sword or by the ordinary methods of peaceful government. That is the whole question. You may allow education to proceed in the direction in which it is proceeding, tending to bring about such miserable results as were made so plain to us last year. You may feel secure in the strength of your military power and your naval resources, and believe that, whatever might be the feelings of the people of India, or whatever sources of discontent might develop there, the possession of India to England would never be lost. But, depend upon it, that is not the spirit in which India has welcomed the footsteps of Britain in her land. That is not the purpose for which a wise Providence has placed the people of India and their destinies under the protection and guidance of Britain. The work of Britain is to educate and instruct the people of India so as to make them capable of understanding the blessings which they enjoy under British rule and to profit by them; and in order to start on that work now, you will have in the first place to hold an investigation at an early date into the question as to what has been the effect of the educational policy which has been carried out so far, and you will have in the next place to consider seriously whether that policy has fulfilled the objects of its inception, and, if not, what action should be taken for the future. I would briefly refer now to another matter which has engaged the attention of the Committee. The formation of the Currency Committee has been the subject of many remarks, but I cannot withhold an expression of my approval of the composition of that Committee as it now exists. I have heard complaints of many interests not being represented on it, and I think that is not a very just complaint. If I might proceed upon the same lines, I might complain that the great industries of India—like that of the cotton mills—have no representative on that Committee. I think it is quite competent for any interest not represented on the Committee to send their witnesses and lay their case before the Committee. At the head of the Committee we have the right honourable Gentleman the Member for Wolverhampton; and in him we have a guarantee that, as far as judicial acumen and a clear grasp of the whole question, combined with, great experience of the affairs of India, can solve a question of that very abstruse and perplexing character, he will find a solution. With regard to that Committee, there is, however, one complaint I have to make, and it is that the whole native population of India, has not upon it a single representative. But, as I have said before, that to my mind is not a fatal drawback, and the omission can be repaired by the Committee inviting, and asking the Government of India to send, at least two or three capable witnesses of the native mercantile interests of India. I know that among the Hindoos I can name the assistant manager of the Bank of Bombay, and among the Mahomedans and Parsees there are capable merchants of wide experience in business; and I should, think that the Committee would act very wisely if it were to invite a representative of each of these communities, or adopt some other means by which it could obtain their opinions on the currency question. Now, Sir, in concluding, I must reiterate my congratulations to the Secretary of State for India, and through him to the Governmet of India, for the splendid work they have done in the course of last year, more especially when we come to think of the difficulties under which that work has been performed; how, at the sacrifice of life even, British soldiers and the officers of the Government have gone into the homes of the natives to relieve the plague-stricken individuals as far as they can; how, in combating the ravages of famine, man after man has lost his life; and how Lord Elgin and Lord Sandhurst, and other officers of the Government in various parts of the country, have performed their duties nobly under exceptionally difficult circumstances, and in the teeth of tremendous opposition. I say that it is due from me, in my place here, that I should re-echo those words in which the noble Lord the Secretary of State for India has bestowed his praises most deservedly upon the retiring Governor General of India. But he has naturally left out one prominent name, and if it were not bad taste to say it in his presence—and for the moment I wish that he were absent—I should like to say that the way in which the noble Lord himself has performed his very responsible duties under exceptionally trying circumstances, the way in which he has firmly supported the action of Lord Elgin in the teeth of bitter opposition of a character which I do not care to describe, entitles him to the grateful admiration of this House. In conclusion, I would repeat that, under the circumstances, the administration affairs of India for the past 12 months, as presented by the Budget, show a record of which the Government of India may well be proud, and of which this House, as representing the people of Great Britain, also might justly express its admiration.

MR. A. STRAUSS (Cornwall, Camborne)

I desire to associate myself with all the previous speakers in congratulating the noble Lord on his lucid and satisfactory statement. There are, however, two ugly features which spoil the pretty picture which he has presented to us. To one he called our attention—namely, that, for some unaccountable reason, private capital does not seem to flow to India for industrial undertakings. I hope to show to the noble Lord in a few minutes that he himself is partly responsible for that deplorable fact. The other he did not mention—namely, the remarkable diminution of the exports of merchandise from India. In 1896 the value of such exports was Rx.144,000,000, in 1897 they amounted to Rx.104,000,000, and in 1898 they were further reduced to Rx.96,000,000. This reduction in the exports cannot be due to the famine or the plague, for in that case it would have consisted in food stuffs, such as wheat and rice, but must be due to other causes, for the diminution took place in raw cotton, jute, and indigo. There is no difficulty in ascertaining the cause. It is dwelt upon at every meeting of bank shareholders, when the chairmen attribute it solely to the unsatisfactory state of the monetary system. Sir James Westland, the Indian Finance Minister, himself, in numerous dispatches and in a speech, refers to the same cause of the diminution of trade. I am afraid the noble Lord, in his anxiety to present a satisfactory Budget to the House, neglects the more important question of the influence of the currency on trade, and, indeed, all through hi a speech it was obvious that he showed much greater concern for the finances of the Government than for the prosperity of Indian commerce. I will now endeavour to show to the noble Lord in how far he is partly to blame for private capital not flowing more freely to India. He himself admitted that it may be attributed to the unsatisfactory monetary system. In an admirable speech which the noble Lord delivered in this House on the 29th March last, he declared that no currency could be successful which did not command the confidence of the people. The monetary system now in force is the outcome of the Committee which sat in 1893 under the Chairmanship of Lord Herschell. That Committee was composed of nothing but Government officials, with the exception of my right honourable Friend the Member for Bodmin, who did not agree with the recommendations of that Committee. Twenty-seven witnesses were examined before that Committee, three or four of whom were merely experts, and were only examined on the system prevailing in other countries. All the commercial witnesses condemned the proposals which were then submitted by Sir David Barbour, and only a few official witnesses gave a half-hearted acquiescence to the proposals. Nearly every forecast made in the report of that Committee has been falsified by events. It would take me too long to give a full list of them; suffice it to say that the summing up of the Report was that the only loss inflicted on India by the silver currency was the depreciation in value of the silver which was then existent in India. They showed by elaborate figures, which are quite correct, that all the silver imported into India went through the Mint; then these wisacres go on to say that if the proposals are adopted, minting of silver would for the time be at an end, and this use of, or demand for, uncoined silver would cease to exist. The proposal of the Indian Government would sooner or later cause a demand for gold in India which does not now exist. Will the House believe that, 80 far from the demand for uncoined silver coming to an end last year, 70 to 80 per cent, more silver was imported into India than ever before, and that this demand has been steadily increasing ever since the closing of the mints. That Committee, consisting of officials, in spite of the unanimous condemnation of the witnesses, did not oppose the proposals of Sir David Baruour, but, to their credit be it said, their consciences did not allow them to recommend them. All they said was that the question was so grave that they preferred to leave the solution in the hands of the Indian Government, who, with the responsibility attaching to them, would be the best judges. It is now universally admitted that the result of the Departmental Committee, consisting mainly of officials, was to make confusion worse confounded. And with this experience to guide him, what does the noble Lord do? He appoints another Departmental Committee, which, notwithstanding his promises to the contrary, contains a majority of officials mid ex-officials.

THE CHAIRMAN

I do not think the honourable Member is entitled to go at length into the question of the composition of the Committee.

MR. A. STRAUSS

I merely wish to assist the noble Lord in his endeavours to influence capital to go to India for private enterprise. Does the noble Lord expect merchants, both here and in India, to have confidence in that Committee? The right honourable Gentleman, the Member for Wolverhampton, who presides, over that Committee, with his usual modesty and frankness, himself this evening said— If we fail, as I am afraid we shall fail, it will not be owing be our error, but to our incapacity to deal with, the subject before us. Memorials have been sent from London, Manchester, and Glasgow to the noble Lord, condemning the constitution of the Committee, and warning him beforehand that the deliberations will not command any confidence. The memorial from the City of London is signed by the Governor of the Bank of England, all the Indian banks, Messrs. Rothschild, Matheson, Ralli Brothers, and many others; and I have no hesitation in saying that the signatories represent at least two-thirds of the entire trade done with India. And what did the noble Lord anawer? He simply gives his Dixi, and refuses to alter the constitution of the Committee, without assigning any reason. It is not too late yet. Only two official witnesses have been examined, and an addition to the Committee has been frequently made, even while they were sitting. The question has raised an intense feeling in the City, and complaints are growing louder and louder every day. I would suggest to the noble Lord that it he is intent on creating that confidence which he so truly described as an absolute necessity for the success of the currency question, he may yet add a few gentlemen of commercial practical experience to the Committee which he has appointed. By doing so he would give immense satisfaction to the entire community, both here and in India.

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

* MR. DUCKWORTH (Lancashire, Middleton)

I had no intention, Sir, of taking any part in the discussion on this very interesting subject until the honourable Gentleman who, I believe, is a native of India rose to make his speech; and when he complained of the absence of honourable Members on this side of the House, I felt that there was great force in that complaint, although I do not wish him, nor do I wish the House, to blame those who were present for those who were absent. For very many years I have read the proceedings of this House with very great interest, and amongst other things I have read that when matters pertaining to India came before the House for discussion the House was usually very thin and very languid in its interest on. Indian matters. But I must confess, Sir, that I should not have thought that there was so much truth in the statements on this matter which I have read from time to time in the papers as I have found here to-day.

[Attention drawn to the fact that 40 Members were not present. Quorum formed.]

* MR. DUCKWORTH

I was observing that I do not wonder at the complaint made by the honourable Gentleman opposite at the want of interest taken in the affairs of India by the House to-day. I remember reading many years ago that a similar want of interest was manifested by the Members of this House with reference to Irish affairs. I remember reading of one of the leaders of the Irish cause in those cays leaving the House, after a Division had taken place on Irish affairs, and mournfully expressing his great grief that he could not have that attention which he felt the affairs of Ireland demanded from the Members of this House. I do not wonder at the complaint of the honourable Gentleman opposite, coming as he does from India, and feeling, as he must do, the vital importance of the question. I fear, Sir, that, so far as India is concerned, we are laying up in store trouble, for days to come, not only similar to that which we have now with regard to Ireland, but even perhaps more disastrous than the Irish question is likely to be. The government of over 200,000,000 of human beings in a far-distant country like India ought not to be a matter of indifference to this House. When we have not only financial matters to deal with, but matters pertaining to the social well-being, and the moral welfare also, of such a vast number of our fellow men, it is as little, I think, as one can expect that those who have taken upon themselves the responsibility of becoming Members of this Legislature, should give their time and attention fairly, honestly, and seriously to the government of that vast Empire. So far as I am concerned, as representing an industrial constituency, I feel that our interests in Lancashire are closely bound up with those of our fellow men in India. Not only have we close business relations with them, not only does their welfare or ill-doing reflect upon us in an industrial sense, but we feel also our moral responsibility for the welfare of our Indian follow subjects. I think it is a proud distinction for a country like ours to have such ft Dependency as India, and we ought to try and make it one of the brightest jewels in Her Majesty's crown. It is a grave and a great responsibility for our country to have the guidance, the development, and, as we believe, the uplifting of such a mass of human beings under Providence in our hands. It is a proud distinction, and one which we ought to feel, year after year, demands our greatest interest and our best effort and thought. Therefore I desire to associate myself in sympathy with honourable Members who have spoken, and I feel I do not like to be numbered amongst those who think lightly and with indifference about the affairs of India when brought before this House. If they are financial affairs they are of great importance, and if they are affairs with reference to the social well-being of our follow men in India they are even of greater importance, and so far as the development of the moral and spiritual as well as the financial and social affairs of India are concerned, I feel they ought to have the greatest care, the deepest thought, and the closes attention when brought before this House. I hope that as long as I am a Member of this House I shall manifest that interest, whatever others may do; and I must express my deep regret that we should see such indifference manifested. For my part, I feel grieved that we should have benches bare during the most of the day when such important matters are under discussion.

MR. HARWOOD (Bolton)

I should not have ventured to intervene in this Debate were it not for the invitation of the right honourable Baronet the Member for Wolverhampton. Before referring to that invitation, I should like to say a word with reference to a remark which fell from the honourable Member for Bethnal Green. While I greatly admire patriotism of the honourable Member, I do not think he is wise in dragging the trail of Party across this matter.

* SIR M. M. BHOWNAGGREE

I beg the honourable Member's pardon. I pointed out that the trail of Party was dragged persistently by a couple of Radical Members of this House, and I wanted to show the people of India that that Party had nothing to do with the consideration of Indian questions.

MR. HARWOOD

I accept the explanation with the greatest possible pleasure, and I hope the honourable Member will forgive me for giving him that piece of advice; but he will serve India best by keeping it outside Party. I am sure Members of all parties are equally proud of India, and desire to do the best they can for that country. It is not the privilege of either Conservatives or Liberals, and therefore I think we all can join in one common platform with regard to it. The honourable Member sneered at the spread of education in his country.

* SIR M. M. BHOWNAGGREE

I must again beg the honourable Member's pardon. I did not sneer at the spread of education in India. I said, on the contrary, that I desired as much education, and for as many people, as could possibly be given. What I referred to was the application of the system of education to ultimate uses.

MR. HARWOOD

As I followed the honourable Member, with my small experience of India, I thought he pointed out to the House that there might be a wiser character given to education in India—that it should be less literary and more practical, more general and less special. With reference to the invitation of the right honourable Baronet the Member for Wolverhampton in regard to the Committee of which he is the chairman, and in whose appointment we all rejoice, I am afraid there is a little too much official optimism at what has been accomplished, and I would beg the noble Lord to correct his perspective a little in the matter. It is not the first time we have heard from him, and from the right honourable Baronet the Member for Wolverhampton, congratulations that they made the Budget meet without imposing extra taxation. I quite conceive that it would be financially wiser in India to arrange that the Budget should not meet. How has it been made to meet? By producing evils much, more widely distributed than the advantages attending it. The advantages of this official arrangement are focussed; the disadvantages are spread throughout the whole country. What is the most marked lesson of the last 10 years of prosperity in this country? Is it not the advantage of free trade in currency as well as in markets? And if you were to apply the Indian monetary system to England the people would at once see the absurdity and the injustice of it. What have you done? You balance your Budget, but at the same time you are putting a burden on every trade and every class of labour throughout the length and breadth of India. I have been brought personally into some little business connection with India, and I have had still more opportunity of learning the business condition of that country, and I am quite certain that no greater disaster could be brought on it than by this forcing up of the rupee. You had much better meet the difficulty. There is only one safe system with regard to currency. Adopt what standard you like, be it gold, silver, copper, or brass; but whatever your standard, it should be left to find its natural value in commodities. Then people can understand what they are doing, and they can engage in trade enterprises. Attention has been called in all parts of the House to the fact that capital is not going into India. Everybody who knows India knows what a fruitful country it is for the employment of capital; but capital is not invested in it because there is a want of confidence, and because the currency is based on a fictitious basis, which is certain to crumple and bring endless disaster on every trade in the country. I appeal to the noble Lord to consider not merely the desires of the privileged class. Everybody knows they want to keep up the rupee, and it is the desire of the officials to make a balance without laying on more taxation. But that is a secondary matter. A country would stand better a much greater taxation if you left it a free operation in prices. In railways and trade enterprises you would recover a hundredfold all that you would lose at the moment. I beg the noble Lord to take a wider view of the situation, and to consider, not merely the official view, not merely the desire to balance the Budget without imposing fresh taxation, but also to consider the welfare of the multitudinous trades throughout the country. I believe that by carrying on a fictitious manipulation of this kind you are doing untold disaster. Take the tea trade. Those of us who have been in India have rejoiced and marvelled at the spread of that trade, which is now one of the great elements of recovery in India; but by what you ore doing I believe you are throttling that industry and stopping the development of hundreds of other industries which would yield an improved revenue. I only rose to ask the noble Lord to make a fair and just allowance for these views, and to consider not only the official desire to balance the Budget, which is strong in a Secretary of State, but also the feeling of this House and this country, and the welfare of thousands of enterprises and of millions of striving and struggling men in India.

Resolution agreed to; to be reported on Thursday.