INDIAN CURRENCY.

HC Deb 29 March 1898 vol 55 cc1314-56

*MR. VICARY GIBBS (Herts, St. Albans)

, rose to call attention to the present unsatisfactory condition of monetary affairs in India, and to move— That a Select Committee or Royal Commission be appointed to consider the monetary condition of India and the effects of closing the Indian mints to silver on the different classes and interests affected thereby, to report on the suggested establishment of a gold standard in that country, and to make such recommendations as they may think fit. Mr. Speaker, I am sorry that the Government have thought it right to restrict the discussion of this matter to three hours, as that will not indicate that a sufficient interest it taken in this country in this great question. I have put upon the Paper a perfectly colourless Resolution, but I hope before I sit down, to show the House that the closing of the Indian mints was a criminal blunder, and that the attempt to put India upon a gold standard will produce greater dangers and evils than any it was intended to remedy. Before I go further I feel bound to call attention to what was the position of affairs in India before the mints were closed to silver. India was flourishing; her manufactures were increasing; she was enjoying an automatic currency, and getting an enormous stimulus to her productions from the low rate of exchange. But, as this low rate of exchange made it difficult for the Indian Government to pay its gold debt in England, the Indian Government made a volte face, became reckless, and closed the mints. I am not prepared to say what was exactly in the mind of the Government of India, in doing so, but, whatever their object may have been, it is clear that they had thought out no settled plan. If any measure in this world demanded for its justification the fact that it was part of a well-considered, well-matured, well thought-out, and feasible plan for putting India upon a stable basis with regard to her currency, it was this one. Five years after that mad experiment was made, the Indian Government, in their dispatch of September last, wrote— The measures to be taken when the transition period has passed have not been laid down. Is it not appalling to realise the levity with which that step was taken? No plan, no consideration, nothing except the one idea that they must be able to pay their gold debt in England, no matter who suffered for it. What was the effect upon the commerce of India? I have had innumerable letters from Bombay, Calcutta, Burmah, and Ceylon, showing the effect upon the commercial and financial position of India of these experiments of the Indian Government. They all tell one story: a 12 per cent. rate of discount, and as much as 24 per cent. per annum paid on the security of gold bars in the bazaars by the Natives. The position is appalling. Nobody can engage in commerce successfully in a state of chronic panic, yet that is the position to which India has been reduced. It is not merely a question of a momentary 12 per cent. rate, but it is one of an average rate of discount steadily rising as the Indian Government approach what they are pleased to call their "eve of success." It needs no great financial expert to tell us that if we reduce the amount of coinage indefinitely, we shall produce a scarcity value. The effect had been to cause a commercial paralysis. As I have said, I have had letters showing that there is a money famine in India caused by the action of the Government. They have failed in one of their primary objects, which was to secure a stable exchange. I think the House will be surprised to hear that the fluctuations in the exchange from 1894, when this experiment was first enforced, to 1897 have been precisely the same as they were from 1884 to 1889. They have been at the rate of 11½ per cent. Everyone is apt to think that people who have committed a blunder will go on to commit further blunders, and a fear on the part of the people as to what the Government might do has had a damaging effect upon trade. It has been feared that an import duty would be placed upon silver, but I have every confidence that the Secretary of State for India will not sanction such a policy. It is of the greatest importance that in all matters of this kind the people should have complete confidence in the Government. Ever since this experiment began the "forward" rate of exchange has always been materially lower than the spot rate; that is, a good measure of the confidence of commerce in the power of the Government to bring to a successful issue this fantastic experiment. The Government have dealt a heavy blow at the producing power of the community. If a low rate of exchange tends to stimulate production, then the artificial raising of the rate must tend to check production and drive it into other countries. I will not weary the House with a number of instances, but I will give one. Take the case of opium before and after this experiment. For the nine months ending in December last year, which is the last nine months that anyone can get, there were 43,000 chests of opium valued at four millions of tens of rupees, whilst the nine months which ended on the 31st December, 1893, show 53,000 chests of opium valued at six millions of tens of rupees. That will show anyone who thinks for a moment one of the economical aspects of the case. This is not the whole of the trouble. What has been the effect of forcing up the rate of exchange upon the bankers and the merchants? The idea was—and the recent currency law of the Indian Government shows what their prescience was worth in this matter—that they would force commerce by putting the rupee up to an extravagant rate, giving gold for the sake of obtaining rupees. What has been the result? The result has been that the Indian bankers, the moment the rupee reached 1s. 3d., or thereabouts, have hurried to get their money out of the country, and by so doing have increased the monetary stringency and have aggravated the mischief which the Indian Government has caused. It was very strange that anyone should have supposed that they would do anything different, and a relative of mine in the National Review put this matter in a way which certainly will come home to many people. He said, in effect, why should merchants, men of business, and men of common-sense enter on a game in which, if they were very lucky, they would get their stakes back, and if they were not they would lose? That is exactly the position which anyone would be in who sent money into India when the Indian Government had so arranged that the rupee might fall indefinitely in value, and that under no circumstances could it rise above 1s. 4d. That is the exact position in which the Indian Government assumed that men of business would put themselves. I will not labour the commercial question any further. I know very well that the doctrines of Robin Hood, that it is a meritorious action to plunder the rich, are so well established in this country, that it is hardly worth while to dispute them today, and I am not going to do so, but I am going to call the attention of this House to the question of the very poor in India—poor in a sense which Englishmen can hardly realise—I mean the poor Indian ryot; and I am going to ask this House to consider how this action has affected them, and whether they can say that it is honourable, justifiable, and worthy of this great country. Now, Sir, the hoards of silver in India have been variously calculated—and never mind how clever a man may be, and how much he may know upon the subject, his calculation must be in the nature of guesswork—but I do not think that anyone will dispute that the hoards of silver in India, uncoined and coined, are enormous, or that the hoards of uncoined silver, at any rate, as far as the poor of India are concerned, vastly exceed the coined hoards. I think I may consider that position accepted before I go any further. Then, Sir, I would ask you to consider, and this House to consider, what has been the effect upon the individual. Let us get it into the concrete. Let us take a single illustration. Let us remember that in the last great famine before this—about the year 1877—there were 30 millions of uncoined silver and ornaments tendered for rupees. Let us imagine the position of the man who tenders this silver in 1893, and who tenders it now in 1898. In 1893, with an open mint, for every 180 grains of silver in bangles or other things that he tendered he got one rupee, or 16 annas. With a closed mint, and with the present price of silver, for that same number of grains of silver he gets 10 annas; that is to say, you have taken away, or the Indian Government has taken away, without warning, without notice, from, the very poorest class of her subjects, about 37½ per cent. of their hoards—the hoards of men who live on the barest pittance which will keep them alive—of the man who, with infinite industry, with infinite patience, and with infinite self-denial, scrapes together some small amount of money, which he feels that he will have as a refuge in the inevitable day of trouble, and which he believes he has an inalienable right to turn into rupees, to protect him and his wife and starving children against the day of famine which he knows must come, and which has come, and it is from these that this great and rich Empire is not ashamed to have taken 37½ per cent; and when Englishmen, during an Indian famine, are asked to subscribe, and they give £100 or £1,000, they think they are doing very finely in so far helping the poor Indian, and all the time they have sat by and let their Government take out of the poor man's pocket vastly more than all their charitable subscriptions can possibly put into it. I ask you if that can be established—and it is established, and cannot be disputed—is there not a cause for inquiry? There is such a cause. It is a great charge, a grave allegation to bring, and I bring it most fearlessly because I know that that fact cannot be disputed. But Sir, what will be the line of defence which my right hon. Friend will take when he makes his official defence on this occasion? Will he say that it is out of one pocket and into the other? Will he say that for every penny which the Indian has lost in his silver he has gained in his rupee? I do not know whether he will dare to say that. I do not think anyone will venture to say that their hoards are as large in rupees as they are in uncoined silver; but if they are—admitted that they are—what profit is it to him that the rupee should have increased in its gold value? Would a Scotch or an English farmer say "Thank you" if you came to him and told him that his sovereign would buy more rupees than it did last year? Therefore, by the same analogy, why should the Indian care whether his rupee will buy more gold? What he wants is that it should buy more commodities, more bread for his belly, more clothes for his back. That is what he wants, and nothing else will satisfy him. There has been an argument advanced outside this House—a defence of the Government—which I do not think will be advanced inside. It is that the Indian Government has not yet been found out; that the Indian has not realised the wrong done to him because it has been smudged up in a question of currency. Well, Sir, the conveyance—I will not use a stronger word—of other people's property does not cease to be a conveyance because the man has not found it out. Whether the Indian population finds it out or not we shall have cause—we have cause—for shame, and if, and when, they do find it out we may have cause for fear. But there is another argument, another line of defence, which the right hon. Gentleman has himself indicated in an answer to an hon. Member of this House. The line of defence indicated in that answer is, I suppose, the line he will adopt to-night. He has not said it in so many words, but he has implied that if silver has fallen as expressed in rupees, if the divergence between the value of uncoined silver and the value of rupees has increased, it does not follow that silver will not buy as large a number of commodities now as it did before. But let us look and see where that argument will take us. Silver has fallen 37½ per cent., or thereabouts, in rupees. If silver has fallen in commodities, then it follows, as the night the day, not that the rupee has appreciated 37½ per cent. in commodities, but that it has appreciated 60 per cent. Well, Sir, this is not a matter of rhetoric—and I would ask the right hon. Gentleman's attention to this—but it is a matter of mathematical calculation. If the rupee has risen 60 per cent. in commodities, then what is the picture that he presents to us of the action of the Indian Government since 1893? Why, it is this: that she has increased the taxation of the people of India 60 per cent.; that she, fearing the weight of her gold debt in 1893, has added to it faster than it has ever been added to in the history of India—22 millions since 1893. The Government has increased the taxation, has added to the gold debt, and is face to face on its last Budget with a deficit of nine millions. Are any more words needed to justify an inquiry? or, if that be true—and I do not believe it is—is anything more needed to condemn British rule in India as a miserable and ghastly failure? That is what it would be if that were true; but I suppose it will be said that the end justifies the means, that it is perfectly true that India has been subjected to a period of financial agony, that her commerce has been throttled, that her production has been destroyed, that the greatest anxiety, bordering on panic, has been raised among all our commercial class; but that all this is worth doing for the sake of giving her a gold standard. Now, let us examine this matter, let me ask two or three questions. Can India get a gold standard? Can she keep a gold standard? Can India afford a gold standard? What will be the cost of the standard to her and to us? Now, Sir, those are pertinent questions, and I will endeavour to answer them. I entertain the gravest doubts as to whether she can get a gold standard, and those doubts have been shared, and may be shared now, by no less an authority on these matters than the Chancellor of the Exchequer. But it may be said that what was impossible a few years ago may, through the enormous progress made in the production of gold, be rendered possible to-day. It indicates a curious mental attitude of the Indian Government that they should have abandoned the metal, in which the wealth of her subjects consisted, as a standard of value because the output of that metal was increasing, and that they should urge as a ground of the possibility of obtaining a gold standard that that metal was now in its turn increasing in output. I should like to point out that when I speak of the possibility of India getting a gold standard owing to the increased production at the moment history shows, and has done so repeatedly, that this increased production of a metal is not consistent. In the Fifties everybody would have told you that gold was going to be enormously reduced for a very long period, but it was not so. In the Seventies everybody would have said the same thing with regard to silver, but it was not so. It is a curious comment upon the suggestion of this increased production of gold that the amount of gold at the bank to-day is materially less than it was a year ago, and I am very doubtful whether the increased production will do more than meet the increased demand of foreign Powers for gold. Now, let us assume that India gets a gold standard. Could she keep it? I would answer that by another question. Has Japan kept it? We have an excellent object lesson in Japan. She went in for a gold standard. She gave her silver currency a value in much closer conformity with the actual facts than India proposes to do. Let me give you the ratio. The Japanese ratio of silver to gold is 32½, the Indian ratio 23. The market value is 36½, yet in spite of the fact that Japan has not got the immense drain that India has got, in the habit of hoarding ingrained in its people, Japan has lost already £2,000,000 sterling in gold yen—£2,000,000 has gone out of the country owing to the competition of other nations, such as China. I have received letters from persons resident in Japan, showing the serious condition of Japan, and the unfortunate position in which her commerce has been placed by her attempt to adopt a gold standard, and I will ask this House before they allow India to follow Japan in this respect to look at the example of that country, and to read the lesson. Now, there is another matter which, before I conclude, I should like to bring before, and press upon, the attention of this House, and that is the duty, interest, and competence of Parliament to deal with this question. Now, as to the duty. As the right hon. Gentleman who, I regret to see, is not now in his place, said, "we are all Members for India." That was a fine phrase, and I hope the House will remember it to-day. The people there are dumb millions, who cannot utter their thoughts or express their own opinions in this House. And this House has a duty towards them which it cannot throw upon others. It cannot shirk its responsibility to these dumb millions without loss of credit and character. I say that it has a duty to perform towards the people of India, to protect them, and to see that they are justly treated, that if a wrong has been done to them to see that the wrong shall be remedied. We have an interest in this matter also, because, what ever may be officially said, it is perfectly well known that we are behind India in this respect, that India's debts are our debts, her obligations are ours, that she is so tied and bound to us that we cannot cast her adrift financially any more than we can politically. Without the help and support of England, and without the knowledge in the market that England is behind India, do you suppose a country in that position, with its exports declining, a country which has found the greatest difficulty in paying the interest on its debts, could borrow more? It would be useless for her to come to this market were it not well known that we were behind her. But that is not our only interest in this matter. We have the interest that we are the only free market for gold in the world. That it is from us that the gold must come. We have a deep concern in seeing that our gold reserve is not drawn upon to an extent which this country cannot afford. Anyone who takes the trouble to look and see what the gold reserve in the bank now is, and compares it with the reserve of Russia or France or other Foreign Powers will see that it is dangerously weak. It is essential—and our bankers will bear me out in this—that we should not have this gold reserve heavily drawn upon by India. There is another matter more debatable than either our interest or our duty in this matter, and that is our competence. There is nothing cheaper or more easy than to run down the House of Commons in this matter. Many say the less we have to do with India the better; well, "it is an ill bird that fouls its own nest," and I am not going to talk against the House to which I have the honour to belong, but is it so certain that this House could not form a Committee that could hold its own financially, economically, in every respect with Sir James Westland? What are the names that rise to one's lips in a moment—"Fowler," Lubbock, Courtney, and Beach. Are not those to be placed against Sir James Westland? Why should his name be sounded more than yours? Write them together, 'tis as fair a name; Sound them, it doth become the mouth as well; Weigh them, it is as heavy. Why, Sir, it is preposterous, it is nonsense, to represent that this House is not competent to deal with the question! Why, it is common knowledge that we have men here in the first positions with regard to the shipping, commerce, and the banks of India! Have not these men a right to be heard in this matter which directly concerns England? It is not merely an Indian question. It cannot be put aside on that ground. It is a question which deeply concerns us as well, Sir. It concerns us all, and that brings me to a point which I urge, and which I think I have a right to urge upon this House, and that is that this House should appoint its own Committee to consider this Question. I know that my right hon. Friend will endeavour to meet me as far as he can, and he will be as kind and considerate and just as it is possible for one man to be to another. This is a question of principle. I am not saying for a moment that if the appointment of a Committee is left to the right hon. Gentleman he will not appoint a good Committee, but I ask the House to consider whether they should allow their duty to devolve upon other shoulders, whether they should not do it themselves? I have brought grave charges and indictments against the Government of India. I charge them with levity, I charge them with incapacity, and I charge them with injustice. [Laughter.] Hon. Members may laugh, but those who have done me the honour to listen to what I have said cannot say those charges have been unsupported by proof, by the teaching of history, by the things which have taken place between 1897 and 1898, and, further than that, they cannot say that they are not supported by a great body of opinion in the City of London, and in India, and in Glasgow and Manchester. The right hon. Gentleman knows very well the expressions of opinion that he has received, and he knows very well who are with me in this matter. I ask this House to consider whether, if these were baseless charges, this application for a Select Committee would have received the outside support which I can show to have been the case. Just listen to the names of the men who have signed the petition to the right hon. Gentleman that a Select Committee be appointed—they are all men engaged in commerce. First of all, there are all the Indian banks, then nearly every mercantile firm in the City of London trading with India—Ralli Brothers, Wallace Brothers, David Sassoon and Co., and many others with whose names I will not trouble the House. It is sufficient for my point that I should show that there is a body of opinion behind me desiring an independent committee of inquiry. This is a charge against the Indian Government for doing this, and against the India Office for supporting this thing, and is it equitable that they should be the judges in their own cause? It is not. Under no circumstances in private life, or between man and man, would such a proposal be adopted, or accepted. I think I have taken up more time of the House than I ought, but before I conclude let me urge upon this House in the strongest way I can the social and humanitarian aspect of this question. Because the Indian native is poor, because he is ignorant, because he puts his trust in your sense of justice, that is no reason for taking away 37 per cent. of his hoard. I know that this House will not approve of such action; I know they will say that if such action was necessary, it is in itself a condemnation of England's rule. I ask this House!—I implore it—to deal as tenderly with the interests of the people of India as if they were their own. Unless we do so we have no right or title to remain there. I ask this House in regard the people of India, to remember, and to act upon, the noble words of the Royal Proclamation when we took over the government of India from the East India Company— In her prosperity shall be our strength, in her contentment our security, and in her gratitude our great reward. I beg to move the Resolution.

*MR. J. M. MACLEAN (Cardiff)

I am afraid I shall fail to reach the high level of moral earnestness which has made the able speech of my hon. Friend so attractive to the House. I think that the plan of the Government of India that was adopted in 1893 has failed, but I do not believe that it has wrought such widespread mischief in India as my hon. Friend imagines. I do not think that the value of silver hoards has been so greatly depreciated as my hon. Friend says. A complete answer to a statement of that kind is that India goes on cheerfully importing millions' worth of silver every year, just as if this regulation bad never existed. I do not approach this subject from the same point of view as my hon. Friend. I differ from him on many questions of currency; and I only second the Resolution because I look upon it as a practical matter which ought to be inquired into and to be examined upon its merits. When the plan of artificially raising the rate of exchange to 1s. 4d. the rupee was brought forward in 1893, I spoke against it at the Society of Arts, and I objected to it on the ground that it was nothing better than a bastard bimetallism, which has been adopted by the Government of India in default of getting the legitimate article, and I believe experience has shown that the scheme has not accomplished the results looked forward to. I do not think the people of India have shown any great feeling upon the subject as a body, but the mercantile and banking interests have felt the working of the scheme very severely. Sir Forbes Adams, a very distinguished merchant engaged in the Indian trade, a man who is well known as a confirmed monometallist, wrote to me to say he was glad I was seconding the Resolution, and his conclusion on the whole matter was this: that the position of India now is intolerable and impossible, and that a fair inquiry by a competent body of men is urgently wanted before the Government of India are tempted into fresh experiments. I think that represents the opinion of the great body of men engaged in business in India. But not only is that the feeling in that direction, but the Government of India are dissatisfied with the present position of affairs. I do not join in Mr. Vicary Gibbs's attack on the Government of India for trying this experiment, for I have the greatest admiration for the wisdom and the courage displayed by the Government and the Secretary of State last September in rejecting proposals which, had they been accepted, would, in my opinion, have been a great disaster for the British Empire. I should not have come forward now to attack what they have done if they themselves had stood by the position that they then occupied. In their dispatch of last September they said in regard to the position of exchange— India has since 1893 passed through a period of serious tension and embarrassment alike to trade and to the Government. We are satisfied that, great as have been the troubles that have attended this period of transition, the attainment in the end of the paramount object of stability in the exchange is really worth more than all the sacrifice made. We believe that our difficulties are now nearly over, and that we shall, in the future, succeed in establishing a stable exchange at 16d. the rupee by continuing the policy initiated in 1893. If the Indian Government had stood by the terms of that dispatch I should have thought it only fair to have granted them some further time, to see if their experiment could be carried to a successful conclusion. But since that dispatch was published they have passed an Act, stillborn from the very commencement, to get gold paid into the Bank of England against rupees to be issued in India. Again, they have submitted proposals to the Secretary of State—fresh proposals which he has said he intends to inquire into. Therefore they have departed altogether from the terms of the statement they made only a few months ago. They have taken a new departure, and, therefore, it is admitted on all hands that we cannot go on with the legislation of 1893. That is admitted by the Government of India itself. What were the proposals made by Lord Herschell's Committee in 1893? They tried to secure two objects—to establish the stability of exchange between India and England, and to prevent the competition of silver with Council Bills. Neither of those objects has been attained. The exchange has not been stable, and the competition of silver with Council Bills has gone on as freely as before. I always thought that Lord Herschell's Committee was constituted too exclusively of men who were students and thinkers, and not enough versed in practical business. We respect and admire the names of many who were members of that Committee. I have read again and again the majority and minority Reports of the Committee, and the memoranda which accompanied them. I have read the memorandum by the Member for Bodmin (Mr. Courtney), who was on that occasion—I believe it is unusual—in a minority, and the result of reading his memorandum was that I feel as though I have passed through a strict mathematical examination, and, no doubt, the memorandum did credit to the great ability we know Mr. Courtney possesses. With the exception of Mr. Currie, I do not think there was a single member of the Committee who had any knowledge of mercantile and banking business, and I do not think Mr. Currie even had much to do with the Indian trade himself. What was the result of the Committee? I came, in reading the Report, upon this remarkable statement— Hitherto the expansion of the revenue has largely provided for the additional calls which the fall in exchange has made on the Government of India. There, I think, the Report of Lord Herschell's Committee might have stopped. This is an exact description of what took place under the old system, when the Mints were free for the coinage of silver, without any ratio being attempted between silver and gold. The country prospered immensely, and in a few years the increase of trade would have more than compensated for the loss on exchange which accompanied the Government's remittances to this country. But that was not allowed to continue. It is said in some quarters that the old system encouraged the exporter to the loss of the importer. But it seems to me there is an absolute fallacy in a statement of that kind. How can we encourage the prosperity of a country and give the people wealth when at the same time we are discouraging the import trade? The more prosperous India grows, the greater becomes her ability to buy our goods. After making a statement of that kind the Herschell Committee fell under the influence of Sir David Barbour, a gentleman who has a remarkably facile pen, and who knows exactly what the Indian exchange ought to be. The Indian Government had always thought far too exclusively of its remittances to this country, and of the loss to the revenue thereby incurred. India has to pay away about one-third of her revenue in expenditure in this country every year, and that expenditure is necessarily measured in gold currency; and it is necessary, therefore, that the Finance Minister should look very carefully to the means by which he can provide that money. What I complain of is that the Indian, Government has looked exclusively to that, and has not considered the effect upon the general trade and prosperity of the country of the changes in the rupee, and so lessened what the Indian Government has to pay for sending its remittances. That has been the great mistake throughout. The Government of India has not been sufficiently informed by what I may call the commercial instinct. It has devoted itself exclusively to the point of remittances to England, and the result is seen now in the miserable conclusion we have come to after these years—that the rate in England can only be supported at 1s. 4d. by borrowing money in England. From an answer of the noble Lord's I take it that the real deficit on the year now coming to a conclusion is between 11 and 12 millions tens of rupees, including the four millions sterling which have been borrowed in this country towards meeting the home charges. The noble Lord has been obliged to stop the drawing of Council Bills on India in order to maintain the rate at 1s. 4d.

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

No, it is quite the other way, The expenses of the famine made the cash balance so low that we could not call upon it. It was not for the purpose of the exchange at all.

*MR. MACLEAN

I quite admit that there are exceptional circumstances this year. The noble Lord knows that the Finance Minister has estimated that he is going to remit 16 millions sterling from India during the next year—the year which is about to commence—which means perhaps Rx. 35,000,000. Does the noble Lord imagine that he will be able, even if the country revives, to draw 16 millions sterling in Council Bills during the coming year at the rate of exchange which is now maintained? [The SECRETARY of STATE for INDIA: Certainly.] Then the noble Lord is more sanguine than I am. The rate has only been bolstered up by the sterling Loans which have been raised in this country. Well, I admit that what the noble Lord has promised to do has robbed this Resolution of a great deal of important. He has promised that an inquiry shall take place, that all the documents shall be published and made the property of the community, and that he will, if he possibly can, lay them before Parliament before any new proposals are carried into execution. Well, we can only suppose that those proposals which will come before the noble Lord have reference to the established of a gold standard in India. It seems to me I may be allowed to say so—and I say it with all due respect—that the noble Lord labours under a strange delusion if he imagines that the establishment of a gold currency in India will get, him out of all his financial difficulties. So long as the revenue of India is paid in silver—and it must always necessarily be paid in silver—the Treasury in India must be tilled with silver exclusively, and when they come to turn that silver into gold, in order to remit it to England, it is obvious that the man who has to part with his gold in order to buy rupees, will not take them at the rate which the Government choose to put upon them, but at the market rate, and you will have to buy the gold at a considerable sacrifice, so that the state of the Indian Treasury will be no further advanced by the establishment of a gold standard than it is at the present moment. It is not a question upon which a man would like to dogmatise, so extensive are its ramifications, but the result of my own experience and study is that the old system of keeping the mints open, without fixing any ratio whatever, and of leaving the market to find its own level, is the best system you can adopt in India; and I hope whatever Commission is appointed will take that question, into consideration. I will only say one word, in conclusion, on the difference between the proposal of the noble Lord and that mentioned in the Resolution—the Resolution asking for the appointment of a Parliamentary Committee or Commission. Well, I think the very best tribunal that can possibly be appointed is a Parliamentary Committee. The House mainly consists of men who have had a very large experience in different ways and in various parts of the world. We have had recent experience which shows that a House of Commons Committee is not altogether a Satisfactory tribunal for finding out the truth when political feeling is excited, but where political feeling does not exist I think that there is no better tribunal to be found in the world than that of the British House of Commons. I hope, therefore, that the noble Lord will not bind us down absolutely to a Departmental Committee, but if he does appoint a Departmental Committee I hope that the fault will be avoided which one detects in the Hersehell Committee, namely, that no men were appointed representing the commercial interests of the country. I also hope that the terms of reference will be sufficiently wide to allow of all questions connected with the Indian currency being fairly discussed. I know there are some people who wish to limit the inquiries of the Committee, and to shut out one thing and another thing. They are afraid of our friends the bimetallists. I am not afraid of the bimetallists. I believe that the more bimetallism is examined the more it will be treated as an economic heresy. I am therefore in favour of a full and free discussion of this matter. In that way alone shall we promote the best interests of India; and in advancing the best interests of India we advance those of the British Empire.

*SIR SAMUEL MONTAGU (Tower Hamlets, Whitechapel)

My long experience of over half-a-century in dealing with all currencies induced me to take part in this Debate. I shall approach it solely from a commercial point of view. I think that a strong case has been made out for granting a Select Committee to inquire promptly into this important question. Although a bimetallist, I do not blame the Indian Government for having closed their mints to the public for the free coinage of silver. I do not see what other course they could have adopted in order to prevent all the world's discarded silver from being shunted on India. They are bound, however, to supply a sound currency of some kind in India. At present they have a forced currency of token money without any metallic standard: whatever. India resembles Spain and Portugal in having over-rated silver and paper as currency, neither of which is available for international payments. Surely India, with her splendid credit, need not be classified with those countries; yet the system is identical, and has already lasted long enough—perhaps too long. Austria, contrary to what, as has been stated by the mover of this Resolution, has no gold reserves. She has also an over - rated silver currency, but she has already accumulated a sufficiently large amount of gold to establish a gold circulation. The Indian Government have fixed a maximum value to the rupee. It cannot rise above 1s. 4d.—the maximum which has been fixed by the Indian Government—but it can descend to unknown, depths. Traders who, naturally, base their operations on the currency of the country with which they deal desire stability, and care far more about the limit of depreciation than the limit of appreciation. Apparently no one can depend upon the action of the Indian Government, which is fitful and vacillating. If they cannot promote international bimetallism, which, I think, is the best possible solution—because France blocks the way—let them adopt the only alternative and introduce a gold currency. They have undertaken to control the circulation in India, yet they allow discount to fluctuate in a most violent manner. When the mint was closed in June, 1893, the discount on bills for January 1894 was 6 per cent.; in February, 10 per cent.; in March, 9 per cent.; May, 7 per cent.; June, 5 per cent.; July, 4 per cent.; and September, 3 per cent. The average for 1894, therefore, was 5½ per cent. In 1895 it varied again. In February it was 7 per cent., and it went gradually down to 3 per cent. in July, while in November it was 5 per cent., giving an average of 4½ per cent. for the year. In 1896 it was still worse. In January it was 5 per cent.; in February, 7 per cent.; and in May, 4 per cent. Then it went up to 5, 7, and 8 per cent. in September, October, and November respectively, and in December it was 10 per cent., the average being 5 2–3. In 1897 the fluctuations are again very remarkable. In January the rate was 10 per cent.; in June, 8 per cent.; July, 5 per cent.; September, 6 per cent.; October, 7 per cent.; November, 5 per cent.; and December, 9, or an average of nearly 8 per cent. This year the average is between 10 and 12 per cent.; this high rate of discount is an intolerable burden upon the people of India, leading to the constant oppression of usury. If the minimum charge by the Presidency banks is 12 per cent., what excessive rates must have been encouraged outside commercial circles! We condemn usury in this country—and I think very rightly—and we will, I hope, legislate against it; but you act differently in India, where you allow these high rates of discount, and encourage the very practice which you condemn in this country. Rupee stocks were depreciated no less than by 7 or 8 per cent. in the last year, yet investors were not attracted, because the rupee was an unstable investment. Gold is not attracted to the Indian Treasury by these excessive rates, which are known to be unreliable. Now, what are the remedies? The Select Committee might advise the Government as to the best remedy. They might recommend international bimetallism, they might advise the Indian Government to regulate the discount in India to a 1 or 5 per cent. rate, and might accumulate gold quietly and steadily in the Indian Treasury. This may be effected in two ways—by intercepting the gold coming from Australia and Africa, which would otherwise go to foreign countries, and by making a part of the taxes or duties payable in gold; perhaps a portion of the rates on imports and exports might also be made payable in gold. The great landowners, by differentiating between the present owners and those who had the land tax fixed over a hundred years ago, in 1793, when the rupee was worth two shillings in Bengal, and later on in other Presidencies, might fairly be required to pay the land revenue in gold at the rate of 1s. 4d. per rupee. They would not lose, because the object of raising the revenue in gold from them would be to maintain the rupee at 1s. 4d. There is an enormous quantity of gold in India, which has been estimated at over £300,000,000, and I feel sure, from my knowledge of what has been sent to India, during the last 50 years, that £300,000,000 is even below the mark. I do not think they were quite wise in fixing the rupee at 1s. 4d. Indian experts have thought that 1s. 3d. would be a fair rate. I advocated 16 rupees to the £1 in 1892, and had that been done those who had bought gold at 1s. 2d. and 1s. 3d. the rupee would have been inclined to have parted with it; but when you fix the rupee at 1s. 4d. you inflict a loss upon those who took their gold when the rupee was much lower; if you can attract even a fractional part of these large stores of gold that do exist in India you can certainly establish a gold currency, and when a reasonable quantity of gold has accumulated, the Indian Government might fix the rupee at 1s. 4d., within one-eighth below or one-eighth above, and could certainly maintain that rate. They have got 2d crores, or about £16,000,000 sterling, in bank notes, in circulation, and if they accumulate gold they could begin by making those bank notes payable and issuable in gold. They might familiarise the well-to-do Native with the sight of gold in circulation, and by persisting in that course for some time steadily, and with the fixity of purpose not generally displayed by the Indian Government they would attract from Europe millions and millions sterling of money which is seeking investment. They could, if they had a revenue in gold, make an issue of a gold loan in rupees that should be made transferable only in India, so as to prevent its being brought, over here to compete with the sterling loans in England. This might be considered by a Select Committee, and I think that the only satisfactory course that this House can take, and that the Government can take, would be to have a Select Committee to consider these proposals. I trust, therefore, that they will not shirk the question by having a Departmental Committee which would not satisfy those who trade with India and the public generally, but accede to the request put forward by the hon. Gentleman opposite.

*MR. BURDETT-COUTTS (Westminster)

In rising to offer a few remarks on this Motion I must join in the expression of regret that an occasion so inadequate, and time so short, should have been allotted to a subject of such great imporance. Sir, we have heard a great deal about external dangers during the past few weeks; but not all the dangers to which a great commercial Empire like this is subject are concerned with wars and rumours of wars. The safety and protection, and, I may add, the extension of our commerce is a legitimate cause of anxiety; but the financial stability upon which that commerce depends, the public confidence with which all nations turn to the method and system by which that financial stability is maintained, are matters of still greater importance. And it seems to me there is implied in this Motion an indirect, but none the less certain, danger to the financial stability and the commercial prosperity of our great Indian Empire. Sir, that country has entered, with the full sanction of Her Majesty's Government, on a certain course with regard to its currency. After pursuing that course for five years the Government of that country has recently had an opportunity of expressing their opinion that it is the only wise course for them to follow, and of avowing their unanimous determination to maintain it. What, then, can be the object of this Motion? It is not to strengthen and facilitate that policy, but to thwart and change it. The object of this Motion is not to help to effectuate a gold standard in India; and any other subject is simply a disturbance and grave danger to the financial and commercial welfare of that country. I have not the slightest intention of making a speech on the merits or demerits of what is called bimetallism. But it is necessary to my argument to state that I believe I speak the mind of gigantic interests in this country, and of hundreds of thousands of people who are engaged in and who depend on those interests, when I claim that the financial stability and public confidence to which I have referred have, in this country, been built up on the integrity of a gold standard, and that in India the same stability and prosperity can alone be attained by effectually securing and pursuing the same monetary system. I hold with the declaration of the Indian Government— We believe that whatever inducements are held out to us by other nations, our best policy in monetary matters is to link our system with that of Great Britain. Therefore, Sir, before we can accept this Motion, before we can know with any certainty where we are in this matter, we must clearly understand and define the scope and object of this Committee. The position is simple. Nearly five years ago, in 1893, India closed her mints to silver, and declared for a gold standard. There was nothing really very remarkable in such conduct. During the last quarter of a century, or since 1870, Germany, France, Austria, Russia, the United States, and Japan have done the same. The whole credit of the Indian Empire, and, to some extent, the credit of Great Britain, which has countenanced the action in question, is pledged to this policy. It cannot be within the scope of a Committee to inquire into and recommend a return to a silver standard, especially as at the close of last year, as I have said, India again declared for a gold standard. Sir, it is worth while to recall the very remarkable circumstances under which that declaration was made. Possibly not every Member of the House has followed the course of events. I will briefly state them. In July of last year Senator Wolcot, of Colorado, and the French Ambassador, as representing M. Méline, the French Premier, had an interview with a Committee of the Cabinet. In this interview they made certain definite proposals constituting a complete scheme of bimetallism—the first we have ever seen in practical form—and urged its adoption by the British Government. This scheme included a proposition for re-opening the Indian mints, and for the unlimited coinage of silver at a ratio of 15½ to 1, the actual value of silver being more nearly represented by a ratio of 30 to 1. The House will observe that the envoys represented two countries—the United States, which is a great silver-producing country, and which has an active and determined silver political party; and France, whose national pockets are bulging with 5-franc pieces, the unhappy legacy of their former bimetallic system, which they would only be too glad to sell at double their actual value. These two countries, thus interested in silver, were dealing with the country which has maintained and prospered to a marvellous extent upon a gold standard; and specifically, with a great dependency of our Empire, whose policy, adopted in 1893, had lowered the market value of silver, a commodity in which France and the United States were specially interested, from 3s. 2d. per oz. down to 2s. 3d. This was the consequence of the stopping of the Indian absorption of silver, the import of that metal into India falling on the closing of the mints from 54,000,000 ounces down to 27,000,000. It was a position not unnaturally causing some anxiety to a great silver-producing country like the United States, and a country whose currency was choked with silver like France. What was the action of the Indian Government? They rejected the proposals. In a most powerful and closely-reasoned dispatch they pointed out that such a Measure would result in— a paralysis of their trade and industry, prolonged and accompanied by acute and individual suffering; that— none of the advantages expected would be attained; and that— the country would pass through a critical period which would retard its progress for years. They stated that they were— quite clearly of opinion that the interests of India demand her mints shall not be opened as part of an arrangement to which two or three countries only are parties and which does not include Great Britain. They concluded by a— strong recommendation that Her Majesty's Ministers should decline to give the undertaking desired by France and the United States. This rejection on the part of the Indian Government was absolutely decided and unanimous. And the Indian Government thus early saved the situation. Her Majesty's Ministers immediately proceeded to come to a conclusion wholly adverse to the scheme; and they supported the Indian Government, and in that action they were supported by a widespread expression of public opinion. Is it too much to say that, after what has occurred, after the Indian Government, on the Report of Lord Herschell's Committee, have closed their mints, after they have pursued that policy for five years, and now, at the end of that period, re-affirm it, and have been supported by Her Majesty's Government in doing so, it would stultify the Indian Government and Her Majesty's Government, to go back on that policy, and it would be impossible to accept a Committee which, directly or indirectly, had that object in view? Sir, the only basis on which a Committee ought to be accepted is to investigate, with a view to supporting, the policy of a gold standard For India. I know that in connection with that policy there are a multitude of powerful conflicting interests in India. Some persons, such as officials, may want a rupee as high as possible, not merely at about 1s. 3d., which it was when the mints were closed, or even at about 1s. 1d., which it is now, but 1s. 6d. or higher. And why? Because these persons naturally want as much gold for their rupee as possible. Again, others, such as the tea-planters of Southern India, may want an exactly opposite state of things, a falling rupee. Why? Because, selling their tea in Europe for gold, they get, with a falling rupee, more rupees per sovereign, while at the same time, they do not pay their labourer any more of these depreciated rupees. And there is even a third class, not only in India, but also here, who want a rupee which fluctuates in price, now up and now down. And why? Because it is their business to ensure traders against these fluctuations, and thus a fluctuating rupee brings grist to their mill. But amid this vast conflict of contending interests there is one that is paramount—one that is identical to India and to Britain. That interest is a rupee that neither rises nor fluctuates nor declines, but is stable to gold. And to secure that, although I know that it will take time and trouble, the only sure means is to link the monetary policy of India to that of England. That, in so many words, is the wise and consistent policy of the Indian Government, and after pursuing that policy for five years they are able to say— We are satisfied that, great as have been the troubles which have attended this period of transition, the attainment in the end of the paramount object of stability in exchange is worth, more than all the sacrifices made. We believe that our difficulties are now nearly over, and that we shall, in the near future, succeed in establishing a stable exchange at 16d. the rupee by continuing the policy initiated in 1893. Sir, there are two overwhelming reasons for aiming at this stability of the rupee. Firstly, at this moment, capital is being withdrawn from India because people have no confidence in the maintenance of the rupee, and are alarmed at the insistence with which some persons clamour for the re-opening of the mints. The hon. Members who moved and seconded this Motion attributed the depression in India to various causes. I attribute it to one cause. India wants capital: that splendid territory is an honour to British rule, and, I venture to say, a disgrace to British enterprise. To develop the resources of India is a duty which our capitalists neglect. Why so? They will not entrust their capital to a country whose currency may fall 20 per cent. in respect of their own. To attract them, and thus to remedy so large an evil, you must assimilate the standard of Britain and of India. Secondly, the Indian Government pays us annually £16,000,000 or £17,000,000. With a rupee fluctuating up and down, that Government is always in the dark as to how many rupees it must raise from its subjects in order to discharge that annual debt. Hence confusion and chaos in the Budgets, and this re-acts upon the taxpayer, in itself a dangerous element of possible discontent and dissatisfaction. Thus, on broad and general lines, I am convinced that the Indian Government have adopted a right policy. The question for a Committee should be solely—how to carry this general policy to a successful issue. In my judgment, the Indian Government does require guidance in this matter. In detail, and during the five years that have elapsed since 1893, it has pursued its own end with feebleness. Why has it collected no gold? We are living, and shall live, in an age of gold. There is plenty of gold for a gold standard in India. Its finances, though depressed to-day, are on a sound basis; in ordinary time I think, it could afford, slowly and steadily, to collect gold. Again, no one will deposit gold with it, because it has made no arrangements for anyone to get back the gold thus deposited. How best to do these things is matter for investigation. Errors have been committed, but the path has been difficult. Yet, to consider these difficulties as insuperable is, in my opinion, a weakness unworthy of British statesmanship. The thing has been done by many other nations—Germany did it in 1870. Russia is doing it now—it went on a gold standard last year and is now collecting gold, and has already 130 millions sterling. India, with our help, should be able to do it too. Sir, if this Motion is a Motion for a Committee to inquire into the currency of India, with the specific object of sustaining the now fixed policy of the Indian Government, and of facilitating and securing a gold standard in that country, it deserves the careful consideration of Her Majesty's Government. But if it is a Motion made to reverse the present policy, if, in short, it is a Motion made in the interests of bimetallism, then the Committee will be appointed to a hopeless and post-mortem examination. For bimetallism is dead; it has been killed by every country; and to grant a Committee with the hope of fanning a breath of life into it would simply be to waste the time of the House of Commons.

*MR. A. WYLIE (Dumbartonshire)

Mr. Speaker, I understand that the Motion which has been so eloquently proposed by the hon. Gentleman the Member for St. Albans, has the support and concurrence of many gentlemen who are supporters of bimetallism in this House. I am a supporter of bimetallism under certain conditions, and have spoken in its favour on the floor of this House; but I do not think this Motion is in the real interests of bimetallism, and I am almost certain it is not in the interests of India, because it will tend to weaken that confidence in the stability of Indian money which lies at the very root of the prosperity of the country, and which the Indian Government has been doing so much to establish during the last five years. I have accordingly put down an Amendment to the Motion to the effect that— This House being satisfied that the Indian Government has been and is giving due consideration to the monetary condition of India, awaits further communications from the Indian Government before taking any steps in connection with this subject. Before speaking to this Amendment, I wish to join hon. Members who have spoken before me in expressing regret at the short time which has been allotted to the discussion of this important subject. I feel, therefore, bound to omit many facts, figures, and communications on which I have based my convictions, and which otherwise I would have been very pleased to have laid before this House. No Government in recent times has had to face such a severe monetary problem as the Indian Government. From 1873, when silver was very largely demonetized, with the result that the currency of India was subjected to the enormous disadvantage of sometimes violent fluctuation, but at all times of steady decline, to 1893, the Indian Government repeatedly recommended the Home Government to join with other countries in establishing the old bimetallic standard of value, and, in my opinion, this would have been the wiser and the more successful course to pursue; but, in 1893, abandoning the hope of any immediate relief in this direction, they recommended that they should be allowed to close the Indian mints; and the India Office of the day, with the right hon. Gentleman the Member for Wolverhampton at its head, and with the approval of the right hon. Gentleman the then Leader of the House of Commons, whom I am glad to see in his place to-night, concurred in this recommendation and gave every facility for its being carried into effect. In making their arrangements the Indian Government had to consult the apparently divergent interests and the absolutely divergent opinions of two different sections of the community under their rule. On the one hand, the exporters from India, the planters, and the British manufacturers in India, who had been making enormous profits by the fall in the exchange, wished it to be allowed to decline still further. On the other hand, the importers in India, and the British manufacturers who supplied them with material, having experienced enormous disadvantage by the violent fluctuations and steady decline of the rupee, wished it to be maintained at a fair, but at all events a stable, ratio; and in this desire they were supported by the merchants and manufacturers and others in India, who had made money there, and who wished to be able to realise it in this country, and also by the ablest financial advisors of the Indian Government, who had had experience for many years of enormous deficits owing to the disadvantage of a falling currency. While the extreme men on the one side wished the rupee to fall to its bullion value of about 10d. or 11d., and the extreme men on the other side would have liked it to have been restored to its old standard of about 2s., or 2s. 2d the Indian Government chose the happy medium of 1s. 4d., and held the balance very fairly between the two parties. This policy has now been in existence for about five years, and, having sanctioned it, I think we are bound to see that, it has a fair opportunity of being tested. Five years is, in my opinion, far too short a period for testing and giving fair play to such a drastic financial experiment. I maintain, Mr. Speaker, that it has been attended with a very great measure of success, notwithstanding the great fall in silver. The Government has been able to maintain the rupee at the fairly stable value of about 1s. 4d., and this during a period when India was subjected to a terrible famine for three consecutive years, to a most disastrous pestilence which has paralysed industry and trade in many of her principal centres, and to the cost of a very expensive war. We can best measure the success of this experiment by looking, not at the positive disadvantages which it has secured, but at the evils which it has averted. If the Indian Government had yielded to the representations of the United States and France in 1893, and had advanced the value of the rupee to 1s. 11d., then,, judging from the experience which we have had of the rapid rise of the rupee to 1s. 9d. in 1890, we may safely assert that disaster and ruin would have fallen on thousands of the Indian merchants and planters. On the other hand, if the Indian Government had allowed the rupee to drop to its bullion value of 9d. or 10d., the Financial Secretary for India would have had to meet an enormous deficit, and the amount of extra taxation that would require to have been imposed under these circumstances on the people of India would have amounted to ten or twelve million crores of rupees, and this, in the opinion of the President of the Chamber of Commerce in Bengal, might probably have caused another Mutiny. It would have almost annihilated the importer in India, it would have very seriously handicapped the exporter from this country (the British manufacturer), and it would have thrown out of employment thousands and tens of thousands, of British workmen. But with the rupee maintained at a steady value of about 1s. 4d., the Indian Financial Secretary, instead of having to face a large deficit, is able to forecast a handsome surplus in next year's Budget; the steam-power industries established in India by British capital have increased by leaps and bounds; the ordinary manufacturers and planters have been doing fairly well; whilst the British manufacturers and exporters for India, have been enabled to hold their own against the cheaper labour of the East, and to give the enormous staff of workmen employed by them a fair amount of work and wages. These are some of the disadvantages which it has averted, and some of the advantages which it has secured, and I think, Mr. Speaker, judging the Government of India by the evils which it has averted, and the advantages which it has secured, we should congratulate them upon the success of their financial policy. It has been stated that there is very great stringency in the Indian money market, that interest has been advanced—I think it was the hon. Member for Whitechapel who made this statement—to the almost impractical limit of 12 per cent. Now, 12 per cent. Bank rate in this country would indicate a very severe commercial crisis, but in India it is not very much, above the normal rate. That country is the happy hunting-ground of the moneylender, and 12 per cent. is a common rate of interest at the bazaar even between Europeans. I would venture to say to the hon. Member for Whitechapel that, whilst he has given us the Bank rates for the periods since the closing of the mints, he has omitted to tell us that in the five years previous money was also at 12 per cent., and that the fluctuation in the Bank rate then was even greater than it has been since, because it fluctuated from a minimum of 2 per cent. to 12 per cent., whereas, since the closing of the mints, it has fluctuated to the extent of only from 3 to 12 per cent. In fact, this 12 per cent. corresponds to what would have been a rise in this country of from 3 to 4½ or 5 per cent.—a rise that would not cause very great alarm, and certainly would not call for the investigation of a Select Committee. It has been alleged that the closing of the mints has been the cause of this stringency, whatever stringency there may exist in the money market of India; but I maintain that the main cause of this stringency has not been the closing of the mints, but the want of confidence in the stability of the policy of the Indian Government, arising from the fact that it might be interfered with or overruled by the action of the House of Commons, and which has caused the withdrawal, as has been stated by the hon. Gentleman the Member for Westminster, of an enormous amount of capital from India. Several banks, within the last two or three years, have withdrawn all their capital from India, but if they had known that the rupee was going to have been maintained at 1s. 4d. during the last five years, they would have allowed it to have remained in India, where it would have been gaining an interest three times as much as in this country. Were confidence restored British capital would again rush into India. But if this Motion is adopted by the House, will it help to restore that confidence? I think not. If a Special Committee or a Royal Commission were appointed I do not believe that there is a bank in this country that would send its capital to India, and I question very much whether any private individual would do so. But, given the confidence that the value of the rupee will be maintained at 1s. 4d., British capital, which is eagerly seeking investment in every part of the world, even outside our own possessions, at rates of interest considerably below—in fact, a half, and sometimes a third below—what is offered in India, would soon fill to overflowing the coffers of our Eastern dependency. This House could give the requisite confidence, not by a Resolution for a Special Committee or a Royal Commission, which would criticise and possibly thwart the policy of the Indian Government, but by a Resolution strengthening their hands—a Resolution of confidence in, and of approval of that policy of the Indian Government which has done so much for the country and the people in time of storm and stress—and by a Resolution making it certain that the policy of the Indian Government would not be weak, vacillating, and temporary, but that it would be strong, stable, and continuous, for of all things a weak and vacillating financial policy is most disastrous to the welfare of any country. I hope that before very long such a Resolution will be affirmed by this House. And, in conclusion, Mr. Speaker, I would venture to hope that my right hon. and noble Friend, the able Secretary of State for India, will state, in no uncertain terms, that the Government are determined to support the financial policy of India, for, if confidence in its stability were given by the declared assurance of the Government, and by the approval of this House, and if the next five years be years of peace and plenty in India, as we hope they will be, then that policy which has done so much for the people of India during the last five years of war, and pestilence, and famine, will confer upon them still greater benefits, and will make India a still more valuable possession of the British Empire. I beg, therefore, Mr. Speaker, to move the Amendment which stands in my name.

THE SECRETARY OF STATE FOR INDIA

I regret that the exigencies of public business have permitted of only a very short discussion upon this important subject. I think, however, there is still sufficient time to enable me to state very clearly what my views are and what are the intentions of the Indian Government. Let me, in the first place, congratulate my hon. Friend who has just sat down upon his admirable speech—a speech which showed real knowledge and grip of the subject, and which was all the more valuable because my hon. Friend is largely engaged in trade with India and speaks as a bimetallist, although not as a prejudiced one. The hon. Member for White-chapel and the hon. Member for Cardiff have made speeches with which I find but little fault. As far as their demands are concerned, I believe I can satisfy them, for I feel that before any alteration is made in the monetary system of India there should be a thorough and impartial inquiry. I should be sorry to attempt to decide without inquiry upon so controversial and intricate a subject as a material alteration in the monetary system of India. I cannot, however, approve the tone or substance of the speech of my hon. Friend who moved this Resolution. In one respect I must congratulate him. We are discussing the dullest of all subjects—an abstract currency question—and my hon. Friend managed to pack into his speech more exciting language than I ever heard before, even in an Irish Debate, or in any Debate upon a controversial subject in this House. If my hon. Friend succeeds in getting a Select Committee appointed, and if those who differ from him were to give evidence in similar language, whatever other solution is arrived at I do not think it will be a pacific one. I was not responsible for the closing of the mints, and my hon. Friend wishes to bring those who were responsible before a Committee. I have looked most carefully into the history of the matter, and it is my belief that, placed in the circumstances in which they then were—circumstances of very great difficulty—those who were responsible adopted the right course, and I shall not hesitate to say so. It is an abstract question whether if is right of wrong to close the mints, but we must take into consideration the circumstances with which they had to deal. I believe I am the oldest bimetallist in the House, as I became a convert 25 years ago, and I had a great deal to do at that time with starting the organisation, which has since developed itself. The object of bimetallism is to establish a stable rate of exchange between gold and silver money, and the object of anybody who takes an interest in Indian finance is to try and bring about that stability of exchange. It is my belief that if that ever can be established so as to induce capitalists to send their money to India for investment with the knowledge that they will be able to get it back at very much the same rate, I know no bounds to the productive prosperity of India. How is it possible to establish that stability of exchange between England and India? It might be done by an international agreement, and theoretically that would be the best plan, but the world unfortunately does not agree. We have not to deal with individual opinion, but with the opinions of the world. Twenty-five years ago, when the fall in the price of silver took place, largely through the action of Germany in closing her mints, after a period of seven years, from 1870 to 1877, a certain number of nations demonetised silver and adopted a gold standard, and foremost was Germany. For 13 years there was a cessation of the movement; but in 1890 it began again, and since then Roumelia, Austro-Hungary, Chili, Bulgaria, Russia, and Japan all adopted a gold standard. Now, we must look facts in the face. I believe at this moment there are only two countries in the world which have a silver standard—namely, Mexico and China—and, therefore, believing though I do in bimetallism and not having abandoned the theory, I yet think it is obvious that it is no use prosecuting that theory for the purpose of establishing a stable exchange between England and India. There has been no blame of the Government for rejecting the proposal made in the autumn for reopening the Indian mints. A year ago I think it was obvious to anyone who looked into the matter that the proposal would not obtain the stability it was its object to secure. The Government can do one of two things; it can, if it chooses, give an artificial value to silver in circulation, but only on one condition, that is, that it keeps a restriction over the coinage of silver, so that it derives its value from its scarcity—a monopoly value. Or a nation can open its mints to free coinage, but the value of the coins will be that of the intrinsic value of the metal they contain. The proposition made to us was that the ratio of silver to gold should be 15½ to 1. But the market ratio was 35 to 1, and if the wishes of Governments come into contact with the universal law of supply and demand that law will prevail, and the ratio of 15½ could not be sustained. If we ever enter into an international arrangement that does not achieve its object we shall be in a worse position than before, for we shall have all the inconveniences of instability of exchange while having tied our hands and fettered our liberty of action. Therefore, I will go so far as to say—and I speak my own opinion, and I think of everyone connected with the Indian Government—we do not believe that circumstances now exist for entering into an international bimetallic arrangement, because no such arrangement would be worthy of being called international that did not include France, and France would only accept a 15½ ratio. The population of France is 11 per cent. of the total population of Europe, but its currency is 23 per cent. of the total currency of Europe. When that is subdivided, the note circulation is 6½ per cent. of the total circulation of Europe, the gold circulation is 25 per cent., but the silver circulation is 40 per cent. In fact, I believe there is a larger amount of silver in circulation in France than there is in the whole of British India. I go by the statement of the Herschell Committee. At any rate, there is this enormous amount of silver in circulation at the ratio of 15½ to 1, and I do not believe that France can accept any other ratio. So long as she adheres to that ratio she cannot enter into an international arrangement, and without her there can be no real international arrangement. That in a nutshell is the position of the Indian Government; and let the House remember that they did not close their mints until after they saw there was no chance of an international bimetallic arrangement. Another fact which my investigation has brought to my mind very strongly is that I do not believe it is possible for any one nation by its own exertions to rehabilitate silver. America made a tremendous effort in 1890 by the Sherman Act. By that Act the United States Government were compelled annually to buy 54,000,000 ounces of silver whether the currency of the United States wanted it or not. That 54,000,000 ounces of silver is about 30 or 40 per cent. of the total silver production of the whole world. America continued that operation for three years, and at the end of those three years silver was 6d. lower than it was before. That shows clearly that no one country can by its own unaided exertions rehabilitate the price of silver. Under these conditions what was to be done? What was the position which the late Government had to face? I do not want to use language too strong; but India was unquestionably on the verge of bankruptcy. She could not pay her way, and one of two things was inevitable—either that she would be unable to meet her obligations, or that this country would have had to come to her aid. Now, what is the plea upon which bimetallists have appealed to the working classes of this country? Is it not that the constant fall in the price of silver raises prices in those countries where silver is the standard, and that in consequence an impetus and bounty is given to the export trade? But if you open your mints you at once re-establish the bounty system on behalf of the exporter which the closing of the mints has taken away from him, and therefore anybody who has made an appeal as a bimetallist to the working classes of this country to get rid of the bounty which the fall in silver gives to the exporter, must vote against the re-opening of the mints in India, because, if those mints were opened, that bounty which they have denounced would once more be established. The exporter wants a cheap rupee. Everyone who exports produce from India likes a falling rupee, for the reason that it raises prices. But there is always an interval between the rise in the price of the commodity and the rise in the wages of those engaged in producing the commodity, and the exporter gets the benefit for the time being. It does seem to me absolutely inconsistent with the whole theory and principle of bimetallism that those gentlemen who have been holding up the iniquity of this bounty system should now ask us to reopen the mints and re-establish it in full vitality. My hon. Friend expressed in very strong language the terrible commercial, monetary, and economic condition of India as it exists at the present time; and he stated that this had been entirely produced by the closing of the mints. He gave only one set of figures in support of that statement, and those were in connection with the export of opium to China. No doubt there has been a great falling off in the export of opium to China. That has always been foreseen. The area of opium cultivation in China has, decade after decade, been extending; and I was glad to think that my hon. Friend, with all his research, was only able to refer to opium as proving the argument that India has become impoverished under this system of closed mints. I have taken a great deal of trouble to see how far the predictions of those who are opposed to the closing of the mints have been verified. It was stated that the result of the closing of the mints would be to reduce the area of cultivation. The area of cultivation has not diminished in India. The price of staple commodities remains very much the same: the value of exports has not fallen; the prices of exported produce have not fallen; and the prices of imported produce have increased. It was predicted that the trade of India with silver-using countries would fall off. So far from that being the case, according in the latest returns, the volume of trade with silver-using countries was 26 per cent. for the whole of India, whereas previously it was only 24. If I wanted any proof that India was not ruined by the present monetary system it is shown by the extraordinary recuperative power she is now exhibiting in recovering from one of the greatest disasters that have ever visited any country. Sir, attention has been drawn to the dearness of money, and there can be no question that money is dear in India. I do not wish to dogmatise on this point, but it seems to me that dearness of money is not identical with scarcity of currency. I think the dearness of money is caused by want of capital, and the cause of want of capital in India is, no doubt, attributable to that country having passed through one of the greatest economic convulsions of this century—drought, famine, plague, and war. There is another influence at work. I think one mistake in closing the mints was in trying to fix the rate at which the rupee should be converted into gold. The rupee could not rise appreciably above 16d., but could fall to any point below. The result, therefore, is that people who have got capital invested in the banks have preferred to have their money remitted to them whenever the rupee approached 16d., with the consequence that there has been a great depletion of capital. What would be the result if the mints were opened? I have had a calculation made as to what the difference would be beween the number of rupees remitted at the present rate of exchange and the number which would have to be remitted at the market rate of silver at the present moment. That difference amounts to about 15 crores, or, say, £6,000,000 sterling. The Indian Government must pay its way; and it could not pay its way in that state of things except by increased taxation. It cannot increase its taxation, and therefore it could not pay its way unless it received help from this country. If additional taxation were put on here, it would be put on those who are already subjected to unfair competition in India, and so the mercantile community here would get hit right and left. But that is not the only objection. If there were any idea of the mints being opened there would be at once a general disturbance of prices and a continuous fall in the gold value of the rupee; and a general spirit of apprehension and mistrust would be set up which would be absolutely fatal to the investment of capital and to the development of commerce or trade, or any sustained enterprise anywhere. I cannot conceive what reason anyone can give for arguing that the mints in India should be opened without an international arrangement, except that if the mints in India were opened it is just possible that it might be a stepping-stone to securing an international bimetallic arrangement. But it such a thing were done the economic condition of the country would suffer. I am not prepared myself to make the experiment, and I venture to think that no responsible Minister would incur the risk of adopting such a visionary idea. I want it to be distinctly understood that so far as the Indian Government are concerned, both here and in India, we believe that an attempt to open the mints without some international arrangement being come to would be an act of lunacy. Therefore, I should be very sorry to be a party to inquiry into the Indian monetary system if it were believed that I in any way associated myself with the idea that that inquiry would lead to a reversal of the policy established in 1893. Now, Sir, I quite agree that there should be an impartial inquiry into any proposals the Indian Government send home, and that any such inquiry must be to some extent retrospective. The inquiry must not either be limited to the scope of the Indian monetary system, but those who conduct it must have the power to investigate the monetary system of England. The body intrusted with the inquiry should not be composed mainly of officials. I think it is most desirable that gentlemen of experience in connection with India whose names carry weight should be asked to participate in such an inquiry, and I think they ought certainly to be more in number than the officials. I am prepared to undertake, on behalf of the Government, that such shall be the composition and scope of the inquiry into the proposals the Indian Government have sent home, and I am anxious for my own sake that the inquiry should be made as soon as possible. There are many systems of currency in force in different parts of the world, but if we analyse the secrets of success we shall find that those which succeed are successful by virtue of the fact that the people have confidence in them, and I feel that no alteration in the system of India could be accepted with general trust and confidence by the community unless the recommendation were associated with the names of men thoroughly conversant with the subject, whose opinions would carry weight with the community at large. It is rather difficult to select gentlemen to take part in such an inquiry. I think we do not want to have extreme controversialists, we do not want to have faddists, because I think nothing is more inconvenient in a case of this kind—where the demand everywhere is that a decision one way or the other should be arrived at—nothing is more undesirable than that such an inquiry as this should be an opportunity for gentlemen of extreme views to fight one another. At the same time, it is desirable that, while we get gentlemen associated with banking and commercial interests, we should try and not put on the Committee gentlemen with too direct a personal interest in the question one way or the other. Such being the views of Her Majesty's Government, I cannot accept the Motion of my hon. Friend for the reasons I have given. It would be quite impossible for me to do so, but I am prepared to move this in substitution for it— That in the opinion of this House it is desirable that a further inquiry be made into the monetary system of India, and into the proposals of the Government of India for the establishment of a gold standard in that country. Of course, such a Committee would have power to make recommendations. I do not propose to have recourse to a Select Committee, because it is obvious that you have a much wider selection of experts if you do not confine the inquiry to Members of this House, and I do not propose to have recourse to a Royal Commission, because a Royal Commission is a somewhat cumbrous form of investigation. But what I would propose is a Committee, not being a Departmental Committee in the sense of being composed mainly of officials in the India Office, but one having all the powers and all the attributes of a Royal Commission, and which is simply put in the shape of a Committee, because this is a handier—and, I think, a more effective—instrument of inquiry. I have stated to the House what the views of the Indian Government are. Wo cannot assent to the proposal of my hon. Friend, and I cannot hold out on behalf of the Government any hope that we shall reverse the policy established in 1893. My hon. Friend thinks that the currency system in India can be put on a better footing by a reversal of that policy; but I, on the other hand, look forward and hope to be able to consummate the policy which was commenced in 1893.

*SIR W. HARCOURT (Monmouthshire, W.)

The noble Lord was good enough to say that he would leave me some time in which to address the House. That was unnecessary, because he has made a better speech than I could have made in defence of the policy of 1893. There is no doubt what that policy was; it was an experiment, and a necessary experiment, in the condition in which India was placed. The Government of India approached that experiment with prepossessions in favour of a different course; but they have recorded in this dispatch their conviction that that policy was right, and that it was better than a partial international bimetallic policy. Well, that is satisfactory for the Government of India, but still more satisfactory is the voice of Balaam that we have heard to-night, who confesses that he always has been, and still is, a bimetallist by conviction. I can only express my regret that that speech was not made somewhere about the month of July, 1895; it would have been extremely useful in Lancashire and in the agricultural constituencies. But better late than never; and I can only hope that it has carried conviction to the colleague who sits by his side (Mr. Chaplin) and to the First Lord of the Treasury, the Leader of the House. [The FIRST LORD of the TREASURY: In what respect?] I am quite sure that all the arguments which he has used are the arguments we have been using—we who belong to the majority of the world—against the professors of bimetallism, for I do not know how many years. But, in spite of all the professors, the world is against the faith that the noble Lord still holds. I am delighted to hear that he has vindicated the Government of India, as it was his office and his duty to do, against the language, in my opinion absolutely unfounded and unjustifiable, employed by the mover of this Resolution. In his concluding words the hon. Member charged the Government of India with levity and incapacity, for adopting a policy which, I venture to say, has been proved by experience to be absolutely necessary to rescue India from impending insolvency, and in that I am supported by the speech of the noble Lord who has just sat down. I am not concerned with the vindication of the policy of the Government of India in this matter, and I am not going to trouble the House with arguments about the currency. The sort of speeches we want to hear are not speeches on currency by the professors, but speeches such as we heard from the hon. Member for Dumbarton, who spoke with practical knowledge of the questions which have to be decided. The hon. Member is the sort of man we want to assist us in inquiries of this kind. I do not agree with him, however, that an inquiry such as is proposed would shake confidence in the Indian Government. I believe the inquiry would establish the soundness of the policy which has been adopted, and which I hope will be continued in the future. We have listened to appeals on behalf of the poor people of India, who are said to have been injured by the closing of the mints. That is a most mischievous argument, and it is an untrue one. It has been said that these poor people in the time of famine had to sell their silver ornaments, and that they could only get half their value. If anyone is disposed to give in to that mischievous delusion I would ask him to read the most important report, written by Mr. O'Connor, on the trade of British India. He shows on pages 73 and 74 of that Report that it is absolutely untrue that these silver ornaments have been sold at reduced prices, to the injury and discontent of the poor people of India. No such thing has taken place, and that is proved by the fact that silver is being imported into India. Of course, if those ornaments were sold, there would be a plethora of silver in India, and there would be no necessity to import silver into the country.

MR. J. PARKER SMITH (Lanark, Partick)

Will the right hon. Gentleman give us the date of that Report?

*SIR W. HARCOURT

It is dated 1897, the year of the famine. It was issued as a Parliamentary Paper in, I think, November last. I read it with great satisfaction as absolutely refuting the fallacies which have been so frequently put forward. Then, Sir, the noble Lord said that no one would condemn the Government for having rejected the proposals which were made to them by the Governments of the United States and France. The noble Lord said truly that no international agreement could be arrived at except, upon the basis of a ratio of 15½ to 1. We have always asserted that when the bimetallists were brought to book and compelled to state a ratio the whole thing would collapse, and that is what has happened. We have the statement of the Chancellor of the Exchequer, with which I entirely agree, that a proposal of that kind was incompatible with public honesty. He said— In view of the present market price of silver, it seems to me that to fix any such ratio would be an act of absolute dishonesty to creditors. In the dispatch of the Indian Government it was pointed out that such a ratio would be absolutely ruinous to India; that the opening of the mints at such a ratio would mean the disorganisation and ruin of the whole trade of India. I have heard strong language of condemnation of such a proposal having come from the Governments of the United States and France. Yes, but they were not the authors of the proposal; they were invited to make such a proposal, and very much surprised they were when they found that it was summarily rejected by the Government of India and by the British Government. And why were they surprised? Because in 1896, three years after this Measure was adopted which the noble Lord says was necessary to save India from bankruptcy, the First Lord of the Treasury, without any consultation with the Government of India, pledged himself that the Indian Mints should be opened without any reservation whatever in regard to the ratio at which it was to be done. The right hon. Gentleman said— We will re-open the Indian mints; we will engage that they shall be kept open; and thereby we shall provide for the free coinage of silver within the limits of the British Empire for a population greater than that of France, Germany, and Belgium together. This declaration was undoubtedly greatly to the satisfaction of the people of Lancashire. The right hon. Gentleman gave the pledge without consulting the Indian Government, and when it was consulted the proposal was summarily rejected. The United States naturally thought that, after the right hon. Gentleman's pledge, the proposal would be accepted. When it was rejected, and very properly rejected, they were extremely astonished at, and they rather resented the violence of, the language used here to describe their proposal, and I am bound to say that they had some reason to complain. I think the proposal of the noble Lord to-night is perfectly satisfactory. In such a difficult question as the establishment of a gold currency in India there ought to be investigation by experts and practical men. If it could be obtained it would be of great use to this country and to India. I think the substituted Motion proposed by the noble Lord is a very proper one for the House to adopt, and, so far as I am concerned, I shall give it my support.

*MR. WYLIE

I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

*THE SECRETARY OF STATE FOR INDIA

I propose in line 1 to leave out from the word "that" to the end of the Question, in order to insert the words— In the opinion of this House it is desirable that a further inquiry be made into the monetary system of India, and into the proposals of the Government of India for the establishment of a gold standard in that country.