EAST INDIA REVENUE ACCOUNTS.

HC Deb 10 November 1902 vol 114 cc470-549

Order for Committee read.

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

At the late period of the session at which we have arrived, when it is my duty to submit the annual statement on behalf of the Indian Government, there is brought with it a certain advantage of which I hope I shall be able to take advantage. There seems to be a tendency of certain sections of the House, which may perhaps accurately be described as the Indian Opposition, to treat the forecasts of the Secretary of State with regard to Indian Revenue with incredulity. They have been described over and over again as the fantastic concoctions of a phenomenal optimist, an official who is, as to the state of Indian affairs, up in a balloon, who has no cognisance or true appreciation of the wants of India; and it has been urged, therefore, that these estimates should have no weight attached to them. Every successive year shows, when we close the accounts, and when the figures are known, that, if the Indian Secretary has erred at all, it is not by being too sanguine. Of the three years to which I shall refer we have indisputable figures for two years and eight months, therefore the forecast of the estimates can only deal with the estimates for four months of this triennial period.

The first year with which I have to deal is that which terminated on 1st April, 1901. I originally estimated that the outcome of our finances would show a deficit of £826,000. The drought was terribly prevalent throughout certain portions of India. It caused enormous direct and indirect losses to the Revenue. My statement as to our capacity to meet the situation thus created was received with incredulity—I will not say by a section of the House, but by all Gentlemen on the other side of the House—and they moved a resolution to the effect that, in order to enable the Indian Government to fulfil its responsibilities, a grant of £5,000,000 should be made from the Imperial Revenue. We contested that proposal, and now we have the final outcome of this year. Instead of the deficit, we have a surplus of £1,670,000. But something more has to be said. In this year there were enormous profits from the minting of rupees. Formerly these profits have been credited to revenue, but this year I established a surplus gold reserve fund out of the profits, which amounted to £3,100,000; so that if you add the figures together you will see that there will be a surplus of nearly £5,000,000. May I ask hon. Gentlemen opposite to consider what the effect would have been of the financial arrangements which they intended to have carried into effect? They proposed to add £5,000,000 to the existing £50,000,000 deficit of Imperial finance, in order to double the surplus accruing to the Indian Exchequer. The next year with which I have to deal is that terminating April, 1902. Originally the surplus was estimated at £690,000. When I spoke last year we had sufficient behind us to justify a revised estimate of a surplus of £1,824,000. I then gave my reasons after entering into an elaborate analysis of the various industries in India, of its trade and commerce, for the belief that there was a certain revival of general prosperity. That statement was received with even greater incredulity than had been previously displayed, and from that time to now I have been inundated with letters, pamphlets and even books, that have been written to show the fatuity and ineptitude of our calculation. These letters, books, and what-not have been consigned, even by those who wrote them, to the waste-paper basket ["No, no,"] because my modest estimate of a surplus of £1,824,000 has achieved the grand dimensions of £4,900,000. But it is only fair I should add that we had a windfall in this year by the employment of a certain number of troops on the Indian Establishment in South Africa and China.

MR. CAINE (Cornwall, Camborne)

Over £3,000,000.

LORD GEORGE HAMILTON

My estimate is that the saving amounted to about £1,000,000 sterling, but the greater proportion of that sum has been spent in re-arming the native Army and improving the efficiency of the Army. But what is more important, in connection with this year, is that there was an increase under every head of revenue, and notably under Customs and railroads, which, in every country except India, is taken to mean that there is every indication of a revival of trade, both internal and external. Now, Sir, I turn to the last year—the current year. We had clear evidence before us, in considering this Budget, that, assuming the basis of taxation and of expenditure remained the same, there would be a considerable margin of income over expenditure, and we carefully considered to what purpose we should apply this margin—whether we should apply it to a re-adjustment or remission of taxation, or whether we should make special grants to those industries and those provinces and those branches of administration which had suffered so severely during the long protracted drought and distress. We came to the conclusion that the best use which we could make of this margin was to make these special grants, and we, therefore, charged the finance of this year, partly by a reduction of income, and partly by an increase of expenditure, with a sum of £1,500,000. But we estimated that, after we had made this special charge, we should have a surplus of about £837,000. I am glad to say that the year has sufficiently advanced for me to assert that the surplus, at the very least, will exceed £1,700,000.

Now, Sir, just let me review the finances of these three years. They are not normal years, because during the whole period there has been great distress in the western part of India, which is the richest portion of our Indian Empire. We have had very heavy disbursements to make to meet famine distress, and we have also had to meet curtailment of our industries. The upshot is that, after meeting all expenditure, we have realised a surplus of £8,300,000. We have during that interval spent 20 millions sterling upon railroads, and two millions sterling upon irrigation; and we have, in addition, established a special gold fund for the purpose of giving stability to exchange, of which no less than £3,600,000 is invested here in Consols in the name of the Secretary of State. I think that all—even my most prejudiced critics—must regard these as remarkable financial results to achieve, and they are the more remarkable if we throw back our recollections to what were the conditions of Indian finance at the time when the Crown took over the territories of the East India Company. The prospects of the finance of the new Government were then indeed gloomy. The Mutiny had been suppressed at great cost, and a large Debt had been incurred in consequence. For the maintenance of order and authority it was essential that there should be a vast increase of the white forces that previously had been stationed in India. This entailed a very heavy increased charge for military purposes, and, in association with this increase of white troops there was an enormous capital outlay in providing the necessary accommodation. The East India Company had some years back entered into arrangements with a number of companies for the purpose of constructing railroads at a very high rate of guaranteed interest, and it was a matter of certainty that for years to come, though they might develop the trade and agriculture of the country, they would be worked at a financial loss to the State. If the East India Company transferred all these financial liabilities to the Crown, they also transferred the services of two eminent financiers—Sir Thomas Seccombe and Sir Henry Waterfield. Sir Thomas Seccombe at once assumed the position of chief financial adviser of the Secretary of State for India. For twenty-two years he held that position. During that time he contrived, by his indomitable energy and knowledge of finance, to assist every Finance Minister in India. Little by little the yawning gap between income and expenditure was diminished, until ultimately Sir Thomas Seccombe succeeded in establishing more than an equilibrium, and when he retired the credit as well as the stability of Indian finance was restored. He was succeeded by Sir Henry Waterfield, who had been trained under him. Sir Henry Waterfield also held the office for twenty-two years, and had great difficulties to deal with. The great fall in the price of silver immensely increased the number of rupees that had to be provided in India to meet the obligations of the Indian Government in this country, and the Government's finance had again to pass through a most serious ordeal. We have emerged from that, and Sir Henry Waterfield then had to deal with six years of successive drought and famine. Not with standing this, under Sir Henry Waterfield's advice and guidance, our financial system has arrived at such a condition that I am enabled to state to the House the gratifying figures I have just mentioned. Sir Henry Waterfield and Sir Thomas Seccombe are admirable specimens of the permanent Civil servants to which this country owes so much. I doubt if in the long record of the Civil Service there has ever been another instance of two men, in combination, holding the responsible position of financial adviser for forty-four years. Their names will be inseparably associated with the resuscitation of the credit and finance of India, which is so largely due to their respective efforts.

Now, Sir, it is asserted that, even if the results of our financial system are satisfactory on paper, they have been achieved at terrible cost to the population on whom that system has been imposed; that the population under our rule in India has been slowly bled to death, and is steadily deteriorating in material prosperity. On these assertions, which are frequently made, I have only two observations to make. The first is that if a man's income year by year increases, nobody can contend that by that process he is getting poorer. The second is that if, under any system of taxation imposed on a community, the taxation remains steady, and the proceeds of this taxation year by year increase, it is universally accepted as evidence that the burden of taxation is lightening, and not pressing heavier on the communities who bear it. But whilst I deny—a grotesque libel—the statement that the masses of those under our rule in India have gone back in material prosperity, I admit readily that India is a very poor country, that there are dense masses of poverty located there, that the partition between the ordinary wage of the coolie and indigence is very thin, and that their general standard of life and comfort is far below that of European nations. And I admit that, not from over-assessment, but from certain mistakes which I think have been associated with our land assessment, there is a great increase in the indebtedness of the cultivating classes; and, therefore, these facts should always be present to us when we are considering the financial system in India. I propose tonight to indulge in the somewhat prosaic ordeal of taking each great head of taxation, and estimating its future probabilities placing these against the corresponding probabilities of expenditure, in order that we may be able to form some opinion of what the future prospects of Indian finance and of the Indian taxpayers may be.

The first big item of income with which I will deal is that relating to Customs. Now there has been a steady growth of the Customs revenue, and that growth has been associated with the articles which the poorer classes in India consume. The external trade during the year 1900–1901 reached the highest figures known. Both the imports and the exports were largely in excess of those of any preceding year, and a still further increase of considerable dimensions was shown in 1901–1902. I quite admit that the external trade of India bears nothing like the same relation to the internal trade as the relation between the external trade and internal trade of this country—the vast mass of the population are not affected by it. Still, large numbers of the community are engaged in it, and so far as it affects them any substantial increase is conclusive evidence of increase both in their power of production and their power of consumption. In 1891–92 the total external trade was £130,000,000. Ten years later, those figures had advanced to £163,000,000, showing an increase of £33,000,000 during this period. I think, therefore, we may look upon Customs as an absolutely stable and increasing source of revenue, and, unless some alteration is made in the rates, it is certain over a series of years to give us a successive series of increases.

I now come to railroads. For many years the railway system in India was worked at a loss to the revenue, but during the last three years there has been a remarkable development in the receipts, so that we may confidently rely in the future upon its being a rapidly increasing source of income. In 1891, our railways had an open mileage of 17,300 miles, and the capital associated with this open mileage was £151,000,000. Ten years later, the open mileage had reached 25,300 miles and the capital £228,000,000. In as much as the earlier railways were laid through the richer and more densely populated parts of India, while the latter traversed the poorer districts, and many of them were promoted quite as much for military as for other reasons, it might be supposed that the return on the larger mileage and expenditure would be less than on the smaller. But such is not the case. Whereas, in the earlier period, there was a loss of £458,000 (including interest), in the latter period there was a profit of £795,000. But that figure does not convey a full sense of the difference. The Indian Government have the option—which in almost every case has been exercised—of purchasing all the old guaranteed railways at certain periods by terminable annuities, which carry with them a sinking fund for the redemption of capital. Those annuities do not now run for a longer period than fifty years, and the whole of this sinking fund is charged annually against the ordinary railway revenue account. Therefore, there is silently at work a sinking fund which will automatically bring into the possession of the Indian Government, fifty years hence, a magnificent property valued at £80,000,000 or £100,000,000 sterling, and the whole revenue annually derived from it will go for the benefit of the Indian Exchequer. The Indian Government have been compelled themselves to construct, either through guaranteed companies or directly, nearly all the railroads existing in India, and they annually devote a sum, which varies, from revenue towards the construction of these railways. The process which takes place is that each year the amount devoted from revenue to the construction of reproductive railways is deducted from the permanent debt, and transferred to the capital account of the railway. So there is constantly going on a two-fold process—the reduction of debt which is non-productive, and the increase of capital which is productive. The result has been very remarkable during the last ten years; because, although the capital of the productive debt has largely increased, the receipts are so great that they far more than counterbalance the increased interest which has to be paid on the larger capital. Taking again the same period, I find at the commencement (1891) that the service of non-productive debt was at £2,450,000, and in ten years it has been diminished to £1,487,000. The charge against revenue for railways; irrigation works, and other commercial services at the commencement of the period was £1,500,000. At the close of the period these services gave a profit of £800,000. The result is, therefore that taking the charge for non-productive debt and productive capital outlay during these ten years, the Indian Government have improved their position by a reduction of the general charge on the Indian revenue of about £3,300,000. This is an item which I will ask the House to consider in connection with the growth of general expenditure of the Indian Government. It shows that we can count on the Indian railways producing an increasing source of income for years to come.

I turn to what is the most important source of revenue at the disposal of the Indian Government—namely, the land revenue. The Indian Government have the right of landlord over all the land of India, and from time immemorial it has been the practice of whatever Government is in existence in India to exact in the exercise of that right a certain proportion of the produce of the land, no matter what the form of ownership or occupation may be. I believe there is not a single one of the forms of ownership or of land occupation in existence throughout the world, which does not in some shape find a reproduction in India. Consequently it has been impossible to lay down any very general principle or formula as to the proportion of produce which, under all these varying forms of tenure, the Government should be entitled to obtain. Upon the moderation and the equitable enforcement of our land assessment depends the development and progress of the cultivators of the soil, who certainly constitute the overwhelming proportion of the population of India, and upon whose contentment and prosperity to a large extent depends the stability of our rule in India. It is, therefore, of paramount importance that our assessments should be moderate in themselves, and that our method of enforcing them should be equitable. During the protracted period of distress and drought through which the country has passed, doubts were expressed in certain quarters as to the equitable nature of these assessments; and a certain gentleman, Mr. Romesh Dutt, stated the proposition that the primary cause of distress and famine in India was not want of rain, but over-assessment on the part of the Indian Government. This expression of opinion took shape finally in a series of letters written by Mr. Romesh Dutt and addressed to myself and the Viceroy. Several gentlemen interested in the question of land tenure also wrote on the subject. Mr. Romesh Dutt not only denounced the assessments which the Government had imposed, but also suggested what he thought would be an equitable settlement, and a scale which, in future, the Government should exact. Lord Curzon, with characteristic promptitude, at once took up the challenge. The question has always been under the consideration of the local governments; and, after consultation with them, Lord Curzon issued a singularly able and lucid resolution in the first month of this year which dealt fully with the various contentions advanced; and he showed conclusively that the allegations as to over-assessment were quite unreasonable; and that, if the Government accepted Mr. Romesh Dutt's own estimate of what was just, the assessment in many parts of India would have to be doubled. But the Viceroy, while proving the moderation of the assessments, very wisely associated in the resolution a statement with regard to certain principles which had been always in operation, but which certainly would not have been less effectively in operation if universally known. He expressed the strong desire of the Indian Government in favour of long term settlements, and against sudden and great enhancements; and dealt with the principle of assessing improvements. But if it were true that assessments were not too high, it may also be asserted that in some parts of the country they were too rigidly enforced; that there was not sufficient elasticity in the methods by which they were collected. Therefore, Lord Curzon expressed, on behalf of the Indian Government, the desirability of a more elastic policy of revision and collection; so that, whenever local deterioration could be shown, remission should not be to the individual, but general to the whole district. The Government of Bombay, which is the part which has most suffered from distress, are about to introduce a Bill for the purpose of giving effect to tins idea.

The unpleasant feature connected with our system of land assessment is undoubtedly the increase in the indebtedness of the cultivator. There was an idea prevalent amongst certain very distinguished Indian administrators that the great object of land assessment should be, not only to be equitable in the amount levied, but to be rigid in the enforcement of the assessment. It was thought that it would teach the cultivator thrift and economy, and it was assumed that, if he were unable to pay, he would probably be bought out by a better cultivator, and that thus, under this process of rigid enforcement, you would develop a stronger and stronger race of cultivators. They were further of opinion that it was most advantageous that the cultivator should have full opportunities of obtaining assistance in the cultivation of his land. The result has not been satisfactory. The moneylenders have come in, and have given to each individual cultivator, in consequence of the lowness of assessment, such facilities for borrowing that they have in many cases availed themselves of them so far as to be absolutely in the hands of those from whom they have borrowed. We have established a system of Courts by which the moneylender has increased facilities of obtaining the repayment of money advanced; and the consequence has been that so far from bringing capital into agriculture, they have become absolute master of certain parts of India, of the holdings as well as the persons of those who cultivate it. Therefore, I think that, whatever the moral we draw, we should not be too hasty in introducing into India ideas and principles which, although they work very well here, may not necessarily bear the same fruit when all the surrounding conditions are entirely different. The hon. Member for Camborne in the last speech he made last year laid stress on the advisability of providing some system of conciliation by which the creditor, the debtor, and an official might meet together, and some equitable arrangement might be arrived at by which the cultivator might be free from the burden of his debt. Mr. Fraser, the Chief Commissioner of one of the districts which has suffered during the recent visitations of drought, has put in practice this idea, and the results have been extraordinarily satisfactory. He made a speech not long ago to those engaged in this work—to the officer in charge, to the creditors, and to the landlords and the tenants. I have not the document with me, but the purport is this—that a very large amount of debt had voluntarily been remitted, and that there was no friction or controversy between the landlord and tenant in that part of the country. The conclusion he has arrived at is this—a sound one—if the Government show a spirit of generosity in not enforcing during bad times land assessments, probably those to whom the cultivators are otherwise indebted will follow the example thus shown.

MR. CAINE (Cornwall, Camborne)

Will the noble Lord lay the Paper on the Table?

LORD GEORGE HAMILTON

I will.

MR. CAINE

I thank you.

LORD GEORGE HAMILTON

Therefore I think, assuming that our assessments in future are on the side of moderation, we may confidently calculate that the land revenue will, as the country opens, continue not only to be stable, but to increase. I need not say much as to stamps, Excise, and assessed taxes. All these branches of revenue show a slight increase. As they stood by us in the past and in time of trouble, we can, I think, rely upon them to give us an increasing income in normal times for the future. Opium, on the other hand, shows a falling off. Many years ago, when the first discussion took place on the opium revenue—I believe I was Under Secretary for India at the time—the contention was advanced that it was entirely due to the introduction of Indian opium into China that they were an opium consuming population. I was able to show that in those parts of China to which Indian opium had not penetrated the largest amount of opium was cultivated and consumed. The opium revenue has been of great service to India, but it has fallen off greatly of recent years. Twenty years ago it brought in a net revenue of about £6,000,000, but in recent years it has only given us about £3,000,000 sterling. It is not absolutely a reliable source of income. Possibly it may diminish in the future, but it is satisfactory to know that it is each year forming a less proportion of the revenue which is at the disposal of the Indian Government.

I now come to a tax which excites a good deal of attention in this country—the salt tax. Looking at the figures connected with this tax, I cannot say that the conclusions which one draws from them are very satisfactory. Receipts from it increase very slowly, though I am told that this year there is a considerable development. If we take the consumption of salt in connection with the immense development of railroads and the increased facilities of transmission and distribution, the development in consumption is very small. Therefore I think that one must arrive at one of two conclusions—either the people do not want to increase their consumption of salt or the tax prevents them from doing so. I incline to the latter theory. Lord Curzon informs me that, though he has had very many petitions on almost every conceivable subject he scarcely ever receives a petition connected with the salt tax. I believe the tax is viewed by the natives with very different feelings from those which prevail among certain sections of opinion in this House. It would be useless to touch the salt tax unless a great slice could be taken off, and we are obliged to be very cautious in the action which we take if it involves the surrender of a considerable amount of income. My hon. friend behind me, who has had considerable experience of the East, knows that, if a mistake is made by those who are responsible for the finances of this country, it is not possible to make good the deficiency that is caused by putting a penny on the income-tax or raising a duty on an article of general consumption. The deficit would probably remain, and the Government would have difficulty in making it good. Therefore we have to act very cautiously in connection with this tax; but I own that the feeling which always influences me is—I believe you would, by reducing it, increase the consumption, and if you increase the consumption you then get a financial reserve always possible in a time of emergency to raise by a tax on this increase of consumption. It is not possible, at any rate, for me to say anything now in relation to tins tax. There are other taxes which have also to be raised by the Indian. Government, and it would be quite out of place if I were now to indicate, assuming hereafter that we were to reduce taxation, the direction that that reduction should take.

Summing up, I may say that our sources of revenue, with the exception of opium, are increasing, and there is, therefore, every reasonable likelihood if we can keep expenditure down, that there will be for the future a considerable margin of income over expenditure.

Let me turn now to expenditure. When I came first into his House, many years ago, there was a fashionable theory among hon. Members that if the expenditure of the Government was to be checked it could be best done by putting it under the control of a representative Assembly which was elected on a democratic basis. That was the argument brought forward by Mr. Fawcett and others; and for this reason it was contended that the House of Commons should exercise more control over Indian finances than it did when they were under the direction of a Government which was necessarily autocratic in its composition, but in which the military element was, to a certain extent, predominant. I do not know whether that view any longer prevails as to democratic Assemblies; but, if there be any who still believe in this old fable, it may be useful to mention the growth of expenditure during the ten years under this military autocracy in India and the growth of expenditure under the supervision of representative democracy in this country. [An HON. MEMBER on the Opposition Benches:—" Tory Government."] I take the years between 1891 and 1901. The civil and military Estimates of Great Britain (exclusive of Debt Services) amounted at the end of the decade in 1891 to £50,950,000; now they are £84,900,000, showing an increase of £34,000,000. In India at the beginning of that period the Civil and Military Estimates and general administration amounted to £32,000,000; at the close they were £35,600,000, showing an increase of £3,600,000. But the House will recollect that I showed that in consequence of judicious development of railroads and the constant transfer of sums from non-productive capital to productive capital, in respect of these two items the Indian Government had improved their position during the ten years by £3,300,000, and if you deduct this from the excess of £3,600,000, the Indian Government have accomplished the creditable task of carrying on the Civil and Military Government, improving the efficiency of both, with an increase to the taxpayer of £300,000.

Can we hope to be able to continue this improved administration? There are certain items which it is perfectly clear we shall have to increase. We shall have to increase our expenditure in connection with education, in police administration, and the amount allotted to the local governments in respect of provincial contracts. The claims on the local administration as civilisation develops are greater and greater, and they can only be legitimately met by making some increase of their resources. But I cannot hold out any hope of reduction of expenditure as regards our Army. I hope the increase may not be large or substantial, but I think it is not improbable that we may have to add, to a certain extent, to the number of white troops in India. We have been fortunate during the past three years in obtaining large sums from the Imperial Government by loan, and for Imperial purposes, of Indian troops. We ran some risk in so diminishing our military forces in India, but we have benefited financially. We have received about £2,300,000 from the Imperial Exchequer, and we have expended most of it on re-arming the native army with the most modern rifle, in re-arming batteries of artillery, increasing the store of ammunition, and establishing new works for the manufacture of munitions of war in India itself; and the outcome of this expenditure has contributed to the efficiency of the Army, in mobilisation and otherwise. We are fortunate to have obtained the services of Lord Kitchener as commander-in-chief in India. Lord Kitchener is an administrator of the highest quality, and his work is always associated with economy. While I have been anticipating a reduction in certain branches of military expenditure, still I am afraid the demands which science imposes upon us of keeping our troops up to the latest requirements will necessitate some general increase in our military expenditure.

But military expenditure is regulated by policy. Our policy, both along our own frontiers and in the countries contiguous, has neither changed nor varied. Unaggressive in its character, it is based on principles of self-defence, regulated by a vigilant observance of what is going on. The death of the late Ameer Abdurrahman, though it removed a great personality from the rule of Afghanistan, in no way affects the engagements we have entered into with Russia as to the limits of our respective spheres of action, intercourse, and influence, nor the principles underlying the understanding between the ruler of Afghanistan and ourselves. Reviewing, then, the factors on both sides of the account it will be seen that, unless there is some abnormal expenditure forced upon us, our existing income, with the annual increments that limy be anticipated, will so far exceed the demands upon it as to leave a margin available either for the readjustment or remission of taxation, or for extra grants to localities, services, or local governments which are in special want of such assistance. But on this occasion it would be altogether premature to express an opinion on the question to which of these purposes that margin may hereafter be applied.

There is one group of subjects on which I should like to say a few words. They are subjects which have attracted a great deal of public attention, and which arise from controversies which periodically crop up between the Imperial and Indian Exchequers. They relate to the apportionment of charges in connection with services in which both countries have a joint but a varying and unequal interest, or they arise in connection with questions where the limit between Indian and Imperial interest is not very clearly defined; or at other times they have their origin in military charges, where a Department supplying articles and men which are indispensable to the Indian Government has the power of regulating the price at which those articles can be obtained. The first and most important of these questions is the cost of expeditions which are sent from India to places outside the Indian Empire. On this subject I think a very strong feeling exists, both in this House and outside, that India should be treated with the utmost consideration. I wrote some years back to the Treasury making certain suggestions, and endeavouring to lay down this principle—that, whereas within a certain sphere and for certain objects, India might be considered interested, outside those spheres and objects any expedition sent from India ought to have its cost exclusively defrayed from the Imperial Exchequer. The Royal Commission which was appointed to enquire into Indian Expenditure took up my suggestions and amplified them, and drew up an elaborate scheme, discriminating between those zones and those objects which in their judgment were Imperial, partly Imperial and partly Indian, and wholly Indian. We sent that document on from the India Office to the Treasury, and the late Chancellor of the Exchequer at once agreed to accept the principle which was embodied in that document. During the past three years India has sent expeditions to China, South Africa, Jubaland, and other parts of Africa, and in every single instance, without demur, the whole cost of that expedition has been thrown upon the Imperial Exchequer. But in connection with operations of this kind disputes may arise as to questions of changes. I therefore asked the Chancellor of the Exchequer to agree to the principle of arbitration. He readily assented, and the Lord Chief Justice, Lord Alverstone, has kindly undertaken, for three years to come, to arbitrate on questions that may arise as to the division of charges between the Imperial and Indian Exchequers that can be referred to arbitration. Then there was a proposal, made by the Royal Commission, that, for the purpose of putting on an equitable footing Indian and Imperial expenditure, there should be a transfer of a charge of £260,000 from the Indian to the Imperial Estimates. To this the late Chancellor of the Exchequer gave a prompt assent. That sum was so transferred last year, and it will in all subsequent years be a permanent reduction of the requirements which were made upon the Indian Treasury. The most difficult of these controversies are those which arise in connection with military charges. In other questions the two parties, that is to say, the India Office and the Treasury, represent two independent Exchequers, over which the chief of each Department has absolute control; but when we have to deal with the War Office the relations between ourselves and the War Office assume another aspect. We must have a certain number of British soldiers in India, and the only Department which can supply them is the War Office. I think it is almost universally admitted that it would not be possible for India to supply her own wants in this respect. The ordinary practice of the War Office is only to charge us the cost price of that which is supplied. From time to time, however, military considerations of an Imperial character arise, and these may involve an increase in the pay of the British soldier, even although the change which necessitates the increase may not be one which India herself would require. It is exceedingly difficult for India to refuse to accept the increased charge when it takes the form of pay. India cannot refuse to the British soldier the rate of pay which he obtains in other parts of the Empire. Such a case arose the other day in connection with the system of recruiting which my right hon. friend the Minister for War has adopted. He proposed to raise the pay of recruits by 2d. for the first three years, and by 6d. more if they remained a longer period with the colours. We agreed to pay the extra 2d., but we demurred to paying the extra 6d., and we gave reasons for doing so. The change was, in our opinion, more beneficial to Imperial than to Indian interests, and the whole cost of it should not, we thought, be put on the Indian revenues. The War Office, I am sorry to say, would not accept the validity of our contention, and I have requested that the question should be referred to arbitration on the principle of which I have already spoken. This course has been agreed to. I have an apology to make to the right hon. Baronet the Member for the Forest of Dean. I told him some time back that I hoped to be able, before the Indian Budget came on, to lay Papers before the House. There has been some delay in getting certain information, and the Papers in question do not deal with the particular matter in which the right hon. Baronet is most interested—the best period of service for India. That question is only raised indirectly, the argument being mainly financial.

Now I come to the last of these questions, the smallest in amount, but one which, perhaps, has excited more interest than even the other two—namely, the cost of the entertainment of visitors from India who come as public guests to this country. As the original arrangement, to which both I and the Council of India and the Government of India were parties, has been very severely criticised in certain quarters, perhaps I may be allowed to explain what were the conditions then existing which alone induced us to agree to this arrangement. When East India was transferred to the Crown it was transferred subject to all the conditions which then existed—conditions which were sanctioned by long practice and tradition—one of which was that when a distinguished person came from India as a visitor his expenses were to be defrayed out of the Indian revenue. Last year His Majesty's Government appointed an inter-Departmental Committee to consider the scale upon which the Coronation should be celebrated and the number of visitors who should be invited. We were engaged at the time in a most serious war, taxation was heavy, and a large deficit was impending. In these circumstances His Majesty's Government came to the conclusion that they would not be justified in sanctioning more than an expenditure of £100,000 for the purpose. The Committee who examined the question found, however, that if there were a rigid adherence to that sum it would not be possible to give that adequate representation to India which we thought was desirable, and which she was entitled to. I was therefore faced by this alternative. I must either acquiesce in a reduction of the number of visitors, which would have caused great heart-burning and political discontent, or I must revert to the old practice of selecting those whom we wished to come, and pay that portion of their expenses which came over and above the £100,000. The Indian Council, after full consideration, came to the conclusion that we should have full control as to the number of visitors to be asked. I referred the matter to the Indian Government, which very reluctantly came to the same conclusion. But the whole circumstances under which these arrangements were made were changed when peace was proclaimed. The unfortunate illness of His Majesty increased the cost of these entertainments and hospitality, and, therefore, I wrote and made further representations on the subject to the Treasury, and asked them to reverse their decision under the changed conditions, and they promptly responded that the whole of the expenditure would be defrayed from the Imperial revenue. The question of the scale of hospitality and entertainment to be given to the Indian visitors was not so easy to settle as outsiders assumed. The scale, especially as regards the great princes, is higher than that allowed by Treasury regulations in this country. The hospitality which the native Indian princes extend to us is magnificent, and, therefore, when they come to this country we must take care that the hospitality we dispense is not such as to contrast unfavourably with that which they accord to us. I was anxious to come to some arrangement with the Treasury on the point, I and asked them to appoint an inter-Departmental Committee, to which they have agreed, so that I hope we shall never have again any controversy as to the cost of our Indian visitors. Therefore, though I have been greatly attacked in connection with the charges which are divided between India and the Imperial Exchequer, and although all these questions are legacies left to me by my predecessor in office, I am thankful to say that, should they arise again, they will be satisfactorily settled in a manner which the Indian taxpayer would appreciate.

I have only one more word to say, and that is with regard to the Coronation. I would point out that it had a deeper significance for India than for any other part of the British Empire. The relations between the Sovereign and the people of this country and the Colonies were the same at the recent Coronation as those which existed at previous Coronations. But it was otherwise with regard to India. It was the first Coronation at which the Sovereign of these islands was universally recognised from one end of India to the other as the Lord Paramount of India. At the last Coronation, in 1837, the Crown had little direct authority in Indian matters. The sway of the East India Company was confined to a territory which is only a comparatively small portion of the British Empire, outside which there were a number of wholly independent kingdoms which did not in any way acknowledge the sway of the East India Company. Now, as I have said, all this is changed, and the Sovereign of these islands is recognised as the Lord Paramount and undisputed Sovereign of a vast Indian Empire. I had no conception until I came into contact with the representatives of India .how deep and intense is the sense of loyalty and reverence with which the Princes of India regard the person of the Sovereign. When His Majesty was so seriously ill, I had to receive a deputation of the native officers who had been specially selected to represent the native Army. They laid their swords at my feet, and appealed to me in the strongest and most touching terms, the sincerity of which could not be doubted, to have arrangements made by which they could stay in this country until they saw the person of their Sovereign and did him homage. They further stated that they were ready to remain without pay, provided they got rations, and that if they went back without having performed this duty their faces would be blackened in the eyes of their fellows. Therefore, we have in this feeling a bond of inestimable value, one which, in time of stress greater even than that we have lately passed through, will be more effective than the material reasons which we can advance on behalf of our rule in India; and it was to give full public expression to this feeling, by which all the antagonistic races and religions of India are united together in one common bond of fealty to the Throne, that we gave the reception on July 4th, at the India Office, and that the Great Durbar will be held on January 1st next in India. That Durbar, I hope, will be held under happy auspices. The restoration of the Sovereign to full health, the cessation of the drought, the full treasury, the indications of returning prosperity in different parts of India—all these will tend to make the occasion one of universal rejoicing. The Viceroy, who will preside, is worthy of the occasion. Lord Curzon, by his example, and his work of the last four and a half years all over the country, has infused fresh life and energy into every branch of Indian administration. He has raised the standard of official duty—high as it was before. He has been fearless in exposing wrong and in fighting down evil, and he has been equally energetic in advancing reform and improvement. The Durbar itself will be a scene almost unique in its historic picturesqueness. The civilisations of the East and the West will there meet and be blended together; and the most gorgeous trappings that can be suggested will surround our authority on that occasion. The fabric of our rule in India will be supported by a pomp and magnificence which will be worthy of the great organism which it represents. But fair and majestic as the edifice of our rule in India appears, we must never forget that, from the nature of its structure and the composition of its materials, there must be always in it risks and difficulties and possibly dangers and menaces from outside. I have spent the greater part of my official life in connection with the India Office, and it is many years ago since I went there in a subordinate capacity. The result of my experience is that I believe that henceforth the most serious of the difficulties that will cross the path of the Indian Government will not be those which are inherent, not those which are connected with the system of Government, but those which we have by our own action created. We have been too prone in the past to assume that any idea which dominates for the moment our own fiscalor industrial system, and which produces good results here, is a Heaven-born inspiration which, if transplanted anywhere, no matter under what conditions, would produce the same fruits as in these islands. The Government have had more than once to retrace their steps and, by legislation or otherwise, cheek or countercheck the consequences of measures which the light of after information had shown ought not to have been adopted. Therefore I would say to all who take an interest in India, whose numbers I believe are steadily increasing in this House, let us ever keep this experience before us, and remember that it is incumbent upon us to see that our administration in India is based upon progress, reforms, and improvement, and that it is necessary for us to be fully cognisant of the traditions, instincts and usages of those for whom these reforms and these improvements are intended. I beg to move.

Motion made, and Question proposed, 'That Mr. Speaker do now leave the Chair."—(Secretary Lord George Hamilton.)

(4.0.) SIR HENRY FOWLER (Wolverhampton, E.)

I would like to take this opportunity of saying a few words on the general statement which the noble Lord has made, and in reference to some of the points which are not referred to in the Amendment on the Paper, upon which the noble Lord has expressed some opinion. Before I touch on the perhaps dry, and maybe controversial matters, I should like to associate myself with the noble Lord in the concluding portion of his address. I think we all congratulate him that he has extricated the India Office from what might have been unpopularity in connection with the details of the hospitality which this country rendered to the Indian guests at the Coronation. I would also take this opportunity of congratulating the noble Lord, if he will allow me to do so, on the admirable manner in which he discharged his own specific office during that season. In all the functions, great and small, he admirably represented this country, and he dealt with the great Indian potentates and princes who came over on that occasion in a manner which would increase the confidence they had in the home administration, and which in no way derogated from the hospitality or dignity of Great Britain.

The noble Lord's Budget speech has been, if he will allow me to say so, rather vague. He has skated very gently over some of the thin ice of the statement, and in generalities rather than in details he has very pleasantly taken the House away from the consideration of what are the most—I will not say serious, but, at all events, the questions which upon this Budget, as upon every Budget, we have chiefly to consider, viz., the finance of the year just closed and the finance of the year on which we are embarking. So far as the figures are concerned, that embarking took place some six months ago, and we know pretty well the accuracy of the prophecies made in the month of March. The House should, I think, appreciate what is really the smallness, comparatively speaking, of the real Indian Budget. We are accustomed to such very large figures in connection with these budgets that we get incorrect ideas both of Indian taxation, as it is called, and of Indian expenditure. On the second page of the noble Lord's Memorandum, the House will find that the figures are there stated in sterling money, with their net result—showing what we really raise by taxation and expend upon India. I find that the revenue of last year was £44,000,000, and the expenditure £39,000,000, leaving the large surplus to which the noble Lord has referred, and that the Budget with which the House is now asked to deal estimates for an income of £42,500,000, and an expenditure of £41,500,000, leaving a surplus of barely £1,000,000 sterling. I do not know whether the noble Lord alluded to the mode in which the surplus of the year 1901–02 has been dealt with.

LORD GEORGE HAMILTON

made an observation which was inaudible in the Press gallery.

SIR HENRY FOWLER

I know it has gone into that Department, but I think we should notice in passing a very large sum allowed—and I think very wisely allowed—for the remission of arrears to tenants in India. I understand from the accounts as presented that considerably over £1,250,000 sterling has been written off the arrears of rents of those tenants who have suffered in consequence of the famine. Although, of course, the whole distribution is not a matter with which we need now consider, this was a very large contribution out of the surplus for that purpose, and large sums were also given for other purposes. The noble Lord has told us that the result of the figures that have come out in the course of the last six months is to make the surplus very much larger than he himself anticipated, for which the Indian Government budgetted. I want to call the attention of the House to that surplus, because I want to enlist the sympathies of hon. Members with respect to it. That surplus was put at something like £800,000, and the noble Lord has told us—although I am sure he has underestimated it—that he thinks it will be £1,750,000. Lord Curzon, when he came to deal with this income six months ago, was also, wisely and properly, very cautious, but he made one or two remarks to which I should like to call the attention of the House. He said— When a Government finds itself in possession of large balances, the world is always more interested to know what they are going to do with them than how they got them, and I turn accordingly to the manner in which we have decided to dispose of our surplus funds. Lord Curzon lays down three principles, which I am not going to challenge, although I am going to challenge his application of them. He said— Every Government, every Viceroy, every Finance Minister, and, I am sure, every Chancellor of the Exchequer, must wish to reduce taxation, if they honestly and conscientiously can. We are not above those feelings, and, for my part, if the conditions of oar finance continue to improve— —and the House will note that they have continued to improve by 100 per cent. in the six months— —"if the conditions of our finance continue to improve, I entertain reasonable hopes of being able to recommend such a reduction before I leave this country.…But the questions we have to ask ourselves are these: Are the burdens imposed upon the community by existing taxation so heavy as to stand in urgent need of mitigation? Is our position sufficiently assured to enable us to make what must be a permanent sacrifice of revenue? After a period of exceptional distress, which has been confined to distinct parts Of the country, is a reduction of taxation to be general rather than partial? The upshot of Lord Curzon's speech, and also of the speech of the Indian Finance Minister, was that there must be no reduction of taxation this year. When we get to the month of November in a financial year which expires on March 31st next, it is idle to talk of any reduction of taxation this year. But I think the House of Commons ought to have a word or two to say, especially as to its own position upon this question, with regard to the Budget of next year, the Budget which will be introduced next March, and this will be our only opportunity of raising the question on which I, for one, entertain a very strong opinion. I quite agree with Lord Curzons laying down of the general principles that we ought to follow, but there is another principle which he did not mention, a principle, I think, of both Indian and British finance, viz., that where the Government have the right—and they have the right—to increase taxation under exceptional circumstances, it is also their bounden duty and obligation to reduce the taxation so exceptionally raised when the occasion for which it was raised has passed away. We are not called upon to look forward to all the possibilities of what may come in future years; we have to deal with a year at a time, so to speak, and we have to ask ourselves whether we are under any obligation with reference to the reduction of a specific tax exceptionally increased when the occasion for which it was imposed has passed away. I am very glad to see that the Chancellor of the Exchequer has strolled in during this discussion. This is a matter not quite outside his ken, and I am sure he will appreciate the laying down of, and approve the doctrine that in this country when we have submitted to exceptional taxation for a specific purpose, when that purpose has passed away we expect the exceptional taxation to go also.

Now, I am going to apply that doctrine to the case before us. I need hardly name the tax to which I am about to refer. The noble Lord has forestalled some portion of my argument; he probably knew what it would be about. I am going to say a word or two upon a tax which I consider to be the most oppressive tax levied in India—viz., the salt tax. I must tell the House the history of this tax. The salt tax was levied on a variety of scales, in a variety of manners, and under a variety of circumstances until the year 1882. In that year the tax was consolidated, the principle of its assessment made universal, and its rate fixed at two rupees per maund. (A maund is about 82 lbs. and two rupees is 2s. 8d.) In 1888 things had not been looking bright financially in India; there was not an equilibrum, and it was necessary to increase taxation. The Finance Minister of that day—I think it was Sir James Westland—increased the salt tax by half a rupee, viz., 8d. I must trouble the House with two or three quotations as to what the Finance Minister said in India, what the Secretary of State said in England, and what has been said again and again in this House upon that increase. Sir James Westland, speaking on behalf of the Government, said— It is with the greatest reluctance that the Government finds itself obliged to have recourse to the salt tax"— that is, to make up the deficit. I have told the House that the mode in which they proposed to deal with it was to increase the tax to two and a half rupees. Lord Cross, Secretary of State for India, in his despatch dated April 12th, 1888, said— I do not propose to comment at length on any of the measures adopted by your Government except the general increase in the duty on salt. While I do not dispute the conclusion of your Government that such an increase was, under existing circumstances, unavoidable. I am strongly of opinion that it should be looked upon as temporary, and that no effort should be spared to reduce the general duty as speedily as possible to the former rate. Then the noble Lord goes on— I will not dwell on the great regret with which I should at any time regard the imposition of additional burdens on the poorest classes of the population through the taxation of a necessary of life, but apart from all general consideration of what is, in such respects, right and equitable, there are, as your Excellency is well aware, in the ease of the salt duty in India, weighty reasons for keeping it at as low a rate as possible. The policy enunciated by the Government in 1877 was to give to the people throughout India, the means of obtaining an unlimited supply of salt at a very cheap rate, it being held that the interests of the people and of the public revenue were identical and that the proper system was to levy a low duty On an unrestricted consumption. Lord Cross spoke in England again on that question, and on February 28th, 1889, said— He was convinced that the earliest occasion should be taken to abrogate the increase on the salt tax. In March of the same year Sir David Barbour, speaking in the Viceregal Council with special reference to a proposal for the abolition of the income tax, said— I think it would be an injustice so gross as to amount to a scandal if the Government were to take off the income tax while retaining the salt duty at its present figure. On this point the right hon. Gentleman the Member for Cambridge University, then Under Secretary for India, said on the 14th of August, 1890, speaking in the House of Commons on the Indian Budget— The tax (on salt) was no doubt a tax which ought to be removed, and would be removed as soon as it should be financially possible to do so. I need hardly say that during the time I had the honour of holding the office which the noble Lord now holds, we were becoming snore and more hampered owing to the Exchange difficulty, and when the noble Lord took office, I know that difficulty had increased. In September, 1895, the noble Lord said— I have looked through the proceeds of the various taxes which have been imposed, and I am bound to say that there is only one tax which does seem to press more heavily upon the Indian people, that is, the Salt Tax, which was raised in 1858. I shall watch the Salt Tax, which certainly seems to have reached the maximum limit, with a view, if possible, of taking an early opportunity of reducing it. And if I may be egotistical enough to quote myself, I said in 1895— I venture to predict that whoever is responsible for the finances of India, whenever the time comes when he may be in the happy position of possessing such a surplus as may enable him to propose a reduction in the burden of the people of India, the very first burden he will have to consider, with a view to its reduction, will be the Salt Tax which is such a heavy burden on the people of India. Under these circumstances I venture to say that this tax stands on a different footing from the ordinary taxes which may be raised or lowered, so to speak, according to the ideas prevalent in Calcutta at the time. Therefore this reduction has, so to speak, become an Imperial question and an Imperial obligation, in consequence of the pledges given to the people of India by the different representatives of the British Government, that as soon as possible this tax should be dealt with. It is a tax upon the prime necessary of life, the consumption of which has not teen increased, although the population of India has increased largely. This tax produced ten years ago £5,500,000. The next year it produced £5,250,000, then £5,500,000, £5,600,000, £5,300,000, £5,400,000, £5,800,000, and now it is back again to £5,500,000; and the Budget of 1891–92 puts it at £5,393,000. That indicates that the consumption is not increasing, although the population is increasing. I do not wish to labour that point, but I do put it to the noble Lord that this is a question which he ought to decide himself, which he is pledged and which his predecessors are pledged. The noble Lord has a surplus which is already known to be £1,750,000, and no further delay ought to take place in making a large reduction of this tax. If the noble Lord would take off the amount put on in 1888 it would take about £1,100,000 of that surplus, and the House can calculate what a larger reduction suggested would do. What I am pleading for is that the increase put on in 1888 should be taken off now. The Finance Minister of India has stated very much the same as that which has been said by the noble Lord—that you ought not to take off a tax of this sort unless you can deal with a very considerable amount of reduction. I am in favour of making a much larger reduction because I think it is a tax which is most oppressive, and the amount it brings in altogether has practically reached its maximum and now is about £5,500,000.

There is another point to which I desire to draw the noble Lord's attention. He has spoken of the great progress made in our railway system, and he said that we have now turned the corner so far as railway finance is concerned. I noticed that the mileage of railways now opened is 25,529, and that there were from 2,000 to 3,000 miles of railway under construction. The number of passengers carried in 1898 was 152,000,000, while in 1901 it had increased to 195,000,000. In the same period the goods traffic has increased from 36,000,000 tons to 44,000,000. There was a very important speech delivered in the course of the debate in the Indian Council which propounded views which had been mentioned in this House and upon which I feel somewhat strongly, namely, as to the facilities given by the Government of India with reference to the construction of railways. I am going to quote from the speech of one of the wealthiest and most influential landlords in India, the Maharaja of Darbhanga. He is evidently a statesman of a very high order, and has a thorough grasp of the Indian situation. The difficulty to which he calls attention is the want of adequate means of internal communication by means of feeder lines. I had that trouble myself in 1895, and I fancy that the noble Lord has that trouble still. Feeder lines are not popular with the administration in India. This Maharaja spoke with knowledge, and I can endorse what he says. He says that if progress is desired in the construction of railways in India private enterprise should be encouraged, and he elaborates that argument with very great ability. He asks why cannot the principle of private enterprise be adopted in India, where he says the Rothschilds, the Barings, and the Morgans will not turn their attention to promote railway schemes like they do in other countries. He asks, with some show of justice, why should English capital be lavished so freely in other countries and not in India? I ask the noble Lord whether these difficulties which stop the progress of these railways are not due to the fact that they have to submit to red tape delays and difficulties. The noble Lord has alluded to the large sum which has been invested as part of the gold reserve. This was the settled principle of the Currency Committee which sat two or three years ago, for it decided that the profit upon rupees should not go into revenues of the Government of India. I may say that my colleagues and myself attached supreme importance to the principle that that money should never go into the revenues of India at all, but should form a separate gold reserve fund. I think the noble Lord has carried out those recommendations when we are told that £3,600,000 is now invested in Consols. There is another question which the noble Lord did not allude to, and that is the gross cost of the famine so far as he is able to ascertain—I mean the famine of the last three or four years. My own impression is that the famine has cost something between £14,000,000 and £16,000,000. We have had in years gone by long discussions as to the famine insurance fund, but it has been explained over and over again that there is no such thing as a famine insurance fund in the shape of a fund separately invested for the purpose. Now twenty-five years have elapsed since the system of that fund was put in operation, and during that period, with regard to the £1,000,000—that was the sum fixed as representing the famine insurance fund—we have been told again and again in this House that it was non-existent, and was never applied to famine purposes at all. I find that during the twenty-five years, for famine relief £12,750,000 has been spent, on protective works £9,250,000, on reduction of debt £9,500,000, and that the balance, at the end of the twenty-five years in favour of the fund is now £1,250,000. Having lived out its twenty-five years, I think the vindication of the policy of the fund is complete.

I congratulate the noble Lord and the Viceroy, and I congratulate the people of India on what is, after all, a prosperous Budget—a Budget which indicates by the increase of receipts, to which the noble Lord has alluded, an increase in the purchasing power of the people of India. These large imports have not been destroyed, they have not been burnt, they have not been re-exported. They have been consumed in India. Therefore, where there is a large increase of consumption, there must be increased power of purchasing following as a matter of course. These figures and all the various points of taxation to which the noble Lord has referred may be taken as a sound index from which the financier can draw conclusions as tot he prosperity of the nation. So far as economic conditions are concerned the elements of prosperity are all present in the state of Indian finance at this time. I do not deny that poverty prevails among the Indian people. That is one pf the reasons why I have spoken with reference to the salt duty. With all that, the country is not, I venture to think, on the down grade, but that it is improving financially and economically. I wish to refer to but one figure more, which the noble Lord did not give, but which I think the House ought to have before it, with reference to the burden of taxation in India. The burden of taxation in India for 1902–3 was 1s. 9¾d. per head without the increase of the land revenue—which is rent and not taxation. If the land revenue were added it would only bring it up to 3s. 3d. per head. These are circumstances of which, if we do not boast, we can say that we are discharging our duty every year better than the year before. There is no reason why we should slacken in our efforts. The noble Lord rather dissented to applying the principles popular here to India. I think that the principle of the reduction of the expenditure and the reduction of taxation are principles sound in every country in the world where they can he properly carried out. There is a danger in dealing with these large surpluses. It would be a danger to the English Exchequer. I do not think it is a good thing for the Exchequer of this country to have large surpluses. There was that state of things prevailing in this country thirty years ago, arising to a great extent from under-estimated revenue, and then there were the sensational, results following when these surpluses were announced. I wish to say nothing controversial, but there was a period in this country prior to the breaking out of the recent war when it was not to the advantage of this country that we had these large surpluses, for I think the fact did induce excessive expenditure, which would not have been embarked upon if these surpluses had not existed. Chancellors of the Exchequer would not have faced the expenditure if they had had to put on taxation. We ought not to subject the people to additional burden of taxation because we think we can spend the money better. I do hope that the noble Lord will take what I have said into his most serious consideration, and that he will lay down as a principle that pledges have been given to the people of India that taxation on salt should be reduced whenever the state of the funds will admit. Nobody can contravene the fact that there have been surpluses of millions during the past three years. Last year there was a surplus of nearly five millions, and this year, after making ample allowance for increased expenditure, there is all estimated surplus of something like two millions. I think under the circumstances it would be safe financial policy to budget next year upon the ascertained figures, not only of the past but of the reasonable prospects of the future, and to insist that the people of India should have what I am sure the people of England would have under similar circumstances—a reduction of their taxation.

MR. HERBERT ROBERTS (Denbighshire, W.)

I rise for the purpose of moving the Resolution that stands on the Paper in my name. I think the fact is to be regretted that we are discussing the Indian Budget at such a late date in the session. I am aware of the present difficulties of the position, and I realise the pressure of public business, but I hope that at no distant date there will be no such pressure, and that the affairs of India will not have to be thrust aside. It is a melancholy reflection, at all events at the present time, that India takes a greater interest in Parliament than Parliament takes in India. I do not believe that that is a permanent phase in the history of the attitude of Parliament to India. I wish also to associate myself in one sentence with the satisfaction expressed by the noble Lord opposite with reference to some of the signs of improvement which are now to be seen in the general situation of India. I am not a worshipper at the shrine of pessimism, and I for one do not believe that the Government of India will be unequal to the task of dealing with the serious problems which are in front of them. I think that improvement in future must be along two channels—in the first place, the lightening of the burden of taxation upon the masses of the people, and, in the second place, the steady development of the resources of the country.

I now come to deal with the Motion which stands on the Paper. If I were to enter into the many recommendations of the Indian Expenditure Commission, it would obviously open a very wide field, but I will today confine myself strictly to one recommendation. Let me say first of all that I think it will be admitted on both sides of the House that the inquiry instituted by that Royal Commission was a very important one. We have already had some indication from the noble Lord opposite in the course of his speech, that the recommendations made by that Commission have borne important fruit. That inquiry not only emphasised the importance of giving reasonable arrangements as regards the financial relations between India and this country, but I think it did more. It emphasised the fact that there was conflict of opinion upon many points between the Treasury at home and the Government of India in India. The final decision of that Commission upon the sent to which I draw attention particularly in my Resolution, was that, a certain lump sum of £257,500 per annum should be transferred from the Indian Exchequer to the British Exchequer. I do not wish to make any continent en that point, but I would point out that no provision is made in that arrangement with regard to arrears, and I cannot regard as altogether satisfactory the reply of the noble Lord on that point to the question which was asked him last year. But I admit and recognise that for the present, at all events, the recommendation of that Commission settles the question.

The main point in my Motion is that the cost of the India Office in this country ought to be borne by the United Kingdom. That was the unanimous recommendation of the Commission. In dealing with this recommendation, or any other recommendation of time Commission, I, of course, refer to the recommendations made not by a sect ion of the Commission, but by the Commission as a whole. There are one or two points I should like to mention in reference to the history of this recommendation. First of all, there is the fact that the recommendation was made. In paragraph 364 of the final Report of the Commission a specific grant of £50,000 is definitely recommended in aid of the charge for the India Office. Consequently it is interesting for the House to know the grounds upon which the Commission made the recommendation. They draw attention to the colonial analogy, and indicate as their view that no distinction should be drawn—or rather that the same principle ought to be regarded as bearing both on the case of the Colonial Office and that of the India Office. But they went on to explain that "we have never asked for the expenses of the Colonial Office here, and the Colonies throw so little work on the Colonial Office that their share would be infinitesimal." In the light of the events of the last three years there is certainly a grim irony in such a suggestion as that, and I do not suppose that the Colonial Secretary would accept it for a moment. I next come to the treatment accorded to this special recommendation by the India Office itself. The noble Lord in the course of his clear statement this afternoon informed the House that a lump sum was recommended for this purpose by the Commission. According to the recommendation of the Commission, a sum of £293,000 per annum was to be allocated as follows: India Office, £50,000; half of the military charges at Aden, £108,000; Persian mission £5,000; and half of the cost of transport £130,000. Another grant was finally decided upon. Some of the items were altered, but not to a very great extent. But there is one fact which I think is of great importance with reference to my Motion today. The item with regard to the charge for the India Office was omitted from the list altogether. I do not in any way wish to make it a point of attack that the sum finally agreed upon to be transferred from the one Exchequer to the other was less on paper than the Commission recommended, because the noble Lord has already explained that the difference of the two amounts is not because of any diminution in the amount the Government propose, but because of an arithmetical mistake in the calculation. As a matter of fact, I believe the Home Government decided to give £50,000 more than the sum originally recommended by the Royal Commission. The reason given by the Government for the changes made in the various items in the list was that it would put an end to certain payments now made in India, and that it would simplify accounts between the two Governments. I do not doubt that these results would follow the change made in the character of those items, but I venture to submit that that by itself is not a sufficient excuse for omitting out of the list this, specially recommended item of £50,000 in aid of the charges of the India Office.

Is it not the case that upon these facts the Government have found themselves in a kind of dilemma? If the recommendation of the Royal Commission was founded upon good grounds, why not carry it out? If, on the other hand, it was based on insufficient grounds, why do not the Government deduct this sum of £50,000 from the total sum finally agreed to be given to India? I want to point out that the Royal Commission was so clear on the point, that they went into particulars as to how it was to be paid. I would quote one sentence from the Report of the Royal Commission: This contribution may be made the subject either of a charge on the Consolidated Fund, or an annual vote in aid of the Home charges of the establishment of the Secretary of State for India. The choice of these two methods will be a question of policy. I venture to express an opinion upon the facts. The Royal Commission, in making that recommendation, meant that this sum of £50,000 should be definitely paid by Parliament. They were naturally debarred from expressing an opinion as to the precise method by which it would be paid; but that it should be paid there was no doubt in their minds; and the object of my Motion today is that the spirit of that recommendation has not been carried out, and that it is time to suggest that it should be given effect to.

Before I conclude I wish to put before the House one or two of the main grounds on which I advocate the adoption of the Motion which stands in my name. Let me say, first of all, that I sweep away altogether, as irrelevant, personal considerations. This Motion is not aimed at any particular Government or any particular person in India. I have no doubt that the noble Lord opposite, who has never shown a disposition to shirk legitimate criticism, would not, on personal grounds, have the slightest objection to its adoption. What would be the gain which would result from the adoption of the suggestion I make in my Motion? First of all, we should have a further opportunity in every session of discussing Indian affairs. The fact that we have only one day in the year, is recognised as a serious evil, amounting almost to a constitutional scandal, when we consider the immense issues at stake, and the responsibility of Parliament in regard to these questions relating to India. I think I have heard the noble Lord opposite, on more than one occasion, state that, judging from outward signs, the interest of Parliament is on the wane in regard to Indian affairs. But what is the reason of that? The reason is that practically there is no opportunity for discussing Indian questions in this House. I do not blame particular Governments. The root of the difficulty is, of course, the congestion of public business, and until we remedy that, it is impossible to hope that we will find adequate time to deal with this problem. If it is said that the adoption of my Motion would only give one day more than we now enjoy for discussing Indian matters, I say that that would be exactly double the opportunity which we now enjoy for this purpose. There is another gain that would follow the adoption of my Motion: we should have an earlier day in the session for discussing Indian matters, and I think that would be a gain of considerable practical importance.

I would like to refer very briefly to the constitutional aspect of this question. How do we stand? First of all we have the fact that the Royal Commission unanimously reported in favour of the course suggested to be followed in my Motion. We have further the fact that the Government adopts the recommendation by including the sum in the amount of the Vote or grant which is now made year by year in aid of the Indian expenditure. I submit that it follows that, if the obligation is admitted in any form, this sum should be placed on the Estimates. But supposing that the noble Lord opposite takes the view that the recommendation of the Royal Commission cannot he regarded as finally settling the matter, I am prepared to argue the point on the general ground that, under present circumstances, the responsibility of the Secretary of State for India to Parliament should be directly acknowledged. The Secretary of State for India is the Minister through whom the authority of the Crown is exercised over India in England. But as Secretary of State for India he is capable of performing the functions of any other Secretary of State. He sits as a Cabinet Minister, and is precisely on the same footing as any other Minister of the Crown. I ask what practicable distinction can be drawn between the position of the noble Lord and that of the Colonial Secretary? It may be said in reply to this argument that in 1858, as has already been referred to by the noble Lord, we took over the powers, liabilities and duties of the East India Company, and that one of the conditions of that bargain was that all the expenses of administration, not only in India but in England, should be borne by India. But that does not conclusively apply to the present time. If the circumstances of India forty or fifty years ago rendered it necessary to make that bargain, it does not follow that these conditions should remain binding for ever. Hon. Members who have read the debates in Hansard which took place in 1858, must have been struck with the anxiety of Lord Stanley and of the House generally to make it clear that the responsibility of the Secretary for India for the Governnent of India should be directly acknowledged in Parliament. Another argument may be advanced against the line I am now taking. It may be said that the circumstances of India are different from those of other quarters of the Empire, that the conditions of our rule in India are exceptional, that the place of sentiment in the sphere of administration in India occupies a larger plane than elsewhere Let me admit all these different surroundings of the Indian position, but I ask what difference could the adoption of my Motion make in the present situation? Every year, as the House well knows, the action of the Secretary of State for India is debated on the. Indian Budget, and from a practical standpoint the only difference made by adoption of my Motion would be that there would be two opportunities for this instead of one.

My last reason in favour of the Motion, which I make is the ground of policy. I admit, that the conditions of India are different from those of other portions of the Empire; but I lay the greatest importance upon not drawing the slightest distinction between the responsibility of Parliament to India in regard to Indian affairs and the responsibility of Parliament in regard to the administration of any other portion of His Majesty's dominions. If we were to argue on this point at any length it might very well be submitted that the fact that India is the only country under the British flag where our rule is debarred from criticism, is a reason why Parliament should be particularly jealous that no shadow of distinction should be drawn between the responsibility of the noble Lord the Secretary of State for India, and the responsibility of the right hon. Gentleman the Colonial Secretary in respect to Colonial Affairs. There is another element which is of interest. India itself fills a very different place in the Empire from what it did forty or forty-five years ago. When we took over the government of India in 1858 we were mainly concerned with internal administration, but to day the case is wholly different. India touches the Empire at a hundred points. There are few questions in our foreign affairs which arise to-day which have not either a direct or an indirect bearing on India; and that is a consideration which is of weight in the relation to my Motion.

I conclude with this final remark. I have spoken of the past in regard to India; I have spoken of the present on Indian matters. But what of the future? What is the inevitable trend of events to day in regard to foreign affairs? Does not everything point to the fact that the great Empire of the future will be the nation dominating the East? I regard India as the greatest factor on our side in this development, and the object of every debate on India should be to impress the people of this country with the immense importance of India to the Empire. The essential condition of obtaining that end is to arouse to action the conscience of Parliament in regard to its responsibility in every branch of Indian administration. I do not look on this Motion as a panacea for every unsatisfactory characteristic of our rule in India, but I do look upon it as a step in the right direction, because I believe it will contribute towards bringing about a new interest in this matter. I beg to move the Amendment standing in my name.

(5.3.) SIR CHARLES DILKE (Gloucestershire, Forest of Dean)

If there is anything too optimistic in the remarks of the Secretary of State for India, the answer is to be found in the words of one who was long employed in the India Office under the right hon. Gentleman and his predecessors, who said, "We do not sufficiently distinguish between the prosperity of India and the felicity of its inhabitants." We are too much inclined to look at the material prosperity of India as a whole rather than at the poverty which is to be found in many parts of that country. I think, in confirmation of that view, the Secretary of State went out of his way to admit that, owing to the mistakes in our system of the settlement of land values, the people of India had been thrown increasingly into the hands of the money lenders. As the right hon. Member for East Wolverhampton, in his powerful denunciation of the salt tax, showed the House, in years of what are called prosperity by the Secretary of State, we have been unable as yet to diminish, still more to abolish, a tax which has all along been, admittedly by this House, probably one of the worst ever levied in the civilised world; a tax distinctly admitted by the Government of India for the last thirty years to be one which subtracted from the health of India in the most marked way. The slackness of the consumption of salt through the heaviness of the tax tends directly to the ill health of the people in a way not known to the people of other countries. The right hon. Member for East Wolverhampton spoke of the salt tax as having been reduced. It was reduced at the time of which he spoke, but I remember the views entertained at the time of that reduction by my friend Professor Fawcett I remember it was pointed out and demonstrated most conclusively that however greatly it was reduced in one province it was increased at the same moment in every other part of that Empire; and that tax, which was again increased in 1888, has not vet been repealed or even diminished to its former level. In view of these facts, the quotation I gave just now is the true explanation. Both Russia and India are examples at the present time of countries rapidly increasing in the scale of nations, but where, nevertheless, the increase of the prosperity of the country is consistent with a low and diminishing standard of happiness of a large part of the population.

Now, the Secretary of State for India is in fact directly responsible to the House for the condition of India. The Secretary of State is the real autocrat of India—the Secretary of State who is controlled, and in the last resort dismissed, by this House. The right hon. Gentleman speaks of the part that is played in India by the name and person of the King. The Emperor plays a greater part and looms larger in the eyes of the people of India in their daily life, than does the King in the United Kingdom or the King Emperor in the Colonies. But the King is advised by the Secretary of State, and it is the Secretary of State who is the real responsible ruler of India. India is a statutory Empire with legislative restrictions—restrictions which are imposed by an Act of this Parliament, a Parliament in which India is not represented and never will be. Those legislative restrictions are such that we can repeal them any day, and we, therefore, through our influence over the Secretary of State, are the personas directly responsible for the condition of India today. I cannot but think, looking at the present position of the Empire, that this responsibility to India, ought to be the first responsibility in our mind. India makes greater sacrifices for the Empire than any other part of it except the United Kingdom. India has so enormous a population that when you talk of the population of the British Empire it is the population of India you speak of—the rest hardly counts. Looking at the position of India, it seems to me that the heaviest of all the responsibilities that press upon this House and the Government is the responsibility we have towards India. We ought constantly to hold that responsibility in mind, because there is no constituency behind us to make us bear it in mind. We owe it to ourselves and our consciences alone, and we should keep this responsibility in view, and if we fail in that trust there is no one to remind us of it. There are some who salve their consciences with the belief that some day it will be otherwise, and that some machinery will be set up, under which India will be able to influence the opinion, not of this House, but of some Imperial Council which will take the place of this House. Sir, I believe those are dreams, and will never be anything more than dreams. I believe that what exists now will continue to exist, and that we shall be responsible to the United Kingdom for the chief control of India. Parliamentary representation for India is, to my mind, impossible; because it is impossible without unfair ness to grant her Parliamentary representation. India, moreover, is not a single dependency; not a country progressing towards a Parliamentary system as a nation. It is an Empire within an Empire; a country of diverse races which are only brought together by our rule, and which must be ruled from hence and by us. The Government's responsibility is, I think, higher towards India than towards the Colonies, and far more direct. India is far more directly under our control than the Colonies. Take the question of tariffs alone. Not only are all, the self-governing Colonies absolutely independent of us with regard to tariffs, but the so-called Crown Colonies are almost independent, and nearly all have a representative system under which they fix their own tariffs. The Colonies are not affected by what we do here. India is. And looking at the overwhelming sacrifices which she makes for the Empire, and the direct manner in which she is governed by our proceedings and our acts, the Cabinet responsibility towards her is far greater than that towards any other part of the Empire which we rule. I pointed out, when first the Government came into office, that the-first thing they did was to reduce the contribution towards the defence of the Empire by the Straits Settlement, and the fact brought back to our minds was that these contributions were a mere trifle compared with those which we asked from the Indian Empire. India, too, is quite different from the Colonies. If discussions were to take place, as they did take place, with regard to ourselves and India and the Colonies, I venture to think we are more able to understand India than the Colonies. That is not the view in the Colonies, but in India we have to deal with a civilisation very much more ancient than our own, and, that being so, we having a middle civilisation, are more able to understand India than the newer civilisation of the Colonies. Now, we had a Conference with the Colonies, in which was discussed a system of representation and a system of tariffs for the whole Empire. In that Conference India seems to have been entirely forgotten. Not a word was said about India. Once only is the name of India mentioned in the Blue-book. A table was given to the Conference to be published in the Blue-book, "Appendix 1, British Empire Military and Naval Expenditure," containing a list of the various component parts of the Empire, and India is omitted from that list. It seems hardly credible that it should be so, but there is the fact. When we turn to our table prepared by the Admiralty—and I congratulate my hon. friend at the Admiralty—India does figure in it. The naval expenditure of India is one-fiftieth of the military expenditure, and yet that one-fiftieth is infinitely larger than the sum our Colonies are expected to give in the future. The largest of all the questions considered by the Conference was the future Parliament, the future governing body of the Empire; but in that future governing body there seems to be no place for India. We are told what is the opinion of the Government and of the Secretary of State for the Colonies, which is that the Colonies are to have representation when they wish it; if not in this Parliament, they are to have representation in an Imperial Council which is to supersede Parliament as regards the affairs of the Empire. Yet in the whole of the discussion of that contingency India is not named. I blame the Government for entering upon the consideration of this gigantic problem without bearing in mind the position of India in the Empire. I second the Resolution of my hon. friend, because it brings home these facts to us, and because I think it is only by a Vote in this House for the Secretary of State that this responsibility could be brought home.

Now, besides the proof I have attempted to give by the quotations of these references from the proceedings in the Blue-book of the Colonial Conference, I would refer for a moment to the military aspect of the question. The Cabinet came to a decision on the 27th or 28th of February last with regard to the pay of the British Army; it was communicated to the Viceroy of India on one of those dates, and on the 4th of March it was communicated to this House as a settled thing. Yet we now know from the Viceroy's own words that at the first moment that he heard of it he protested against it as affecting India. I take it that he protested against it in Council, because a Council was called immediately, and the Viceroy's words are, "We protested." Yet those protests were never presented to the House. I believe in discussing the Indian Budget in the old days, we should have insisted on having those protests laid before us. With regard to the rate of pay and the terms of service, those two matters have always been, and I believe are indissolubly, connected. When in years past we have made proposals here which would have an effect both on the rate of pay and the terms of service, we have always been met by the statement that the changes proposed by us would make some small increase in the burdens of India. We have always contended that they would be reduced, but the highest cost that could have been forced on India in that way is far less than the initial cost to be paid by India under the present scheme. It is difficult to discuss this matter without the Papers, for the absence of which the right hon. Gentleman has apologised, but upon it I support the argument of my hon. friend. Every Member of this House will be willing to admit that there is some ground for modifications and improvements in the present system, and every Member will admit that we owe a duty to India, and that that duty can be best performed here. Now, in this change we propose to make there may be a danger arising from the Parliamentary interference in Indian affairs; but even a certain risk of the danger of undue Parliamentary interference, which, if it appears, will be checked by the good sense of those concerned in the Government of India, such interference, if it occurred, would be better than mere dull apathy and neglect. I believe the hands of the Secretary of State, and those who have a keen sense of responsibility with regard to India, would be strengthened and not weakened when they felt they had the support of the people of this country at their back. If there is a danger such as I speak of, there is a means of checking that danger by the India Office using and organising more than they now do Indian native opinion on all subjects. Native opinion is generally opposed to the view forced upon the Secretary of State; and I believe the India Office might do more than it does in organising native opinion in the local municipalities, not only of towns but of the rural local governments, and also the opinions of chiefs and princes. I am not entering into any comments on the Government of India, but I think, after the repeal of the salt tax—if it were abolished—the Government should spend money on improvements in police. I admit that there must be increase of expenditure in the army, and that you must increase the number of white officers in the Indian regiments, and also that there must be an increase of expenditure on the transport. What I press for today is a greater recognition of our responsibility for the affairs of India; a responsibility which I believe to be recognised to the full by the Secretary of State. When you consider the position of India in the Empire, even in trade—if you exclude Australia, you find her trade with us is infinitely greater than that of all the other self-governing Colonies, and on a scale which puts India immediately after the United States, France, and Germany—I maintain that we do not give enough time and thought to India, and that we have not hitherto recognised in anything like an adequate degree the responsibility this House of Commons and the nation owes to India.

Amendment proposed— To leave out from the word 'That' to the end of the Question, in order to add the words, 'in the opinion of this House, it is desirable that the cost, of the Parliamentary representatives of the India Office, with an adequate staff, should be paid by the United kingdom by a Vote of Parliament.'"—(Mr. Herbert Roberts.)

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

(5.30.) MR. MOON (St. Pancras, N.)

One cannot but feel sympathy with a great deal that has been said by the two speakers to whom we have just listened. I think that what the noble Lord representing the Government of India has said, and also what the Viceroy put before us in his great speech on March 26th, in discussing the Indian Budget, shows what a large part India plays in the affairs of this great British Empire; and it is because I feel that India is so much an Imperial concern that I would not indeed follow precisely the hon. Member for Denbigh, or the right hon. Baronet the Member for the Forest of Dean, but I would suggest that a considerable sum, perhaps not less than the £50,000 recommended by the Royal Commission, should be charged on the Consolidated Fund annually. I am aware that a sum of £50,000 has, as a matter of fact, been arranged for the benefit of India in a different way. It has gone really to defray the expenses of Aden. But when we look at Aden, and consider the relations of India on the one hand, and the United Kingdom on the other, with points like China and Persia, it seems to me that the idea that India should ever have to pay half the expenses of Aden while the United Kingdom paid the other half, is preposterous. I think that we might very fairly make a present to India—treating it as a part of the recommendations of the Royal Commission—of that sum of £50,000 in respect of Aden, and follow the recommendation of the Royal Commission in placing £50,000 to the credit of India in respect of the establishment of the India Office. According to the Home charges as detailed in my noble friend's Explanatory Memorandum, the charges of the India Office amount to over £180,000 a year, or three times as much as the Colonial Office charges. How they teach that large total it is difficult to say. I would take this opportunity of asking my noble friend to explain this apparent omission—that although Section 53 of the Government of India Act of 1858 prescribes that the salaries and allowances in connection with the establishment of his office, as head of the Council of India, should be anually laid before this House at the same time as other facts and figures in reference to India, they do not appear to be so laid. I notice that in the excerpt from the statute of 1858, which is printed at the beginning of the "Condition and Progress of India," certain lines from the statute are omitted. Whether they include anything else I am not quite sure, but they do include the stipulation of the Act of 1858, which requires that the salaries and allowances should be yearly laid before Parliament with any changes made. In order, if possible, to avoid raising a matter of detail, I looked into the India Office list to see if the figures were given there, but I failed to find them.

May I say a word on one or two points in relation to the finances of India and as to the causes of prosperity which have not yet been adverted to? Apart from the imports represented by Customs duties, it appears from the statement of the Financial Member of Council that there are large imports of machinery and mill work, approximating in value for the year under review to £476,000, which do not become subject to the tariffs, and there is also a large increase—amounting to 34 per cent. of the production—in Indian-made cotton. This is indicated by the Cotton Excise Returns. We have these two further evidences of the greatly increased purchasing and consuming power of the native population.

MR. SPEAKER

Order, order! The hon. Member will not be in order on this Amendment in discussing amendments of the Indian tariff.

MR. MOON

I presume I may follow preceding speakers in making a slight reference to the salt duty?

MR. SPEAKER

I would point out to the hon. Member that the right hon. Baronet who seconded the Amendment was speaking to the main question. The question put from the Chair since then limits the discussion.

MR. MOON

The other remarks I desired to offer not being applicable, I will merely ask my noble friend to solve my difficulty as to the omission of certain facts and figures required by the statute of the Government of India.

LORD GEORGE HAMILTON

As you, Sir, have pointed out that any further discussion before this Motion is disposed of must be strictly limited to the words of the Motion, it would perhaps be convenient that I should say a few words in reply to the speeches which have been made, so that the House may then speak at length on other subjects. The argument advanced in support of the proposition is two-fold, financial and constitutional. The financial argument I think I can answer in a very few words. The Royal Commission recommended that a certain charge should be transferred from the Indian Exchequer to the Imperial Exchequer, and in that sum they included £50,000, which they thought might be given in support of the India Office. His Majesty's Government transferred the full charge suggested from the Indian Exchequer to the British Treasury, but they did not follow into all the detailed proposals of the Royal Commission. Although they gave the exact amount, they did not include that particular £50,000; they included another £50,000. Therefore the financial suggestion of the Commission was thoroughly complied with. If this proposal were carried, it would mean putting a charge upon the British revenue which is not suggested by the Commission. I do not quite know what the amount would be; the Motion of the hon. Gentleman is very vague; it might be £240,000, it might be £50,000. Anyhow, I propose to call it £50,000. The constitutional advantage which is to accrue is an extra day's discussion, but I think the hon. Gentleman will find he is putting the value of a day's discussion somewhat high if he asks the taxpayers of this country to pay £50,000 for it.

MR. CAINE

£35,000.

LORD GEORGE HAMILTON

As to the desire which Parliament has to have more opportunities of discussing, not small details, but questions of principle, with regard to the administration of India, I must frankly say that, owing to the manner in which time is now distributed, I think the debates and deliberations of this House have gone back from the condition which existed when I first took office as Under Secretary of State for India. It will rather surprise the House to know that when I was Under Secretary of State for India I had more Motions to deal with and more debates to take part in than the Under Secretary of State for Foreign Affairs. The reason was that, under the system which then prevailed, you had a number of abstract Motions twice a week—on Tuesday and Friday—and the Members who spoke, as a rule, spoke with special knowledge of the subject under discussion. I have always regretted that that class of Motion was put on one side. But why was it put on one side? Because at that time, as soon as you got to Supply, Supply was always voted, whereas now some twenty-six days or more are taken for elaborate discussion of Supply. I think that is the time which is the most wasted of any in the House. It is the discussion in which the House takes the least interest, in which the public take the least interest, and which gives the most unsatisfactory results. Of course I feel the force of a great deal the right hon. Baronet has said. He called me an autocrat, but he must remember that I am surrounded by a Council—

SIR CHARLES DILKE

You have large powers which the Council do not share.

LORD GEORGE HAMILTON

But the Council are absolute on matters of finance, and whoever is absolute on matters of finance occupies a very prominent position.

MR. CAINE

But you select members of your Council.

LORD GEORGE HAMILTON

I protest against that remark. They are a body of men who are absolutely independent; they are men selected for ten years; they have nothing to hope for; can anybody believe that because the Secretary of State appoints a member to be in the Council, that member subordinates his opinion to that of the person who appoints him?

But it must be recognised that at the time India was transferred to the Crown, India differed from any other part of the Empire—and does differ. You cannot establish any analogy between India and the Colonies. It is a separate and distinct organism; it is an empire, the like of which the world has never seen. There are conditions surrounding it which make it almost impossible at times to fit in constitutionally the personal representations of other parts of the Empire. Therefore, when this Colonial Conference was held it was quite clear to the Council that the great mass of the discussion would be really outside India; but the Secretary of State for the Colonies at once assented to my proposal that there should be present a well-known and distinguished Indian civilian, representing the India Office, to watch the proceedings, and who was to report to the India Office, or take any action he thought fit if a discussion was of such a nature as in any way to affect directly the interests of India. Now, would the House, if they wished to take greater part in the discussion of Indian Affairs, gain by this particular proposal? At present there is no legal obligation to have a discussion on the Budget at all. The form of words merely affirms that the accounts of the year closed are so and so, and so and so, and it is designed merely to give the House the opportunity of having a general discussion on finance. At present the Secretary of State for India is always in a difficulty upon any Indian question which may arise, because Indian questions are considered to be really outside Party controversies and Party organisations, and the result is that, unless the action of the Secretary of State is in any way challenged, he is very likely to be hard pressed unless he has a good case. But the moment you put the Secretary of State's salary on the Estimates all that is changed. Any discussion on a Vote affecting a member of the Government is more or less a vote of censure, and the House knows quite well from long experience that a vote of that kind is hardly ever carried. Therefore I think we should go back as regards the tone of our debates if this proposal were agreed to. If it be the desire of the House to devote more time to the discussion of Indian affairs and less to the minute examination of the Estimates, why should not the House come to some arrangement on that basis? Surely what we have to do is not to add to the number of days given to Supply, but to knock off some of the questions which are already over-discussed. I do not know that I need follow the right hon. Baronet in all his remarks regarding the contributions of India to the Army. With regard to the facts that the right hon. Baronet has addcued, I would only make just one general observation. There is a great distinction between the British Army located in India and the British Army located in other parts of the Empire. As soon as the troops reach India they are under the control of the Indian Government and cannot be moved away without the assent of the Indian Government. India pays for the troops because she has absolute control of them. In the same way India contributes a certain sum to the Navy, but it is to pay for ships, not for the ordinary service of the Navy, but for special service, notably for the suppression of pirates in the Persian Gulf. These contributions are not for Imperial purposes, but for purposes which are essentially and peculiarly Indian. I cannot hold out any hope of the Government's accepting this Motion,

but I would suggest that if there is an earnest desire to discuss questions of principle affecting the administration of India, some arrangement might be made by which nights now given to the Estimates could be given to Indian affairs. That seems to me a very much better way of attaining the object which the mover and seconder of this Motion have put forward, and certainly it would be much more reasonable than to say that another Vote should be added to the Estimates for the purpose of providing for one extra afternoon's discussion.

(5.48.) Question put.

The House divided:—Ayes, 119; Noes, 45. (Division List No. 494.)

AYES.
Agg-Gardner, James Tynte	Fardell, Sir T. George	Nicol, Donald Ninian
Agnew, Sir Andrew Noel	Fellowes, Hon. Ailwyn Edward	Orr-Ewing, Charles Lindsay
Anson, Sir William Reynell	Fergusson, RtHn. Sir J.(Manc'r	Palmer, Sir Charles M. (Durham
Arkwright, John Stanhope	Fielden, Edward Brocklehurst	Percy, Earl
Atkinson, Rt. Hon. John	Finch, George H.	Pier point, Robert
Bailey, James (Walworth)	Finlay, Sir Robert Bannatyne	Platt-Higgins, Frederick
Bain, Colonel James Robert	Fisher, William Hayes	Purvis, Robert
Balfour, Capt. C. B. (Hornsey)	Flannery, Sir Fortescue	Randles, John S.
Balfour, Rt Hn Gerald W.(Leeds	Forster, Henry William	Rattigan, Sir William Henry
Banbury, Frederick George	Gordon Maj Evans (T'rH'mlets	Reid, James (Greenock)
Bartley, George C. T.	Gore, Hon. S. F. Ormsby-(Line.)	Remnant, James Farquharson
Bathurst, Hon. Allen Benjamin	Gray, Ernest (West Ham)	Ridley, Hon. M.W.(Stalybridge
Beresford, Lord Chas. William	Greville, Hon. Ronald	Rolleston, Sir John F. L.
Bhownaggree, Sir M. M.	Hamilton Rt Hn Lord G(Midd'x	Royds, Clement Molyneux
Bignold, Arthur	Hanbury, Rt. Hon. Robert Wm.	Rutherford, John
Bigwood, James	Harris, Frederick Leverton	Sandys, Lieut.-Col. Thos. Myles
Blundell, Colonel Henry	Haslett, Sir James Horner	Sassoon, Sir Edward Albert
Bond, Edward	Hay, Hon. Claude George	Seely, Maj. J. E B (IsleofWight
Brookfield, Colonel Montagu	Helder, Augustus	Seton-Karr, Henry
Brown, Alexander H.(Shropsh.	Henderson, Sir Alexander	Sharpe, William Edward T.
Butcher, John George	Howard, J. (Midd., Tottenham	Sloan, Thomas Henry
Campbell, RtHn. J.A (Glasgow	Hozier, Hn. James Henry Cecil	Smith, James Parker (Lanarks.)
Carson, Rt. Hon. Sir Edw. H.	Hutton, John (Yorks, N. R.)	Spear, John Ward
Cautley, Henry Strother	Kemp, George	Stanley, Lord (Lancs).
Cavendish, V.C.W (Derbyshire	Kimber, Henry	Tomlinson, Sir Wm. Edw. M.
Cecil, Lord Hugh (Greenwich)	Lambton, Hon. Frederick Wm.	Tuke, Sir John Batty
Chamberlain, Rt, Hn. J (Birm.	Law, Andrew Bonar (Glasgow)	Valentia, Viscount
Chamberlain, Rt. Hn J. A (Worc.	Lecky, Rt. Hon. William Edw. H	Vincent, Col. Sir CEH(Sheffield
Chapman, Edward	Legge, Col. Hon. Heneage	Vincent, Sir Edgar (Exeter)
Charrington, Spencer	Leigh-Bennett, Henry Currie	Wanklyn, James Leslie
Clive, Captain Percy A.	Leveson-Gower, Frederick N.S	Whitmore, Charles Algernon
Cochrane, Hon. Thos. H. A. E.	Lyttelton, Hon. Alfred	Wilson, A. Stanley (York, E. R.)
Cripps, Charles Alfred	Maconochie, A. W.	Worsley-Taylor, Henry Wilson
Denny, Colonel	Malcolm, Ian	Wortley, Rt. Hon. C. B. Stuart-
Disraeli, Coningsby Ralph	Maxwell, WJH (Dumfriesshire	Wylie, Alexander
Douglas, Rt. Hon. A. Akers-	Milvain, Thomas	Wyndham, Rt. Hon. George
Duke, Henry Edward	Montagu, G. (Huntingdon)	Wyndham-Quin, Major W. H.
Durning-Lawrence, Sir Edwin	Moon, Edward Robert Pacy
Egerton, Hon. A. de Tatton	Moore, William (Antrim, N.)	TELLERS FOR THE AYES—
Elliot, Hon. A. Ralph Douglas	More, Robt. Jasper (Shropshire	Sir Alexander Acland-
Faber, George Denison (York)	Mowbray, Sir Robert Gray C.	Hood and Mr. Anstruther.
NOES.
Abraham, William (Rhondda)	Bayley, Thomas (Derbyshire)	Burns, John
Allan, Sir William (Gateshead)	Bell, Richard	Burt, Thomas
Barlow, John Emmott	Bowles, T. Gibson (Kings' Lynn)	Caine, William Sproston
Caldwell, James	Leng, Sir John	Taylor, Theodore Cooke
Cameron, Robert	Levy, Maurice	Thomas, Sir A. (Glamorgan, E.)
Cremer, William Randal	Lloyd-George, David	Thomas, David Alfred (Merth'r
Dilke, Rt. Hon. Sir Charles	Lough, Thomas	Toulmin, George
Ellis, John Edward	Markham, Arthur Basil	Tully, Jasper
Emmott, Alfred	Norton, Capt. Cecil William	Wallace, Robert
Fenwick, Charles	Perks, Robert William	Weir, James Galloway
Fitzmaurice, Lord Edmond	Price, Robert John	White, Luke (York, E. R.)
Griffith, Ellis J.	Rigg, Richard
Harwood, George	Robson, William Snowdon
Hemphill, Rt. Hon. Charles H.	Shackleton, David James	TELLERS FOR THE NOES—
Jacoby, James Alfred	Shaw, Thomas (Hawick B.)	Mr. Herbert Roberts and
Jones, David Brynmor (Sw'nsea	Shipman, Dr. John G.	Mr. Schwann.
Labouchere, Henry	Stevenson, Francis S.

Question put and agreed to.

Main Question again proposed.

(6.0.) MR. CAINE

I think I can congratulate the House on the increased interest which is now evidenced in Indian questions. During the many years I have been connected with the House, I have taken an active part in the discussion of the Indian Budget, and I have been accustomed to speak to two or three individuals. There is another evidence of the popular interest which is taken in Indian affairs in the recognition given to them by having two Parliamentary representatives of India in this House. Before I come to the main subject I have chosen for discussion tonight, I should like, in the first place, to express the gratification with which I heard the noble Lord refer to the speech I delivered last February, and in connection with which I see that one of the main representations of that speech has been given effect to by the Indian Government in the Central Provinces. My speech has escaped the fate of other speeches which are made on this side of the House; according to the noble Lord they are cast into the waste-paper basket, even by their authors.

I want for a moment or two to criticise the supposed surpluses which, the noble Lord claims, have existed in the Budgets of the last three years. The surplus this year was £837,700. I congratulate the noble Lord on that fact. The surplus last year was £4,672,000, and the total surpluses of the last three years were over eight millions, but it is significant to note that, during those years, although there has been these large surpluses, not a single reduction has been made in the taxation borne by the Indian people. The surpluses have all been swallowed up by additional expenditure. I do not like to speak strongly on the figures which have been laid before us, but the surpluses the noble Lord speaks of are entirely fallacious. During the last fifteen years the total increase of public burdens has risen to something like fifteen millions without a single remission of any taxation, with the exception of the recent remission of £2,000,000 of arrears of land revenue, which, after all, is only writing off a bad debt. The increase in the Army expenditure has been terrible during the last few years. It is not possible to conceive of an Indian Budget surplus, however fat, that is not promptly swallowed up by Army and other fresh and increasing expenditure. In 1887, the Army expenditure in India was £20,874,000; in 1892 it had risen to nearly £24,000,000; and in 1895 to £25,500,000. Taking the six years from 1887 to 1892 the total Army expenditure was £130,000,000, while in the last six years, 1897 to 1902, it reached the astounding figure of £153,000,000—an average increase of £4,000,000 per annum for Army expenditure alone during the comparative period submitted. The surpluses were largely made up of contributions from this country in consequence of the hiring of Indian troops for South Africa and China for services altogether outside the boundaries of the Indian Empire. In 1902, £1,006,000 was paid in this way; in 1901, £3,850,000; and in 1900, £3,909,000. During the last three years the British Exchequer has paid close upon £10,000,000 for the hire of Indian troops. If this amount had been borne on the Indian Estimates, instead of these three years showing total surpluses of £7,000,000 there would have been a deficit of £3,000,000 involving fresh taxation, or the absorption into revenue of the profits which the noble Lord referred to in his able speech There is no reason why the relief enjoyed during the last three years should not become permanent. The South African war has made it abundantly clear that the home Government looks upon the Indian army as largely a reserve force for the needs of the Empire at large, and India ought to be permanently relieved of at least £3,000,000 a year by a grant from the British Exchequer, in acknowledgment of the clear fact that 30,000 troops in the Indian Army are not required for the defence of India, but are simply reserves for the Imperial forces. The taxation of the country has got no relief whatever, and is maintained at an unjustifiably high level, while expenditure increases and the people are growing steadily poorer in spite of the optimistic opinions expressed today by the noble Lord in his speech. I recommend Members of this House to read and study the remarkable speech of Professor Gokhale, the member for the Bombay Presidency in the Viceroy's Council, at page 164 of this year's Financial Statement. It will help hon. Members to realise the profound wisdom of some words in the concluding paragraph of Sir Edward Law's Financial Statement, when he said— I strongly deprecate exaggerated optimism. The vicissitudes of fortune in a country mainly dependent on agriculture must be borne in mind, and we must not count too certainly on the continuance of the prosperity now enjoyed by the people of India. We must not allow our satisfaction over generally good results to deaden our sympathy for suffering groups and classes. I turn from general criticism of the Budget speech to the subject I wish specially to refer to, and I am afraid I shall have to trouble the House at some length on that question. I have placed on the Paper a Motion which I do not now intend to move. It reads as follows: "That this House views with alarm the steady annual increase in the consumption of alcoholic liquors and intoxicating drugs throughout India, and is of opinion that the Excise system of India is calculated to stimulate intemperance and crime, to increase the poverty of the people, and to diminish revenue from every other source." I hold that Excise revenue of any kind which is drawn from drink and drunkenness and the demoralisation of the people is practically burning the candle at both ends. What revenue you get is wasted in the national expenses brought about in consequence of the demoralisation of the people themselves. I well recollect Mr. Gladstone, in one of his brilliant Budget speeches, congratulated the House and the country on the largely diminished revenue from the sale of intoxicating liquors. I met him in the Lobby afterwards, and I asked him what he would do if he had to deal with a nation of total abstainers. "Oh!" he said "do you think I am such a poor Chancellor of the Exchequer as not to be able to frame a satisfactory Budget for a nation of total abstainers?" The right hon. Gentleman knew that such a nation would be more taxable material.

Sir, I make no apology if I have to occupy the House at some length on this subject. It is of the greatest possible importance to the people of India. India steadily year by year increases her consumption of intoxicants. The noble Lord slid very quickly over his reference to that. I wish to give the House the figures, and to show that the increase of revenue is from Excise as well as from other sources. I wish to remind the House that India is practically a nation of total abstainers by religion, habits of life, climate, and especially by reason of their poverty. The people of India are against the use of liquor, and any restrictions which the Government of India might make with regard to the traffic, would meet with the cordial approval of the whole of the people. I say that if the Government were to pass a local option law giving to seven-eighths of the adult population of the districts power to decide, the liquor shops of India from end to end would be closed within twelve months. The Indian people are not a drinking people. There are not more than thirty million people who use intoxicating liquors at all. Every element of Indian society is favourable to a great restriction in the traffic in intoxicating liquor and drugs, but instead of recognising these favourable conditions, and suppressing intemperance, the Government have built up an Excise system, which obtains a vast revenue from a stimulated sale of intoxicating liquor. Twenty years ago, in 1880, the total Excise revenue for the year was 2,838,000Rx.; in 1890 it was 4,891,000Rx.; and in 1900, 5,775,000Rx. In the last three decades the totals were: 1870 to 1880, 24,000,000Rx.; 1880 to 1890, 39,000,000Rx.; and 1890 to 1900, 54,000,000Rx. These figures represent the revenue drawn from the sale of intoxicating liquor and drugs, the increase during the last ten years from a traffic which is an absolute Government monopoly being 39 per cent. with an increase of only 4½ per cent. in the population. If you take the twenty years there is an increase of 125 per cent., with an increase of 17½ per cent. in the population. The noble Lord in his speech referred to the falling off of opium. I am glad, and I believe the House is glad, that there should be a diminution in opium, but all I can say is that, however much sobriety may be increasing in China, the Government of India is making it up by pushing the sale of intoxicating liquor, opium included, among the Indian people. The question naturally arises—and I have no doubt it will be raised by the noble Lord who will reply—how much of this increase comes from consumption and how much from enhanced duty. I have been trying for the last fifteen years to get some data on which a sound reply could be given to this question, but they obstinately refuse to give anything of the kind. I declare that, at the very least, 70 per cent. of this increase in revenue is due to an increase in consumption. I tested it very simply a year or two ago. I have all the Excise reports of India for the last fifteen years. I take the North West Provinces and Oudh, and there I find the reported gallonage of spirits turned out from the Government stills in 1897 was 661,000; in 1898, 885,000; and in 1899, 1,169,000, showing an increase of 80 per cent. in three years. The Government of India publishes an annual romance which it jocularly entitles "A Statement exhibiting the Moral and Material Progress and Condition of India." The following passage occurs in its last issue— There has been a considerable increase in the net Excise revenue during the past thirty years (from £1,755,000 in 1875 to £4,239,000 in 1901–140 per cent.) but this increase, though in part due to enhanced consumption caused by the growth of the population and the general increase of earnings, is yet largely, and in some localities mainly, the result of improved Excise administration, which has doubled or trebled the rates of taxation, and has at the same time restricted the use of illicit intoxicants. This is a complete summary of the defence of the Government for its scandalous Excise system, and will probably form the defence which will be offered presently. I must remind the House that the Excise revenue in India is not raised as it is in this country, by a duty per gallon on spirits. The Government is its own distiller, and sells the licence to deal by public auction to the highest bidder—every liquor shop being, therefore, practically a tied-house to the Government distillery. The Excise revenue consists of first, and mainly, auctioned monopolies for the sale of liquors and intoxicating drugs over defined areas; second, still-head duty on all spirits manufactured by the farmers within the walls of a Government distillery; third, licences for the working of stills by the liquor farmer himself, known as the out-still system. This stupendous and steady increase of revenue is due almost entirely to the fierce competition for licences, stimulated and encouraged by the revenue collectors of the Government, regardless of the moral and material ruin of the poor Indian ryots, or factory-hands, whose wretched incomes are depleted to get money to pay for Durbars and the salaries of British Cabinet Ministers.

I will presently justify these broad charges by an analysis of a single State administration, that of Assam. But I wish to say a word or two about the nature of the intoxicants which a Christian Government deals out to its defenceless Hindu and Mohammedan subjects, whose religions absolutely forbid their use. They are threefold. First, alcohol; second, opium; third, Indian hemp. The alcohol is mainly produced by distillation from the sugary flowers of them how a tree, and to a lesser extent from sugar refuse, called jaggery. The latter is an inferior rum. Them how a, or country spirit as it is called, is damnable stuff. One of the conditions of the licence is that it shall not be sold to a British soldier, though six bottles at a time may be sold to an Indian woman. In the Report of the Commission appointed by the Government of Bengal to inquire into the excise of country spirits in Bengal in 1883–4 the following remarks occur by Dr. Warden— The worst sample of Indian liquor contained nearly seven times as much fusel oil per fluid ounce as Dr. Dupre's sample of unrectified Scotch whiskey, while the least contaminated contains rather less than half the amount found in fine 'samsho.' This method of indicating the relative purity of the spirits is correct as long as we compare the volumes of the various liquors. But low-class consumers of liquor take it for the effects which it produces. An ounce of 'chirkunda' at nine pies per bottle does not equal an ounce, say, of Scotch whiskey or 'samsho' in alcoholic strength. To institute, therefore, a comparison between Indian country liquor and the spirits examined by Dr. Dupre, the ratio which the fusel oil bears to the ethylic alcohol must be the standard; and by this standard the least contaminated of the Indian country liquors contained twice the amount of fusel oil present in 'Cape smoke.' Well, the Government have the best of reasons for forbidding the sale to soldiers. Why then sell it to the weakly and ill-nourished Indian peasant? As to opium and Indian hemp, the Government retail these drugs, not as medicines, but for the purposes of intoxication only. I have been in a Lucknow opium den, now happily abolished, and I recollect seeing and counting 126 men and women dead drunk on opium. This was in a house licensed by the Government, controlled by the Government, and the profits of which went largely to the Government The Government even sells the opium specially prepared for smoking, and the poor people can take it home and smoke it there instead of in the opium dens. Hemp, like opium, can only be obtained in this country by prescription, and signed for in the druggist's poison book. The sale of hasheesh (which is the same article under another name) is prohibited in Egypt, and the manufacture and sale of it is prohibited in Afghanistan.

I will illustrate the operation of the Indian excise system by its administration in a single province, that of Assam. The conditions there are not worse than in any other province of India, but rather better than the average. The average increase in the consumption over all India during the last twenty years has been 125 per cent., with an increase in population of 17 per cent. In Assam the increase in the same period has been only 73 per cent. in consumption, with 25 per. cent. increase in the population. I shall rest my case upon two documents first, the last Annual Excise Report for Assam: and, second, a most remarkable Memorandum impeaching the excise system of Assam, which has just been published by Mr. James Buckingham, C.I.E., the chairman of the Assam branch of the Indian Tea Association. Mr. Buckingham is a business man of great ability and reputation, and has been a member of the Viceroy's Council. For a long time past the tea planters of Assam and Darjeeling have been making indignant protests against the policy which has long been pursued by the Indian Government of opening liquor and opium shops close up to the boundaries of tea plantations. These tea gardens are mostly manned by labourers drawn from a distance, the Assamese not caring for the work. They are drawn mainly from Bengal, but also come in considerable numbers from other parts of India. There is absolutely nothing in the habits of life of a tea-garden coolie to give the smallest excuse for the provision by the State of facilities for getting drunk on filthy and badly-distilled spirits, and for stupefying themselves with opium and hemp drugs. But the Indian Government appears to be blind to all moral considerations in the excise administration, and thinks only of exploiting these unhappy coolies for revenue purposes. The planter worm has at last turned, and through their recognised leader, Mr. Buckingham, they have issued a Memorandum on this grievance of the tea planter that is the most concise, conclusive, and damning indictment of the Government's excise policy that the heart of the temperance reformer can desire.

The Assam tea planters are neither teetotalers nor prohibitionists. They are simply traders who find that the liquor shops, thrust upon them against their will to the demoralisation of their coolies, inflict terrible financial loss upon themselves, as well as all manner of evil things upon their labourers, towards whom they naturally and rightly feel a strong sense of responsibility. They have, therefore, no prejudice against the use of intoxicating liquors as such; and yet we find them united as one man in the strong and insistent demand for a root and branch reform of the licensing system and its administration, while the great bulk of them declare that nothing but absolute prohibition will meet their just grievance. From 1897 to 1898 the Population of the coolie labourers on the tea gardens of the Lakhimpur district increased from 81,957, to 84,974, about 4 per cent., but in the same period the consumption of spirits increased 53 per cent. Over the whole of Assam the revenue for spirits alone had increased during the last ten years no less than 250 per cent., while the tea-garden adult population rose only 70 per cent.

Mr. Buckingham, in preparing this document, has been fully aware that mere denunciation of the iniquity of the grog shops will not solve the difficulties of the problem. He has, therefore, proceeded to collect statistics from competent authorities connected with the tea-garden industry, winch completely expose the weakness of the out-still system in Assam, while at the same time basing upon that evidence proposals for more efficient control, with a view to abating, if not destroying, the terrible social and moral mischief resulting from it. Mr. Buckingham recites a number of Clauses from the Report of the Excise Commission of 1889, which was the outcome of action taken in Parliament by the hon. Member for Flintshire and myself. These quoted Clauses are those relating to Assam, and show conclusively how ineffective their recommendations were, and how completely they have failed from their professed object, because they have been persistently ignored by the Excise Department of Assam. The main recommendation of that Commission was that the tea planters themselves should apply for licences and run liquor shops of their own for the "benefit" of their coolies. It is twelve years since this preposterous recommendation was given, and yet the Government, in the face of the universal refusal of tea planters to become potboys, can still find no other remedy but this to propose, as is shown in the answer given by the Secretary of State for India to myself in Parliament last April, who said that he was of opinion that the plan of getting the tea planters to take on the liquor shops already existing in the vicinity of their gardens had his entire approval, and was likely to conduce to good order and sobriety!

Now, Mr. Buckingham publishes analyses of samples of the spirits sold in the Government grog shops to these unhappy tea coolies. Messrs. Waldie & Co are distinguished analytical chemists with a large practice, and no one can doubt the accuracy of their work. They publicly declare that the spirits distilled and sold by the Government of India contain seven times as much fusel oil as unrectified Scotch whiskey, rendering their use as a beverage very deleterious, and that it is unfit for human consumption owing to the amount of fusel oil and other deleterious matters present. The last Excise Report for Assam says: The Commissioner reports that no deleterious substance was found in the samples analysed by the Chemical Examiner for analysis, and that the quality of the liquor was pronounced good. The Report goes on to give the Examiner away ruthlessly in the next paragraph, which says: Analyses in the past have been directed to the discovery of adulterants, and have not been used to ascertain whether the liquor does not contain a perniciously high proportion of fusel oil. What an extraordinary confession! Who on earth is this precious "Chemical Examiner" employed by the Indian Government to analyse their intoxicants, and who never tests them for the commonest and most deleterious poison to be found in distilled intoxicants? The reports of the medical officers, and managers on the tea gardens cited by Mr. Buckingham, reveal a horrible and appalling condition of things. It is impossible to read them without seeing the most conclusive evidence of the nature of the stuff sold in the results which its consumption produces. The medical officers declare that it is a most fruitful cause of cholera and dysentery, and make it clear that frequent epidemics of these fell Indian scourges have been directly caused by these Government grog shops. Innumerable and definite cases are quoted in which deaths have ensued among the coolies by direct alcoholic poisoning, as well as by cholera, apoplexy, dysentery, pneumonia; enteric fever, murder, and manslaughter, the result of drink. The reports of the managers bristle with riots, wife-beating, desertion of work, brawls, accidental deaths, and fifty other intolerable evils wrought upon these wretched coolies, with grave financial losses to their employers.

The first question addressed by Mr. Buckingham to the principal medical officers in the tea district of Assam was as follows— What is your opinion regarding native grog shops in the vicinity of tea gardens? Do you consider they are prejudicial to the health of the coolies? Do you think they should be wholly abolished or partially? There is not a single reply sent in which does not make it quite clear that every medical officer, most of them holding distinguished English degrees, is satisfied of the prejudicial character of the grog shops, and the reply to that part of the question is emphatically "Yes." Taking the entire number of fourteen medical officers, their replies to the latter Clause of the question are also very emphatic. Nine of them urge total prohibition, while five recommend severe control. Some of these five, however, urge practical prohibition so far as the vicinity of the tea gardens are concerned. It is clear that, without exception, the medical officers declare the present system to be utterly mischievous, while two-thirds of them are convinced that total prohibition of the grog shops is urgently needed. The managers thoroughly endorse the opinions of the medical officers. I make no personal reflection on the Excise authorities in Assam, or upon the very distinguished Chief Commissioner who has sanctioned it, when I say that the Report of their administration for the year 1901–1902 is scandalous. They are called upon to administer a system which is rotten to the very core, provided for them by the Central Government of India, and the angel Gabriel himself could not present a better report with such a system at his back. There is no province in India where the protests against the Excise administration are so loud, so bitter, or so fully justified. The Indian Excise administration is bad enough all over the Empire, but Assam has more Europeans engaged personally in agriculture than any other province, owing to the great development of the tea industry, and they are not, like the more timid Indian farmer elsewhere, afraid to speak out. There is no complaint more bitter, all through the pages of Mr. Buckingham's memorandum, echoed by every witness cited by him, than that of defective administration. He contends that supervision is a farce, that the liquor sellers break the law continually and with complete impunity, and that the constant protests of the tea planters, and their demand for tighter control meet with no response from the Excise Department. A careful examination of the Report shows that this complaint is fully justified. The total expenditure of the Excise Department for the entire province of Assam was £770. The total Excise revenue was £192,000. The area of the province of Assam is 49,000 square miles, the population 5½ millions. The Government thus get 250 rupees of revenue for every one spent on administration. This accounts for the deep affection with which the Government treat Excise revenue. It brings in a larger return for less expenditure than any other source of revenue in their budget. The expenses of collecting opium revenue are 61 per cent.; forest, 59 per cent.; land, 16½ per cent.; salt, 6 per cent.; Customs, 5 per cent.; Excise, 4 per cent. We fear they know only too well that the tight and vigorous administration which is so justly clamoured for by the tea planters would enormously reduce the revenue. In face of the terrible facts brought out by Mr. Buckingham, it is quite impossible for them ever again to protest against the charge so often brought against them, that they deliberately stimulate the sale of intoxicants for the money it brings in, and that moral considerations are flung to the wind when they clash with revenue interests. If the present system is to he maintained in Assam, an expenditure of at least £50,000 a year, instead of £770, will be necessary if the farmers they employ to distribute these filthy and poisonous liquors are to he kept in anything like decent control.

There is another fact brought out in the Report which fully justifies this grave accusation. It is the custom everywhere throughout India for the Government to sanction a far greater number of licences than can be taken up, and then to push them upon the liquor farmers to the utmost of the sanction. This year the Assam Commissioner sanctioned for settlement 1,426 shops; only 1,276 shops of all descriptions have been taken up! Now what possible explanation can be given of this simple fact? Why should the Excise Commissioner sanction 150 more liquor and opium dens than even the stimulated demand is able and willing to take up? The Commissioner is much grieved that people drink so little. Here is his lament— The results, as compared with 1901–2, are disappointing. In the Surma valley the bidders combined, and the sales had to be held several times. In Cachar the bids obtained were so low that orders were issued to keep a considerable number of shops closed. Several of these have since been settled on reasonable terms. In Sylhet the ring of liquor farmers is stronger than ever, and owing to scarcity in the early part of the year under review, and consequent low profits, outsiders were even less willing than usual to compete for shops.…The decrease in Lakhimpur is under all heads, and is attributed to combinations among vendors.…In Kamrup the decrease is general, and is attributed to the absence of competition.…In almost every district the sales were conducted by the deputy Commissioner in person. It is noteworthy that this was not done in the district where the sales were worst. What does this quotation tell us? The Excise Department have screwed up the farmers to such a point that "sales had to be held several times." In Cachar, when the bidding was low, and shops were not taken up, steps were taken to push this dirty trade, and eventually "several of these got settled on reasonable terms." In Sylhet the trade is so overdone, so many liquor shops have been thrust on the community, that no outsider would compete, and the liquor combine had it all their own way. Things seem to have got so low down in Assam, so many unnecessary shops have been opened, that the sales, to be any success at all, had to be "conducted by the Deputy Commissioner in person." I must not weary the House with extracts from Mr. Buckingham's memorandum, which show, with only too terrible truth, the methods which the liquor and opium farmers are compelled to take up to sell their demoralising compounds, and pay the rents screwed out of them by the Government. If they were properly controlled and inspected, if they were compelled to keep their premises in decent sanitary order, if they were fitly punished for their constant breaches of the law, for the riots and disorder which they produce, the revenue would fall to less than one half its present amount, and that would never do. Revenue! revenue! revenue! even when drawn from the very life blood of the people and their inevitable moral ruin, is the fetish of the Indian Government in its Excise administration. That hoary old excuse for the steady increase of revenue from drink and those intoxicating drugs which are in the poison list of every British pharmaceutical chemist, that it is to prevent illicit sale, is of course trotted out in the Excise Report. But how hollow it all is! It has been proved over and over again that any smuggling and illicit distillation is almost entirely on the part of the liquor farmers, who cheat the Excise right and left, with perfect impunity. How can there be any preventive system in a province as big as the whole of England out of a total expenditure of £770? In the whole of the vast province of Assam only fifty-one prosecutions for the illicit sale or manufacture of liquor are reported for the year under review, and there were only nineteen cases in all of opium and drug smuggling and illicit cultivation. There has been a so-called "preventive staff" appointed, but in nine months operations only two cases were detected by them. It is a singular comment on the "prevention of illicit sale" theory of which the Government are so fond. that the Excise Commissioner, commenting on some other matter says— This is not as it should be, and tends to establish the theory that much of the value of a licence to sell opium lies in the facilities it affords for trafficking in the contraband article. Here is a frank confession of what is notorious in all well-informed native circles in India, that the Government Returns of liquor and drugs sold are hopelessly fallacious, and do not, in all probability, account for more than half the stuff sold, the other half having never paid duty. It might reasonably be expected that the existence during 1901–02 of the horrible details of debauchery and demoralisation revealed in Mr. Buckingham's able memorandum would have brought out a great list of prosecutions under the Excise and opium laws. The total convictions under these laws for the entire province of Assam were 301. The nature of the offences might be erroneously inferred from Mr. Buckingham's memorandum, but they are all for offences tending to diminish revenue. There is no mention of any licence being taken away, and the lightness of the punishments may be inferred from the fact that the total amount of fines only realised some £400. I ask the House to weigh this extraordinary statement made on the first page of the Excise Report, "Local public opinion was consulted as far as possible before any new shops were licensed." This formula always appears year by year in the Excise Report of every province of India. It is most discreditable to the Government that this silly lie should ever be allowed to appear at all. If next year they would back it up with some instances of the so-called consultation of public opinion, I will undertake to furnish, for every such case, half a dozen in which public opinion has been outraged. There is not a liquor or drug shop in the whole tea districts of Assam and Darjeeling that is not a glaring outrage on local public opinion, as Mr. Buckingham most clearly demonstrates.

If there is one thing more surely established by Mr. Buckingham's witnesses it is the deleterious and poisonous quality of the abominable stuff sold by the Government's liquor farmers. Yet we read: "The Commissioner reports that no deleterious substance was found in the samples of country spirit sent to the chemical examiner for analysis, and the quality of the liquor was pronounced good." In face of this statement, what are we to say of the analyses reported by Mr. Buckingham, in every case of which fusel oi lis found in large quantity? But the simplest test to which the "good quality" of this country spirit can be brought is the regulation which prevails all over India, that no country liquor seller shall ever sell drink to a British soldier. Will the Government repeal this regulation? I am sure they will not; but all the same they will go on selling their vile compounds to the poor Assam tea coolie. Last week in reply to a Question from the hon. and gallant Member for Taunton about the importation of spirits into West Africa, containing fusel oil, the Secretary of State for the Colonies stated "that the Governor of Lagos is of opinion that alcohol containing a noxious substance like fusel oil in deleterious quantity should be seized and dealt with in such a way that it should not reach the public, and that legislation would be passed by the Council of his Government securing this." The Secretary of State for War protects the British soldier from the fusel oil of the Indian Government, the Secretary of State for the Colonies protects the West African negro, the Secretary of State for India sells it to. Indian peasants in 100,000 grog shops.

There are about 300 shops in Assam licensed for the sale of "ganja." These were so far in excess of the demand that twenty-four licences were surrendered during the year. One might reasonably have expected that these would have been allowed to lapse. That is not the method of the Government of India! The Report says: "Sixteen of these licences were resettled, but at greatly reduced prices." What an abominable bit of administration here reveals itself. These licences, "at greatly reduced prices," are, of course, put into competition with others who had paid the full licence tax, and the Government holds up its hands in pious horror because the liquor and opium farmers form a trade combination against dishonest treatment. Now, what is this "ganja," of which the Report remarks, with touching frankness, "the decrease in consumption is not satisfactory?" It is a preparation of Indian hemp, and is the most noxious and maddening intoxicant of all the varieties dealt in by the Indian Government. It cannot be procured at any chemist's shop in this country without a medical prescription and the customer's signature in the poison book. In Egypt it became such a curse to the people, under the name of "hasheesh," that the Government prohibited its sale and manufacture, employed a fleet of gunboats to stop its importation, and sent anyone who was found with it in his possession to gaol with hard labour for three months. The British Government places ganja on the lists of poisons, and prohibits its sale except on medical prescriptions. The Egyptian Government has penal laws for those possessing it, the Amir of Afghanistan prohibits its manufacture and sale. The Christian Government of India draws its revenue from the open sale of this virulent and maddening poison to the poor Indian peasant, and public opinion in this country is silent and acquiesces. On this damnable Excise system, so terribly exposed by Mr. Buckingham, the Government build up a steadily increasing revenue. In Assam, during the last ten years, the revenue from country spirit alone has almost trebled. It was 273,000 rupees in 1890, and 703,000 in 1901. Is it to treble itself dining the next ten years? Why not, if the same system is to prevail? The Government are simply tinning the coolie population of the tea districts into confirmed drunkards, drawing revenue out of the vice and degradation of these unhappy people. On April 14th last I asked the Secretary of State for India a long Question on this tea planters' grievance. He gave the usual stereotyped answer†, and I asked this additional question— Is there any necessity whatever for forcing these liquor shops on the planters who do not want them? To which the Secretary of State replied— My information is that they are wanted.— At that time Mr. Buckingham's Memorandum had not appeared. If the planters "want" these liquor shops, they certainly make their "wants" known in strange fashion. It will also be seen that, in reply to a further Question in July, the Secretary of State said that Mr. Buckingham's Memorandum was receiving the "serious consideration" of the Government. We know by sad experience what this means. Two years delay, and nothing at the end of it! I have in my hand a document which is the outcome of this "serious consideration." It is addressed by the Chief Commissioner of Assam to the Deputy Commissioners of Labour Districts, Assam. I wish time permitted me to submit this foolish and futile document to the House in full, but I will conclude my speech with just a few extracts from it. I understand the Secretary of State is going to lay it presently on the Table of the House, when the replies have come in. When it is published, the House will see that it is no honest inquiry at all, but that the Commissioners of Labour are practically told what reply is expected by the following paragraphs:— I am directed to forward, with the following remarks, a copy of a Memorandum on the Excise Administration of Assam which was written by Mr. J. Buckingham, C.I.E. Within the last twenty years the Excise arrangements of Assam have, been four times subjected to examination. It cannot, then, be stated that the question has not received a good deal of consideration; but having regard to its importance, Mr. Fuller is quite willing to re-open it. † See (4) Debates, cvi., 142. There are two conclusions, however, which he holds to have been finally established by the investigations that have already been made. The first is that the imported coolie population of the province is mainly recruited from classes who are in the habit of drinking fermented or distilled liquor, and that, in affording them opportunities of obtaining liquor in Assam, the Government is merely supplying an existing want, not creating a new one. The second conclusion is that if coolies are denied excise liquor, they will brew rice beer, and that there can be a great, deal of drunkenness and demoralisation on tea estates which are quite unaffected by licensed liquor shops, There is a passage in Mr. Buckingham's Memorandum which may be taken to imply that the tea-garden coolie is naturally an abstemious man. This is a view which, in Mr. Fuller's opinion, is quite untenable. Moreover, certain of the views which are referred to in the Memorandum are coloured by the idea that coolies can be, or should be, altogether prevented from drinking. This is a reform which is both hopeless and unjustifiable. The Officiating Chief Commissioner can see no reason why we should expect a higher standard of restraint amongst the coolies on it tea garden than amongst the labouring classes in Europe. Any practical person reading these paragraphs in the light of Mr. Buckingham's Memorandum, and Mr. Buckingham's Memorandum in the light of these paragraphs, will see that any honest inquiry is damned at the outset. I cannot continue my speech further, having already trespassed sorely on the time of the House. I can only say, that if this state of things in Assam is not dealt with by the Government on the lines of Mr. Buckingham's Memorandum, I shall next session use the forms of the House to the utmost of my power to get some protection for these poor Indian peasants, and the tea planters who employ them, by debate and division of the Members of this House, who are the only final Court of Appeal on Indian grievances.

(6.50.) THE UNDER SECRETARY OF STATE FOR INDIA (Earl PERCY, Kensington, S.)

The hon. Gentleman who has just sat down at the opening of his speech referred to the speech of my right hon. friend the Secretary of State, and characterised it as that of a confirmed optimist. I am not sure that the speech of the hon. Member does not lay him still more open to the charge of being a confirmed pessimist. I do not think I ever heard a speech in this House which exhibited a greater capacity for swallowing wholesale the accusations made against the conduct of the Indian Administration, or which made less allowance for the difficulties of the Government, and showed less patience in waiting for the result of the inquiries which the Government is undertaking. I do not think that we have any right to complain that the hon. Member should raise this subject. It is an extremely important subject, and the hon. Member is well known as an advocate of temperance reform, and no one is better qualified to bring such a subject to our notice. At the same time, I think his attack is a little premature. The protest by Mr. Buckingham, to which he has drawn attention, and which he says is the most damning indictment that anyone could desire, has only just been received, and there has been very little time for the local authorities to institute the searching inquiry that has been promised, much less to express their conclusions upon it. But I might point out that the charges which the hon. Gentleman has made tonight are not new. They have all been made before, even before 1889, and I believe in the last twenty years the Excise administration in India as a whole, and in Assam in particular, has been inquired into no less than four or five times.

MR. CAINE

To no result.

EARL PERCY

The last time it was inquired into, it had formed the subject of a Resolution in this House, and as a result of that Resolution in 1889 the whole system was examined by the Government, and the result of that inquiry was embodied in a despatch of the Government of India, and endorsed in a despatch by Lord Cross in the following year.

Mr. CAINE

Which were never carried out.

EARL PERCY

I am coming to that in a moment. The conclusions arrived at by the Government of India as regards Assam were that the excise system then and now in force—the outstill system—was the only possible one, although not theoretically the best, and that the principles by which the Excise Commissioners were to be guided in fixing the number of shops and the price of the licences were in the first place the local demand, so far as it could be reasonably ascertained, and in the second place the paramount necessity of keeping the price of liquor as high as was compatible with the discouragement of illicit manufacture and smuggling. The Government of India repudiated as strongly as it repudiates today the desire to stimulate the consumption in Assam, or any part of India, for the sake of increasing the revenues; but, on the other hand, they expressed in the strongest language their opinion, and I think that opinion is one which must be expressed by every Government that has to deal with this question in India, that it would not be either just or possible to use the machinery of Excise for one particular province in India in order to deny the population of that province the legitimate facilities for indulgence which are enjoyed by the population of every other. The hon. Member is, of course, an avowed prohibitionist, and he is quite logical, for he would enforce that view in England as he would in India; but I think he will himself admit that if we are going to force this system on the people of India there is some argument for first forcing it upon ourselves at home. The hon. Member spoke with truth of the Indian people as extremely abstemious, but it is by no means true that drinking is prohibited by the religion of the majority of the population, nor is it true that there is a considerable degree of drinking among them. I do not know a single administrator of any experience who has dealt with this question who has not expressed himself quite as strongly as the Government of India in 1889, to the effect that it would be quite impossible, even supposing they had a system of local option and could get a three-fifths majority of the people in favour of closing the liquor shops—there is not an Indian administrator who believes you would have power to enforce that law on the minority. I think the fact that although these charges were made ten years ago, and although the circumstances under which they were made have not changed, the Government of India have expressed their readiness to undertake another inquiry, ought to be sufficient disproof of any insinuation of indifference on their part to the interests either of the coolie or of the planter. On the other hand, the very fact that these charges have been reiterated after such a short interval ought, I think, to make us very careful how we accept them without careful inquiry, especially without taking into consideration the peculiar circumstances under which they are now made.

It may be within the recollection of some hon. Members of this House that only a very short time ago the Government of India passed a new Act dealing with the question of the labour supply in Assam. That has always been a very difficult question, because the proportion of the labour element in the Province of Assam itself is only three per cent. of the total population, and therefore most of the labour which is employed on the plantations has to be imported from outside. The Act in question was the subject of very heated controversy in the native Press, and between what I may call the party of the planters on the one hand, and the philanthropic party, which has been so ably represented by Sir H. Cotton, on the other. Broadly speaking, that Act represented a compromise which went some way towards meeting the views of both parties. It enforced an addition to the statutory minimum monthly wage of the coolie, but by no means au addition equivalent to the increase which had been demanded by Sir H. Cotton. On the other hand, it met the views of the planters who complained of the competition which they suffered from unlicensed contractors by placing the unlicensed contractors under very severe restrictions, and encouraging the system of recruiting by garden sardars. Since that Act was passed the tea industry has undoubtedly been going through a period of very serious depression. That depression is possibly owing to some extent to over-production; it is largely, I daresay, due to the high taxation which it has been necessary to maintain in consequence of the prolongation of the South African war; but it is mainly due to the lack of an adequate labour supply. That supply has been, I believe not more but a little less than before the Act was passed. I frankly admit that all these considerations are considerations which entitle the tea industry to our commiseration, and any representations which the planters may make will deserve our most serious and sympathetic consideration. On the other hand, the very fact that this agitation synchronises with a period of depression is, I think, evidence of what I believe to be the fact—that the agitation is motived quite as much by economic considerations as by considerations of philanthropy.

MR. CAINE

And quite properly.

EARL PERCY

I am not bringing that as a charge against the promoters, but the fons et origo of this agitation is really the lack of an adequate labour supply. Sir H. Cotton's party, on the one hand, say that the planters will never get a sufficient labour force unless they considerably increase the present statutory wage, which Sir H. Cotton calls a. miserable pittance as compared with the wage age offered in the mining districts adjacent to the districts in which the coolies live. The planters, on the other hand, say that no increase of the statutory wage on their part will have any effect so long as the coolies are encouraged or allowed to spend a large portion of their earnings in the liquor shops which are under the control of the Government. It is obvious, therefore, that exactly in so far as the charge against the Excise administration in Assam can be made out, so far is the case for an increase of the statutory wage diminished. I do not say that that militates in the least against the case for inquiry, but it does make it extremely important that we should be careful how we accept the accusations that are made.

Let me ask the House to consider; what is the case and the scope for inquiry. To my mind it seems that the scope for inquiry must necessarily be a very limited one. If it is true, as the Government of India said ten years ago, that total prohibition is impossible, and that the central distillery system is impossible under the conditions in Assam, all we have to consider are the reforms which have been proposed in the working of the out still system. We have to ask ourselves whether it is really a fact, as the hon. Gentleman opposite says, that the consumption of liquor has increased to a greater extent than would be warranted by the increase in the population, by the increase of wealth—and what he really leaves out of consideration—by the stricter administration of the law; and also, supposing that statement be true, whether it is an evil which it is in the power of the Government to remedy, or whether it is an inseparable accompaniment of the only system of which the conditions of Assam permit. I will not weary the House by going into a discussion of the rival merits of what is called the central distillery system and the out-still system. We have always admitted, and we admit now, that the adoption of the out-still system in Assam was not due to any preference for it in the abstract, but merely to geographical and climatic conditions and to habits, and customs of the population which no arguments on the part of temperance or other advocates in this House can alter. In Assam you have a district, roughly speaking, of 400 miles long by fifty broad, four-fifths of which is over-grown by high tree or grass jungle. It possesses exceedingly scanty means of communication, and the population, which is so sparse that I think it is reckoned to be something like 100 to the square mile, lives not in villages, but in scattered houses, surrounded by jungle, and therefore with every facility for carrying on illicit manufacture either in their own homes or in the adjacent jungle. In addition, you have to consider the habits of this population. The hon. Gentleman opposite said—I think with reference to the Assam population—that they were not, on the whole, consumers of liquor. That, I believe, is perfectly true. The great mass of the native population of Assam are not addicted to the consumption of liquor to the same extent, perhaps, as the natives of India and elsewhere.

MR. CAINE

They are the chief customers of the opium and ganja shops.

EARL PERCY

The drug that they do use is not spirits, but ganja, which is exceedingly deleterious; at any rate, it is a stronger compound than the ordinary liquor. I recollect that in his report for the year 1889 the Excise Commissioner expressed the opinion that it would be a positive advantage if the population which now consume opium and ganja could be weaned from the habit and persuaded to drink the country spirit instead. The bulk of the native population of Assam consume, I believe, twice as much opium as the population of any other province in India. Besides them, you have a number of aboriginal or hill tribes, both in the north and in the south, and in no part, I believe, is the territory of these hill tribes divided from the tea plantations by a distance of more than twenty miles. These tribes have always been inveterate liquor drinkers in the past, and not merely drinkers of the ordinary beer which I believe the hon. Member thinks is harmless—for they are in the habit of subjecting fermented liquor to a further process of distillation, under which process it becomes a spirit of very considerable strength. In addition to the hill tribes and the ordinary population, you have half a million coolies imported every year from outside, from Bengal and the Lower Sonthals, who have all been accustomed to the ordinary facilities for obtaining liquor which obtain in every other part of India, and who, if the party represented by Sir H. Cotton are to be believed, are, owing to the low class of wages offered, drawn from the lower strata of the population. What would be the practical result of adopting a change, and introducing there the central distillery system under which a still-head duty is levied upon every gallon of spirits distilled in the distillery? In the first place, there is one very grave objection to the central distillery system, viz., that where it is adopted, the very fact that you ensure a fixed price per gallon of liquor is an obvious temptation to the distiller himself either to distil liquor outside the central distillery or to smuggle outside free of duty the liquor he distils inside. For that reason the system requires a very large preventive force.

MR. CAINE

I hope the noble Lord does not think I advocate the central distillery system.

EARL PERCY

The hon. Member, I may point out, has made no practical proposals beyond reading out a series of very small suggestions which were not made by Mr. Buckingham himself, but were tabulated by him as a list of recommendations which had from time to time been made by various advocates of reform. If the hon. Gentleman does not wish me to pursue the topic of the central distillery system, I will only say that he is at one with us in thinking that all we can do is to consider the reforms which can be suggested for removing the evils attaching to the present system. That system has a great many disadvantages, but it, at any rate, has the great advantage that it does enlist the interest of the liquor sellers on the side of the law, and they have exceptional means of ascertaining where the manufacture and smuggling of liquor is going on.

What are the reforms suggested for removing the evils attaching to this system? Broadly speaking, I think they fall under three heads—(1) the reduction of the number of liquor shops, (2) more effective and adequate supervision, and (3) more careful analysis of the liquor supplied. As regards the last two points, there is no difference at all as to policy between the Government and the hon. Member. The only difference is a question of fact and of practice—whether the reforms which the hon. Member suggests can be carried out or not. Take the question of analysis. We are all anxious that the system of analysis should be as strict as possible, and strict enough to detect the presence, if such there be, of deleterious ingredients. So far as the Excise Reports go, they do not indicate that the tests which have been applied have revealed the presence of any of these noxious ingredients, but the Excise Commissioner draws attention to the fact that it is quite true that these analyses in the past have not been directed to discovering the proportions of fusel oil in the liquor supplied. Fusel oil is present in considerable quantities in all liquors distilled at a high temperature, and the Commission is at the present moment considering how far a better quantitative test can be adopted. The authority quoted by the hon. Member opposite does not give details with regard to the presence of fusel oil. He states that there are large quantities, but he does not give the figures. I may just mention in passing that if the hon. Member will look at the Excise Report of the administration of Assam for 1899–1900 he will see that the strength of the ordinary country liquor is exceedingly low, there is only one case over proof, and the vast majority are 57, 52, 46 and 72 under proof.

MR. CAINE

The noble Lord will find that the dilution is very largely clone with water drawn from a source which is full of all sorts of germs of disease.

EARL PERCY

I know that one of the reforms suggested is that a purer water supply should be insisted upon. I am told, however, that the in reprocess of distillation is supposed to get rid of most impurities. I will pass on now to the question of supervision. Here, again, the question between us is one of practicability and not one of policy. The chief difficulty, as I have already explained, is the enormous size of the area which has to be supervised, the very small staff which is available, and, what is more important, the limited area from which that staff can be drawn owing to the unattractiveness of the Assam chlorite to the natives of other parts of India. In 1889 it was pointed out that it was practically impossible in such a vast area, with a police force of only about one to every forty square miles, to suppress all illegalities, and the Deputy Commissioner said he did not believe any preventive force would achieve complete success under such circumstances. The hon. Gentleman alluded to the amount of the Excise revenue compared with the cost of the Excise staff, but those figures are not a reliable test, because neither the pay of the police nor of the land revenue officials, both of whom have Excise duties, come under the head of Excise expenditure. Allow me to say in conclusion on this point that I believe that the Chief Commissioner is at the present moment considering the possibility of appointing special officers to assist the Deputy Commissioners in this work.

I pass on now to the question of the reduction of the number of shops. That is a controversy with which we are all familiar at home. It is probable that there is some relation between the number of shops and the amount of drunkenness in a district. I do not want to discuss the general question, but it is obvious that in a district like Assam—which is exceedingly sparsely populated, and where the facilities for illicit traffic are so great—the amount of local demand and the number of shops required must be far more accurately gauged by people on the spot than it can be gauged here. The gist of the charge against us is that we are pushing the sale and the consumption of liquor by a system of repeated auctions. The fact that the auctions have to be held over and over again in order to secure that the proper number of licences is taken up does not prove in any sense that the number of shops is in excess of local requirements. In the first place the hon. Member ignores the fact that the auction system is one of the few means we have of testing whether there is a local demand or not; and, in the second place, the objection is theoretical rather than practical, because under the present system a man is only allowed to buy one shop, and the Government see that he does not sell liquor at any place not mentioned in his contract, and the retail price of the liquor is strictly laid down. Therefore it is practically impossible for the licencee to diminish the cost of his liquor below the amount represented by the licence tax "plus" the cost of production. On these occasions when auctions had to be held over and over again there has been a combination amongst the licencees to force down the price of licences and to obtain at a profit to themselves—at the cost of the revenue and, therefore, at the cost of the taxpayer—the right to sell liquor below the ordinary prices to the consumer. That is an object which we are bound to prohibit, both in the interest of the coolies themselves and in the cause of temperance. It is true that you cannot raise the price of liquor beyond a, certain point without inducing illicit manufacture on a large scale, but I think the hon. Gentleman opposite would be the first to admit that the high price of liquor has, at all event, something to do with discouraging consumption and intemperance. The hon. Member has given a lot of figures, and I confess I was unable to jot them down as he went along. It was almost impossible with the large number of figures which the hon. Member gave to check them straight off.

MR. CAINE

I sent them to the noble; Lord three days ago.

EARL PERCY

I beg the hon. Member's pardon, but I did not know that they were the same figures. I have a few figures here that I should like to ask his attention to. Take, for instance, the actual growth of the Excise revenue during the past ten years in India as a whole. Taking India as a whole, the Excise revenue increased from £3,300,000 in 1890–91 to £3,937,000 in 1900–01. This shows an increase of only £600,000 in ten years, and this not with standing the fact that there has been an increase of 10,000,000 in the population, and that during that period there has been a stricter system under which illicit traffic has been largely prevented, that the duties on every kind of liquor and drugs, both country and foreign, have been considerably raised, and that the central distillery system has been widely extended. I come now to the Excise figures for Assam, and here the figures are in rupees. The increase in Assam is about 600,000 Rs., but of the total revenue of 2,933,390 Rs. only £720,870 is supplied by liquor, the rest being supplied by drugs. It is true that the liquor revenue in Assam has more than doubled, and that the population has only increased by 12 per cent., and the hon. Gentleman attributes that apparently to the increase in the facilities for drinking. What is the fact? The number of shops in Assam in 1889–90 was 1,723, and in 1900–01 the total was only 1,343. In India the total number of shops in 1889–90 was 113,259, and in the year 1900–01 the total was 102,516. The average population per shop in India in 1889–90 was 1,950, whilst in 1900–01 the average was 2,250. If you take merely the shops in which the country liquor to which Mr. Buckingham principally refers is served, the number is only one to 7,000 of the population in India as a whole, whilst in Assam it is one to 26,419 of the population as compared with one shop to only 242 in this country. Therefore, I do not think that the very sweeping indictment which has been made against the Excise Administration by the hon. Gentleman is borne out by the facts. I do not deny that there is a case for inquiry, and the Government has already instituted one, but I do ask the House to believe that the defence I have endeavoured to put before hon. Members is not a mere red-tape apology for the conduct of the Administration, but is fully borne out by an authority whose sympathy with the coolies is beyond suspicion, and who cannot be accused of undue partiality—I mean Sir Henry Cotton. He says— One word in conclusion on the drink question. This is merely a red herring which has been drawn across the discussion to divert attention from its real merits. No one will seriously suppose that I have ever taken steps to encourage drinking. I am thankful that in my time the consumption of opium in Assam has greatly decreased. But I cannot help the growth of the drinking, population, which is really the immigrant population of the province. I do not believe I have sanctioned a single new liquor shop, but there has, undoubtedly, been an increase of drinking with the increase of tills population. I do not think that I need to add anything more to the testimony of so competent a witness. I will only say in conclusion that I think the House will prefer to await the result of the inquiry which the Government have already begun rather than accept off-hand the charges which have been made by the hon. Gentleman.

It being half-past Seven of the clock, the Debate stood adjourned.

Debate to be resumed this evening.