HL Deb 19 June 1879 vol 247 cc138-67

rose to call attention to the condition of the finances of British India, and to present a Petition from the Committee of the British Indian Association at Calcutta. In doing so, he thought it right, by way of preface, to state that the views he was about to express were his own individually; that he had not put himself in communication in reference to the subject with any of the noble Lords around him with whom he usually acted; and that nothing was further from his desire than to comment in a hostile spirit upon the general financial action of the Government of India, whose difficulties he was, perhaps, better able to appreciate than most of their Lordships. He would take, for the purposes of comparison, two periods of Indian finance— first, the four years from 1872 to 1875; and, secondly, the four years from 1876to 1879—omitting, as everyone was bound to do who wished to consider Indian finance fairly, the expenditure on reproductive public works. In selecting those periods, he had not been influenced by any personal considerations. He was not responsible for the finances of 1872—and he was responsible for the Budget of 1876. During the first period the Government had to meet a famine which cost £6,500,000, and in the end there remained a surplus of about £2,000,000; so that if, had there been no famine, the surplus of the four years would have amounted to about £8,500,000, or at the rate of more than £2,000,000 a-year, notwithstanding the modification or abandonment of various taxes, and without taking into account some 30,000 chests of opium of which the Indian Government were in possession, and which might be considered an important asset. During the four years from 1876 to 1879, the Government had to meet a famine which, according to the statement of the Finance Minister, cost £9,500,000, and there was a deficit of £5,750,000; so that, if there had been no famine, the surplus of the four years would have amounted to £3,750,000. Meanwhile, however, taxes had been imposed to the amount of some £3,000,000. Therefore, speaking broadly, if no fresh taxation had been imposed, the revenue of the four years would have been only just sufficient to meet the expenditure, without leaving any surplus to provide for the cost of the famine. The Government of India had always, and very properly, recognized the necessity of providing against the famines which had, unfortunately, become so frequent in India, without increasing the debt—yet, during the last four years, that has not been done. The statement he had now made would, he believed, be sufficient to satisfy their Lordships that the condition of Indian finance was deserving of serious attention. At the same time that taxation, the receipts from which amounted to £3,000,000 during the four years, had been imposed, some remissions of taxation had been made—there had been an alteration of the salt duties, and the Customs import duty on cotton manufactures had been reduced. Into the substantial merits of the latter question he would not enter. No one could suppose he would defend protection to the industry of India, which would be wrong in principle, and he was not complaining of the remissions themselves; but he entertained very strong objection to the time and manner in which these remissions had been made. He had imagined that the policy of the Government had been made sufficiently clear. The noble Marquess the Foreign Secretary, when he was at the India Office, over and over again, in speeches, in despatches, and in Minutes, stated that, however desirous he might be to get rid of anything which savoured of protection in the Indian Customs duties, the reform could be carried out only when the state of the Indian finances enabled it to be done without the imposition of fresh taxes. The same opinion had been publicly expressed by the present Governor General shortly after his arrival in India. The Finance Minister, Sir John Strachey, in introducing the Budget of 1877, said that the financial difficulties were so serious that no source of income could be sacrificed. The Resolution passed by the other House of Parliament in 1877 was to the effect that the duties should be reduced when the Revenues of India would permit of it. When the Budget of 1877 was introduced into the Legislative Council of India, the finances were not in so critical a condition as they were found to be in the winter of that year; for it was at first supposed that the Madras Famine would not cost so much as it ultimately did. In December, 1877, the Government of India found themselves compelled to anticipate the usual Financial Statement of 1878, and to introduce to the Legislative Council proposals, which were adopted, for imposing taxes to the extent of about £1,000,000 a-year, to provide the funds necessary for meeting out of income the I expenditure upon famine. No intimation was given at that time that it was intended to remit any taxes or Customs duties; and what Sir John Strachey then said was— How soon, and to what extent we shall be able to carry out the important, and, in my own opinion, most necessary reform in regard to the cotton duties which has now been enjoined upon us by Her Majesty's Government, supported by a unanimous vote of the House of Commons, I am now unable to foresee. It was clear that up to that time the policy of the Government was that it would be wrong to undertake the reform of the Customs duties until the state of the finances enabled them to do so without imposing fresh taxation. In dealing with the finances of any country, it had always been recognized as a fundamental rule that, however right in principle Customs or other reforms might be, they ought not to be carried out unless the condition of the finances enabled it to be done without risk. Notwithstanding this, only three months after the discussion in the Legislative Council—namely, in the beginning of March, 1878—notwithstanding the assurances which had previously been given, the Government of India undertook the reform of the Customs duties; and, as part of that reform, a reduction was made in the import duties upon cotton manufactures. That reduction was still further increased in 1879, and the reduction then effected would involve a loss to the Revenue of £200,000 a-year, or more. He deeply regretted the change in the policy of the Government, and their departure from the position that the reduction of the duties ought to be postponed until the finances of India would allow of its being made. An endeavour had been made to separate the remission of these duties from the imposition of the new taxes, which were solemnly pledged to be devoted to the creation of a Famine Insurance Fund; but the taxes were put on in December and the remissions were made in March, and it was impossible to dissociate the one from the other. He was sorry to say that the effect on public opinion in India was to produce the impression that advantage was taken of the new taxes to reduce the Customs duty upon cotton manufacturers, in consequence of the pressure put upon the Government by an important manufacturing interest in this country. Numerous public addresses showed that this was the opinion of the educated Natives of India, and of the European commercial community; and that it was the opinion of the mass of English Civil servant, was shown by Sir Alexander Arbuthnot, the senior Member of the Council of the Viceroy, who said that there were not a dozen officials in India who did not believe that the reduction had been made, not for the interests of the people of India, but in consequence of the pressure put upon the Government by a great interest in this country. What had been done had been done on the responsibility of Her Majesty's Government, and he (the Earl of Northbrook) did not attribute any improper motive to them; but he asserted the fact that what had been done had produced this deplorable impression. This was no question of Party, and the pressure had come fully as much from Liberal as from Conservative Members of Parliament. While he deeply regretted the time at which, he more deeply regretted the manner in which, this policy had been carried into effect. The Government of India, both at home and in India, was a matter that had often been considered by Parliament; and, while full power over Indian affairs was given to Her Majesty's Government on the responsibility of the Secretary of State, care was taken to associate with him Indian statesmen, to be consulted on all ordinary matters of Indian policy, and more especially upon matters of finance; but whose opinion, excepting under peculiar circumstances, he could, in the exercise of his responsibility, if necessary, overrule. Now, to the best of his (the Earl of Northbrook's) knowledge and belief, the last remission of the Customs duties on cotton goods had not been put before the Council of the Secretary of State in such a form as to give them an opportunity of expressing an opinion upon it. The responsibility of the act having been admitted to be with Her Majesty's Government, who originated the measure, he still doubted whether the conditions of the Government of India Act had been fulfilled, and whether the orders given to the Government of India instructing them to carry out the change ought not, as a matter of law, to have been communicated to the Se- cretary of State's Council, in order that they might have had an opportunity of expressing an opinion upon them. The Council at Home having been, as he believed, passed by in this matter, he regretted to say that, in his opinion, a considerable strain had been put upon the Constitution of India in the manner in which the measure was carried out in India. The government of India in India was not an absolute government by a Viceroy; it was vested by the wisdom of Parliament in the Governor General in Council, and it was only in certain specified cases that he had the legal power to overrule the majority of that Council. The 5th section of the Act of 1870, which dealt with the point, was as follows: — Whenever any measure shall he proposed before the Governor General of India in Council whereby the safety, tranquillity, or interests of the British possessions in India, or any part thereof, are, or may be, in the judgment of the said Governor General, essentially affected, and he shall be of opinion either that the measure proposed ought to be adopted and carried into execution, or that it ought to be suspended or rejected, and the majority in Council then present shall dissent from such opinion, the Governor General may, on his own authority and responsibility, suspend or reject the measure in part or in whole, or adopt and carry it into execution. He was far from saying that the Governor General had acted illegally in taking advantage of that clause; but it seemed to him to be exceedingly difficult to understand by what process of reasoning—considering the condition of finances of India, and the feeling on the subject which was entertained by the whole population of India, European and Native—the reduction of the import duties on cotton manufactures could have been construed as a measure " whereby the safety, tranquillity, or interests of the British Possessions in India "were so "essentially affected" as to require so great a strain on the Constitution. He contended that the power which had been given to the Governor General was intended by Parliament to be used only on the most important occasions; and if, upon any ordinary occasion, the opinions of those who were by law the advisers of the Governor General might be set aside, he looked, he confessed, with apprehension to what might occur in the future. A Secretary of State might, like the noble Viscount opposite (Viscount Cranbrook) have not been many months at the head of the India Office — a Viceroy might have arrived in the country on the very day before a question such as that to which he was now calling their Lordship's attention was brought before him—and it was very dangerous indeed, he thought, that the advice of the Council at Home should be passed by, and that a certain line of policy should, by order of the Secretary of State to the Viceroy, be carried into effect, while, at the same time, the opinion of the majority of the Council in India was overruled.

He wished that was all he had to say on the subject; but he regretted to have to add that in carrying out the measure to which he was referring, a strain appeared also to have been put on the law in India. On that subject he could quote the highest authority. Among the Members of the Viceroy's Council was one who had been appointed for his legal qualifications, and who was the Legal Member of the Council (Mr. Whitley Stokes). That gentleman was appointed by the present Government, and had no political opinions of which he was aware. Well, what was the view taken by that gentleman of the matter? The question was of so much importance that he should read to the House his own words. He said— Lastly, I object to the way in which the proposed change in the law is to be effected. The Viceroy, as I understand, intends to overrule the majority of his Council, and to make the proposed exemption by Executive order, in the Revenue Department, under Section 23 of the Sea Customs Act. Such an order is, no doubt, authorized by the terms of that section. But the Indian Legislature, in conferring on the Executive power to make such exemptions, never intended that it should be exercised so as to make suddenly a vast change in our law, affecting not only the importers and consumers of the particular class of goods dealt with, but the taxpayers of India in general—a change that will not only seriously diminish our present Revenue, but force the hand of the Legislative Council by compelling them to impose new direct taxation. The power to exempt goods from Customs duties was originally conferred by Act 18 of 1870, and was merely intended to relieve the Executive from the useless and troublesome formality of coming from time to time to the Indian Legislature to make in the tariff petty alterations which that Legislature, if applied to, would have made at once. The change now proposed is of a very different character. I have reason to think it would never be sanctioned by the Legislative Council, unless, indeed, arguments were brought forward in its favour far more cogent than those that I have heard. The proposed exemption of cotton goods, if made by a mere Executive order, will thus resemble what lawyers call a fraud on the power; and there is, unfortunately, no Court of Equity to relieve the people of India against it. That opinion, coming from the Legal Member of his Council, ought, he thought, to have had great weight with the Viceroy, and to have induced him to pause before he took the course which he adopted. Without discussing the merits of the measure, he contended that, from the first moment to the last, though no actual illegality might have been committed, the Constitution of India had been strained, the checks which had been placed by Parliament on the Government of India had been dispensed with, and sufficient attention had not been paid to the strong feeling of the Natives of India on a matter which, to them, appeared to be a departure from the system of government to which they had been accustomed, in accordance with which the interests of the people of India had always been held to be the paramount object with the Government of that country. He wished to add only a very few words more on the subject. He had observed, with very great regret, that the following Resolution had been passed by the other House of Parliament, at the suggestion, he believed, of the Chancellor of the Exchequer: — That this House accepts the recent reduction in these duties as an important step towards their total abolition, to which Her Majesty's Government are pledged. With the utmost earnestness, and with the strongest sense of responsibility, he must warn the Government against the danger of encouraging the passing of Resolutions like that, which prospectively affected Indian finance, and on the representations, too, of those who happened to be interested in a particular tax. If the interests of the people of India were to be considered, there were many taxes that pressed heavily on the people which ought to be remitted before the remission of the remainder of the cotton duty. There were export duties upon important articles of Indian produce which remained only because, up to the present time, the Government of India had, in consequence of the condition of finance, been unable to remove them. During the last few years heavy taxation had been introduced into India. There was a licence tax, to which even a man who earned but as. a-week was liable. If such Resolutions as that recently passed by the House of Commons were encouraged by Her Majesty's Government, a responsibility would be adopted by Parliament with respect to Indian finance which must be serious, and which might be disastrous to the Indian Empire.

He now turned, with pleasure, to another part of his task, in which he could cordially approve of the policy of Her Majesty's Government. There had been, as he had shown before, for some years past, a deterioration of the finances of India. One of the causes was the depreciation of silver, which had cost the Indian finances £7,000,000 more in the four years from 1876 to 1879 than in the preceding four years. That depreciation was beyond the reach or the province of the Government to remedy. The next cause was the military expenditure, which had increased by £6,500,000 in the same period. On the other hand, the Government had gained £1,500,000 by the sale of opium, and £2,000,000 from a great increase in the returns from the guaranteed railways. He thought the Government had adopted the right course in insisting that such a condition of things should be met by a vigorous reduction of expenditure; but it was essential that such reduction should include the military expenditure. The net expenditure upon the Army was estimated at £17,500,000 for the year 1879. The average net expenditure upon the Army in 1872-3-4-5 was £14,250,000. The increase of expenditure in that respect was, therefore, £3,250,000. Of that sum of £3,250,000, £2,000,000 represented the expenses of the Afghan War; so that, besides the war in Afghanistan, the military expenses had increased by £1,250,000. He saw no reason why, if the military expenditure were seriously taken up, the cost of the Army in India should not be reduced to the average expenditure of the years 1872–5. If such a reduction could be carried out— and he believed it could be—it would go a very long way towards placing the finances of India upon a sound and satisfactory basis, and, instead of there being a deficit, as there was expected to be this year, there would be a surplus. As to military expenditure, he adhered to what he had stated upon other occasions, that the British Forces could not be wisely reduced, and he did not see that any considerable reduction could be made in the Native Forces. It had been proposed to compel the Native Princes to reduce their Armies, and it was supposed that that reduction might enable the Government to reduce the Native Army of India. He should be glad to see the Armies of some of the Native States of India reduced —not that he entertained the slightest suspicion of the loyalty of the Native Princes of India, but because he objected to a waste of money upon military establishments. The maintenance, however, of those Forces, in almost every case, depended upon Treaty engagements; and the Government of India ought to adhere faithfully, under all circumstances, to the Treaty engagements they had entered into with the Native Princes. He was sure the noble Viscount the Secretary of State would find in the India Office suggestions that considerable reductions could be effected without impairing the efficiency of the Army in certain Departments—for example, in the Medical Service and the Ordnance establishments. He thought, moreover, that the expenses of the Head-quarter Staff of the Madras and Bombay Armies might be revised with advantage, without, however, amalgamating those Armies with that of Bengal. He approved of the proposal to reduce the expenditure on reproductive public works. But it was a mistake to suppose that the expenditure on those works had greatly increased in recent years, because the fact was that it had been less than before. A reduction in the expenditure on reproductive works might be effected with perfect safety, provided it were not done too quickly. He was not sanguine as to the possibility of making any large saving in ordinary public works, and he hoped the noble Viscount the Secretary of State would take care that reduction was not carried out too hastily, otherwise, for the purpose of securing a saving in the year, considerable loss might be incurred. He knew cases in which this had happened, and even compensation had to be paid to contractors in respect of postponement of works. Some reduction might be effected in the civil expenditure; but already there had been great economy in the civil expenditure. Between 1869 and 1876, the civil expenditure had been reduced, as Sir John Strachey had shown, by no less than £1,500,000. It was, therefore, a mistake to suppose that the Government of India had been extravagant with regard to civil expenditure, and that it required the control of the opinion of Parliament at home. The present Governor General had taken up, with great warmth and energy, the question of employing Natives more extensively in the administration. In 1870, the restrictions on the employment of Natives were removed by Parliament; and he (the Earl of Northbrook) had framed rules, which were approved by the Secretary of State, for carrying the intentions of Parliament into effect. He hoped to see the policy he had inaugurated carried further, and that many Natives would be employed, with the contingent advantage of some reduction of expenditure. He was one of those who thought there was nothing wrong in Natives of India being employed at lower rates of salary than English officials. They were not subject to the same expenses as officers coming from a distant country; and, therefore, their salaries might fairly be calculated upon a lower scale. If reductions were made in civil expenditure, it was desirable that they should not be confined to the lower branches of the Service, by cutting off a clerk here and a clerk there; but that the Government would look at the high officers, with large salaries, and see whether some reduction could not be made there. With the view of assisting the Government, as he was anxious to do in all matters relating to reduction of expenditure, he would suggest that the Government might begin so high as the Constitution of the Government of India. When he was Viceroy, the noble Marquess (the Marquess of Salisbury) added a Member to the Governor General's Council. The duties of the new Member were connected with public works. He (the Earl of Northbrook) did not consider that addition necessary, or, indeed, advisable. The able officer who had been appointed to the charge of the Department had now nearly served his five years; and it might be suggested now whether, at the end of the term, it was necessary to continue the appointment. If it was not, then there would be a saving of £8,000 a-year. There were other positions high up which might be well considered, and as to which advantage might be taken of the present pressure to get over local difficulties and jealousies which very often stood in the way of administrative reforms of the kind. He considered that it might be desirable to examine whether the expenses of the Governments of Madras and Bombay might not be reduced. The Governments of Madras and Bombay were maintained on a much more expensive scale than the Governments of Bengal, the North-West Provinces, and the Punjab, which were not inferior in responsibility and importance at the present time, when communication was much more rapid than formerly. He, therefore, invited the Government to consider whether a large reduction might not be made in the higher appointments connected with those Presidencies. But, while he considered that those reductions might be made, he did not consider that any reduction ought to be made in the pay and allowances of the officers of the Civil Service of India, who were doing the real work of the country. He meant the collectors and magistrates, upon whom the proper administration of India mainly depended. Their salaries were not too high, and their numbers were by no means too great. Looking at the reductions proposed by Her Majesty's Government, he believed, if they were firmly carried out, especially in the Military expenditure, both here and in India, Indian finance would be placed in a satisfactory position. He hoped the depreciation in the value of silver might before long be removed; and a slight alteration in the exchanges would make a considerable difference to the finances of India. Upon this subject he desired to express his entire and hearty approval of the conduct of the Government in respect to certain proposals which he understood were made for an alteration of the standard of value in India, for the purpose of giving an artificial value to the rupee in India. Knowing, as he did, the pressure put on Her Majesty's Government, and the great difficulties they had to contend with in this matter, he desired to express, not only his warm approval of the decision arrived at not to interfere with the standard of value in India, but his conviction that the Government deserved great credit for their firm action in this matter. It was probable that the result of that decision would be to have a favourable effect on the exchanges. He was, however, surprised that the Government had not taken off the duty now imposed upon the importation of manufactured silver into this country, which produced a paltry sum to the Revenue, but the removal of which might have increased the demand for silver, and have done something to keep up its price. He was not one of those who partook of the gloomy anticipations of some, for whose opinions he had great respect, with respect to the future of the finances of India. For himself, he believed that, with economy and care, if it should not be considered necessary to engage in any new wars, the finances of India would soon recover comparative prosperity. He based that view on reasons similar to those which induced Mr. "Wilson to entertain sanguine anticipations with regard to the finances of India when he went to India as Finance Minister after the Mutiny— namely, the steady progress of the trade of India.

Before sitting down, he desired to present a Petition from the Committee of the British Indian Association of Calcutta, which consisted of noblemen and gentlemen resident in Bengal. These noblemen and gentlemen included some of the most distinguished among the Native population. Several of them were Members of the Legislative Council of the Viceroy, or occupied positions of the highest importance. They prayed that the expenses of the Afghan War should be borne by this country, and not by India, and they dwelt at length on the circumstances connected with the subject. Under other circumstances, he might have felt it necessary to move that the Petition which he presented, together with other Papers, might be printed and placed in the hands of Members of their Lordships' House; but as the question was one which more particularly concerned the other House of Parliament, and for some further reasons, he would be content with moving that the Petition which he presented do lie upon the Table.

Moved, " That the Petition do lie upon the Table."—(The Earl of Northbrook.)


said, he had little to complain of in the address their Lordships had just listened to from the noble Earl, with whom he agreed very much in thinking that the finances of India were by no means in so desperate a condition as was represented by some persons both in and out of Parliament. He believed that both the wealth of the country and the circumstances that had led to the present depression were of a character that would ultimately and inevitably lead not merely to the establishment of equilibrium of Revenue and Expenditure, but also to the creation of the financial surplus necessary to provide against a recurrence of Famine. In regard to the Petition which the noble Earl had presented, he did not propose to go at length into a discussion of the questions with which it dealt. He might, however, say that it would, in his view, have been prejudicial alike to the interests of this country and of India if the cost of the war in which we had recently engaged with Afghanistan had been thrown exclusively upon England; it was, indeed, a war which affected India materially, though he would not say exclusively. If an account were taken of English outlay which arose from connection with India it would be found very large. He thought that, except in circumstances of the most extraordinary character, it would be desirable to keep the Revenues of this country and of India entirely separate; and he was bound to say, for his own part, that he considered that the English Government had done all that could be expected of them in making the large loan of £2,000,000 to India on the most favourable terms possible. This was a course which he believed, in the long run, would prove more advantageous to India than any other which could have been adopted. As to the question of silver, any discussion on that subject would scarcely be apposite to the Petition which the noble Earl had presented, inasmuch as he could not admit the intimacy of the relations which were supposed to exist between manufactured silver and that which was used in currency; and, therefore, he could not conceive that the small amount of silver plate imported into this country could have any appreciable effect upon the immense mass of silver in currency in India. He had strong doubts whether the difficulty which undoubtedly existed in reference to this matter of the exchanges could be effec- tually cured by means of the subtle, artificial, and empirical remedies which had been suggested in some quarters. If artificial means were adopted in a case of the kind, and the Government gained, the inevitable result must be to saddle some persons who ought not to bear it with the loss involved; and, therefore, for this, if for no other reason, a resort to such means ought to be avoided. He now came to a part of the case as to which there was hardly any difference of opinion between himself and the noble Earl. The noble Earl had gone into the wide question of retrenchment. He had suggested measures in regard to the Governments of Madras and Bombay. As to Bombay, it was one of the most important cities of India, and might be said to be connected with the beginning of our rule in India, and was, besides, the headquarters of a rapidly developing trade. Then, whether there might not be reductions in the Council and other official Departments, that was a proper subject for inquiry, and one which, no doubt, would be inquired into. Then, as to the Departments under the Governor General, he had anticipated the noble Earl's suggestion as to the Department of Public Works by expressing his opinion that the office should not be renewed when the tenure of the present holder expired, and that the Department should not be placed under the charge of a professional engineer. It was, undoubtedly, a proper consideration whether other economies could not be effected in the cost of the official Service and Departments in India; and he had himself suggested several ways in which such savings could be accomplished, so that he thought the House might make its mind easy that this branch of the question would not be overlooked by Her Majesty's Government. Their Lordships might also accept his assurance that the employment of Natives in the Public Departments, and also the question of productive works and works of an ordinary character, would not be lost sight of. It was, no doubt, essential that some reduction should be made; but that reduction must not be made too hastily, or as a mere question of present saving of money, without careful regard to future expenditure, lost that result might be brought about against which the noble Earl had warned them, and which would be injurious rather than beneficial. The Government of India was perfectly alive to the importance of that fact. He was very glad to hear the noble Earl say that he was opposed to an amalgamation of the three Armies. He (Viscount Cranbrook) believed there could not be a more disastrous thing for India than to make the three Armies into one. It would, indeed, be a fatal measure, the consequences of which at this moment they could not foresee. It was their imperative duty, however, to take care that each Army had a fair share of employment, and that it was placed in a position where honour and credit could be won whenever the occasion might arise. In regard to the other portions of the military question, the Committee had been already appointed, and would, he had no doubt, give them careful consideration. Though he did not expect there could be any reduction in the British Forces, as the noble Earl said, nor any great reduction in the Native Armies, there were still a great many subjects connected with military expenditure which might well be considered. As far as the Indian Army was concerned, he agreed in thinking that the troops employed in the different Presidencies should be kept apart as far as matters of management and otherwise were concerned. He now came to what was really the main part of the noble Earl's speech. The noble Earl commenced by saying that he was not going to make an attack on the conduct of the Governor General, or to impugn his action. He (Viscount Cranbrook) was perfectly aware that the observation must be taken cum grano saltis, and his impression received an immediate justification when the noble Earl proceeded to animadvert strongly upon the course of policy which had been pursued by the Government in reference to the cotton duties. Now, in respect to the comparison of the four years with which the noble Earl commenced his speech, there was very little to be said. The main difference between this year and those is a greater Famine expenditure, and a larger amount of loss by exchange. A great deal had been done in recent years with respect to alterations in finance. Now, in the Financial Statement of the present year would be found a quotation from the Financial State- ment of last, which showed that at that time the Indian Government had already determined that there should be no protective duties wherever they could remove them. Instructions were given by his noble Friend (the Marquess of Salisbury), as early as 1874, that the cotton duties should be taken into consideration; and in a despatch, dated May 31, 1876, his noble Friend said— With regard to the question as it affects consumers or producers, I am of opinion that the interests of India imperatively require the timely removal of a tax wrong in principle, injurious in practical effect, and self-destructive in its operation. The tendency of the tax was to give an absolute monopoly to India, and it was because there was growing up an artificial protective system that it became necessary there should be some interference. If, as seemed probable, that protection excluded certain classes of goods, the duties would fall off and abolish themselves. The sugar duties had already been abolished — a step to which no one had taken exception. With respect to the salt duties, to which reference had been made, he hoped the period would soon arrive when we should be able more thoroughly to equalize them, and to reduce them to that amount which all Indian financiers had looked forward to as the final result. At present the changes worked well, and there was an increasing demand where for the vast majority they had been lowered, and no falling off where for the minority they had been increased; and he hoped that the time was not distant when all would be fully and cheaply supplied. The noble Earl had objected to the time and manner in which the protective duties upon cotton of which he spoke had been reduced. He must recall to his noble Friend's recollection what had been done. In 1876 it was impressed upon the Government of India, in language quite as strong as that he had already quoted, that they should take the earliest opportunity of removing by degrees the taxes upon the import of cotton; and in 1878 a tentative step was taken in that direction, as regarded certain of the coarser goods, by reducing the duties on those articles. This was done with the full consent of the Council and of the Secretary of State, and was in conformity with the opinion of his noble Friend, which he had already quoted. The tentative measure to which he alluded was, no doubt, a very small one; but it would, it was thought, have reduced the duties by some £40,000 a-year, and it was supposed to meet the most oppressive part of the case. But what was the result? It satisfied nobody; it gave offence in India, and it did not meet, to any extent, the complaint in England. In the beginning of the present year a deputation came to him (Viscount Cranbrook) from Lancashire on this subject. It was a very large deputation, and, as indicating its character, he might mention that its spokesman was an advanced Liberal. The deputation expressed, in very forcible terms, their opinion of the protective duties of which they were speaking. He (Viscount Cranbrook) gave the members of that deputation no further encouragement than had been given by his Predecessor; but promised, as had been clone before, to urge the same policy, leaving India to take the initiative. Not long after that he received a telegram from India, asking whether, if the Viceroy overruled his Council on this point — as regarded a reduction of the duties—the Government at home would support him? He consulted with his Colleagues, and telegraphed back that they would support him. Their Lordships must remember that the policy which was thus sanctioned was no new policy, but a policy which had been adopted by the Council; it was a policy enforced by his noble Predecessor (the Marquess of Salisbury), and the Government of India had practically taken the initiative with respect to it. "What had been done last year, however, resulted in failure; and as protective duties continued to exist, tending more and more to exclude English manufactures from India, it might be with some the policy of this country to allow India to set up a protective system to the detriment of the manufactures of England; but he could not describe it as a wise policy. If we had Free Trade in England, he thought we had a right to ask for Free Trade in India. We took into consideration the state of manufactures in this country, and we could not disguise from ourselves that masters and workmen felt irritated at the fact that mills were closed or working short time, believing that it was wholly or partly an effect of the protective system in India— and when we were asked whether the Government would support the Viceroy in carrying on a policy, long ago decided upon, we at once said that we should do so; and he believed that course to be in harmony alike in the interests of England and of India. It had been said that the remission of these duties was an injudicious measure in the present financial condition of India. But in regard to the financial condition of that country we must look, not only to the present state of India as regarded finance, but to her past and future. The past, as he had already said, had been most materially affected by the condition of exchange—which, in its turn, very injuriously affected the trade of importation into India. That condition got worse and worse; and it was only on account of that fact that a surplus was prevented this year. That being so, the Viceroy in Council came to the conclusion that the time had come when these protective duties, which were pressing against imports, and coddling, as he might say, an industry which ought, and he believed could, support itself without artificial aid in India, ought to be got rid of—or, at all events, that the most strongly protective part of the duties ought to be removed. They created in that country a fictitious value on cotton goods, and it was distinctly in the interests of the vast consuming populations of India that the duties should be reduced. "When he was told to look at the protests of Members of the Governor General's Council which had been presented to Parliament, he could not help reading between the lines, and fancying that these gentlemen—or, at all events, some of them—were Protectionists. The manufacturers of Lancashire asked only for fair play, and that was the principle upon which we had acted. Mr. Stokes, who opposed the step taken by the Viceroy, said what was equivalent to this—-that by the remission of the cotton duties the Manchester manufacturers would, in the absence of competition, be able practically to compel the people of India to buy cotton goods adulterated more shamefully than at the present time. He went on to say that it was an imaginary protection; but he added that if it was taken away the result would be the destruction of a local industry. Such language was hardly calculated to decrease the irritation in Lancashire, which was charged with desiring monopoly. Well, but was a monopoly in Manchester worse than a monopoly in Bombay? What was asked for England was nothing more than fair play. Bombay might send goods to England without paying duty; and yet England, which legislated for India, was not to have the right to say that India should not use protective duties, and that to the detriment of her own consumers, who were, for the most part, poor people. But he was told that all the people of India were against what had been done. The noble Earl opposite (the Earl of Northbrook) would not deny that there was a time when the people of England were opposed to Free Trade. For his own part, no one more heartily wished and prayed that India might increase and prosper in all her industries—as she deserved to do—by means of the earnestness of purpose and the ability shown by many of her children. They ought not, however, to favour her unduly in her competition with England. The Government, he contended, were perfectly justified in the course they had adopted, because the loss in the matter of exchange was really the impediment to a surplus, and was itself working so as to be almost prohibitory of the export of our manufactures. But it was said that the change was made, if not in an illegal, in an unconstitutional manner. Such was not the opinion of Mr. Stokes, who said that the change was authorized by the Act, although he added that it could not have been within the intention of the Legislature. It was a step which was by no means new, for it had been commenced last year by the Governor General in Council, and, in carrying it further, the Viceroy had acted within his power. With respect to the Council at Home, he (Viscount Cranbrook) did not commit them in any way by the answer he had telegraphed to the Viceroy. The noble Earl would find that the Budgets were almost without exception always made in India. They were sent to this country for the consideration of the Secretary of State in Council; and the question now raised would come before the Council, who would have a full opportunity of expressing their opinion in reference to it. Then the noble Earl referred to the Resolutions of the House of Commons. But the noble Earl must know that that House, by an almost unanimous vote, supported the course taken by the Government, What they had done had been practically condoned by the House of Commons. They had not only said that the Government commenced well, but they urged them to go further in the same direction. Then, as to another point which had been referred to—his own conduct in communicating with the Viceroy without the advice of his Council —there was a Return on the Table of the House, moved for by the Duke of Argyll, who was not then present, and which showed the view the noble Duke had taken as Secretary of State. It would be absolutely impossible to carry on the government of India if the Secretary of State was not to be at liberty to communicate privately, by telegram or otherwise, with the Viceroy of India. What were his Council? They were not a Cabinet selected by the Secretary of State; and was the Secretary of State to reveal to them the secrets of the Cabinet at Home? It would be impossible to carry on business in that way. He thought he had met all the objections put forward by the noble Earl. It was admitted by the noble Duke that the Viceroy was within his right in the step ho had taken. He would have been within his right even if he had made no communication to the Government at Home; but it was only reasonable that he should ask the Government at Home whether they would support him in a measure which he felt to be one of high policy, and which was necessary in the interests of India. Her Majesty's Government told him that he might rely on their support; and in sending the telegram to the Viceroy, he (Viscount Cranbrook) had acted in conformity with a usual and necessary practice, and he had the authority of the most eminent Legal Member of the Council (Sir Henry Maine) to that effect. He would not go into the question as to taxes, which might, as was said, with greater advantage have been repealed. He quite agreed that export duties were very objectionable. That observation applied, of course, to the export duty on rice; but the effect; of that particular duty on the trade of India might be said to be nothing whatever. India had a monopoly so far as the trade in household or table rice with this country was concerned. To have, abolished that duty would not really have affected the trade in any way. He was much indebted to their Lordships for the patience with which they had heard him while he endeavoured to deal with a dry, though very important, subject; but he thought they would say that the course adopted by the Government was one which was taken in the interests of our great Indian Empire, and not only for the advantage of the manufacturing interests of this country.


who was very imperfectly heard, was understood to say, that the deficit in the Indian Revenue for the last three years had been upwards of £3,000,000, and, adding to this the expenditure on reproductive works, the deficit was brought up to about £7,000,000. When the extreme poverty of the people of India, and the fact that a large portion of the country was liable to severe Famines, were taken into account, it could not be doubted that the burden of taxation was very great. It was of the greatest importance that they should endeavour to make the two ends meet; and, therefore, he thought the reduction of the cotton duties was an imprudent step, having regard to the financial straits of India, and the difficulty of meeting new emergencies by new taxation. It would be easier to raise £20,000,000 in England than £2,000,000 in India. Considering how much India was dependent on agriculture, and how small her trade compared with her population, it seemed to him that the financial perils of India were great, and that the most careful and economical administration was required to obviate them. With regard to the reduction of the cotton duties, the promise held out to those who clamoured for the remission was that it should be made when the finances of India were in a condition to bear it; but that time had certainly not come, and he thought the Governor General ought not to have gone out of his way to anticipate the decision of Parliament on the subject. It was a vital question whether the Secretary of State should have the power of carrying on the business of the government of India without consulting his Council. His opinion was that, by the Act of 1858, the Secretary of State for India was bound to consult his Council on all questions concerning India, save those which were expressly excepted by the Act; and compliance with this prin- ciple was of vital importance for the government of India. After the considerable experience he had had, having served under no less than five Secretaries of State, he regarded this as a vital question; and he deprecated the course taken by the noble Lord (Viscount Cranbrook) in concealing from his Council the decision arrived at with respect to the reduction of the cotton duties. Referring to the Afghan War, he (Lord Lawrence) must express his opinion that as it had been undertaken as much to maintain the honour and prestige of England as in the interest of India, this country was bound to bear her due share of the expenses of the war. A precedent was to found in the Persian War for what ought to be done in respect of the Afghan War. He approved of the changes which had been made in the salt duties, which still amounted to thirteen times the cost of the article, and pressed heavily upon the millions of India. But the import duties on cotton goods fell mainly on the richer classes, who were the chief buyers of the finer goods made in England, so that the remission was no relief to the great mass of the people, who wore the coarser goods made in India. He was glad the Government had not attempted to interfere with the currency. Any step in that direction might be attended with serious, not to say disastrous, consequences. He could not but approve the determination of the Government to introduce a strict economy into the Administration of India —but that policy required to be carried out very prudently. He did not think, for instance, it would be wise to reduce the Army in India by a single man; but the greatest care should be taken in the selection of the men who were to serve them.


said, the noble Viscount the Secretary of State for India had very ingeniously devoted a great portion of his speech, not to answering the arguments of his noble Friend the late Viceroy (the Earl of Northbrook), but to replying to those who advocated protectionist theories. Now, he had not a word to say in favour of those theories; and his noble Friend, he was sure, shared his views in that respect. But as to the question before the House, he thought it might be summed up by a reference to the Resolution which was passed by the House of Commons in 1877, in accordance with what then ap- peared to be the policy of the Government. That Resolution, as amended at the suggestion of Lord George Hamilton, who was then Under Secretary of State for India, was to the effect that the changes with respect to the cotton duties should be made " so soon as the financial condition of India will permit." It was then admitted, on the part of the Government, that it was desirable the cotton duties should be abolished as speedily as might be; but it was pointed out that they were not prepared to impose new taxes for the purpose, or to run the risk of creating a deficit. Now, that being so, the question between his noble Friend (the Earl of Northbrook) and the Government was whether the state of Indian finance at the present time was such as to justify the remission of the cotton duties? He found, in the Budget Resolution of the Government, the position of affairs in India described as being such that it was extremely difficult to follow any settled financial policy, for that the Government could not even approximately say what income would be required to meet the necessary expenditure of the State. Now, for some reason or another, no explanation had been given by the noble Viscount, or, as far as he knew, by any other Member of the Government, as to why they had made so material a change in their policy between 1877 and 1879, as to abandon the wise and statesmanlike course of making the remission of the duties when the finances of India would warrant them in doing so, instead of making it at a very inopportune time and in the very hasty manner which had characterized their action in the matter. He could not, he might add, concur with the noble Viscount in thinking that it was a proper course for the Secretary of State to take to commit himself beyond the power of withdrawal to a particular policy before consulting his Council with respect to it. The noble Viscount appeared to forget that they had distinct and definite functions as regarded expenditure to discharge, and that they were in that respect, at all events, not merely his advisers. The Government of India was, of necessity, in the nature of a despotic Government; but it was highly desirable that its rule should be as little arbitrary as possible. He was convinced that nothing could be more dangerous or more fraught with mischief to the good government of India, than the adoption of any course which would tend to weaken and remove those checks which had been imposed upon arbitrary action on the part of the Secretary of State or the Governor General by the provisions of the Acts of Parliament.


said, that he certainly did not want to prolong the discussion in the present deserted state of the House; but he had one consolation—that he believed that this was an overflowing audience compared to that which had listened in " another place " to the discussion on the same subject on Tuesday night. He must be permitted to say that throughout the discussions on this subject, both there and in that "other place," the noble Marquess (the Marquess of Ripon) and his Friends had appeared in a very curious light. After having been all their lives, and during a long period of history, vigorous supporters of Free Trade, they no sooner found that the doctrines of Free Trade were being applied by their political opponents to our great Indian Dependency than that they became vigorous Protectionists. The results of this action on their part might not be so small as usually attended the freaks of political Parties in this country. It might be all very well for a Party to take up a decided opinion today and drop it to-morrow—people in this country knew the value and meaning of doctrines taken up for the moment by Parties, and dropped when they had served their purpose; but how would foreign nations and our great Dependency, who were not versed in the usages of our Constitutional Law, interpret the phenomenon? Much of the discontent of which they had heard had been raised by the language of those very persons when, three years ago, he had endeavoured to introduce Free Trade into India. He deprecated these violent evolutions inpolicy—these changes of opinions on the part of the noble Marquess and his Friends when they were in Opposition, as contrasted with those they held when they were in Office. In this case the Governor General overruled his Council. Nobody doubted that he had a strict legal right so to do; but it had been disputed whether he had a Constitutional right to overrule his Council, and whether it was one of those occasions contemplated by Parliament when it invested him with that power. What would naturally be the object of Parliament in placing such a power in the hands of the Governor General upon all subjects where the Councillors were to be trusted? There would be no need to give the Governor General such a power upon all matters where their intelligence had fair play, and when they were unbiassed by any Party passion or any theoretical prepossession. On such questions the Councillors might be safely trusted, and there would be no reason for giving the Governor General power to overrule them. But if there should arise a case where they were hopelessly wrong, or where they were affected by some heresy, or biassed by some prejudice, which this country had earnestly repudiated, the special Representative of English statemanship, as opposed to the Indian statesmanship, ought to be armed with power to overrule their error; and such a case had arisen in the present instance. The Governor General, who represented Indian, and not English, statesmanship, wisely thought that the time had come when this weapon, placed in his hands by the prevision of Parliament, ought to be used and exercised—and he exercised a legal power which he undoubtedly possessed. The noble Lord who spoke last but one (Lord Lawrence) had discussed the question of how far the Indian consumer was interested in the reduction of these duties, and had said he could have no interest whatever, because he did not use English cloth, but Indian cloth. A rudimentary knowledge of the controversy which raged 30 or 40 years ago would be sufficient to dislocate that argument. The price of Native cloth used by the Indian peasant depended upon the amount of competition to which it was exposed; and the amount of that competition depended upon the freedom of the ports through which that competition could enter; and in proportion as that competition was withdrawn from the markets, the Native manufacturer was enabled to charge a higher price. He thought they had all agreed upon this subject 20 or 30 years ago. He supposed there was no doubt whatever that the interests of enormous numbers who consumed cotton goods in India would out-weigh any other interest that could be brought into competition with it. The Indian peasant had two main wants—food and clothing. The Indian peasant's clothing was, he believed, entirely of cotton. Those who desired to cheapen the price of clothing to the Indian peasant were not wholly unworthy of the sympathy of those who, 20 or 25 years ago, desired to cheapen the food of the English peasant. The two cases seemed to him very similar in their operation. It was said that the duty of 5 per cent was not a large one; but that would not appear as a very strong argument to those who remembered how bitterly the project of the shilling duty on corn was opposed in the controversies at the beginning of this generation. Discussing the question from the producer's point of view, he would observe that there was one consideration to which sufficient attention had not been paid. If England and India were two foreign countries dealing with each other, he supposed that, according to the philosophy of the present day, they would make Treaties of Commerce; and if, 30 years ago, England had made such a Treaty with India, she would have proposed to remove her corn duty on condition that India removed her cotton duty. The corn duty, which limited the access of Indian corn to our markets, had been removed. In every part of England the effect of that removal was felt. Every market in this country and every farmer felt, in some degree or other, the effect of the cheapness of corn at the present time. If the question were regarded from a producer's point of view, instead of looking at it, as we generally did, from the consumer's point of view, he had a right to pit the interest of the English farmer, in excluding Indian corn, against the interest of the Bombay millowner in excluding English cloth. As appeared plainly from the despatches laid on the Table of the House, it was not economical considerations which weighed chiefly in his mind when he urged this matter upon the Government of India. The condition of India and England, working well together in that alliance which Providence had destined for them, depended much more upon the agreement of the peoples than upon the policy which the Government might pursue. It was a matter of capital importance that no subject of bitter antagonism should exist between large sections of two com- munities. He asked any man, who doubted as to removing these duties, these two questions — was it not of vital importance that this cause of quarrel should be removed; and, if it was of vital importance, how was it to be removed? Nobody would dream that it could be removed by maintaining a permanent duty. In the long run, the line contended for by the Lancashire manufacturers was founded on sound policy; and, therefore, the only durable and safe solution of the controversy was to act upon their view. He felt that this was not an occasion to enter largely upon other matters discussed in this debate, and he should not speak on the question whether India ought or ought not to bear the burden of the Afghan War. He would only say this —that if England was to share with India everything in which Indian interests were mainly concerned, the converse, at least, must be true, and India must share every warlike undertaking in which English interests were a foremost and essential consideration. If they were to carry this out and go back to the Crimean War, they would find that England had paid far more than her share in the costs that ought to be borne in the common partnership. It appeared a sound principle, that where the war was waged for the interests of India alone—where the object of the war was to keep the Frontier of India clear—India should pay the cost. Any other doctrine would introduce a system of perpetual application to the English Treasury, disastrous not only to English solvency but fatal to Indian thrift.


rose to say a few words in reply, when—


said, there was no Motion before the House, and, therefore, the noble Earl could not reply.


said, though he had been a long time in that House, he did not remember a case in which a noble Lord who had introduced a subject raising an important discussion had not been allowed the privilege of making a few observations in reply.


said, the Rule of both Houses was that only a noble Lord or hon. Member who moved a substantive Motion had the privilege referred to.


reminded the noble and learned Lord that he had concluded with a Motion; but he would not further engage the attention of their Lordships.


said, he would not take upon himself to say what reply his noble Friend might have made, if he had been permitted to reply at all. But he would himself venture to make one remark on the speeches of the Secretary of State for India and the Foreign Secretary, which he was sure his noble Friend would not have omitted. Both those noble Lords had justified the action of the Governor General in overruling his Council, not on the ground of any special Indian interests, but altogether on grounds of general British policy; that was, on the policy of Free Trade, and the policy of avoiding causes of difference between British industry and the Government of India. He would put it to the common sense of any man, whether this was not distinctly to set aside the spirit and substance, if not the letter, of the Act of Parliament, which gave the Governor General the power of overruling his Council only on grounds specifically and expressly Indian? If the general policy of Free Trade could be pretended to be such a ground, he did not see what other reason of European policy might not, with equal plausibility, be alleged to be so.


said, the remarks made by his noble and learned Friend showed the great inconvenience of the course taken by the noble Earl who introduced this discussion. The noble Earl placed this Notice on the Paper— To call attention to the condition of the Finances of British India, and to present a Petition from the Committee of the British Indian Association of Calcutta. If the noble Earl believed, or if the noble and learned Lord believed, that the Viceroy had not conformed to the Act of Parliament, and if they considered that in acting in opposition to his Council the Viceroy had violated the Act of Parliament—and a greater violation of an Act of Parliament than that suggested by his noble and learned Friend he could not conceive—it was the duty of the noble Earl or the noble and learned Lord to introduce the subject and challenge the action of the Viceroy. If they had done that, they would have raised a clear issue; but it was not in a meagre House that such a question should be raised, and thrown out as a statement which could not be controverted. He was prepared to controvert it. If the noble and learned Lord was prepared to maintain the opposite, let a Motion be placed on the Paper of their Lordships' House, and it should be met.

Petition ordered to lie on the Table.