EAST INDIA LOAN BILL. (Hansard, 30 June 1898)

*THE UNDER SECBETAEY FOR INDIA (the EARL OF ONSLOW)

My Lords, the Bill that I have to ask your Lordships to give a second reading to is of a similar character to many other Bills which, during the last quarter of a century, have received the approval of your Lordships' House. In 1874 a similar Bill, which enabled the Secretary of State to borrow £10,000,000, was passed by Parliament. In 1877 a Bill was passed to enable the borrowing of £5,000,000; in 1879, to enable a further £5,000,000 to be borrowed; and in 1885, for a further £10,000,000. On the last occasion the Bill was introduced by the noble Earl opposite, who was then Secretary for India, to enable the Secretary of State to borrow £10,000,000. On that occasion there was in this House a considerable discussion on the question of the currency in India. I am glad that to-night it is not necessary for me to enter upon that thorny and difficult question, because, in the first place, a Committee is at this moment considering the proposals which have been made by the Government of India in that direction; and, in the second place, because this Measure has nothing whatever to do with the question of currency. The Secretary of State has given a pledge that none of the money to be raised under it shall be applied to the promotion of currency proposals. My Lords, there are three objects for which this Bill is introduced. The first is that very satisfactory one which, owing to the increasing reduction in the value of money, has been made use of by many States and many Corporations who are in the enjoyment of credit—I mean for the purpose of reducing the amount of interest which is paid upon their loans. In August of this year £3,000,000 of 3¼ per cent. Indian Debentures will mature, and it is proposed to repay those debentures and to borrow the money at 600 a cheaper rate. There have also been £384,700 of Railway Debentures paid off, which bore interest at 4 per cent., and which will be replaced by debentures bearing a lower rate of interest. The home net expenditure of India is estimated at £16,286,500, and it is proposed out of this loan to utilise £286,500 for the purposes of that expenditure, drawing from the Government of India for the £16,000,000. It is proposed to raise at once an amount of £6,000,000, and the expenditure which I have already indicated will absorb £3,671,000 of that amount. The balance will be expended in remunerative enterprise—in the construction of railways. I think that that is an expenditure which will meet with your Lordships' approval, because, in addition to the expenditure in wages, which is involved by the construction and maintenance of railways in India, the provision of easy communication between different parts is one of the most highly valued works the Government can introduce. My Lords, there is one penalty, if I may use that expression, which India has to pay for the system of Government under which she lives at this time, and that is that owing to our administration those dread calamities of pestilence of famine, which used to decimate the population and devastate the country no longer do so to anything like the same extent, with the result that the real problem for Indian statesmen now is, what are we to do with the rapidly increasing population of India? I believe, my Lords, that in no other way can that be dealt with so satisfactorily as by increasing the means of communication between different parts of India. During the time of the late famine some 829,000,000 of units—that is to say, one person for one day—were relieved by the Government of India, and I think for the first time in the history of India, when a famine occurred as widespread as the one of the past three years, we can say that in every case the grain that was wanted for the sustenance of the population was to be found at the spot where it was most wanted. This was due to the improved means of transport by rail. But these are not the principal objects for which this Bill is introduced. The principal object is that the Secretary for India may have a reserve of borrowing power in case 601 of emergency. In the beginning of 1897 there remained under the Bill of the noble Earl opposite borrowing powers to the extent of £9,900,000. A telegram received from the Viceroy stating that, owing to a temporary failure of revenue and heavy famine advances, the drawings of bills on India must be cheeked, rendered it necessary in January, 1897, to borrow £1,000,000 on India (sterling) bills, leaving the borrowing powers at £8,900,000. The Budget of March following announced that he would issue stock to the extent of £3,500,000, and a further sum of £1,000,000 on sterling bills would be borrowed, the Government of India balances not admitting of more than £13,000,000 being remitted from India. The stock was issued in May, thus reducing the borrowing powers of the Secretary of State to £5,400,000. On the 3rd of August the Government of India telegraphed that their balances were most insecure in the face of the famine and possibilities of war, and it was arranged to strengthen them by purchasing a crore of rupees of drafts on India. On the 31st of the same month, however, the Viceroy again telegraphed that there should be a further restriction of the drawings, and on the 1st of September the Secretary of State announced that the sale of bills would be suspended for 10 weeks. It was eventually not found possible to resume them at all till the 15th of December last year, and not freely till February, 1898. To strengthen the Home Treasury, sterling bills were issued for £2,500,000 on September 14, 1897, and £2,500,000 on November 29, 1897, thus reducing the borrowing powers to about £400,000. As Parliament rose on August 6, you will see that unless the borrowing powers of the Secretary of State had chanced at the same time to be largely unexhausted grave consequences might have arisen, for it is difficult to see how it would have been possible to have avoided summoning Parliament to authorise the Secretary of State to borrow further money, a course which would have been fraught with much misunderstanding, and would have led to the idea that the financial situation in India was very much more serious than in reality it was. That, my Lords, is the third reason and most important reason why I ask your 602 Lordships to give a Second Reading to this Bill, in order that there may be reserved to the Secretary of State the power to borrow in case of emergency. It is not intended at the present time to add to the existing debt of the Government of India more than £2,615,000. When it is remembered that the additional burden on Indian revenues during the last three exceptional years amounted to the enormous sum of Rx.24,000,000, and that no less than Rx.18,000,000 of this has been met out of ordinary revenue, I think your Lordships will agree with me that the finances of India are in a fairly stable condition. That is no doubt largely due to the fact that there has been a marked rise in the exchange value of the rupee. This shows a degree of stability which contrasts not unfavourably with this country in times of adversity, for whereas in times of adversity the revenue of England is less stable, the revenue of India is as stable, or almost as stable, as it is in times of prosperity. I hope that, under the circumstances, your Lordships will see that this is only a Measure of ordinary Indian finance, and that you will not hesitate to give it a Second Reading. It is important that notice should be given early in the month which begins to-morrow, in order that the necessary arrangements may be made, and therefore I propose, so as to obtain the Royal assent to this Bill as soon as it has passed your Lordships' House, to ask your Lordships to suspend the Standing Orders to enable the Bill to be passed through all its stages at this sitting.

THE EARL OF KIMBERLEY

My Lords, I entirely agree with the closing observation of the noble Earl, that this may be regarded as an ordinary Measure of Indian finance. As the noble Earl pointed out, it has, from time to time, always been found necessary to take power for the Secretary of State to borrow certain sums of money, and I think it would be perfectly obvious that it would be in the highest degree unsafe and impolitic to leave the Secretary of State without sufficient power to borrow money in case of emergency. I therefore entirely agree with the principle of the Bill, and I cannot see any possible reason why your Lordships should not pass it immediately, as the noble Earl 603 proposes. I wish, however, to say one word with regard to two or three of the remarks made by the noble Earl. I was very glad to hear him repeat the pledge given in the other House that no part of this money will be applied to the proposed reform of the currency. With regard to the money which is to be applied to the creation of new railways, I am not at all prepared to object to a moderate sum being spent in that manner. There is not the least doubt, as the noble Earl said, that it is of the highest importance that the railway system of India shall be as far as possible extended. At the same time I would point out that there is considerable difference between the application of money out of this loan, which would be a gold loan, for the purpose of constructing new railways, and the operation of the Indian Government, which has been going on for a considerable time, of spending money out of the revenue of India for the purpose of making new railways. The difference I mean is this: it is obvious that, unless for very good reasons, it is undesirable to increase the gold liability of the Government of India. It is those gold liabilities which create the main difficulty which has placed us in the present embarrassment as regards currency. I should deprecate any very large borrowing in this country of gold loans for the reason which I have stated, even for the purpose of extending railway communication. The noble Earl said it was upon the extension of the railway communication that the increased prosperity of India would depend, or largely depend, and the extremely difficult problem which is caused by the rapid increase in the population would be met. Railways are only one of the means which can increase the resources of India, and tend to meet the difficulty, and there cannot be a doubt that amongst the difficulties we have to contend with which bear upon this question is the difficulty of currency. There is no doubt as to the stability of the currency in India, but the difficulties which have arisen with regard to it tend very largely to prevent the investment of English capital in India. I do not think there is anything, not even the extension of railways, which is of such supreme importance as that we should be able to induce a permanent and continued flow of English money 604 into India. Until we do that I do not think we shall be able to develop the resources of that great country with the rapidity and certainty which we all desire. I make that one observation, because I think there are other matters which require equal attention to railways. I do not see the slightest objection to the Bill passing into law.