HL Deb 10 July 1903 vol 125 cc272-301

, who had given notice "To call attention to the position of India with regard to the proposal before the country for the arrangement of preferential tariffs between the United Kingdom and the rest of the British Empire, and to ask His Majesty's Government whether our commercial relations with India form part of the inquiry upon which they are engaged, and if any correspondence has passed with the Government of India on the subject," said: My Lords, His Majesty's Government have expressed their desire that Mr. Chamberlain's plan for preferential tariffs for the Empire shall be fully discussed. I therefore beg to be allowed to put forward some considerations in respect to its application to India. No one can recognise more fully than I do the value of Mr. Chamberlain's services as Secretary of State for the colonies, or the weight which attaches to his opinions upon colonial questions. I must, however, beg to observe that his attention seems to have been directed exclusively to the colonies, and that in his speeches announcing and defending his proposals he has made no reference whatever to the foreign possessions of the Crown, of which India is incomparably the most important.

I have no desire in the slightest degree to depreciate the importance of our trade with the colonies, but I am bound to point out to your Lordships that our trade with India is at least as important. The whole trade of India has reached the value of £173,000,000 sterling. In 1901, the value of the exports from the United Kingdom to India was £35,000,000—a sum equal to the value of our exports to Australia, New Zealand, and Canada together. The question of the trade of this country with the colonies was referred to in a passage in a speech made by Mr. Chamberlain at the Constitutional Club, which was quoted to your Lordships the other night by the noble Duke the Leader of the House, and it may be interesting to know what the figures really are. The last statistical abstract of the trade of the United Kingdom shows that the declared value of the exports of British and Irish produce in 1901 was £280,000,000 sterling. Of this, £175,250,000 were taken by foreign countries, and £104,750,000 by British possessions. Of the latter, about half was taken by the self-governing colonies. In round numbers, the figures were—Australia and New Zealand, £27,000,000; the Cape and Natal, £17,250,000; and the North American Colonies, £8,000,000; giving a total of £52,250,000. The remainder—£52,500,000—was taken by other British possessions, and of this India took £35,000,000. India, therefore, took one-third of the whole trade with British possessions.

It cannot be denied then that India holds an important position in the commerce of the Empire, and that her interests should not be overlooked, as hitherto they appear to have been, when such great changes as those proposed by Mr. Chamberlain are put before the country. A circumstance connected with the position of India must not be lost sight of. The Customs tariff of India has for the last five and twenty years been framed upon the same principles as that of the United Kingdom — namely, upon what are commonly called free trade principles. Slight duties upon imports have been imposed, but for revenue purposes only, and not to protect Indian manufacturers. An ad valorem duty of 5 per cent. is levied upon what are called general imports; 3½ per cent. upon cotton manufactures, with an equivalent Excise upon the produce of Indian cotton mills; commodities which are useful for the development of the resources of India are admitted at a duty of 1 per cent., or free; while, as with us, special rates are put upon spirits and other liquors, with a corresponding Excise upon Indian products of a similar kind. It has for a long series of years been held by Indian financiers, and notably by Sir John Strachey and Lord Cromer, that the condition of the people of India and her financial interests call for the freest practicable interchange of her products with the rest of the world. The Government of India, in 1882, when Lord Cromer was financial member of the Council of the Governor - General, under my noble friend Lord Ripon, took off all Customs duties upon the general imports, and they were only reimposed owing to the financial difficulties which occurred in 1894.

The trade of India has flourished under this system of free trade. The value of her sea-borne commerce with the world, which received a considerable impetus from the tariff of 1875, by which the import duties were reduced from 7½ to 5 per cent. and most of the export duties were taken off, has increased from £104,000,000 to £164,000,000 since that time. Her manufactures have very largely increased. There are important manufactures of the coarser qualities of cotton yarn and piece goods. Jute manufactures have sprung into existence, and now form an important part of Indian exports. In 1876 only four millions of yards of jute cloth were exported from India; in 1901 the quantity had risen to 365,000,000 of yards. In 1876 24,500,000 of pounds of tea were exported; in 1901 the exports were 192,000,000 of pounds. Sir E. Law, the Financial Member of Lord Curzon's Government, said in his Budget statement of last March that he anticipates a further development of Indian industries. This progress of Indian manufactures is not due to protection. The 5 per cent. duty upon imports, although it may have some slight protective effect, cannot be sufficient seriously to interfere with competition from outside. The progress of Indian manufactures is due to the natural advantages possessed by India, and is the more satisfactory because it rests upon a sound basis.

While the trade and manufactures of India have flourished under free trade there is no ground for complaint as to the effect of the Indian tariff upon the trade of the United Kingdom with India. We hold a commanding position in respect of the imports of India from Europe and the United States of America. The trade of India with Asia and Africa may be put out of consideration in this connection, for it consists of commodities which we do not produce. Taking the most important of our imports into India—namely, cotton yarn and manufactures — their value in 1902 was £20,500,000 while the value of the same commodities imported into India from the rest of Europe and the United States together was considerably under £1,000,000. The price of cotton manufactures has fallen considerably of late years, but a comparison of the quantities of the piece goods which are measured shows that the quantity imported into India from the United Kingdom has nearly doubled since 1876. In that year 1,166,000,000 yards were imported, and in 1902 2,154,000,000 yards. The quantity imported from all other countries in 1876 was 20,250,000 yards, and in 1902, 35,750,000 yards; so that there has been an increase of about 1,000,000,000 of yards in the imports of our cotton manufactures, and of only 15,500,000 of yards in those of all other countries. Lancashire has more than held its own in supplying India with the finer qualities of cotton goods, while India has increased her output in the coarser qualities which are manufactured from the short staple cotton grown in India.

The condition of the trade of India having been so healthy under free trade, I ask, why should there be a change? But as Mr. Chamberlain advocates a system of preferential tariffs for the Empire, I will try to show what its effects would be upon India. I have already pointed out that India treats our cotton manufactures on a system of perfect equality with her own, and that the 5 per cent. duty imposed by the Indian general tariff can hardly have any protective effect. There is no need, therefore, for any bargain with India in order to improve the position of our manufactures in their competition with the manufactures of India. The position of India in this respect is altogether different from that of the colonies, which, impose Customs duties upon our manufactures in order to protect their own from our competition. The only way of which I can think by which a preferential tariff in our favour could be arranged in India would be by permitting the produce and manufactures of the United Kingdom to be imported free while similar commodities imported from elsewhere should be charged with much higher duties than the 5 per cent. now charged In return for such preferential treatment given to us I presume that India would receive some such advantage in regard to her exports to the United Kingdom as Mr. Chamberlain proposes for the colonies. In other words, if India gives protection to our manufactures we should give some protection to her trade with us.

This I conceive to be the system advocated by Mr. Chamberlain for the Empire. Let us see what the United Kingdom and India would gain or lose by such a transaction. The value of the imports of private merchandise by sea from the United Kingdom into India in 1901 was £32,500,000 while the value of the imports from the rest of Europe and the United States was £10,000,000, so that at first sight it would appear that under a preferential tariff we might get a considerable share of this trade. But it consists to a great extent of articles such as mineral oils, sugar, and wine, which we do not produce, and an examination of the figures shows that the margin upon which we might expect to gain something must be reduced to about £5,000,000. In fact, we already have the lion's share of the imports into India of such commodities as we can supply. In return for this slight advantage, we should have to favour Indian producers at the expense of the consumers in the United Kingdom. Indian tea requires no protection—the tea of India and Ceylon has nearly driven Chinese tea out of our market. India has a virtual monopoly in rice. The Indian exports which might benefit by protection are wheat, sugar, and tobacco. The trade of India with us in wheat is liable to great fluctuations; it depends upon the harvests in India, upon the price of wheat in the markets of the world, and upon the demand for wheat in India. For instance, in 1900, which was a famine year, no wheat was exported from India. I very much doubt whether any such duty as is likely to be imposed upon wheat here would be of advantage to the producers of wheat in India.

A considerable stimulus, however, might be given to the production of sugar and tobacco in India if differential duties in favour of India were put upon imports of sugar and tobacco from other countries, but I hardly think any Chancellor of the Exchequer is likely to be found who would entertain such an idea. I will not stop to examine whether a preferential duty created on sugar in favour of India would be consistent with the Sugar Convention into which His Majesty's Government have entered. Moreover, the whole fiscal system of both countries would be upset by the introduction of protection. I will not dwell on the effect upon the trade of the United Kingdom, but to India the result would be very serious. Her financial condition greatly depends upon finding a market for her exports; a preferential tariff in favour of the United Kingdom could not fail to involve India in a war of tariffs. She does most of her export trade with other countries than the United Kingdom, for we only take about one-fourth of her exports, and any serious diminution of her exports would be severely felt by the people and derange the finances of India. I might dwell further upon this point, but I think I have said enough to show that the introduction of a preferential tariff into India would be highly injurious both to India and to the United Kingdom.

So far, I have dealt with this matter from the economic standpoint alone, but political considerations, I need not remind your Lordships, must not be left out of sight. I ask your Lordships to consider the effect which would be produced upon public opinion in India if our fiscal policy should be changed for the avowed object of promoting what are supposed to be the interests of the United Kingdom. The feelings of natives of India have always been strongly pronounced in favour of the protection of native manufactures. Protection is already being discussed in the Indian Press in consequence of Mr. Chamberlain's speeches. English Finance Ministers and English Viceroys have met this feeling by declaring that the fiscal system of India has not been constructed with the object of giving any special advantages to the United Kingdom, but because we believe a tariff based upon free trade principles to be for the true interests of both countries. In my judgment we have been honest in our profession, and we can appeal to results in support of our arguments. But if the free trade tariff is to be changed into a system of preferential duties, we must expect that an agitation will be raised in favour of protecting Indian manufactures. Indian Statesmen—and there are many of them fully capable of appreciating the position—will say—"Why do you treat India differently from your colonies? You are ready to accept from them fiscal arrangements which, while giving you some advantage over the foreigner, will still leave substantial duties upon your manufactures for the protection of the manufactures of the colonies. Can you refuse the same treatment to India? We give you the preferential tariff for which you ask—allow us to protect our own manufactures." I do not know what answer could be given to that argument. I should not like to rely on my own opinion in this matter, but I will quote the opinion of the noble Marquess opposite. In 1894, when the noble Marquess had just come home from his successful Viceroyalty in India, and when a similar question was being discussed, he said— Many causes are at work which should make us pause before we do anything to shake the confidence of the people of India in the absolute disinterestedness of our rule. The Press takes advantage of the wide measure of liberty which it enjoys to speak its mind with a licence that would not be tolerated by the rulers of any other Eastern country. The Government must make up its mind to be misrepresented, and may in ordinary cases console itself by the hope that the truth will prevail, but it should think twice before it supplies the party of agitation with a real grievance and with the materials for an indictment to which no reply is possible. The noble Marquess was supported on that occasion by Lord Roberts, who said— While as a soldier I believe that the prosperity of India depends on the maintenance of our naval and military supremacy, as an Englishman who has lived for more than forty years in that country I know that the position we occupy in India is mainly due to the firm reliance of the natives on our integrity and honesty of purpose, and our determination to do what is right and best for them. If this feeling is once destroyed the cons-equences would be disastrous. These observations dispose of the selfish doctrine which has been advanced—namely, that England can do whatever it likes with India, and whether it is right or just does not signify. I remember but too well the baneful effects which followed from the acute controversy between the Lancashire manufacturers and the Government of India, which was so courageously and satisfactorily settled by Sir Henry Fowler, not to deprecate in the strongest terms I can use the introduction of a preferential tariff into India, which would seem to me to be almost certain to produce similar agitation in future.

Mr. Chamberlain has declared that— A system of preferential tariffs is the only system by which this Empire can be kept together. I have tried to show that this doctrine cannot be accepted so far as one of the most important parts of the Empire is concerned, and that to introduce such a system into India would be economically inexpedient and politically dangerous. Perhaps some of your Lordships may think that I have built up a fine castle in the air in order to have the satisfaction of knocking it down, and that my arguments may be sound enough but that the preferential system for India which I have been discussing will never be proposed. My Lords this is not my fault. Mr. Chamberlain's plan for the colonies is that they shall give us preferential tariffs in return for taxes upon the food of the people of the United Kingdom. He has been silent as to his plan for India. What can I do but assume that his intention is to proceed on the same lines? If I am wrong, I hope that one of the right hon. Gontleman's colleagues will explain to-night what his plan for India really is. No light was thrown upon it by a short answer given by the Prime Minister in the House of Commons. He implied, however, that our fiscal arrangements with India formed part of the inquiry in which, His Majesty's Government are engaged, and I must assume that this is the case. Has this subject been considered, and has His Majesty's Government come to any determination upon it? I beg to ask, in conclusion, what the plan for India is, whether the Secretary of State for India in Council, to whom Parliament has entrusted the financial interests of India, has expressed any opinion upon it, and, if not, whether he will be invited to do so; also whether the Government of India has been consulted. I trust, at any rate, that the plan, whatever it is, and the views of those in authority upon it, will be placed before Parliament and the country before the mandate for which Mr. Chamberlain is about to ask in favour of preferential tariffs for the Empire becomes the subject of discussion in the autumn.


My Lords, the noble Earl who has just sat down, who speaks with so much authority on every-thing which concerns India, has pointed out the grave difficulties of preferential trade in the case of that country—difficulties, however, perhaps, rather than impossibilities. But while, on the one hand, India has little to gain from preferential trade, the same may be said with reference to this country. Our imports into India amount to no less than £32,500,000, against £10,000,000 from foreign countries as mentioned by the noble Earl. Of these one-fifth, or £2,000,000, come from Austria-Hungary; £1,000,000 of the amount consists of sugar, which we do not produce here. The next largest importer into India is Russia, with £1,900,000, and out of that sum £1,870,000 consists of mineral oils, which we do not produce. The imports from Russia into India, therefore, with the exception of mineral oils, are practically nil. Germany's imports into India are £1,700,000; but over £300,000 consists of sugar, and a large portion of the rest is made up of other substances and products which we do not produce. The imports of the United States into India are £830,000, and there, again, £300,000 consists of mineral oils, so that the whole importation from the United States, except mineral oils, is only about £500,000. The imports from Spain amount to £290,000, and £280,000 consists of raw cotton and jute, so that the other imports are absolutely nothing. It seems to be clear, then, from the figures that while on the one hand India has little to gain from preferential trade, we also in this country have little to gain from it here. Nevertheless this question must be faced and decided; it cannot be disposed of by a few general observations. The discussions at successive colonial Conferences cannot be ignored, and the noble Marquess the Secretary of State for Foreign Affairs showed very clearly the other night that the novel systems of bounties, cartels, and syndicates have raised problems which did not exist in the time of Cobden and Bright. Sir K. Grey admits that— He could imagine a case in which some foreign country might mete out to us treatment hat was so obviously hostile and unfair that it would be impossible for us to sit still under it. But cases have arisen which give good ground of complaint, and would amply justify retaliation, though I should not advocate it, hoping that our grievances may be redressed without our taking any such extreme step. Sir R. Giffen has referred to this in a recent article as regards our shipping. We should certainly exhaust all the resources of negotiation before proceeding to reprisals, but in the last resort we may be driven to do so, and in doing so need not, I think, depart from free trade principles. The favoured-nation clause is the sheet anchor of our commerce, but in some cases it is kept only in letter and broken in reality.

So far as trade arrangements are concerned, foreign countries may be divided into two categories. Some, Turkey for instance, treat us fairly. They impose certain specified rates of charge on all countries and all goods. Other countries, however, while ostensibly giving us the favoured-nation clause, and in fact imposing equal duties on all nations, place high, and sometimes prohibitive, rates on just those articles which we produce. Directly our manufacturers establish a trade in any article the duties on it are raised against them. Suppose we acted in the same way. Suppose, for example, we raised the duty on claret or hock—theoretically it would apply to the whole world, practically it would affect France or Germany alone. From this point of view we have, I submit, a weapon in our own hands which in the last resort we might use without affecting free trade. If we have nothing to give, we have much that we might take away. The Secretary of State for Foreign Affairs has, in fact, in his hands the big pistol for which he has asked; but the noble Marquess, I am sure, will agree that pistols should only be used in the last resort. But what are the views of the colonies? We have given them long ago a free market for all their produce. We do not ask them to exclude foreign manufacturers. What we wish is that they should treat us as we treat them. Do their wisest statesmen ask us to do more than we have done? Sir Wilfrid Laurier has said that Canada gave us a preference because— We looked carefully round the world, and we found England to be the only country which receives our products freely. We desired to show England our gratitude. In his Liverpool speech Sir Wilfrid Laurier also said— It is no intention of ours to disturb in any way the system of free trade which has done so much for England. And in Canada he said that preferential treatment might be an advantage— But we cannot have it so long as we have a protective tariff in Canada. … But the moment we are ready—it may take a long time, but I hope that some day it will come—to discard our tariff, the moment we come to the doctrine of free trade, then it is possible to have a commercial mutual preference based on free trade in the Empire. Mr. Seddon also, though he is reported as having since expressed a somewhat different opinion, speaking at the New Zealand dinner, assured us that the New Zealand Government, in proposing to grant preference to the mother country did so— In the spirit and desire to help—to give, and not a desire to take. They felt it was an opportunity to assist the mother country; it was love, and not sordid motives, that prompted the sending of the resolution. That there are grounds for inquiry cannot, I think, be denied. On the other hand the subjects which have been mentioned as the subjects of the inquiry do not include one of the most important. What are the colonies going to do? Hitherto their object has been to exclude our manufactures. How can we decide whether any alteration in our fiscal policy is desirable until we know what line the colonies are going to take? It is no answer to say that they are willing to impose 33 per cent. more on foreign goods. If they exclude our goods what does it matter to us if in the case of foreigners the duties are higher still? Our real competition in the colonies is not with foreign manufacturers but with colonial manufacturers. How can the country be expected to give the Government a mandate on such an important subject in the present state of matters? The Government require no mandate to enable them to negotiate; and that, in fact, they have done already. It is, of course, very interesting to know the views of our leading statesmen, but it is still more important to ascertain the views of the colonies. Are they prepared to abandon protection and adopt free trade within the Empire? If they are, it may be worth our while to alter our policy. But if they are not, how can they expect us to depart from our present position? It would be most unwise and ungracious to throw cold water on any real proposals for closer trade connection with the colonies. An appeal to the country on such an issue would be most unfortunate. On the other hand, how can the country be asked to abandon the policy of fifty years without knowing what is to be adopted in its stead? And yet, if we decide to maintain the existing system, we shall seem to flaunt, and shall certainly be told that we are flaunting, the colonies. We should be wantonly entering on a course which is almost sure to rouse bad blood between the mother country and the colonies. Surely the Government are amply justified in negotiating. They have—as I have said—done so already. The colonics propose to give the mother country a preference. We welcome their intention. It is impossible, it would be most ungracious and unwise, to meet them by a simple non possumus. We must face the question. The Unionist Party feel, and are justified in feeling, great confidence in the Prime Minister, in the Duke of Devonshire, in Mr. Chamberlain, and the other ministers. If they could negotiate an arrangement with the colonies which, in their judgment, was fair and wise, I believe it would be one which the country might and would accept; but to go to the country on a mere question of preferential trade in the abstract would surely be unfair to the country, might break up the Unionist Party, which would be a grave misfortune, and, what would be still more deplorable, would perhaps even break up the Empire itself.


My Lords, my noble friend who has introduced this question speaks with so much authority on behalf of all those who have held the high office of Viceroy of India that I should have thought it almost unnecessary for me to interpose, but he desired particularly that I, as having had more recent experience than his own, should say a word or two in regard to the subject which he has brought before the House. On the general view of the matter I shall not detain the House at any great length, because I entirely agree with the opinions which have been put before your Lordships by the noble Earl. But I have, perhaps, this justification for saying a word or two, that during my time in India there was a good deal of discussion on the imposition of the Customs duties which were proposed in 1894. I must confess that it made a great impression upon my mind, that upon my arrival in India, with a rooted conviction for free trade, the first great duty which I was called upon to perform should be the introduction of a measure for the imposition of duties. But I am sure that the noble Marquess opposite, as my predecessor in the office of Viceroy of India, will bear me out in the statement that the necessity for those duties, for revenue purposes only, had become urgent before my arrival in India, and their urgency was imperative.

I refer to them on this occasion because I think that what happened illustrates to some extent the difficulties which have been foreshadowed by the noble Earl as likely to occur in the future. It took three years to settle the arrangements in connection with the introduction of those duties into India, though, as the noble Earl has pointed out, they were very moderate duties—at the highest point 5 per cent. ad valorem; and, as I have said, they were introduced for purely revenue purposes. Manufacturers on both sides objected to the imposition of a duty which did not also affect their rivals, and the solution which was eventually arrived at was that which was proposed by Sir Henry Fowler, who was then Secretary of State for India, which brought in an Excise duty on cotton goods—a measure which excited a very considerable amount of opposition in India, and which really left matters balanced as they were before. Throughout the whole of this period there was a great deal of friction. There was a great deal of friction when the first proposal was made for the introduction of the duties; there was a great deal of friction because the cotton duty at that time was omitted; there was a great deal of friction when it was proposed to tax cotton; and there was still further friction when, in order to meet the claims of Lancashire, an Excise duty was imposed on Indian manufactures.

The noble Earl has said that we could, of course, use the argument, though he thought it was a dangerous one, that it was the will of the British Government, and that that will must be obeyed. I had some difficulty in regard to the legislation that was necessary in India. It did not seem possible at one time to progress in the manner that was desired, and I thought it my duty to remind my Council of the nature of their powers in regard to legislation. At that time, rather unfortunately for myself, I made use of an expression which is very commonly used just now, and which has occurred this evening, in regard to the "mandate" which a Minister wishes to obtain for a policy that he professes. It is an expression very commonly used, I think, with reference to a seat in the House of Commons, and it was in regard to that illustration that I used it in my speech on that occasion. But it was immediately seized upon and converted into an expression of the mandate of the Secretary of State, and throughout my term of office I was always met on every convenient opportunity by an assertion that I was in favour of Government by mandate. I do not mention this matter because I have any personal feeling in regard to it, but I think it is a good illustration of the rapidity with which ideas of that kind are taken up in India, and taken up in a very insidious and dangerous form, because they very often excite a considerable amount of sympathy among the European population in India itself.

At that time, of course, we had to deal solely with the relations between home and Indian merchants, but I venture to think that any difficulties of that sort would now be increased tenfold, and that it would be necessary to safeguard Indian interests with regard not only to the mother country but to each colony. I would like to give an illustration in support of that contention. Take the case of the great and growing industry in coal. If the coal of the United Kingdom is to have a preference in the colonial markets, what is to happen to Indian coal? It appears to me that it would be intolerable that Indian coal should be put at any disadvantage in markets, such as, say, Singapore, or even its next door neighbour. Ceylon. Yet if that is to be avoided it will be necessary to have a whole system of relations, not only between the United Kingdom and the colonies, but between India and the colonies also. As the taxation of food has been often spoken of in connection with this question, I should like to say one word with regard to Indian wheat. The noble Earl stated that in his opinion Indian wheat would probably not be so much affected, and he dwelt particularly, I think, on the case of famines, when the supply of wheat is naturally wanted on the spot. I sincerely trust that Indian famines will not be so often recurrent in the future as they have been of late years; but, apart from that, I rather think we must take wheat into account as an Indian export. It is well known to those who are acquainted with India that the native of India does not live habitually upon wheat, but upon millet and other kinds of grain, which are not exported in the same way. Since the noble Earl's connection with India, there has been a great extension of irrigation, and I think I may say that the irrigated lands are, in many cases, wheat lands, and must be regarded as wheat-exporting areas. I think, therefore, that the interests of India, with regard to wheat, will require consideration.

As those connected with India know, India depends largely on its land revenue. But this land revenue is governed by a system of land settlements—this always struck me as an admirable part of our system, but it is probably not familiar to many Members of this House—and anything that disturbs the current rate of prices very materially affects the land settlements which have been made. I am not going to elaborate this point, because the Government of India in 1897, when we had to deal with proposals which were then put forward for bimetallism, went very thoroughly into this question, and showed the great dangers which were involved to India in regard to it. I would only say here that on that occasion I had warnings from most experienced officers of the Government of India, showing how much the Government might be affected by any disturbance of prices, not so much from the point of view of loss of revenue as of loss of confidence of the people in the settlements that had been made. There are two ways, of course, in which the question may be dealt with. India may be included in the scheme of the Government, or it may not be included. If it is included, the noble Earl who brought forward this subject has shown how many difficulties will present themselves; and I am not sure that I do not go a little further than he does in regard to any question of excluding India from any plan. I cannot help thinking that to exclude India might, in certain circumstances, give rise to many of the political dangers to which he alluded. If it should be possible—I only put it hypo-thetically—to bring forward a great scheme which would confer benefit on the United Kingdom and its dependencies and India should be excluded from that scheme, I cannot help thinking, that questions of difficulty would arise which it would be very disastrous to this country to excite. I should, therefore, be inclined to put it that no system, will be satisfactory which does not preserve for India the advantages which she has gained under her present free trade system.


My Lords, like the two noble Earls who have addressed your Lordships this evening, I have had the great privilege of being connected for a time with the administration of Indian affairs, and I realise as deeply as they do the immense importance of dealing with this subject in the most cautious spirit. I think I am justified in assuming that the noble Earl who spoke first introduced it to your Lordships mainly with the idea of eliciting from His Majesty's Government a statement of the procedure which they proposed to follow in so far as the inquiry to which we are committed will deal with India. I can hardly believe that he seriously expected that so soon after our announcement that an inquiry was to take place we should come down to this House and inform your Lordships of the results which that inquiry is likely to have; nor, I think, can the noble Earl have seriously believed that we should leave India altogether out of account. I understand the noble Earl to have been perturbed by the fact that the Colonial Secretary, in certain speeches which he has lately delivered, made no reference to the case of India. I suggest to the noble Earl an explanation of that fact. It is not a very profound one; but it seems to me obvious. It is that Mr. Chamberlain holds the office of Secretary of State for the Colonies, and not that of Secretary of State for India; and that, as this question has been brought to his attention in his official capacity, and more particularly by the proceedings of the two great Colonial Conferences, it was natural that he should deal with it as a colonial question, and that when he spoke of the effect of his proposals upon the Empire he should have had in his mind more especially the Colonial Empire of Great Britain.

Now, my Lords, the noble Earl asks us to tell him whether there is a plan for India. The object of the inquiry and the discussion which we have invited, and to which we have had important contributions this evening, is to determine whether a plan can be discovered and to what parts of the Empire that plan should be applied. But the noble Earl assumed throughout his argument that there was a plan, and that the plan had been applied to India; and he gave a very alarming description of the disastrous consequences which such a policy would be likely to involve. I think it will be time to dwell upon any untoward effects which a change might produce when we have determined what our plan is to be, and when we have determined whether India is to be included within its scope. But when I come to the other question of the noble Earl, whether India is to be included within the scope of the inquiry, there, I think, his request for information is a most legitimate one; and I answer unhesitatingly that India certainly does come within the scope of the investigation. And I say more. It is not, to my mind, conceivable that any Government should be found ready in dealing with such a problem to ignore the case of India or even to contemplate the possibility of imposing on India a new fiscal system unsuited to her requirements and repugnant to the feelings of the Government and the people of that country.

With regard to the statements of the two noble Earls, I listened attentively to them, and so far as I was able to follow them, I do not think that I have any reason to differ from the description which they gave of the present fiscal arrangements of India and of their results. I readily, for example, admit the marked contrast that exists between the fiscal systems of India and of the great colonies. The colonial tariff systems are frankly protective. They are designed for the purpose of sheltering domestic industries from external competition. The Indian tariff, on the other hand, is, as has been truly said, a purely revenue tariff; and I therefore freely admit that, so far as the present situation is concerned, India is not in a good position either to give preferences to her friends nor to retaliate upon those who treat her in an unfriendly manner. Then I readily admit what has been said as to the immense importance of the export trade of India. That trade is largely carried on with foreign countries, and it is essential to India that that trade should be afforded the most favourable and most unrestricted outlets possible.

My Lords, we also have to consider not only the interests of India, but the interests of this country as the great creditor of India. The greater part of the debt of India is, I believe, held in this country, and India, if I remember aright, has to remit on account of home charges £17,000,000 sterling per annum. It is perfectly clear that the weight of these heavy obligations falls very largely upon the export trade, the importance of which has been so well described. And not only that, but as the noble Earl told your Lordships, India is a very large customer of this country; I believe it is true that she takes from us imports exceeding in value the whole of the imports of the self-governing colonies, and those imports are no doubt paid for by India out of her gains in respect of the export trade, so that, if we in any way diminish her receipts from her export trade, we diminish her power of buying from us the commodities which she now takes from this country. All these are to my mind obvious propositions, and I need not say they are matters which His Majesty's Government will have to take into their most careful consideration.

I have listened with the utmost sympathy to what the noble Earl said as to the necessity of considering not only the commercial and economic effects of changes of this kind, but also the possible political effects of an alteration in the fiscal system of India. The noble Earl did me the honour of quoting at length from a speech I delivered in this House in 1894. We are sometimes a little dismayed when we are confronted with our bygone efforts of eloquence, but I confess that the passages which the noble Earl quoted did not contain a single word which I now desire to retract. I rather welcome the appeal which has been made to political as distinguished from purely economic considerations, because we too in laying our case before the public have had also to appeal to considerations of the same kind. It is a part of our argument also that it is necessary to inquire into these great questions, and to do so with an open mind, because, for political reasons, if we refuse to do so we shall alienate and offend those great self-governing colonies who have on so many occasions earnestly entreated us to take their requests into our consideration. I am therefore perfectly willing to accept the proposition that these questions cannot be dealt with one conomic grounds alone.

Pending the result of the investigation to which we are committed, it is of course impossible for us to answer by anticipation the problems which have been put before us this evening The noble Earl says to us: "India already treats you so liberally that supposing you hereafter decide to give preferential treatment to your colonies you ought to give that preference to India without any further concession on her part." That is an argument which no doubt will have to be considered at the proper time, but how far it will prevail I cannot undertake to say this evening. I may say in passing that I heard with interest what the noble Earl said with regard to the export of wheat from India. My impression is that the amount of wheat available for export from India depends really not so much upon the amount of wheat produced as upon the amount of other food grains available for consumption. If the harvest of these food grains is abundant, the wheat is not required for home consumption, and my impression is that a large quantity of Indian wheat will in any circumstances be at times available for export, and that an import duty levied here would probably not have very much effect one way or the other upon the amount exported from India. I give the figures from memory, but I think I am right in saying that in 1898 we took from India wheat to the value of about £3,500,000; in 1900 we took virtually none at all, and in 1901 we again took something like £3,000,000. Those figures, I think, show that the fluctuations in the export of wheat are due to causes of the kind indicated by Lord Elgin.

With regard to the Indian case, I think I am justified in saying that no part of the inquiry is less likely to suffer from want of ample expert evidence or of due presentation of the facts. We have in this country a Secretary of State with his Council, and we have in India a Viceroy with his Council. On these Councils there are men of high position, of wide experience, and absolutely independent character, many of them men who have had close and intimate acquaintance with all parts of the Indian Empire, and it seems to me evident that the criticisms and suggestions which we are likely to obtain from such men will form the most valuable testimony which it would be possible for us to procure. The noble Earl on the cross benches the other evening expressed his opinion that this inquiry might well have been entrusted to a Royal Commission. I cannot bring myself to believe that any Royal Commission would be likely to produce with regard to India evidence so conclusive and trustworthy as the evidence which will be procurable from the two great Councils to which I referred a moment ago.

I certainly say in reply to the noble Earl that the Government of India will be fully consulted in regard to this question. We shall consider at the proper time in what form and to what extent the results of that consultation might be made public. But I make this general statement—and I am glad to make it—that our policy is not to conduct this inquiry in a hole-and-corner fashion, but to give the public the facts, the statistics, the information upon which we shall ourselves rely in forming our own judgment; and I say that not only in regard to the case of India, but in regard to all the subjects to which the inquiry will have reference. I make this further remark—that we shall gladly welcome any assistance which we may receive from your Lordships or any other quarters in suggesting information and evidence which might be usefully elicited. I notice from the Paper that Motions are to be made for Papers bearing on this subject. So far as our opportunities permit we shall gladly place your Lordships in possession of any evidence which can be conveniently procured upon this most important matter.


My Lords, the noble Marquess has not thrown the smallest light upon that great mystery, the inquiry which is going on, we understand, under circumstances unknown to us, and which is alluded to continually by His Majesty's Government, but about which we receive, whenever they speak, no further information whatever. I gather from the conclusion of the noble Marquess's speech that the function of those in this House who are not connected with His Majesty's Government is considered by the Government to be to give them information as to the points upon which they are to direct inquiry. That is a function from which we do not at all shrink, and when I remember how frequent have been the discussions in this House on this question, and how many have been the efforts made to get some more explicit information with respect to this inquiry than we have yet received, I feel that the part allotted to us may be a useful part, but that it would be much more useful if the points submitted and the inquiries made were, thought worthy of answer by His Majesty's Government. However, that is not to be the case. We must accept the position which is offered to us, and do what we can in this House, where we have more liberty than in the other House, in which I do not observe on the part of His Majesty's Government that extreme desire to receive information, or to raise debates on this question, which happily exists in the more generous minds of the Members of His Majesty's Government who sit on the Front Bench opposite.

Having also had the honour of filling for several years the office of Viceroy of India, I feel bound to add my support to the remarks of the two noble Earls in regard to this question, which is one of vital importance to India. I feel that the Government are bound to deal with India upon the same principle as that on which they intend to deal with the other parts of His Majesty's dominions. They cannot give preferences to the self-governing colonies without considering the extent of the claims which India may have to preferences on her side. I do not think it has been touched upon hitherto in this discussion, but there is one point in regard to the matter of colonial preferences which is of great importance, as it relates to India. If you are going to give, as Mr. Chamberlain—who is the only Member of His Majesty's Government who is not wrapped up in mystery, unless, perhaps, I include on the other side the Chancellor of the Exchequer, who is frank enough in his statements—if, as Mr. Chamberlain proposes, you are going to give a preference to the imports from the self-governing colonies, and especially from Canada, if you are to give a preference to Canada and to Canadian wheat and do not give the same preference to Indian wheat, you will be protecting Canada against India. You will be giving Canada an advantage in regard to the import of wheat into this country which you do not give to India. I do not suppose that His Majesty's Government will do that, but that would inevitably be the result if you were to give a preference to the self-governing colonies and not to India.

This change of policy involves very grave considerations in regard to India. As has been said over and over again in this discussion, India has a free trade tariff. She was, when she had the tariff which was prepared for her by my noble friend Lord Cromer, the most free trade country, I believe, in the world. Some revenue duties have been put upon her since from the necessities of famine and other grounds, but at that time she was the most free trade country in the world. It is a great mistake for anybody to think that the natives of India—I will go further and say the European inhabitants of India, speaking generally—arc in favour of free trade. Their views on that subject are very similar to those that prevail in our colonies. How was it that my noble friend who opened this discussion and myself, and, I think, Lord Elgin, met the charge which was freely brought against us that in establishing this free trade policy in India we were trying solely to help British manufacturers and were acting on a selfish principle? Our answer was this, that if we thought this free trade policy would do harm to India, if we thought that it would inflict injury upon India in any way, we would not be a party to it. That certainly was the language which I held. I said— The policy of England is free trade. We firmly believe in the justice and in the advantage of free trade, and I support these proposals because I believe that they will confer great and valuable benefit upon India itself. And that has been the result. You have had figures put before you this evening showing what has been the result of free trade. But if that policy is now to be abandoned in this country, if we are to have preferential tariffs on the one hand and retaliatory duties on the other, we destroy that argument. We can no longer say to the natives and to the people of India: "We advocate a free trade tariff for you because we believe it to be the best tariff for any country, and because we have it in our own country." If we abandon that policy, how are we going to meet that argument in India? You must recollect, my Lords, that the sources of revenue in India are exceedingly limited. Both of my noble friends, like myself, spent a good deal of time in trying to discover new sources of revenue, but they apparently were not more successful than I was in ascertaining whence to get that revenue. Expenditure increases in India. By the changes which have recently been made in regard to military organisation, a sum of nearly £800,000 a year has been placed on the finances of India. How will you meet those charges? India will say—"We wish to meet them by tariff arrangements. We wish to meet them by import duties." Will you have the face, when you have abolished free trade, to refuse to allow India to do that which you allow all your colonics to do—not because free trade is the policy of this country, not because you consider it to be the best policy, and heartily believe in it, but because it suits your own convenience? You cannot do that. The position is not possible. My noble friend Lord Elgin will confirm me when I say that the Excise duties on cotton created very serious difficulty and a good deal of bitter feeling and misunderstanding as to the objects and desires of this country. They were carried because they were based on sound principles of free trade. Once abandon those principles in regard to India, and you cannot maintain those Excise duties and refuse to India that which you allow to all your self governing colonies.

Under Mr. Chamberlain's scheme those colonies are not to give up their protective duties against British goods. What is the method to be pursued? In Canada itself, when preference was first given to us, an increased duty was put upon goods coming from other countries, and we have heard from Australia, and especially from New Zealand—whence a loud voice is heard over the sea from time to time telling us what we ought to do—that the preference that is to be given to us is not to be in the shape of reduced duties on our goods, but increased duties against other countries. I do not for a moment suggest that we should object to their doing this. But I say that if we abandon the free trade ground, we can scarcely resist the claims of India to impose duties on British manufactures. It is one of the unfortunate circumstances of the extraordinary position in which this country stands at the present time upon this question that all sorts of indefinite hopes, aspirations, and beliefs are being raised in every direction, in consequence of the vagueness of the statements which are made by His Majesty's Government, and now we are told that we are to wait till 6th October to be enlightened further on this question. But we are not told when the reply to the 6th of October statement is to be made, and therefore the country will not get full light on the subject even then.

Just look at the consequences of raising these vague and uncertain discussions. I hold in my hand a letter from Mr. Emmott, M.P., which appeared in yesterday's Times, and in which he gives an extract from the Indian Textile Journal to the following effect. It is headed "Inter-Colonial Free Trade"— The scheme is full of golden promise for this country. Her cotton industry needs the stimulus to its development which such a fiscal arrangement would give. The free circulation of Indian and Egyptian cotton throughout the world, with a tariff charge against American products, would at once restore to India the great wave of prosperity which she enjoyed in 1861–65, during the period of the American Civil War. There is more to that effect. It is grievous to think that notions of that kind are to be raised in the minds of the natives of India. I am convinced, as my noble friend said who preceded me, that there is great and serious political danger in raising up hopes of that kind if they are not to be fulfilled and in encouraging the idea that we are about to abandon the free trade policy in order to adopt a policy of protection, in which case I think we should be bound to relieve India from the obligation under which she now rests, of admitting our products on reasonable terms. I venture to assure your Lordships that the difficulties and the dangers of this question are great indeed, and that it is most desirable, nay, imperative, that something should be done to make more clear and explicit to the natives of India at least, the extent of the policy upon which we are about to embark. If you do not do that you will run the greatest risks. I was sorry to hear the noble Marquess the Secretary of State for Foreign Affairs say that the Government of India will be consulted upon this question. I had hoped that the Government of India had already been consulted. It is no use to tell us that Mr. Chamberlain is Secretary of State for the Colonies and that therefore he cannot pay any attention to Indian affairs. If one of His Majesty's Ministers is prepared to propose to the country an entirely new fiscal system, I say that it is his bounden duty, before he makes that proposal, to study it all round.


My Lords, I only rise to ask one Question of the noble Duke the Lord President of the Council or of the noble Marquess the Foreign Minister. I was gratified to hear that the full information which is going to be collected by His Majesty's Government will be placed I before the public. I think the declaration of my noble friend was perfectly clear and explicit on that point, the most explicit statement we have yet had. I would only further inquire, without asking the Government to give an absolute date, when there will be a probability of the information being placed in our hands? Is there any chance of the information being forthcoming before the beginning of October? I think it is extremely desirable that both, sides should be equally well equipped for argument, and later the controversy, with accurate information, and with the necessary materials for conducting the controversy in the country with knowledge and authenticated figures. I am sure my noble friends will feel that it would be unfair to both sides and to the public if a great portion of the information were already in the hands of members of the Government while those who might feel themselves compelled to contest the Government view were still without the bulk of the information. I would press my noble friend for an assurance that, at all events, as soon as possible, the information, even if it is not absolutely complete, will be made public.


My Lords, I wish to endorse the request which has just been made by the noble Viscount opposite. It is undesirable to keep this question open and to allow an immense amount of loose statistics to float about, and thereby whet the appetite for protection which already exists in India, and encourage false hopes which cannot be satisfied. The noble Marquess has invited us to indicate what questions we should like to see placed before the experts in this inquiry. Perhaps, therefore, he will allow me to indicate some of the questions which I think require an answer. If you intend to give a preference to wheat and rice exports from India to this country you reverse thereby the present policy, and in the case of rice, as the noble Marquess knows, you have an export duty of seven shillings a ton on Indian rice. That export duty would undoubtedly have to go if you gave a bounty to export to the United Kingdom. The result of a preferential duty on wheat and rice would be to raise the price to the point at which other countries would be prepared to send their surplus production to the United Kingdom. I would like to ask whether that point will be included in the inquiry.

I do not know whether it is proposed to give a preferential duty in Hong Kong and in Singapore to rice imported from India. The great advantages which accrue to Singapore from its free trade with Cochin China, Java, and Siam, which also export rice, would be lost in that case. A further question arises: If you give a bounty to wheat and rice on export, how will that bounty affect the storage in India of wheat and rice as against recurring famines. We now rely on that storage, but if a bounty is given for export, then that storage may be reduced. Will the inquiry show what compensation you intend to give to the people in India, whose main food is rice, and what expectation you have that in the congested state of the labour market in India there will be a rise of wages? I do not suppose that the introduction of old-age pensions in India is contemplated by any Indian ruler. The Indian agriculturist who grows rice and wheat will reap a benefit from the bounty by the artificial increase in the value of his produce, but the ryot who does not grow wheat and rice will not secure the bounty. Therefore, as between different classes of agriculturists you would create a privileged class. I trust the inquiry will include the question whether it is desirable to create a privileged class of agriculturists in this way. I lay great stress, too, on the point raised by Lord Elgin with regard to the influence of any increase in the price of agricultural produce on the revenue settlements. I can endorse from my own experience my noble friend's contention that there would be very great difficulty in adjusting the land revenue assessments to the artificial rise in price. As the noble Earl who introduced this discussion has shown, with regard to tea you hardly need a preference, because already Indian tea has displaced China tea. But the inquiry will show how a preferential duty in favour of Indian tea will influence the commercial treaty which has lately been made with China, and how it will influence the "open door" policy, which we are trying to obtain from China. The imports from foreign countries into India are either articles which we cannot produce, which we do not manufacture, or which are cheaper elsewhere. What is the object of interfering with those imports and of imperilling the large export trade of India with other countries? As my noble friend Lord Northbrook has shown, no corresponding benefit is likely to arise to our manufactures if we interfere with the trade from India to other countries. The exports to France, Germany, the United States, Italy, China, and Japan, exceed the imports of those countries, and that state of things realises already for India what the advocates of protectionist doctrines are always urging, that we should look, not to the volume of the import trade, but to the volume of the export trade. The balance of trade is in favour of India. Therefore in the inquiry it will be desirable to ask what can be gained by upsetting the existing; state of things in India?

India is in the same position as the United States. It is independent of foreign supplies of fond, and it is in a strong economic position. Hence the only argument in favour of protection is to encourage the industries and manufactures of India itself. But if you dislocate and unsettle the Indian trade by creating preferential duties in its favour here and preferential duties in our favour in India, what reason is there to suppose that that interference will be beneficial to India? The excess of Indian exports is required for the payment of interest on the capital for public works, on the debt of India, on freights, on home charges, and other private remittances to the United Kingdom. Is there anything in the finances of India at the present moment which calls for a change? Those finances, as the last Budget has shown, are in a very prosperous condition. Then, again, we cannot overlook the fact that the purchasing power of the natives of India is very limited, and to refuse them access to the cheapest market seems to me to be an absolute injustice to millions of our fellow subjects in India. Why should they be compelled to purchase in a dearer market I trust that when the inquiry is opened, not only the Council of the Viceroy and the Council of the Secretary of State for India will be heard, but that we shall also obtain the opinions of the Legislative Councils of Calcutta and of the various Provinces. I wish also to ask whether it is intended to take the opinion of the Chambers of Commerce in India? It is of the utmost importance to know what they think of this change in the fiscal policy. Hitherto the rulers of India have not tolerated a tariff for other than revenue purposes, and I trust that the inquiry will show which of the rulers of India and those responsible for the fiscal system of India, are in favour of the proposed change.

The only argument—I wish to be quite fair—which I have heard in favour of protection for India is that it might attract capital. But is such an artificial impulse needed? Cheap labour in India is abundant, and skilled labour you can obtain. To develop the natural resources of the country a steady exchange was required, and that steady exchange you have obtained by recent measures. Manufactured goods have, during recent years, borne an increasing proportion to the raw articles exported from India. Therefore, you have to prove that any further artificial encouragement is necessary. I deeply regret that this controversy should have arisen. Hitherto both Parties have been agreed on what should form the basis of our commercial relations with India. If we unsettle the minds of our Indian fellow subjects we shall only delude them by an experiment which I feel convinced will, if it is tried, destroy the prosperity which has been such a marked feature of the final system under which India has been governed.


I only rise for the purpose of endeavouring to answer the question put by the noble Viscount behind me. The noble Viscount has given me private notice of a Question which he proposes to put to me on this subject next Tuesday, and I will endeavour, as far as I am able, to ascertain before that time how soon it may be within the power of the Government to lay on the Table the Papers which it is their very anxious desire to lay as quickly as possible.