Over

The

Theological discussions during the Middle community to other communities in the Ages much excited the attention of the world is discharged by the surplus of the community, and the practice of those who exports of that community over ita obtained a prominent position in any imports, and, consequently, it is assumed community was to endeavour to establish that so long as the export trade of India theological orthodoxy by means of the is good it is immaterial to the Indian rack or the stake. Well, currency ques- Government what is the rate at which tions seem to lead rather to the same they will have to meet their obligations position. I have received a good many here. I daresay as an abstract proposicommunications from different persons tion it is perfectly true that the general during the last few weeks; they do not indebtedness of a community is dis agree with me, and I am quite certain charged by the surplus of its exports that, if they had the power, the stake and the rack are the very least of the that general abstract principle in conits imports, but you cannot apply penalties to which they would subject crete to each individual matter. me. Therefore what I am now about to say I will make as non-controversial as exports from India do not belong to the Indian Government. The ability or possible. There is in the Indian accounts for the year the item, "Loss by exinability of the Indian Government to change." I want to make it perfectly meet its obligations in this country does clear what that loss by exchange means. not depend on the export trade of India; For many years the exchange value of it depends on the number of rupees it the rupee measured in gold was 2s., and has in its cash balances, and which it every 10 rupees remitted was equivalent can remit to meet its obligations, and to £1 in gold. As the rupee fell in value the lower the exchange the larger the it became necessary to put in some number of rupees from its cash balances adjusting item in order to show the num- which it has to remit. Consequently the ber of rupees over and above the rate of continued fall in the value of the rupee 10 to £1 which were remitted to this must entail a larger and larger number country in order to be the equivalent in of rupees being remitted here. There value of £1. The loss by exchange which may arrive a period when the Indian is annually included in the accounts of Government will be unable to meet its the Government of India includes that obligations unless it can increase its number of rupees over and above the rate revenues to а similar extent. That of 10 to £1 which annually have to be is a self evident proposition, and remitted to meet the obligations of the I want the Committee just to Secretary of State. It consequently fol- realise what difference a slight rise lows that the higher the exchange value of in the exchange value of the rupes rupee the less is this item called" loss has done for Indian finance during the by exchange"; the lower the rate, the critical period of the last three years. greater the loss. During the last three I will assume for a minute that the years the rupee has steadily risen. During my predecessor's tenure of office in the year 1894-95 it fell to 12.7d.; in 1896-97 it rose to an average of 14.4d.; in 1897-98 to 15.3d.; and in 1898-99 the same rate is taken. The total loss by exchange for these three years in the aggregate is estimated at Rx.33,063,999, giving an average loss of Rx.11,000,000 But if it had remained for each year. I perceive in certain at that figure the loss by exchange during quarters an idea, which is very freely the past three years would have been promulgated, that a fall in the exchange Rx.50,250,000, an excess of Rx.17,000,000 value of the rupee does not really affect over the actual loss that did occur, and the Indian Government, and this conclu- the deficits which we should have had to sion is arrived at by the following face would have been, not Rx.6,000,000, process of reasoning. It is asserted that but Rx.23,000,000, and so far from the aggregate indebtedness of any one having a surplus for

the

rupee had remained at the figure which it reached during my predecessor's tenure of office-12s. 7d.; though at the present moment the silver value of the rupee is as low as 10.5d.. I think, therefore, all will agree that 12.7d. is a reasonable figure at which the rupee might be taken if the Indian Government had done nothing.

next year

debt to the extent of £11,000. The next year, 1896-97, we were able to do better; we met the whole of our obligations, and were also able in the course of our transactions to decrease the debt by £860,000. We then commenced the year 1897-98, which was an exceptional year. Our cash balances in India were reduced to

-of which I think there is every subsequent year, 1895-96, we met the reasonable prospect-we should have whole of our obligations by drafts from been face to face with a deficit of India, and we were able to reduce the Rx.5,750,000. I think it most unfair that an attack should have been made on the Indian Government in this connection. It has been asserted that they have wantonly raised this question of exchange and forced currency proposals on the monetary world. If the Indian Government had stood still and done nothing, I repeat what I have said the lowest possible point compatible before, that they would have gradually drifted into a position in which they would not have been able to meet their obligations. I venture to say in that case the same individuals and the same interests which now attack them for having wantonly raised this currency question would have been the first to denounce them then for an attitude of vacillation and ineptitude when they found what enormous monetary interests were at stake, and that the Secretary of yet come to a decision, but undoubtedly State in Council was unable adequately the bills so issued will in future form to meet his obligations. My honourable a permanent part of the Indian debt to Friend the Member for Cardiff asked me a question in regard to the six million Committee who have followed these bills. There is an impression among figures will clearly see that in no sense certain persons that whenever the Secre are these loans used for the purpose of tary of State obtains power to raise a loan of this character he and the Indian Office utilise it for the purpose of manipulating the Exchange. I can assure the Committee that that is

an

with safety; we had to meet not only the expenditure caused by the prolonga tion of the famine, but to provide ways and means for a great Frontier war, and we were therefore compelled during the last year to raise here a sum of no less than £8,486,000. That includes the 6,000,000 of bills to which my honourable Friend referred. Whether we should convert those bills into stock or not is a question on

this country.

which we have not

Those members of the

manipulating the exchange. Everybody admits the inadvisability of increasing our gold obligations in this country, but owing to very exceptional circumstances we cannot draw to the full extent on India, and we have had recourse to a loan. In every case when we raise money here on loan we know that in practice part of it will be applied to reproductive works in India, and the great bulk of the amount to be borrowed this year will unquestionably be utilised in providing capital for such purposes.

entire delusion. We draw upon the Indian Government as much as their cash balance will allow, and it is only when their cash balances are inadequate to meet our drafts here that we have recourse to raising a loan in this country. The last loan was raised at the close of the year 1893, and if I place before the Committee the applica- not detaining the Committee too tion of the proceeds they will perceive long, I should

If I am

like to take a

very clearly, I think, the procedure which short review of what the result of our the Secretary of State and the India capital expenditure has been during the Office adopt. These loans comprise all last 20 years. It is just 20 years since the sterling capital over and above the the last great famine terminated, and Sir capital raised in India which may be James Westland very properly laid a required for railway enterprise, and series of figures before the Committee therefore the figures which I will read in Council at Calcutta with reference to out will include all those sums which that period. There is an impression in were applied by the Secretary of State many quarters that India did not pay her to railway enterprise and were raised in way during this 20 years. If we exclude this country. In the first year after the war, famine, and special defence works, passing of this loan, the year 1894-95, there has been a surplus of revenue over the debt raised was £1,984,000; in the expenditure of Rx.51,000,000. War has The Secretary of State for India.

cost Rx.21,200,000, special defence works | changed conditions of the Government of Rx.4,600,000, famine Rx.8,200,000, India, the improved credit of India, and making a total of Rx.34,000,000. There the good returns which the railroads were fore there is an absolute balance of making, that it was advisable that revenue over expenditure during that a larger sum should be raised than time of Rx.17,000,000, and 13,500,000 £2,500,000. At the same time they laid of that surplus has been spent upon rail- down as a cardinal principle governing ways, leaving a surplus of Rx.3,500,000. the policy of public works, that they That is an immensely satisfactory account, should not be developed to such an exbut at the same time I am bound to tent as would in any way entail the risk admit that it would not be so satisfactory of additional taxation. My right honourif this country had not contributed five able Friend my predecessor in office gave millions towards the Afghan war. There great attention to this question, and he is also another fact which it is only proposed to extend and develop the right I should lay before the Committee. system under which railroads had During the whole of this period we have been constructed in India. I looked gone on incurring capital on outlay in into some of the figures which this country for reproductive works, he had before him, and I came to the same which has reduced the amount we should conclusion. Some three years ago he have otherwise had to draw upon the suggested that the Government of India Government of India, and by reducing should draw out a much larger pro the amount drawn has raised the ex-gramme in connection with railway exchange at which the diminished amount tension; unfortunately the famine broke was remitted. Now, there has been out at the same time, and we had to some little inconsistency in the policy we have have adopted in connection with the extension of public works. Shortly after the great famine in 1878 a Select Committee was appointed, of which I was the chairman, and among the members of that Committee was my right honourable Friend the Leader of the House, Mr. Fawcett, Sir George Campbell, and a number of other well-known authorities. We arrived at the conclusion then, looking at the comparatively small returns obtained from the railways and the great cost in the construction of the works in India, that it was advisable to limit the capital raised in any one year for the development of reproductiva public works. We fixed the limit at £2,500,000. Almost simultaneously there was the Famine Commission, which was composed of very eminent men who had been taking evidence in India, and they arrived at the result-looking at the matter from a very much broader point of view that it would be a material advantage to India in its direct as well as indirect effects to have a liberal policy of capital expenditure upon the productive works. They considered that it would be advisable to remove this limit of £2,500,000. Another Committee sat in 1884 to reconcile the difference between these recommendations, and they came to the unanimous conclusion that under the

provide for that additional expenditure. There has been undoubtedly considerable financial difficulty in providing under these exceptional circumstances for the additional expenditure contemplated. But notwithstanding the fact that this experiment has been carried on under these most disadvantageous and exceptional circumstances, I see no reason whatever for altering my opinion, and I think I can lay certain figures before you which will justify it. Let us see what is the nature of the problem with which we have to deal in India. During the past 20 years, notwithstanding the curtailment caused by famine, the population has, including the population of Burmah, added at the time of the annexation, risen from 192 millions to 230 millions, an increase of 20 per cent. from 1877 to 1897. During the 20 years the increase of the Native States included has been something like 50 millions. Such a population, unless industrial employment as a means of wealth is developed, is an additional pressure on the means of subsis tence in many parts of the country. If this increase of population goes on, and if we do nothing to improve and develop the resources of the country, India will become nothing more nor less than a that the railways after all only affect the huge congested district. It may be said well-to-do, and that railway extension is only promoted in the interests of

European officials and a few of the land, a most cautious and accurate man, well-to-do amongst the India community. calculates that during the past 30 years But if we take into consideration the Government of India has spent in the people who use those railways various forms in railways, irrigation, comand take the growth of the passenger mercial docks, municipal and agriand other traffic, we shall clearly tural improvements no less than see that these railways are enor- Rx. 166,000,000, and he estimates that, mously used by the poorer classes of the so far from the capital expenditure country. During the last 20 years the having entailed an additional charge on open mileage has risen from 7,323 in the revenue of India, it has actually 1887 to 20,872 miles in 1897, an increase paid Rx.500,000 a year more than if the of 185 per cent. A considerable portion of expenditure had not been made. When these railroads were built for strategical we turn to the value of the assets of the purposes, and were not constructed for Indian Government, we find that there purely commercial purposes, therefore one is a surplus of Rx. 29,000,000, while in would expect that in the return, so far England there is an excess of liabilities as passengers and goods traffic is con- amounting to £55,500,000. I do not cerned, that these strategical railroads think that any Government could show a would bring down the average. In the last more satisfactory balance-sheet than 20 years the increase in the number of that which I have indicated, showing passengers is from over 34 millions to that real success has attended the policy 160 millions, an increase of 370 per cent. of the Government in respect of capital The number of tons of goods carried has expenditure in India. Now, I think that risen from nine millions to 32 millions, at once the reflection arises that, if the which is an increase of 255 per cent. Government have succeeded in obtaining If the railway traffic returns are taken such remunerative results from their more or less as a guide of the internal capital expenditure, does not India offer trade of the country as they are in Eng- a wonderfully good field for private enterland, the increased railway returns give prise and the investment of private capi an indication that affairs are prosperous. tal. We have in that country every quali If that applies to England it must also fication for the investment of capital. In apply to India. Then take the tele- India we have a very dense population, graph and post office. One finds frugal and industrious, a prolific soil and an extraordinary development, and that an amount of mineral wealth which is in the savings bank department of the at present practically untouched, and one Post Office there has been an increase would have thought that private enterfrom Rx.2,000,000 to Rx.10,900,000; if prise and private capital could not go we turn to trade, we find the exports have to a better quarter to invest it; but for increased from Rx.61,000,000 to the last 10 or 12 years it has unforRx.104,000,000, an increase of 70 per tunately happened that the capital has cent.; whilst the imports have increased been coming back from India, instead from Rx.35,000,000 to Rx.72,000,000, or of more capital being invested there. an increase of 103 per cent. Gold has Now I do not wish to go into any conbeen imported during the last 20 years troversial questions, I am only stating to the extent of Rx.50,000,000, and facts; but I think I have silver to the extent of Rx.165,000,000. out as fair a case as anyone could Now comes the most curious phenome- for the necessity of solving this non of all. Last year, which was a year problem. If people could be assured of exceptional pressure, India imported with any confidence that whatever they larger amounts of silver and gold than sent out to India would, more or it did in any year before, except one. less, come back at a higher value, I Now, the figures that I have read clearly indicate that the policy of investing large sums of money annually for the development of railways and irrigation works and other branches of activity in which the Government can legitimately take part has paid well. Sir James WestSecretary of State for India.

made

believe it would effect a complete economic and industrial revolution in India. There is another consideration which has been forced upon me recently in connection with this. I think we are all agreed that industrial competition be tween different communities of the same Empire is good for the Empire, provided

can

that all the communities are able to between this country and India compete on a fair and equal basis. Now, deny that there will always be troubles India does not get the full benofit of her and risks surrounding our dominion connection with the Empire at large, and there. There are social and political a spirit of enmity is raised, which is most problems which every decade seems to injurious to the commercial prosperity render more difficult to solve. Sir, the of the Empire. We had a marked in- present Viceroy of India is now approachstance of that in connection with cotton. ing the last year of his tenure of office; The Lancashire cotton people thought the last year of his rule in India has that the legislation in India would been associated with more serious diffiinjure the operatives here, and I was culties than any period since the Mutiny. compelled to make a slight alteration in Now, I maintain it is not exaggeration their favour, but what has been the to say that if any grave error of judgment result? The cotton trade of India is had been made, if any false step had doing well, whilst the Lancashire cotton been taken, if there had been any vaciltrade has never done a greater business lation or want of determination shown than it is doing at the present moment, by the Indian Government, most serious and so far from there being any bad feeling between Lancashire and India consequences must have ensued. I think the cotten districts of Lancashire there is no subject in Her Majesty's dominions tributed larger sums to the relief of the whose shoulders has sufferers in the famine-stricken districts been concentrated so much responsibility as upon the Viceroy of India. He is the personal head of the greatest adminis trative machinery in the world. He is

con

more

upon

of India than any other similar sized population in the United Kingdom. Now, Sir, the statement I have ventured to make is one which, I think, consideror less responsible for the ing the circumstances under which it is prosperity, progress, well-being, and made, is not unsatisfactory. I may be order of the 300,000,000 of inhabitants told that it is the outcome of official of India. That task in itself is a hercuoptimism, and that all persons who hold lean one, but the burden of his work is office take an unduly sanguine view of not in itself so much associated with the the position of affairs for which they are immensity of the administrative themselves responsible. I never can machinery which he has to maintain as understand why it is the fashion with a with the complexity of the pro certain class of critics to apply the word blems with which he is called upon optimism to Indian officials. The right to deal. Of all the great Indian honourable Gentleman opposite has had statesmen who have held high office some experience of these officials, and so in that country I think no one has have I, and I should say that if there more clearly defined the nature of the is any class of men who are not sanguine difficulties and troubles which surround it is the Indian officials, because our rule there than the late Sir Henry they are conscious of the difficulty Maine. In a celebrated lecture which he and magnitude of the rôle they have to delivered upon the government of India maintain. Through the agency of those he made an appeal to his audience that officials, a perfect revolution has been they should show great consideration and brought about in the financial system of toleration to the Indian officials in the India, and surely we may well take some discharge of their duties, for he knew pride in the position which we have some of the almost superhuman diffiattained. What has recently been going culties with which they had to contend, on in Egypt has been going on in India and he summed up the position thusfor many years on a larger scale, and clearly it is right that we should look with some satisfaction upon the financial edifice we have reared in that country. Such satisfaction is in no sense incompatible with the knowledge of troubles which may arise in the future. Nobody who looks at the relations

be shortly stated. There is a double current "The general character of this difficulty may of influence playing upon this remarkable Dominion. One of these currents has its origin in this country, beginning in the strong The other arises in India itself, engendered moral and political convictions of a free people. amidst a dense and dark vegetation of primibornly rooted in the débris of the past. As tive opinion and prejudice, if you please, stub