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CHAPTER VIII
TRADE AND MANUFACTURE

LoRD CANNING undertook a great reform in the Indian Tariff. In February 1857, a year after his arrival in India, he addressed the Court of Directors on the subject. He proposed to equalise the duties on British and foreign merchandise, on raw and manufactured articles. He desired to exempt from duty a large number of articles which produced little revenue. He wished to abolish export duties, and to augment import duties. The proposals remained in abeyance during the Mutiny of 1857; and, in 1858, the East India Company ceased to rule. Lord Stanley, the first Secretary of State for India under the Crown, replied to Lord Canning in April 1859. The liabilities of India had vastly increased in consequence of the Mutiny, and the financial difficulties were greater. Lord Stanley, therefore, modified Lord Canning's proposals, so as to secure a larger revenue. British and foreign manufactures should be treated equally by raising the duties on British goods to the foreign rates. Duties on petty articles should not be abolished. Export duties should not be abandoned. Import duties should be increased. Before receipt of this despatch, the Indian Government had already passed Act vii. of 1859, raising the duties on British goods to foreign rates, and taking power to levy the increased duties even on current contracts. And on receipt of the Secretary of State's despatch, Lord Canning replied that the Act recently passed was virtually in accordance with the instructions contained in the despatch.

But the Act gave great dissatisfaction to British mer

chants in India; and when James Wilson, the first Indian Finance Minister, went out to India, he had instructions to try and allay the irritation which had been caused. Accordingly, in 1860, he abolished the export duties on Indian raw products, and considerably reduced import duties on manufactures. British merchants were conciliated; and India suffered a loss of revenue at the time of her sorest need.

In the same year, a committee was appointed to inquire into the subject of Indian tariffs generally. Two British merchants of Calcutta and Bombay formed the committee, and Ashley Eden, afterwards LieutenantGovernor of Bengal, presided. The committee submitted their report in 1860, and suggested a uniform tariff and important customs reforms. A second committee was appointed in 1867, and submitted a revised tariff. A third tariff was prepared in 1869, and in the following year Lord Mayo's Government passed Act xvii. of 1870. The Act fixed the import duties generally at 71 per cent. on manufactured goods and raw material, at 31 per cent. on twist and 5 per cent. on piece goods, at i per cent, on iron and 10 per cent. on tobacco. The principal export duties were 6s. on a Maund (82 lbs.) of indigo, 3d. on a Maund of grain, 4 per cent. on lac, and 3 per cent. on oils, seeds, cotton goods, hides, and spirits.

Further changes were made in the following year by Act xiii. of 1871. The principal import and export duties, fixed by the Act, are given on p. 338.

Valuable evidence on the operation of these duties on trade was given before the Select Committees of the House of Commons which sat in 1871, 1872, 1873, and 1874. It is necessary therefore to refer to some portions of this voluminous evidence.

John Nutt Bullen, a prominent Calcutta merchant who had sat on Ashley Eden's Tariff Committee of 1860,

See Sir Bartle Frere's evidence before the Select Committee of the House of Commons, 1871.

Import Duties. Apparel, arms, cabinet-ware, candles, carriages, clocks, \ 1 per cent.

cotton, &c. . Cotton twist .

. . . 31 Piece goods . .

. .

5 . Medicines . .

. 7 Colouring materials .

75 Fruits, glass, skins, jewellery, ivory, and leather . . 77 Beer . . . . . . . . .

. . id. per gallon. Spirits

. . 6s. Wines

. . 38. , Iron.

. . . . . . . . I per cent. Other metals . Naval stores, oils, paints, perfumery, porcelain, pro

visions, and oilman's stores . . Silk .

. 7
Sugar
Tobacco . . . .
Woollen piece goods . .

. . . . 5

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complained of the export duty of 41d. per maund (82 lbs.) of grain, and said it fell on the grower of rice, and was, to that extent, an addition to the Land Tax. The import duty of 5 per cent. on cotton piece goods was, he considered, moderate and unobjectionable. There were only two or three cotton spinning and weaving mills in Calcutta.

Sir Bartle Frere spoke guardedly on the effect of keeping down the import duty on cotton piece goods in order to foster the sale of British goods. “There is this difficulty," he said, "that the interests of India and of England on that point seem rather at variance. No doubt some considerable increase of revenue might be realised by increasing the import duties, say, upon piece goods and yarns, but the direct result of that would be to

1 Select Committee's Report, 1871 ; Question, 6014

diminish consumption and to stimulate production on the

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On the other hand, Walter Cassels, who had been a Bombay merchant and a member of the Bombay Legislation Council, argued that even the small import duty of 5 per cent. on cotton piece goods operated as a protective duty. And he looked with a jealous eye on the growth of the cotton spinning and weaving industry in Bombay. "I say they are protective duties. I do not advocate their abolition solely for that reason. I do not know whether you are aware that, for instance, in the Bombay Presidency there are 12 cotton mills, employing (a very small amount, of course, for Manchester) 319,394 spindles, 4199 looms, and 8170 hands, consuming, I think, 62,000 bales of cotton of 400 lbs. each annually.” 2

British administrators in India marked with satisfaction, rather than with jealousy, the growth of the infant cotton industry of Bombay; but in matters of Indian administration they were the servants of the British merchant and the British voter. The veteran Sir Charles Trevelyan, who had served India with credit and distinction under a former generation of rulers, and who had, at a later period of his life, been Governor of Madras and Finance Minister of India, spoke with some warmth against the sacrifice of legitimate Indian revenues under the mandate of British manufacturers. “Although the trade of India," he said, “increased in these ten years from £60,000,000 to £106,000,000, the Customs yielded £1,013,500 less. If Customs Duties are a legitimate source of revenue, so small an amount as £2,400,000 for the whole of India is simply ridiculous." 3

Lord Lawrence, too, felt deeply on this point. As Viceroy of India he had tried to raise the export duties on jute and other Indian products in 1865, to get a little

Select Committee's Report, 1871; Question 5608.
2 Ibid.; Question 7962.
3 Ibid. ; 1873; Question 923.

additional revenue and save the country from a deficit. But British interests had been too strong for him, and the Secretary of State for India had disallowed his proposals. Eight years after, when he was questioned as a witness by Mr. Fawcett, he guardedly expressed his painful impressions of the influence of British trade over the financial policy of India.

Henry Fawcett.—With reference to export duties; if an attempt was made to increase the export duties, to put an export duty, for instance, upon cotton or upon jute, it would, pro tanto, place the trade of India in a, comparatively speaking, unfavourable position, and would bring to bear against the Government of India the very powerful pressure of the commercial classes in England, would it not ?

Lord Lawrence. That is quite true.

Henry Fawcett. — Do you think, considering that India is scarcely represented at all in this House, that it is only indirectly represented in the House, and that the commercial classes of England are powerfully represented in it, that any Government would, for one moment, be likely to resist an opposition, brought to bear upon them from people who have votes, against putting on such an export duty ?

Lord Lawrence.--I think not.

Henry Fawcett.—Therefore, considering how India is governed, that India is governed by the House of Commons, and that India is governed by the Secretary of State, who, after all, is a Member of the Cabinet whose existence depends upon the votes of the House of Commons, you cannot rely upon the imposition of an export duty as giving you an increase of revenue in India, can you ?

Lord Lawrence. I am afraid not.1

It is necessary to make one more extract here from Mr. Fawcett's examination of Lord Lawrence to indicate the extent to which the Secretary of State and his Council

Select Committee's Report, 1873 ; Questions 5580 to 5582.

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