§ Order for Committee read.
§ On Motion that Mr. Speaker do leave the Chair,
expressed a strong hope that, even after the announcement which had that evening been made by the noble Viscount, the House would permit the Bill to pass through Committee. They would not meet again till Friday, and a further adjournment would then take place in order to allow the new Members of the Government to be re-elected; so that it would be nearly Easter before the measure could be proceeded with. In the meantime it was requisite that the Company should be provided with funds, not only in order to carry on the public service, but in order that it might make those repayments to the Exchequer which he felt sure the new Chancellor, whoever he might be, would be very unwilling to forego.
THE CHANCELLOR OF THE EXCHEQUER
said, that of course he should not ask the Committee to discuss the details of 1871 any measure under existing circumstances; but he wished to say that there was a reason for proceeding with this Bill, arising from circumstances affecting the state of the finances of the East India Company. The Committee were aware of the statement which had been previously made. There were certain Army and Navy Estimates which were re-payable by the East India Company, and which it was desirable should be repaid before the end of the financial year, on the 1st April next, in order to prevent any derangement of the finances of this country. If the Company were not able to repay the amount of public money advanced to them, the Estimates would be deranged. He wished the Committee merely to be in possession of these facts, and then they could deal with the Bill as they pleased; but he hoped that the House would accede to the course proposed by the hon. Gentleman.
MR. T. BARING
said, that when this Bill passed the second reading it was understood that any details were to be reserved till the Committee. He certainly thought this mode of raising money a very clumsy one, and the general principles of the measure most remarkable. But, if it were perfectly essential for the purposes of carrying on Her Majesty's Government that this money should be raised, of course his objections must yield to that consideration. If, therefore, the hon. and right hon. Gentlemen said that it was necessary for the public service that this measure should pass through Committee, he should not resist the Motion for the Speaker leaving the Chair.
MR. VERNON SMITH
said, he hoped the progress of this Bill would not be opposed, as its postponement, would be attended with inconvenience to the public service. The hon. Member for Huntingdon (Mr. T. Baring) had expressed his desire that a discussion should be taken upon the principle of the Bill. He (Mr. Vernon Smith) thought the principle of the measure had been sufficiently discussed upon its introduction; but notice had been given of several Amendments which could not, perhaps, be conveniently discussed under the present circumstances. His right hon. Friend the Member for Portsmouth (Sir F. Baring) had given notice of a Motion for reducing the amount the Company was to be allowed to borrow from £10,000,000 to £8,000,000. To that the Government were willing to assent. He believed, also, that some objection was 1872 entertained by one of the hon. Members for the City of London to the 11th Clause, which proposed that subscriptions to loans raised in India might be taken in this country. There was a novel principle involved in that proposition, as the clause would undoubtedly confer upon the East India Company more extensive powers of borrowing than they had hitherto possessed, the same objection existed therefore to its consideration at present. Except with reference to these points he believed no objections existed to the passing of the Bill through Committee; and it would be competent to the hon. Member for Huntingdon to raise any question as to the principle of the measure upon the third reading.
§ SIR HENRY WILLOUGHBY
said, that this Bill had been read a second time without any discussion, on the understanding that a debate on the principle of the measure might be taken on going into Committee; yet they were now asked to assent to this stage of the Bill without sufficient information with regard to its probable effect. He should like to hear from the Chancellor of the Exchequer, or the hon. Member for Guildford (Mr. Mangles) the precise amount of liabilities of every kind to which the revenues of India were at present subject. So far as he could make out, the amount, including charges of all kinds, was from £90,000,000 to £100,000,000. There was a funded debt of, he believed, from £50,000,000 to £60,000,000; there was the charge for stock; there was also a great' mass of liabilities on account of railways, besides many other charges. He wished to have some information on this subject before he assented to a Bill which would enable the East India Company to increase their funded debt by one-sixth. The Bill would give the Company the power of raising £10,000,000, and he wished to know whether there was any possibility that the Exchequer of the United Kingdom might be rendered liable to that debt. Supposing that by any accident the interest upon this loan should not be paid, supposing that the Indian revenue should be exhausted, could any claim be made upon the British Exchequer? Judging from the evidence upon the table of the House, there had been a chronic deficiency in the Indian revenue during the last four years. Indeed, he believed that the deficiency for the last year was nearly £2,000,000, and that dur- 1873 ing the last four years the deficit had amounted to nearly £6,000,000. Parliament was, however, asked to authorize the Company to borrow £10,000,000, and he wished to know how the Company would raise revenues to enable them to pay the interest upon this loan. The revenue of India was principally raised from land tax, salt, and opium; but, under the existing state of things, the larger portion of this revenue could not be collected. He had heard, moreover, on the best authority, that the revenue of India could not sustain any additional charges, and that there could not be a greater fallacy than to suppose that India, like the United Kingdom, could bear an increase of taxation in order to pay the interest of debt. He would certainly be disposed to support the Motion of which the right hon. Member for Portsmouth had given notice, for reducing the loan from £10,000,000 to £8,000,000, but before giving his assent to the Bill, he trusted some explanation would be given upon these points—what was the present state of the Indian revenue—what were the changes on it in the shape of debt of all kinds; and from what revenue it was proposed to meet this additional charge. He wished also to know whether there was a reasonable prospect that the interest upon the loan would be paid, and whether there was a certainty that the revenues of the United Kingdom would not be liable for the amount which might be raised by the East India Company under the authority of this measure.
THE CHANCELLOR OF THE EXCHEQUER
said, that as he had already addressed the House, he could not now reply to the questions of the hon. Baronet; but when the Speaker left the chair he hoped to be able to give them a satisfactory answer.
§ MR. AYRTON
thought that, in the present state of the House, and considering also the position of the Governments of this country and of India, it would be most inconvenient to continue a discussion on this subject. The prosecution of the Bill at that moment might, in his opinion, lead to very serious difficulties. The right hon. Member for Buckinghamshire (Mr. Disraeli), although he had spoken in somewhat obscure terms, had seemed to suggest the adoption of a policy totally at variance with that which was pursued by the promoters of this Bill. Now, in whatever terms they might frame the Bill, the fact was the House was called upon to consider whether this country would not be morally 1874 responsible for the loan it enabled the East India Company to raise, in the event of any emergency which placed in jeopardy the security for that loan. This question became the more complicated because a change was proposed in the Government of India which would bring that country under the direct supervision of the Crown. It was a matter for grave consideration whether the credit of this country should not be made available instead of the discredit of the East India Company to meet the embarrassments of India. Whatever danger hon. Members thought was likely to arise from mixing up the finances of India and of England, the House should reflect whether the great advantage which such a course would entail did not outweigh the possible danger. The amount to be gained annually in the difference between the rate of interest which would have to be paid by the British Government and that by the East India Company, if formed into a sinking fund, would in fifty years extinguish the whole debt; or the British Government might borrow by annuity for that period at a rate equal to the interest the East India Company would have to pay. The experience of the Turkish loan showed that it was better at once to afford financial aid than to wait until the resources of a country were swallowed up by loans at a ruinous rate, and then have to be content with a diminished security for the aid which the country was ultimately compelled to give. To proceed with the Bill at any time was, he thought, impolitic; but it was extremely inconvenient to do so now, before an opinion was expressed with regard to it by those who were hereafter to undertake the conduct of affairs.
§ MR. WALPOLE
said, it certainly seemed to him that the House was placed in rather a difficult position with regard to this Bill. Hon. Members were called upon to sanction an Indian loan when there really existed no responsible Government. At the same time, considering the statement of the Chancellor of the Exchequer and the Chairman of the Company, that in point of fact there was a public necessity for raising a large sum of money in the present state of India, he thought that the House would act wisely and prudently in acceding so far to the proposal made to them as to go into Committee on the clauses of the Bill. If they did so, however, the lowest amount ought to be taken which would be available for the present emergency, and they ought 1875 not to pass the 11th clause of the Bill, involving as it did an important principle Which might give rise to much discussion.
§ House in Committee.
§ On the question that the Preamble be postponed,
THE CHANCELLOR OF THE EXCHEQUER
I hope I shall be able to satisfy the Committee that there is a real reason of convenience for proceeding with the Bill at this moment. The course which Her Majesty's present advisers are taking in asking the House to consider the measure is quite disinterested on their part, inasmuch as it does not in any way concern them at present that the Bill should make progress. In quitting office, however, they are desirous not to leave such a deficiency of ways and means as would create an inconvenience to their successors, or render necessary a supplemental Vote and an encroachment on the balances in the Exchequer, which might have to be resorted to if the East India Company are not empowered by raising money on loan to repay the advances which have been made to them by the Exchequer during the course of the present year. The proposal is to authorize the Company, for the service of the Home Government, to raise money, either by debentures or bonds. Such a proposition involves no new principle. From a very early period the East India Company have from time to time been empowered to raise money by bonds in this country, and the raising it by debentures constitutes merely a formal alteration, which makes no difference in point of principle. When they were a trading as well as a governing corporation they raised money on bonds for the purposes of their trade. At that time Parliament thought fit, as it limits the amount borrowed by other trading companies, such as railway companies, to limit the amount which this corporation could raise by their bonds. As soon as the Company ceased to be a trading company, and remained merely a governing body—a subordinate part of the Home Government of India—their position was entirely altered. Nevertheless, the old maxim was thought to apply—namely, that they had not an unlimited power of borrowing in this country for the service of the Indian Government. It was stated by the hon. Member for Guildford (Mr. Mangles), and from communications with the India House I know it to be the fact, that the opinion of counsel has been taken on the point whether, now that they have 1876 ceased to be a trading body, there is anything to restrain them from borrowing money in England for the service of the Home Government; and the opinion of counsel is, that there is nothing so to prevent them:—so that in fact, if that opinion be just, there would be no necessity for passing this Bill. But the Government thought, and so advised the Company, that inasmuch as it had been the invariable practice for Parliament to authorize them to borrow on bonds in this country, it would not be expedient to act on the opinion expressed by counsel, and that it would be more respectful to Parliament to ask for their express authority. For that reason the Bill has been introduced. As I said before, the measure involves no new principle whatever. In point of fact the Company have now a power to borrow on bonds, which is not wholly, though it is nearly, exhausted. Therefore, when it is argued that this is a dangerous principle, and that it would involve the British Exchequer, my answer is that the principle is neither new nor dangerous, and that it is perfectly understood with respect to loans contracted by the Company in the London money market. If the Committee wish, I will go through the items of the account which has been framed by the Company, containing an estimate of the probable charges upon the Home Government of India until the end of their next financial year, the 30th of April, 1859, and the means they estimate for meeting these charges. Perhaps, however, it is unnecessary that I should do more than mention the result, which is that there Would be a deficit of about £7,500,000. The charges have, I think, been taken on rather a liberal scale, and the probability is, as far as we can judge at present, that the deficiency will be a sum considerably less than £7,500,000. However, in the present state of India it is very difficult to form anything like a close approximation to the truth in framing an estimate; and we will therefore assume that at the end of the Company's financial year, on the 30th of April, 1859, there will probably be a deficiency exceeding £7,000,000. Now, the question arises, how that deficiency is to be met. The hon. Baronet opposite (Sir H. Willoughby) contends that there is danger in authorising the East India Company to borrow this money, inasmuch as the consequence of such a step may be the creation of a prospective charge upon the Imperial Exchequer.
§ SIR HENRY WILLOUGHBY
I simply wished to have an assurance from the Government that there was no such danger involved in the measure.
THE CHANCELLOR OF THE EXCHEQUER
My answer to the hon. Baronet is, that there is a charge to a certain amount to be met, and that we must endeavour to meet it in one way or another. It is the duty of Parliament to see that adequate means be provided for the purpose; and we, with that view, propose to enable the East India Company to borrow in the English market, the unlimited power of raising loans in the Native market which they possess being now insufficient. The hon. Baronet wishes further to know what is the exact amount of the present debt of the Government of India? In reply to that question I may state that the gross income derivable from our Indian possessions is about £29,000,000 per annum, and that the stock of the Company—which is a portion of their debt guaranteed by Parliament, but not guaranteed upon the credit of the British Exchequer, the fund out of which the dividends are to be paid not being designated by the Legislature—amounts to £6,000,000.
THE CHANCELLOR OF THE EXCHEQUER
In the event of the failure of the Indian revenue, the faith of Parliament is no doubt pledged to provide for the payment of the dividends out of the English Exchequer; but there exists no necessity for malting a demand upon it until that revenue becomes exhausted. I think, therefore, I am right in saying that there is no direct and primary charge upon the Exchequer of England in connection with this stock. That stock, as I have just stated, amounts to £6,000,000, and is guaranteed at £12,000,000—that is to say, £200 are to be paid for every £100—so that the whole sum may be considered as equivalent to a debt of £12,000,000. Now, the guarantee fund which is to be set off against that debt amounts to about £4,500,000, and we reckon that it will in the course of a few years be as high as £7,000,000. Well, the India debt—in respect of all the three Presidencies—is £50,483,000, and the bond debt about £6,000,000; those various sums in conjunction constituting a total charge of £68,000,000. That is the whole of the 1878 present charge Upon the revenues of India, and against that is to be set off the guarantee fund. The Committee will therefore see that, Comparing the gross debt of India with its annual revenue—which is £29,000,000—the amount is not so considerable as might have been supposed. There is, however, another way of looking; at the Indian debt.
THE CHANCELLOR OF THE EXCHEQUER
No. I am referring to that which is strictly speaking the amount of the debt; and I may add, that what seems to me to be most material with respect to it is not the nominal amount of the capital of the debt, but the annual charge which it imposes. The total annual charge for the Indian debt, according to the last accounts presented to Parliament, which relate td the year ending the 3rd of April, 1856) was as follows:—
Now the gross revenue, as I before said, is £29,000,000, and the net income may be taken at £23,000,000; so that the annual charge for the public debt of India as it stood in 1856, amounts to about one-eighth of the net revenue; whereas the annual charge for the debt of the United Kingdom is about £28,500,000, or nearly one-half its ordinary revenue. The Committee, therefore, cannot fail to perceive that the debt of India is comparatively light when taken in connection with the revenue which she yields. The statement which I have just made will, I trust, lead the Committee at the conclusion that when the existing revolt in India has been quelled and the country restored td its ordinary condition, the credit of the Indian Government will be in a position to sustain the loan which I how propose. Let us just see what is the present state of the credit of that Government. On the 6th of October, 1853, the Company's Four per Cents were worth in the Indian market 103½ or 103¾. That was before the public works loan was negotiated. Upon the 29th of January, 1857, just previous to the outbreak of the mutiny, the Five per Cents were 99, and the Four per Cents 80, at which price the Indian 1879 Government could borrow at the rate of 5 per cent. If, however, you compare its credit with that of most of the Continental nations, you will find the comparison to be not disadvantageous to the Government of India. The French Three per Cents, for instance, were lately as low as 69, and very many continental Governments find themselves unable to borrow upon more advantageous terms than 4 or 5 per cent. The ordinary interest of money in India is 10 and even 12 per cent, and if the Indian Government can borrow at 5 per cent it is, I think, impossible to contend that their credit is bad. No better test of the soundness of that credit can, I think, be taken than the value of its bonds in the London market. Those bonds are at 4 per cent, and are now at about 25s. premium. Exchequer bills are at a rate of interest which is equivalent to £3 16s. per cent, and are at about £2 premium, Therefore if the Committee will compare the two scales of credit they cannot fail to perceive that the superiority of the Imperial credit over that of the Government of India is nothing very remarkable. I can therefore entertain no reasonable doubt as to its being able to negotiate its bonds upon fair terms, nor, in my opinion, is there any good ground for calling upon the English Exchequer to give a guarantee for those bonds. It has hitherto been the great boast of the Indian Government that they have been enabled to defray all the expenses connected with their administration; but it cannot with justice be denied that they have always enjoyed the advantage of being backed up by the resources of this country, without which it is clear the Empire of India could not have been maintained for a day. Any one who considers the events of the last six months must be aware that if it had not been in the power of the Imperial Government to send out 40,000 or 50,000 troops the resources of the Company would have been of no avail. It is true that though the number of troops sent out to India has been much larger than usual, the pay and provisioning of those troops is provided for from the Indian treasury. It has been usual for many years for all military expenses and, to some extent, the naval expenses for the defence of India to be paid out of the revenues of India. In the time of Lord North the question was mooted whether the British Government had not a claim to the territorial revenues of India. The East India Company main- 1880 tained their right to them; while, on the other hand, the Imperial Government contended, and has always consistently maintained, that whatever territory might be acquired by British subjects was acquired to the Crown. That doctrine is recognized by all jurists, and there is not the smallest doubt that the Government was in the right. A compromise, however, was effected by the imposition of what was called a tribute upon the East India Company, and for a series of years that tribute was paid into the British Exchequer. Subsequently, however, the arrangement was altered, and the Company was required to pay over the surplus revenues; but no surplus ever came, and at last the bargain was abandoned. But it has always been held that if the East India Company contributed nothing to the revenues of this country they should be independent of all aid from the Imperial Exchequer. There have been loans from the Government to the East India Company which have been repaid, but I am not aware that there has been any grant of public money from the British Exchequer to the Company or any guarantee of any kind by the Imperial Exchequer to a loan for the Company. I can see no ground for departing from that invariable practice; and I hope the Committee will agree that this Bill is founded upon a just principle, and that, should it be passed, the East India Company will have no difficulty in raising money as they may require it for the wants of their home treasury. The Company, I must observe, do not contemplate an immediate call upon the money market for so large an amount of loan as the Bill mentions. If they raise £2,000,000 or £3,000,000 within the next six months, that is quite as much as they are likely to require; but as circumstances arise they will take £1,000,000 or so in order to defray current expenses, and therefore it is that so wide a margin has been taken in the Bill. Every one will see that it would not be a sufficient justification for calling Parliament together next October or November simply because a Bill was necessary to enable the East India Company to borrow another million; and therefore it is proposed to authorize them to borrow from time to time such sums as may be required for the exigencies of their service. While upon the one hand there is nothing in this Bill which is likely to bring any prospective charge upon the British Exchequer, upon the other 1881 hand it provides the means for raising money at the least practicable cost to the taxpayers of India. It is admitted there is a real want of money which must be supplied by some means or other. If the means proposed are not adopted, what is the alternative? Has any hon. Gentleman anything better to propose? It is clear that the current revenue of the East India Company is insufficient; no argument is needed to prove that the tendency of the late outbreak has been to diminish the resources of the Indian Government, and that the revenue is likely to prove insufficient during the present year. That being so, will the Company be able to borrow sufficiently in India? I understand that the Indian loans are not filling so rapidly as they had previously done, and that a sufficient sum of money cannot be raised in India for the expenses of the present year. What course, then, can the East India Company adopt, except to borrow money in London? If they are not allowed to do that, it only remains that the British Exchequer shall supply the deficiency. He defied any hon. Gentleman to show that there is any other alternative. Either the Company must he authorized to borrow in this country, or the Government must borrow money on their own credit, and pay it over to the Company, or they must impose additional taxes. I do not see the smallest reason for resorting to either of the two latter courses. The reasonable and proper course to pursue appears to me to be so obvious in the present necessarily embarrassed state of the Indian finances that I cannot but believe the Committee will be satisfied with the explanations I have given.
Interest on the India debt £2,044,318 Interest on the home bond debt 152,017 Dividends to Proprietors of stock 632,089 Total £2,828,424
MR. T. BARING
said, he was surprised that the right hon. Gentleman had thought it necessary to make so long a speech, considering the state of the House and the position of the Government. The right hon. Gentleman had gone boldly into the whole subject, and had discussed the principles upon which the Bill was framed in so detailed a manner as to render necessary a few remarks in reply. The right hon. Gentleman had enlarged upon the state of the Indian finances, the power to borrow in India at advantageous rates, what the extent of the wants of the country would be, and whether there was any lien on the honour of the nation to come to the rescue of the Indian finances, and meet the Indian engagements. He (Mr. Baring) was not inclined to think very ill 1882 of the Indian finances, considering that two years' Indian revenue would nearly pay the whole of the Indian debt. But if it were true that the East India Company could always borrow money in the country upon as good terms as the British Government, how was it they had not been able to obtain money last autumn upon such easy terms? Why did they not raise the rate of interest upon their bonds so as to place them upon a level with the most favoured securities of railroad companies? He believed that question could be easily answered. Such bonds would have interfered with the right hon. Gentleman's own Exchequer bills. He (Mr. Baring) asserted that in times of difficulty the East India Company could not borrow upon advantageous terms. Then, again, as to the amount of loan to be empowered, the right hon. Gentleman had said £7,500,000 would be wanted, but he proposed to give power to raise £10,000.000.
MR. T. BARING
replied, that was no doubt an Estimate of the wants of the Company; but the proposition was to give them power to exceed the amount of loans to meet those wants by £2,500,000. He did not object to the minimum amount of £1,000,000 proposed to be always retained, but still it must be remembered that it was £1,000,000 sterling that was an available sum. Then came £1,000,000 to meet the repayment to the Bank of England next October of a loan to that amount. That was quite right; but he believed that loan was made upon the security of the East India Company's bonds given under their former power of borrowing. It was quite true the loan from the Bank must be repaid, but the repayment would bring back those bonds, which would again be available for the Company's uses. Another item of the calculation was £653,000, to meet bonds respecting which notice of payment had been given. That operation might have been avoided if the East India Company had raised their rate of interest so as to keep the bonds afloat upon the market. But still, if that £653,000 should be paid off, the bonds being issued under the Company's old borrowing powers, they would be enabled to raise again that amount of money under those powers. Therefore there was clearly £1,653,000, forming a portion of the old borrowing power of the East India Company, and that amount should be deducted 1883 from the estimated wants of the present year, to be raised by new powers. There would then remain about £6,000,000 necessary to be raised under new powers; but the Bill before the House gave power to borrow no less than £10,000,000, although they would probably only be exercised as far as £8,000,000. Considering the present state of affairs, he thought it was most objectionable that a power to raise £8,000,000, in order to meet wants amounting to £6,000,000, of which about £3,000,000 were repayments to the Chancellor of the Exchequer, should be conferred upon a body of whose composition the House was at present ignorant. It was true a Council of some kind had been announced, but who were to be its members no one could tell. The East India Company would not have the administration of the funds to be raised under this Bill, which would be left in the power of some Board or Secretary of State. But he would ask whether it was reasonable in the present conjuncture to vote power to raise £8,000,000 when £6,000,000 only was required. As the right hon. Gentleman had challenged the Committee to say whether England was to be liable for Indian debt, he (Mr. Baring) could only express a hope that so long as England maintained possession of that empire she would never repudiate the liability which was imposed upon her by that possession. He believed and hoped that so long as India belonged to England there never would be found a Chancellor of the Exchequer, no matter from which side of that House he might proceed, who would not be prepared to provide for the wants of that country. The right hon. Gentleman opposite had, indeed, stated that India was of no value to us, and that it was a matter of indifference to us whether we kept it or not. [The CHANCELLOR of the EXCHEQUER: I never said that.] So long as we maintained possession of India he contended that we were bound by every principle of honesty and policy to see that Indian finance was kept in order. On the ground of economy, as well as of justice, we were bound to do so, because nothing would more tend to the security of that empire than the fact of preserving its finances in a state of regularity and order. Upon this point he would read to the Committee the opinion of Sir Robert Peel in 1842. That right hon. Gentleman said—I refer to the state of Indian finance. I am 1884 quite aware that there may appear to be no direct and immediate connexion between the finances of India and those of this country; but that would be a superficial view of our relations with India which should omit the consideration of this subject. Depend upon it if the credit of India should become disordered, if some great exertion should become necessary, then the credit of England must be brought forward to its support, and the collateral and indirect effect of disorders in Indian finances would be felt extensively in this country." [3 Hansard, lxi. 428.]He (Mr. Baring) did not believe, under good management, that India need, except in extraordinary times, apply for loans in England or from England; but he was quite sure, when such a case occurred, that England was bound to meet the wants of India and to support her financial credit. Another reason why this should be done was that it was proposed now to destroy the double Government, and to bring India under the more direct control of the Crown, He wished the Committee to attend to what had been said upon this subject by another authority, for whom he had individually great respect—he meant the right hon. Baronet the Member for Halifax (Sir C. Wood). That right hon. Gentleman, on the 3rd of June, 1853, said:—The hon. Member for Manchester said the other day, at a meeting at Bristol, on the subject of India, that nothing could be satisfactory except a single government, by means of a Secretary of State. That also is the view of the gentlemen who have associated themselves together for the reform of the Indian Government. Now, we must consider what would be the effect of a change of this description. The Proprietors of India Stock and the Court of Directors will remain a body until 1874, and they will be entitled to receive the dividends upon their stock which are secured upon the territory of India, or to claim to be paid the amount of that stock. They claim to revive as a commercial body, and to carry on their trade with the capital thus reimbursed. The Government on the other hand, would assume the charge and government of India, and the obligations, liabilities, and debts of the East India Company; and I am not sure whether my right hon. Friend the Chancellor of the Exchequer would be pleased to have the debt added to his present obligations; because, although it is true that it is secured on the Indian territory, yet it might be convenient that the same thing should be done for India which we have done for some of our colonies, and that by giving the guarantee of the government a lower rate of interest should be payable on the debt. This has, I see, been already suggested by a noble Lord in another place, and though in the present state of things I should not think of preferring such a request to the Chancellor of the Exchequer, the case would be very different if India was administered as our other dependencies by the Government of this country and in the name of the Crown. I do not believe that this is an insuperable objection, but it is one that requires to be carefully considered before we make any change." [3 Hansard, cxxvii. 1112.]1885 That being so, he maintained that it was the duty of the Government of this country in those moments of exigency to lend its aid to the Government of India towards raising any funds that might he required in the least expensive mode. If they borrowed money on the faith of the Government of England and lent it to the Government of India it would be a simple operation. It would be a safe operation also, and the most economical one. If £8,000,000 were required, why not borrow it in Consols? They would get it at the cheapest rate, and they might lend it to the East India Government on the guarantee of that Government to provide for the annual interest, and at the end of a certain term of years—say five years—annually to redeem £1,000,000 of that stock. He believed that by adopting that course they would show that they duly appreciated the powers of the East Indian resources; the operation would cost this country less probably than any other that could be devised, and he was satisfied that it would be perfectly safe. But if the right hon. Gentleman said that we had nothing to do with Indian finance, that the creditors must look to India, and that he did not attach much importance to retaining India, the consequence would be to compel the Company to borrow on much higher terms than they need otherwise do. The right hon. Gentleman had challenged contradiction to his opinions, but he (Mr. Baring) did not anticipate that they should have been called upon to go into this discussion that evening, and still less that the right hon. Gentleman should have made a speech which in reality invited opposition and called for dissent.
THE CHANCELLOR OF THE EXCHEQUER
I wish to say a few words of explanation. The hon. Gentleman who has just sat down has not fairly represented me. I did not say upon any former occasion that I thought it was a matter of indifference whether India was lost to this country or not. What I stated was, that I entertained serious doubts as to the value of India to this country. I said, and I repeat, that the Exchequer of England does not derive any advantage from the revenue of India; that from the mere sovereignty and government of India we derive no benefit; that whatever benefits we derive from India result from the facilities for our trade, which our sovereignty may be supposed to afford; and that I doubted whether our trade with India was 1886 considerably greater in consequence of our sovereignty, than it would be if India consisted of independent States. I expressed a doubt of the supposed value of the possession of our Indian empire; but I added, that having overthrown the Native Governments of India, we have succeeded to the obligations of those Governments, that it is now no longer optional with us whether we will govern India, and that, whether valuable or not, it is necessary for us to maintain the Indian empire, and to make those sacrifices which the maintenance of that empire may require. These are the remarks I made, and I am sorry that they should have been misunderstood.
§ SIR HENRY WILLOUGHBY
said, that the securities which were afforded by the Indian revenue for a loan of this description could not be regarded as very great. That revenue was derived, in a great degree, from the taxes upon opium and salt, one of which yielded £4,000,000., and the other £2,000,000; and it was notorious that both those taxes had been frequently attacked in that House. The same remark applied also to the rental of land. He had heard all the debates on this question, and he believed it was stated, on the occasion of the East India Bill passing through the House, that the instant the Company ceased to have any participation in the rule of India, they might give notice to the Chancellor of the Exchequer to pay them within three years £12,000,000, the amount of the guarantee fund. The right hon. Gentleman seemed to have some misconception as to the Chancellor of the Exchequer's duty to provide that amount in such a case.
THE CHANCELLOR OF THE EXCHEQUER
I stated there was no charge on the British Exchequer. There is no doubt that Parliament is bound to redeem the debt, but nothing is said in the Act as to, its being redeemed out of the British Exchequer.
§ SIR HENRY WILLOUGHBY
All I mean to say is, you will be obliged to find the £12,000,000 in hard cash if the Company, on being deprived of a share in the Government of India, should demand payment.
THE CHANCELLOR OF THE EXCHEQUER
said, Sir Charles Grant, during the debate on the Act, in reply to the question—"Is this country to be answerable for the payment?" from Sir Robert Peel, said, that the revenues of this country would be totally unaffected by the Act, and that it only gave the 1887 security of the territorial revenue of India. He could assure the hon. Baronet that he had looked carefully through the whole of the Act, and that it did not impose a single charge upon the revenues of this country.
§ SIR FRANCIS BARING
deprecated any further discussion in the absence of a responsible Government of the general question of Indian finance. At the same time he begged to say, that he could not withdraw the opinion which he had stated on a previous occasion—namely, that if the Indian Exchequer failed, the amount would have to be made good out of the British Exchequer. In common honesty that would have to be done.
MR. W. WILLIAMS
could not understand on what principle the taxpayers of this country were to be made liable for the repayment of a loan to the East India Company. The Chancellor of the Exchequer might as well ask him (Mr. Williams) to pay the right hon. Gentleman's debts, as ask the English taxpayers to make good a loan to the East India Government.
MR. VERNON SMITH
said, no doubt there was considerable inconvenience in raising, at the present moment, any large question respecting Indian finance; but the fault certainly did not he with the Chancellor of the Exchequer so much as with the hon. Baronet the Member for Evesham (Sir H. Willoughby) who had asked a series of questions which his right hon. Friend was obliged to answer. He thought his right hon. Friend had very clearly shown that if the Indian revenue should fail, the Imperial revenue would not necessarily become bound to repay the loan. They might, no doubt, limit the liability to repay a public loan to the revenues of a particular portion of the empire, as was done every day with regard to the colonies; for instance, a great deal of money had been raised at £6 per cent upon the revenues of Canada, and there was no reason why India should not be capable of raising money in the same way for Indian purposes. But if the whole revenue of India should be lost, this country would no more become morally liable to reimburse the lenders of the present loan if it was in the hands of the Crown, than it would if it was held in trust by the Company.
§ MR. CRAWFORD
referred to the 13th section of the 3rd and 4th Will. IV., chap. 85, in support of his opinion (notwithstanding the observations of the Chancellor of the Exchequer) that the Imperial revenues were answerable for the payment 1888 of the amount secured to the East India Company.
§ MR. AYRTON
said, East India stock was a primary charge upon the revenues of India, and was further secured by the guarantee fund, which provided for the payment of the East India dividends if the revenues of India should not be sufficient for that purpose. There could be no doubt that if Parliament took out of the hands of the Company the government of India, Parliament would become responsible for the repayment of the capital of the Company, if demanded by the Company within a year, wholly irrespective of the Indian revenues. But that in truth was not a serious liability, because East India stock at present was at a very large premium, about £220; but the Government was only liable to pay £200 for every £100. It would, therefore, be a considerable loss to the Proprietors of East India Stock to be repaid their capital. If the Company should fail to demand repayment of their stock within the first year of their deprivation by Parliament of the government of India, it need not be redeemed until Parliament chose at any time after 1874; but whenever notice was given to Parliament by the Company to redeem, the amount would have to be made good by the British Exchequer, whether there were Indian revenues or not. He objected to the interest of the Indian loans being paid in this country, because it tended to encourage holding the Indian loans in this country, whereby India, which would have to furnish that interest, would lose the benefit of the expenditure. The East India Company might, under the provisions of the Act of 1833 pay the Proprietors of East India Stock their dividends out of their guarantee a fund that was yielding only £3 per cent, and thus save themselves the trouble of going into the market to borrow money at £4 or £4 10s. per cent. He protested against this Bill being further proceeded with in the absence of a responsible Government.
THE CHANCELLOR OF THE EXCHEQUER
reiterated his opinion that no charge was made by Act of Parliament upon the British Exchequer for the redemption of the stock of the East India Company. The words of the clause were these:—That if the Company shall at the expiration of the term hereby granted be deprived of the possession or government of the said territories, if shall be lawful for the Company within one year after such deprivation to demand a redemption of 1889 the said dividends, and provision shall be made for redeeming the said dividends.With regard to the law of the case, then, there could be no question; and now with regard to its equity. The East India Proprietors were at present paid out of the Indian revenues, on which their dividends were a primary charge. Their stock was now at a considerable premium, and they would, therefore, be considerable losers by being repaid their stock. This Bill was drawn exactly in the form adopted in the case of Bills for enabling the Imperial Government to borrow India bonds corresponding to Exchequer bills; that was to say, they bore a certain annual interest, and were payable upon a notice either of a year or of six months. India bonds were payable upon a notice of a year, and bore 4 per cent interest. But the debentures which he proposed to give the East India Company the power of issuing, if the state of the market rendered them more profitable than bonds, corresponded to what the Act called Exchequer bonds, which were borrowed for a fixed interest for a term of years, and which, at the expiration of that term, Parliament was liable to pay. Under this Bill there was a fixed sum up to which the Company could borrow on debentures, and when the time for which they were to run had expired, there was a distinct power under the statute to reissue them, provided the entire amount did not exceed the prescribed limit.
§ MR. NEWDEGATE
said, the right hon. Gentleman had this matter very much in his own hands. If he understood the question rightly, the East India Company were his debtors. The right hon. Gentleman, as their creditor, might re-demand his advances. Therefore, this was the only way for the right hon. Gentleman to provide for the demands that would be made, or for the debts that would be incurred. But he (Mr. Newdegate) thought it would be far better and wiser that the credit of this country should be used to indemnify the right hon. Gentleman for those advances in some other manner, because it appeared to him that this would be a most expensive way to repay the Exchequer. If this demand were withheld, the money could be obtained in a better and more economical manner than the proposed round-about process. The right hon. Gentleman said that the revenues of the East India territory would be primarily liable to this charge. Well, grant it; but if the East India Company 1890 should be deprived of its share of the government of India—and he sincerely hoped that that event would not take place—the question of liability would assume a different phase altogether. It was very true that the charge under this Bill would be a primary one on the revenues of India. But what matter? There was very little prospect under the proposed arrangement regarding India that the revenues would be much more than adequate to meet the expenses of the Government. The question would come back again whether the Imperial Government would be at all liable to this charge? If Her Majesty's Ministers undertook the government of India they must provide for the expenses of India, and the demands that would be made under the Bill. Then, in the event of the revenues of India being inadequate to meet those loans, Parliament would be obliged to supply the deficit. It appeared to him, considering the present peculiar circumstances of the Government, that it was very inconvenient for Her Majesty's Ministers to press forward this demand. According to the suggestion of his hon. Friend the Member for Huntingdon, and the known liabilities of the Company, he thought the Government should not urge on this Bill at the present moment.
said, the question who was to redeem was not very germane to the subject of the present Bill; and he regretted the Committee had wandered so far from the subject. The matter now before the House was really a matter of necessity. If the Committee wished to bring the machinery of the Indian Government to a stop, let them refuse this Bill, because, after a certain time their funds would be exhausted. At the present time they were not able to get any remittances from India; and they expected none. When the cash-box was exhausted they must stop, unless means were provided for them to go on with. He was sure no Member of the House would wish that. This was not a party question. He was afraid if the Bill did not pass through Committee that night, it might, in the present situation of affairs, be thrown over till after Easter, when all their funds would be exhausted. He hoped, under these circumstances, the Committee would pass the Bill, instead of discussing Acts of Parliament which passed in 1833, as to how the stock was to be paid off.
§ After a few words from Mr. LINDSAY and Mr. GREGSON, preamble postponed.1891
§ Clause 1, empowering the Company to raise (£) by way of loan.
§ MR. LINDSAY
said, that the Chancellor of the Exchequer had given the Committee to understand that not more than two or three millions would be required for the next six months. He thought, therefore, that the sum of £8,000,000 should be reduced to £2,000,000, which would suffice for three months. In three months' time they would know who were their Ministers, and whether the India Bill was to be proceeded with. If the affairs of India were to be managed by the Imperial Government, the Imperial Parliament would be responsible for its finances. The hon. Gentleman then moved that the amount be reduced to £2,000,000.
said, that the sum proposed by the hon. Member would not 1892 be sufficient to meet the requirements of the Company.
THE CHANCELLOR OF THE EXCHEQUER
hoped the Amendment would not be persisted in. It was nothing new to give the East India Company power to borrow in this country. Under the existing Acts they were authorized to borrow to the extent of £7,000,000, and that power had not been entirely exhausted. It was not intended to raise the entire sum provided for by this Bill at once, but it was desirable that the power should exist, to obviate the necessity of coming to Parliament for further powers.
§ Amendment negatived, £8,000,000 inserted. Clause agreed to; as were the remaining Clauses.
§ House resumed. Bill reported; as amended, to be considered on Friday.
§ House adjourned at a Quarter before Nine o'clock till Friday.
§ On the next Page is a LIST OF THE MINISTRY formed by the Right Hon. the EARL OF DERBY.