East India Loans [Railways and Irrigation].

– in the House of Commons on 29th March 1922.

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Considered in Committee.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed, That it is expedient to authorise the Secretary of State in Council of India to raise in the United Kingdom any sums of money, not exceeding £50,000,000, for the service of the Government of India; on the security of the revenues of India, and to make provision for other purposes relating thereto.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

This Resolution is less serious in substance than it appears to be in form. Perhaps I may first explain that the Government of India, by the original Government of India Act, are free to borrow money in India without the authority of Parliament. By that same Act money can only be raised in the United Kingdom by the Secretary of State in Council on behalf of the Government of India to such extent as is authorised by this House. There have been a number of Acts similar to the Measure which I propose to introduce, founded upon this Resolution. The last was passed in 1910, and authorised the borrowing of £25,000,000 for railways and irrigation. In ordinary circumstances, the borrowing powers under that Act would not have sufficed until to-day, but, owing to the effect of the War, which rendered it impossible to carry out capital expenditure either on the railways or on the irrigation system of India, fresh powers have not been required until now. The present Bill, which I am going to introduce if I get my Resolution, asks for authority to raise £50,000,000 in the United Kingdom for Indian railways, the unexpended borrowing powers under the previous Act to which I have referred being now under £7,000,000. I think I ought to add that it is, of course, not a question of immediately borrowing or immediately spending the whole amount, but rather of renewing the existing borrowing powers of the Government of India under Act of Parliament, and it is really very largely a routine matter.

Perhaps I ought also to add that the expenditure to finance which this borrowing power is asked for is remunerative expenditure for railway development, and that the Government of India expects to secure the same substantial profit in the future that, as a whole, it has obtained from its railway expenditure in the past. It would not be in order to discuss in detail, at this stage, the policy and how it has been carried out, nor to refer to the very important Committee presided over by Sir William Acworth, but on a further stage of the Bill I shall do so. Lest anyone might think that there is any question about the financial stability of the Government of India, I should like to point out that, while it is undoubtedly true that during the last year or two that Government has had temporary financial difficulties, they are the result of world-wide causes by no means peculiar to India. Heavy taxation has been imposed both this year and last year in the Budgets, and both the Government of India and the India Office are fully alive to the importance of restoring the Budget's equilibrium. In conclusion, I would say that when I present the Bill, a Memorandum will be presented fully setting out all its provisions.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

May I ask the Noble Lord one question? Having regard to the conditions which now obtain in India, and which are quite different from those of a month or two ago, does this House assume any responsibility for the capital of or interest on these loans?

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

It assumes neither. This is, as I have said, really a routine matter. By the original Government of India Act, the Government of India, to raise money in this country, have to obtain the permission of Parliament, and the conditions are not affected by the last Government of India Act.

11.0 P.M.

Photo of Sir Francis Acland Sir Francis Acland , Camborne

I do not think that any hon. Member will want to detain the Committee for long on this matter, and for very good reasons, the chief of which is that, although in earlier days the different stages of these Bills used to be made the occasion of long and acrimonius Debates on almost every matter of Indian policy, the House of Commons has, in its wisdom, agreed with the other House to set up a Joint Committee of both Houses on Indian Affairs, before which, no doubt, any explanations that may be desired as to the policy of the Government of India with regard to railways and irrigation will be afforded. That being so, and it being a fact that the Committee is looking forward, a little later in the Session, when the Secretary of State for India has had rather more time to become acquainted with his new duties, to meeting him with regard to various matters concerning his policy in India, I am not going to initiate anything like the old Debates of long ago. I should, however, be glad if my Noble Friend at a later stage would deal with two or three points. The first, which has always been raised on these Bills, is whether any of the railway money is wanted for strategic railways, or whether it is merely for commercial development. I think the House would like to be satisfied with regard to that. The second point is whether, owing to the present financial stringency in India, there has been any particular call for this railway and irrigation money, or whether the Government of India is only resuming, more or less in the natural course of events, its accustomed pace, which has been, of course, as the Noble Lord explained, interrupted because of the War. Thirdly, how much money towards irrigation and railways it is now possible to raise in India compared with the sums which are being or will be raised under this Bill in the United Kingdom; and lastly, I think the Committee would like to have an assurance that at a later date the Secretary of State will explain to the Joint Committee on Indian Affairs any matters with regard to the railway or irrigation policy of the Indian Government that they may like to ask him for an explanation upon. I do not press him on these matters to-night, but I think some of them are matters the House may wish to go into on the later stages of the Bill which will be brought forward.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

As these loans will not be under the control of the House, although permission is asked of the House, will they still be trustee loans, and if so, according to the modern conditions of the Indian Government, will the Indian Government have to conform to the similar Regulation that is imposed on Colonial Governments before they can become trustee loans? That is a point that ought to be cleared up.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

I quite agree. As far as I know there is no change. Before the further stages of the Bill I will have the point made quite clear.

Sir J. D. REES:

There will be further opportunities of considering points arising in the Bill that is to come before the Joint Committee of Lords and Commons, which is in a short time to meet the Secretary of State to discuss various matters. Having congratulated my Noble Friend on having become Under-Secretary of State, I think many hon. Members, who remember Lord Peel as a very capable and active Member of this House, will rejoice that he, too, has succeeded to the high office of Secretary of State, and I think many of us would wish to offer him our hearty congratulations. As regards the need for raising this sum, as one who has been concerned for 45 years with Indian railways, I am convinced of the necessity for this Bill for railways, and for extending irrigation works, such as distinguish particularly the Presidency of Madras and the Punjab. As regards the financial stability of India, which has for the moment been obscured by temporary causes, I can remember a Chancellor of the Exchequer, Sir Michael Hicks-Beach, said the finances of India are far better managed and in far better condition than the finances of England. I do not propose to introduce any controversial subject like a comparative consideration of the finances of the two countries, and having made these few remarks, lest it should appear in India that Members more closely connected therewith were not interested in the matter and were not present, I have no further desire to delay the getting of this Resolution, which I wish God speed.

Photo of Mr John Swan Mr John Swan , Barnard Castle

I hope we shall have opportunities of going into the details of this proposal. I am not going to oppose it; in fact, I am glad that the resources of India are to be developed in regard to railways and irrigation. Some of my colleagues and I, however, are apprehensive that the railways and resources of India are not to be developed for the sake of India or the Empire, but in order to find cheap labour to compete with British labour and to cut down the standards of working men in this country. As irrigation extends land will come into cultivation and mines will be developed. Some of my colleagues will remember the proposals made in this House when the coal dispute was in progress, that coal should be brought into Great Britain in order to reduce the standards of the British miners. We hope that this expansion of India which is so essential will not be used either to reduce the wage standard or worsen the hours of labour of the British miners or enslave the natives for the sake of certain people in this country who would refuse to advance wages. There is just one other observation I would like to make in regard to this matter. I think it is a splendid thing to extend the Empire's resources, to employ our own people, but I hope that the same policy which has been adopted in the development of India will be considered in the development of the resources of Britain as well. This is just as essential to-day as the development of India.

Photo of Mr John Whitley Mr John Whitley , Halifax

The Committee is considering Indian railways and irrigation, and this does not apply to the development of this country.

Photo of Mr John Swan Mr John Swan , Barnard Castle

But we should have some consideration for our own country's development as well as for India.

Photo of Colonel Ralph Glyn Colonel Ralph Glyn , Clackmannan and Eastern

I want to ask one question of the Noble Lord. I wish to know whether the Secretary of State for India will make representations to the Government of India that the money for materials for the railways to be constructed will be spent in this country, because we all know that there are signs that materials are being purchased elsewhere than in this country. If money is being spent in America on Indian railways, then I do not see why some of the money that is necessary should not be raised in the American market.

Photo of Hon. Alexander Shaw Hon. Alexander Shaw , Kilmarnock

I want to ask my hon. Friend one or two questions in connection with this matter. We all sympathise with him and the object he has in view to-night, but at the present critical moment in finance there are considerations to be kept in mind. Are the railways at last going to bring their charges up to an economic level? Can my Noble Friend give mo an assurance that the promises to that effect which were repeatedly made are actually to be carried out, and that the ridiculous surcharges which have been such an impediment on the traffic by railway and waterway are to be stopped? I think before we vote this Resolution we ought to have some information as to whether a determined effort is being made to put the railways on an economic basis. They are not now on an economic basis, and there is a deficit of six crores of rupees per annum. The second question arises out of the observations of the hon. Member for Clackmannon (Major Glyn). If, as I presume, the plant for irrigation and railways is to be purchased in this country, what is the position with regard to the very heavily-increased duties which the Government of India were proposing to levy? By the Budget introduced the other day they very heavily increased the duties on machinery from this country.

Sir J. D. REES:

The duties were rejected by the Legislative Assembly.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

The question of the details of the Indian Budget does not arise on this Resolution.

Photo of Mr John Whitley Mr John Whitley , Halifax

I cannot rule it out of order. It is in order to point out the difficulties in carrying out this matter.

Photo of Hon. Alexander Shaw Hon. Alexander Shaw , Kilmarnock

Look at the position with which we are faced! The Government of India is in the dilemma that it has an enormous deficit. It is not a temporary, but a permanent deficit. What are they going to do? They came here in a financial position which shows a permanent deficit and ask for power to borrow money in this country. Before Parliament give that power one naturally asks what provision they are going to make to pay? If they are faced with a permanent deficit, and the Legislative Assembly refuses to put them in a position to make ends meet, what explanation can my Noble Friend give us, or what suggestion can he make to the House as to why he should give these people power to borrow money in this country? Can he tell us—and I think it is extremely pertinent to the Resolution which he moved—whether they propose to pass their financial proposals over the head of the Legislative Assembly by the use of their reserve powers? Can he tell us whether they propose to meet that deficit by borrowing, and can he tell us—

Photo of Mr John Whitley Mr John Whitley , Halifax

This is now going too far. I do not think we can ask the Secretary of State to explain the manner in which the Government of India is going to equalise matters.

Photo of Hon. Alexander Shaw Hon. Alexander Shaw , Kilmarnock

I bow to your ruling, but the point is, that in order to allay apprehensions which undoubtedly exist, it would be extremely helpful if the Under-Secretary of State for India could assure us that this particular proposal does not in any way arise out of the present financial position. If this were a proposal to borrow money here in order to balance the Budget in India, it would be extremely detrimental to the success of the loan. I do not hold that view. I dare say the loan is intended for real Indian improvements, say, on the railways, but the railways have a deficit of six crores. It is difficult to see how this loan is secured if the railways are not first put in a position to make both ends meet. Can the Under-Secretary of State give tie some explanation? We do not wish to delay the passage of the Resolution.

Mr. J. JONES:

I cannot pretend to be an expert on foreign politics, but I know something about India because I belong to an organisation which took a keen interest in Indian affairs for over 40 years. My late comrade, H. M. Hyndman, displayed considerable knowledge of Indian politics so far as they were then understood. Indian railways are a very interesting subject because they are used mainly for strategic purposes. When money is asked for we ought to know on what it is to be spent and for what the railways are intended. Is it wanted to repeat in India what has already been done in Ireland? Is it wanted to make sure that Imperial policy will be carried out to its logical conclusion, or are the people of India to have any rights in the matter? If 50 millions of money were required in India I believe that the people of India, given the opportunity, would be able to raise it for the purpose of providing all the railway facilities that they require. But, after all, the Government of India is not the government of the people of India. It is government forced upon the people of India without their consent, and the majority of the people of India have practically no voice in or control of what they are forced to maintain. The average Indian peasant receives a wage of about £2 a year, and he is taxed to a greater extent than another person in the world, in comparison to his means. Yet there are in India rich people who are quite capable of raising money if they get authority to do so. Who will have to pay? The peasant and the ryot will have to make up the deficiency. It is always the same story, whether in England or in India—the worker pays. In this case 50 millions of money is to be borrowed in England. Why not give the people of India the power to raise their own money?

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

That is what you are doing in this Resolution.

Mr. JONES:

The Resolution does not give the people of India the power. It gives the power to a comparatively small section of those who claim to represent India; it gives them the right to inflict upon India financial difficulties. The railways of India are not conductors of trade; they are not supporters of the industries of India. They are thrust upon the people of India. Famine is perpetual in India, because people who have to live on handfuls of rice, must always be in a state of famine.

Photo of Mr Arthur Samuel Mr Arthur Samuel , Farnham

They will not get rice unless they have railways.

Mr. JONES:

Or unless they have people like you to provide them with loans at high rates of interest. That is the curse of the situation. The land can produce the things which the people require. The people are not asking for your help. The demand is coming from the dominant section who control the affairs of India. Just as I stand as an Irishman for the right of my own country to control its own destinies, so I also stand for the right of India to control its own destinies and for the right of its people to express themselves accordingly to the principles of democracy. I go further. I ask our Imperialist friends, have they forgotten their Imperialism? Supposing that this permission is given, and it will be given, because there are a lot of people looking for interest—people who believe in getting money without working for it—what is going to happen? Are the orders for these goods to be given to countries who are in an economic position superior to our own? If we give the permission of Parliament for the raising of this money, are we going to make no conditions? [Interruption.] I know I may move in Committee, but my movements will not count for much. Last night we were told we must economise on the education of our children; to-night we are told this is only a mere matter of £50,000,000 which we can find for Indian railways and irrigation.

Photo of Mr John Whitley Mr John Whitley , Halifax

There is no question of any charge falling upon the British Exchequer, therefore the argument of the hon. Member cannot be relevant.

Mr. JONES:

We are going to find the money immediately. Of course, we shall get it back eventually, but the people who are going to raise the money are the very people who say they cannot afford to find money for the education of our own people. They will find this money all right, because big interest is going to be made on it. If this money is to be raised by permission of the British Government, then at least one thing should be done. In order to relieve the unemployment existing in this country the Indian Government should be instructed to see to it that the work, which will be a necessary consequence of this, the manufacture of the machinery which is going to be ordered is given to the people of this country. If that is not to be done, then the Government is insulting our intelligence by asking us to approve of this loan.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

I should like to answer one or two of the points which have been made. Regarding the speech to which we have just listened, may I tell the hon. Member, in a homely phrase, that he has got hold of the wrong end of the stick. There is no proposal such as he suggests. I understood his argument to be, that in some mysterious way the Government of this country were going to raise the money.

Mr. J. JONES:

No, no.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

The Government are going to do nothing of the sort. The money is going to be raised by the Government of India, if they get permission, not necessarily immediately—probably the whole of the amount will not be raised for four or five years. It will not all be raised now.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

I was about to deal with that also. It is not necessary either that it should all be raised here. Some of it will be raised in India, and I find, on looking into particulars of previous loans, that a great proportion of those loans has been subscribed in the past by European financiers, in France and elsewhere as well as our own financiers. Whatever the hon. Member may think of the finances of this country, his view is not shared by financiers of other countries, and Indian loans have always been very freely subscribed to, by the financiers of Europe generally. So much for the question of when and how the money is going to be raised.

There is one other statement in the hon. Member's speech to which I should like to make reference, and it was a statement with which some of his friends seemed to agree. It was suggested that in some mysterious way the building of these railways would do injury rather than good to the poorest people in India. That is a most extraordinary argument. It is generally admitted in every circle, economic and otherwise, that in a country which is admittedly poor, as India is, the one thing to do to increase the general prosperity is to improve and increase the railways. It has always been proved so in the past, and as a matter of fact the railway system in India has been responsible for saving the lives of hundreds of thousands of people in the famine areas through the devoted efforts of the Indian and British civil servants in that country. As regards the rather more serious point raised by the hon. and gallant Member for Clackmannan and Eastern (Major Glyn) with regard to the question of the purchase of the material in this country, this is, of course, a very important question. I must point out to him that anyone standing here in my position, representing not merely the India Office, but the Government of India, and through them the people of India, has to consider the interests of the people of India, their economic and general interests, and, further, has to consider a Resolution which was passed by the Legislative Assembly last September in the following terms: This Assembly recommends to the Governor-General in Council that the High Commissioner for India in London should be instructed by the Government of India to buy ordinarily the stores required for India in the cheapest market consistently with quality and delivery, and every case where this rule has not been followed should be communicated to the Government of India with full reasons for the information of the Legislative Assembly. That was a Resolution passed by the Legislative Assembly in India, and the Government are bound to consider that Resolution. A similar Resolution was passed in the Council of State. I can only say on that point that we shall pursue the same procedure as in the past and that when rolling stock and so forth is required the widest publicity practicable will be given in this country, and tenders will be duly considered, from whatever source they are received; but, in the interests of the Indian taxpayer and in the interests of the people of India, we must naturally buy in the cheapest market from which a satisfactory supply can be received. Of course, full consideration has to be given in every case to such points as the quality of the goods, reliability of the tenders, case of inspection, time of delivery, and so forth, but I have no doubt that, those conditions being complied with, there will be very large purchases indeed made in this country, as in the past. At the same time, I must be quite frank with the House that I cannot give any pledge on that point.

The last question with which I wish to deal is that raised by the hon. Member for Kilmarnock (Mr. A. Shaw) in reference to the Indian Budget. I can at once assure him that this proposal has no connection whatever with the Indian Budget, and has nothing whatever to do with the deficit.

This proposed loan is for the purposes stated, namely, for the railways and for irrigation purposes. As regards putting the Indian railways on an economic basis, I can only say that fares have been increased, although there has been some difficulty in getting it through, and that surcharges have been replaced by increased capital, and we have every hope that we shall be able to put the railways again on a proper paying basis. One reason why permission is sought for the raising of this loan is that we may be able to purchase the absolutely necessary rolling stock, which has become exhausted as a result of the War and which when renewed, will greatly increase the revenue side of the Indian railways. My right hon. Friend opposite stated that what we wanted was additional rolling stock, strengthening of bridges, and things of that kind, and I am confident that when these things have been done it will be one of the principal steps we could take to put the Indian railways on a paying basis, which everyone connected with the Government of India will be only too pleased to see brought about.

Photo of Hon. Alexander Shaw Hon. Alexander Shaw , Kilmarnock

I am obliged to my hon. Friend for clearing away what might be serious apprehensions. Personally, I feel perfectly sure there is hardly a finer security.

Mr. J. JONES:

Will the hon. Gentleman tell us what chance British engineering firms have of providing the rolling stock, which will be bought in consequence of this borrowing, in competition with countries like Germany?

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

I have endeavoured to the best of my ability to answer that question. I said that there would be every opportunity given to British firms to tender, and we hope that the quality of workmanship and the general efficiency of British rolling stock and the price will enable them to tender on favourable terms.

Photo of Lieut-Colonel Penry Williams Lieut-Colonel Penry Williams , Middlesbrough East

Have not very large orders already been placed in this country for railway material during the last few months? Many of them have gone to our district.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

They always have. There is not the slightest doubt that the majority of the rolling stock purchased will be British. I cannot give a pledge, as I have said.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

The hon. Gentleman has enlightened the Committee as to the purposes for which the Loan is to be obtained. He says the railways there have increased some of their fares. I should like to know what he can say with regard to the money that is going to be used in irrigation work. The £50,000,000 has to be borrowed on the security of the revenues of India, and I should like to know exactly what amount of extra taxation is likely to be placed upon the people of India as the result of the borrowing of this money. I can quite understand the point made by the Noble Lord that the raising of railway fares would, in all probability, enable these railways to be put upon a paying basis, and consequently would require to be raised from that point of view. The cost of the irrigation works cannot, of course, be charged in the same way. What I am anxious to know is whether there is likely to be any increased taxation on India for irrigation purposes.

Photo of Viscount  Turnour Viscount Turnour , Horsham and Worthing

It is a very theoretical question to answer, because some of these loans may not be raised for four or five years, but our hope is that it will not be necessary to increase taxation. With the general improvement of trade, we hope future taxation will bring in a great deal more. With regard to irrigation, we have had to guard ourselves against the possibility that we may have to use some of this money for that purpose. The present intention is to spend it on railways, because the need for the extension of railways is great and we quite realise that in the circumstances of the time the amount of money we can afford to raise and spend is limited.

Resolution to be reported To-morrow.