Gold, Sport, and Coffee Planting in Mysore / With chapters on coffee planting in Coorg, the Mysore representative assembly, the Indian congress, caste and the Indian silver question, being the 38 years' experiences of a Mysore planter

by Robert H. Elliot

To estimate the effect on the Indian coffee-planters with reference to the effect of the monetary policy of the Government in placing the Indian at a disadvantage as regards his competition with the Brazilian planter would be difficult, and I am not in a position to form a decisive opinion on the subject; but I may mention that the manager of the London and Brazilian Bank informed the Currency Committee that the production of coffee in Brazil has largely increased, and will still further largely increase, owing to the greater facilities of communication, and also the direct influence of a low rate of exchange. The last-mentioned fact gives, I may observe, one more instance of the direct effect of a low rate of exchange in stimulating production, and so swelling the volume of exports. If, then, the Brazilians are to retain, and we are to lose, the benefits of the cheapness of silver relatively to gold, it is evident that the coffee-planters of India must be handicapped in their competition with those of Brazil; but I do not hazard a decisive opinion as to the exact weight of the competition, as I am uncertain as to how far our quality of coffee comes into competition[^[68]] with the quality produced in Brazil.

I must now at least allude to the effects of the measure on the trade, manufactures, and railways of India. I regret that I am unable to go more fully at present into a consideration of the effects on them of this ill-starred measure, but all that the general reader requires to know is, to use the words of Sir Frank Adam (one of the most important witnesses examined by the Currency Committee), that if the Government succeeds in forcing up the gold value of the rupee, China would be able to undersell India in tea and rice; the Bombay manufacturers would receive fewer rupees for their wares, and, as in the case of opium, the advantage would go to the Chinese and Japanese; the railways would have little to carry from the interior if the rupee prices went down. Finally, I may observe that the gold industry of India would be largely injured, and that, especially, mines struggling towards a successful issue would be seriously hampered if the gold value of the rupee were forced up.

Brief though my survey of this great subject may be, I trust I have said enough to expose the harmonious rottenness of the monetary policy of the Government, and by this I mean a rottenness so complete that it is impossible to find a single redeeming feature in the measure that has been adopted. It is rotten economically, it is rotten financially, and it is, if possible, still more rotten from a political point of view. Those who have knowledge enough to understand the bearing and ultimate evil effects of the measure are angrily arrayed against the Government now, and when the ryots and labouring classes of all kinds experience the fall in prices and dearth of employment that will assuredly follow if the Government should be able to force up the gold value of the rupee, and are able to trace this to the action of their rulers, widespread and serious will be the abiding discontent which will take possession of the people.

I cannot conclude this short notice of a great subject without commenting on what, at first sight, seems the remarkable fact, that the Government in India, as represented by the Viceroy, and those merchants who are represented by Mr. Mackay, President of the Currency Association, have admitted that a low exchange has been a stimulus to the progress of India, and that producers have gained by it. It is true that the Viceroy declared in his speech in Council of June 26th, 1893, that "to leave matters as they were meant for the country as a whole a fatal and stunting arrestation [sic, probably a misprint for arrestment] of its development."[^[69]] But the cat escapes later on in the speech when a hope is expressed that one of the effects of the measure will be "that capital will flow more freely into the country without the adventitious stimulus which we have hitherto been unable to refuse." The Viceroy thus admits, what everyone knows, that a low exchange has acted as a stimulus to the progress of India, and in doing so has given away the whole case for the Government. But no one has ever denied the admission in question except Mr. Mackay; and his absolute denial, when questioned on the subject, that the producers of India would be affected by the measure, was subsequently eaten up by himself in cross-examination towards the close of his evidence given before the Currency Committee. But it is of course the rule, to which there are few exceptions, that those who are engaged in the unfortunate business of bolstering up an indefensible case, invariably let out something which is absolutely destructive to the cause they are advocating; and we find another instance of this at p. 191, Appendix I. of the "Report of the Currency Committee." And if Mr. Mackay has given away the whole case in London, one of his followers equally did so in Calcutta when a deputation, headed by Mr. Mackay, was received by the Viceroy. And on this occasion Mr. W. O. Bell Irving, as representing over 3,300 square miles of land in Lower Bengal, stated that he "was not prepared to contend that in certain respects the ryots and zemindars have not benefited from the depreciation of the rupee." We thus see that both the Government, as represented by the Viceroy, and the most active supporters of the present monetary policy, have admitted that the measure would have injurious effects on the producers of India—in other words, on those on whom the financial stability of the empire entirely rests.

And the producers of India have as little reason to be satisfied with the action of the Currency Committee which was presided over by Lord Herschell as they have with the Government in our Eastern Empire. A glance at the first page of the Report, and at the professions of the witnesses examined, will show that this is the case. The Committee was requested by Mr. Gladstone's Government to form, inter alia, "a just estimate of the effect of a varying, and possibly much lower exchange, upon the commerce and people of India." Now, the people of India almost entirely live either directly (and I think about ninety per cent. do so directly) or indirectly on the land; and yet, though in England there are to be found persons who, like myself, are Indian landowners, and who, from having lived amongst the people in the rural districts, are well able to testify to the effects of the measure on the welfare of the people, not a single Indian landed proprietor was called before the Committee. If a Parliamentary Committee were called upon here to consider any proposed measure that would widely effect the people of England as a whole, and the landed classes in particular, would it not be scandalously unjust if not a single landed proprietor, or any person directly or indirectly connected with land, were requested to give evidence before it? But notwithstanding that a certain proportion of the witnesses were Indian officials, and that the examination of representatives of the classes chiefly concerned (the producers) was carefully left out, the weight of the evidence was entirely against the monetary policy of the Government. And yet the committee supported the Indian Government. So that this measure has been passed after a partial investigation, during which the most important points that ought to have been minutely examined were never even touched upon, and even then in the teeth of the majority of the witnesses examined, and whose opinions, from their character and position, were of great value. Were it not that the Committee was composed of English gentlemen, who would not wittingly do anything but examine into matters to the best of their ability, it would really seem, after a careful survey of the whole situation, as if this Committee was a mere sham got up as a shield to protect a foregone conclusion.

There can be little doubt that the Indian Government and the Currency Committee were acting under the idea that (1) India had been pushed into a financial corner, and (2) in fear of the result of the probable repeal of the Sherman Act in the United States; and so, urged on by a panic-stricken feeling to rush somewhere, the Government began in haste to burn the whole house down in order to roast its financial pig. As to the first point, the state of the finances in India no doubt requires all the care and economy that can be exercised; but to imagine, as many people seem to do, that it has exhausted its taxational resources, is ridiculous. The salt tax, taking the price all over India, is lower than it was fifteen years ago, and this could be raised without hardship to the people. Import duties might be imposed to the amount of several millions. Then, considerable charges now defrayed from current revenues might be passed to capital account, as they would be in England. And if the worst came to the worst an export duty of three per cent. might be imposed, for though is would not be good policy to do so, it would still be better than the seven per cent. export duty the Government would practically levy were exchange forced up to 1s. 4d., and obviously very much better than the twenty-one per cent. export tax which the Government evidently look forward to, for, as we have seen, it is aiming at a 1s. 6d. rate. A large saving, too, might be effected by going back to the old system of having a local European force in India. Let anyone consider these points, and weigh the remarkable and interesting statement quoted from Sir William Hunter, and he will at once see that the condition of India generally is full of hope (or at least was so till the monetary policy was announced), and that its taxational resources are by no means exhausted. It should also be considered that as the Government has not only spent large sums in recent years in defensive works and public buildings, and at the same time paid off debt to the amount of twenty-three millions, it would be perfectly justified in borrowing, if it were necessary, in order to meet temporary difficulties.

Now let me turn to what is the dominant cause of the monetary policy of the Government—the dread that if the Sherman Act were repealed exchange might sink even as low as a shilling per rupee.[^[70]] What if it did? Let us examine the consequences of that to India considered as a whole. The apprehension in question was proclaimed in the Viceroy's speech of June, 26th, 1893, and in considering the consequences of a 1s. rate of exchange, he pointed out that this would entail an increase of Rs. × 7,748,000 in the remittances required to be made for the home charges of the Government, being, curiously enough, almost the exact sum which the people of India would lose on their exports were exchange forced up to 1s. 4d. by the monetary policy of the Government. But as the producers of India would gain largely by the 1s. rate of exchange, the total account would stand thus:—loss to the Government say, for the sake of round figures, seven millions; gain to the producers, twenty-one millions; total gain to India, considered as a whole, fourteen millions. So that if the very worst anticipations of the Government were realized India would be a large gainer by the fall to a 1s. rate of exchange, and the finances could be squared by increased taxation, which, if levied considerably on imports, would be distinctly a popular measure. And, in any case, the agitators could have no ground to go upon, as I have shown, as the increased taxation could be amply justified.

One word more. I cannot refrain from calling attention to the remarkable circumstance that Mr. Gladstone's Government has in a single year adopted two measures which are highly objectionable from political, economical, and financial points of view—the Home Rule Bill for Ireland and the Currency Measure for India; and that both were forced on by arbitrary and tyrannical action. For just as the Home Rule Bill was forced through the House of Commons with inadequate examination and discussion, so was the Currency Measure forced through, not only without adequate investigation, but in the teeth of the majority of those whose opinions were laid before the Viceroy, and in the teeth of the majority of the witnesses examined before the Currency Committee. But arbitrary and tyrannical action seems to be the order of the day with the Gladstonian Government; and it is worthy of notice in this connection that it forced an Opium Commission on India merely to buy a few votes in the House of Commons, and, with the grossest injustice, provided that India should pay for a part of the cost. The outcry raised has, indeed, brought about a reduction of the charge that was to have been made, but, from a statement made in the "Times," I observe that the Government has clung to the travelling expenses of the members of the Commission, which are to be charged to India, and probably with the view of proving that extreme meanness is not one of the national failings.

As the English reader might imagine that the Indian Government was solely responsible for this measure being passed into law, I may point out that the decision of the Cabinet was required and obtained in connection with the Currency Measure. From such a Government the producers of India, while they have everything to fear, can have nothing to hope. Our sole hope depends upon its being turned out, and replaced by an Unionist administration which will either annul the suicidal policy that has been adopted, or at least suspend its action till a full and searching investigation has been made into all the immediate and all the consequential results that must arise from the measure in question, should the Government be able to force up the gold value of the rupee. If the facts adduced in this chapter are substantially correct, the verdict cannot be doubtful, for these facts prove that the Government proposes to levy what is practically a heavy export tax on the products of India, and in a form, too, most injurious to its best interests, and ultimately to the finances of the State. And I say in a form most injurious, because the Gladstonian Government (for the Cabinet is distinctly responsible for the policy proposed to be carried into execution) has practically adopted a policy of protection, not for the benefit of the productions and industries of India, but for the protection and encouragement of the productions and industries of those silver-using countries which now compete with India. Of all the grotesquely ludicrous policies that have ever been adopted by perverted human reason this surely is by far the most absurd. By one and the same measure to stamp down the progress of India and promote the progress of other silver-using countries; to diminish the traffic on Indian railways, and correspondingly increase the traffic in such countries; to diminish the volume of India's trade and increase that of other Eastern countries; to raise a comparatively small sum for the Indian Exchequer at a vast cost to the producers of India; to diminish the amount of capital that would otherwise flow into the hands of the people, and to, at the same time, sacrifice all its consequential effects; to diminish employment for labour and increase the causes that aggravate famines and scarcities; to ultimately diminish the financial resources of our Indian Empire; to create a serious cause of dispeace (a useful Scotch word) between us and the people we govern;—such are some of the effects that must be produced should the Government be successful in carrying out that monetary policy which it has forced on India in the most arbitrary and tyrannical manner. Can we wonder then that Sir David Barbour, the Indian Finance Minister, said that the measure would have "far-reaching effects, and ought not to be attempted unless under the pressure of necessity?" No such necessity, as I have completely shown, has arisen. Out of its own mouth, then, does the Government stand condemned.

In this connection it may be interesting to quote the opinion of the great Duke of Wellington, who, speaking in the House of Lords in 1833 (July 5), said, "My lords, I wish the noble lords opposite had taken the advice of Sir John Malcolm upon the subject of forming an independent body in London, representing the interests and carrying on the concerns of India. My lords, it is persons of this description who interpose an efficient check upon the Government." Unfortunately for India there is no such body, and the final decision on this great question has rested with a Cabinet composed of men who know nothing of Indian interests, and who, indeed, have no time to attend to them, seeing that their thoughts require to be almost exclusively devoted to a consideration of those vote-catching, parochial politics with the aid of which alone the Government can hope to maintain its balance on the political tight-rope.