The country must be grateful to him [the Finance Member] for his sympathetic attitude towards Indian industries. "I think Swadeshi is good, and if the outcome of the changes I have laid before the Council result in some encouragement of Indian industries, I for one shall not regret it." For a Finance Minister to say even so much is not a small thing in the present state of India's dependence upon the most pronounced and determined Free Trade country in the world…. At the same time we regret the absence of fiscal autonomy for India and the limitations under which this Government has to frame its industrial policy. We regret that Government cannot give the country a protective tariff forthwith. However excellent Free Trade may be for a country in an advanced stage of industrial development, it must be conceded that Protection is necessary for the success and development of infant industries. Even pronounced protagonists of Free Trade do not view this idea with disfavour. That Indian manufacturing industry is in its infancy does not admit of controversy. Why should not India, then, claim special protection for her undeveloped industry? Even countries remarkable for their industrial enterprise and excellence protect their industries. The United States and Germany are decidedly Protectionist. The British Colonies have protective tariffs… protective in purpose, scope, and effect. They are not like the Indian import duties, levied for revenue purposes. The Indian appeal for Protection cannot in the circumstances be unreasonable. The development of the industries is a matter of great moment to the Empire, and the popular leanings towards Protectionism ought to engage the sympathy of Government. The imposition of import duties for revenue purposes is sanctioned by precedent and principle alike. … And yet for a small import duty of 3-1/2 per cent, upon cotton goods a countervailing Excise duty upon home manufactures is imposed in disregard of Indian public opinion, and the latest pronouncement of the Secretary of State has dispelled all expectations of the righting of this wrong.
No measure has done greater injury to the cause of Free Trade in India or more permanent discredit to British rule than this Excise duty on Indian manufactured cotton, for none has done more to undermine Indian faith in the principles of justice upon which British rule claims, and, on the whole, most legitimately claims, to be based. In obedience to British Free Trade principles, all import duties were finally abolished in India at the beginning of the eighties, except on liquors and on salt, which were subject to an internal Excise duty. In 1894, however, the Government of India were compelled by financial stress to revive the greater part of the old 5 per cent tariff on imports, excluding cottons, until the end of the year when cottons were included and under pressure from England. Lord Elgin's Government had to agree to levy a countervailing Excise duty of 5 per cent on cotton fabrics manufactured in Indian power mills. After a good deal of heated correspondence the Government of India were induced in February, 1896, to reduce the duty on cotton manufactured goods imported from abroad to 3-1/2 per cent., with the same reduction of the Indian Excise duty, whilst cotton yarns were altogether freed from duty. This arrangement is still in force.
Rightly or wrongly, every Indian believes that the Excise duty was imposed upon India for the selfish benefit of the British cotton manufacturer and under the pressure of British party politics. He believes, as was once sarcastically remarked by an Indian member of the Viceroy's Legislative Council, that, so long as Lancashire sends 60 members to Westminster, the British Government will always have 60 reasons for maintaining the Excise duty. To the English argument that the duty is "only a small one" the Indian reply is that, according to the results of an elaborate statistical inquiry conducted at the instance of the late Mr. Jamsetjee N. Tata, a 3-1/2 per cent Excise duty on cotton cloth is equivalent to a 7 per cent duty on capital invested in weaving under Indian conditions. The profits are very fluctuating and the depreciation of plant is considerable. Equally fallacious is another argument that the duty is in reality paid by Englishmen. The capital engaged in the Indian cotton industry is, it is contended, not British, but almost exclusively Indian, and a large proportion is held by not over-affluent Indian shareholders.
There is nothing to choose between the records of the two great political parties at home in their treatment of England's financial and fiscal relations with India, and English Tariff Reformers have as a rule shown little more disposition than English Free Traders to study Indian interests. In fact, until Mr. M. de P. Webb, a member of the Bombay Legislative Council, published under the title of "India and the Empire" an able exposition of the Tariff problem in relation to India, very few Tariff Reformers seemed even to take India into account in their schemes of Imperial preference. I hope, therefore, to be absolved from all suspicion of party bias in drawing attention to a question which is, I believe, destined to play in the near future a most important—perhaps even a determining—part in the relations of India to the British Empire.
One of the first things that struck me on my return to India this year—and struck me most forcibly—was the universality and vehemence of the demand for a new economic policy directed with energy and system to the expansion of Indian trade and industry. It is a demand with which the great majority of Anglo-Indian officials are in full sympathy, and it is in fact largely the outcome of their own efforts to stimulate Indian interest in the question. There is very little doubt that the Government of India would be disposed to respond to it speedily and heartily on the lines I have already briefly indicated. Will the Imperial Government and the British democracy lend them a helping hand or even leave a free hand to them? If not, we shall assuredly find ourselves confronted with an equally universal and vehement demand for Protection pure and simple by the erection of an Indian Tariff wall against the competition of imported manufactures. I need hardly point out how the rejection of such a demand would be exploited by the political agitator or how it would rally to the side of active disaffection some of the most conservative and influential classes in India. For if, as those Englishmen who claim a monopoly of sympathy with the people of India are continually preaching, we must be prepared to sacrifice administrative efficiency to sympathy, how could we shelter ourselves on an economic issue behind theories of the greater economic efficiency of Free Trade? If we are to try "to govern India in accordance with Indian ideas"—a principle with which I humbly but fully agree—how could we justify the refusal to India, of the fiscal autonomy for which there is a far more widespread and genuine demand than for political autonomy?
CHAPTER XXIV.
THE POSITION OF INDIANS IN THE EMPIRE.
The problems of Indian administration are in themselves difficult enough to solve, but even more difficult are some of the problems connected with the relations of India and her peoples to the rest of the Empire. One of these has assumed during the last few years a character of extreme gravity, which neither the Imperial Government nor the British public seems to have at all adequately grasped.
"I think," said Mr. Gokhale in moving his resolution for the prohibition of Indian indentured labour for Natal, "I am stating the plain truth when I say that no single question of our time has evoked more bitter feelings throughout India—feelings in the presence of which the best friends of British rule have had to remain helpless—than the continued ill-treatment of Indians in South Africa."
Every Indian member of the Viceroy's Legislative Council who spoke during that debate, whatever race or creed or caste he represented, endorsed the truth of Mr. Gokhale's statement, and had a vote been taken on the resolution it would have had what no other resolution moved during the whole session would have secured—the unanimous support of the whole body of Indian members and the sympathy of every English member, official as well as unofficial. The Government of India wisely averted a division by accepting the resolution. Not a single attempt was made either by the Viceroy in the chair or by other representatives of Government to controvert either Mr. Gokhale's statement or the overwhelming array of facts showing the nature and extent of the ill-treatment of Indians in South Africa, which was presented by the mover of the resolution and by every Indian speaker who followed him. The whole tone of the debate was extremely dignified and self-restrained, but no Englishman can have listened to it without a deep sense of humiliation. For the first time in history the Government of India had to sit dumb whilst judgment was pronounced in default against the Imperial Government upon a question which has stirred the resentment of every single community of our Indian Empire. It was the one question which called forth very deep feeling in the Indian National Congress at Lahore last December, where subscriptions and donations flowed in freely to defray the expenses of a campaign throughout India, and it figured just as prominently in the proceedings of the All-India Moslem League, which held its annual meeting there in the following month. In fact, Mahomedans have the additional grievance that the laws of the Transvaal discriminate by name against those of their faith. There is scarcely a city of any importance in India in which public meetings have not testified to the interest and indignation which the subject arouses in every class of Indian audience.