the bankruptcy of india; an enquiry into the administration of india under the crown. including a chapter on the silver question (1886)

' ' f, H- 1V1 : • HYNDWIAN : THE BANKRUPTCY OF % ^mmistrata &\x ^ttqutrg into INDIA of JnMa mxbtx fyt (fofom INCLUDING A CHAPTER ON THE H.v M AUTHOR OF " ENGLAND FOR SILVER QUESTION HYNDMAN, AiIl/J " THE HISTORICAL BASIS OF SOCIALISM IN ENGLAND," ETC LONDON SWAN SONNENSCHEIN, LOWREY PATERNOSTER SQUARE 1886 & CO., Printed by Hazell, Watson, & Viney, Ld., London and Aylesbury PREFACE P^HE -*- three chapters in this respectively, "The little Condition book headed of India," ""Controversy," and " Bleeding to Death," appeared as papers in the Nineteenth Century, between the end of the year 1878 and the beginning of 1880 The title, by the These " of India," was suggested editor of that Review, Mr articles then stood nor the The Bankruptcy I figures, are now reprinted James Knowles almost as they have altered neither the arguments because to have done so would have changed the controversial position as against opponents, Sir John Strachey, Sir Erskine Perry, Mr John Morley, and Mr F Danvers tunately for India, my Unfor- no reform of any importance has since been made, and my contentions remain wholly unshaken with regard to the period which then dealt with The I " Introduction," the chapter IV PREFACE • chapter on headed "Continued Neglect," and the " The for volume this It pleasing is many after me to years my matters, to devoted study of the recall fact, to that Indian opportunity for calling attention first what has always seemed to been written have Question," Silver to me most im- the portant point in connection with our rule, was given me in the Pall Mall Mr Frederick Greenwood old friend, and enemy, A series of letters, entitled India," appeared in that in In one of them the Works Public severely A was then sitting newspaper signed " H." administration India in of very Committee of the House of Commons to inquire into the member enough had been at Our Greatest Danger Department of that very department Fawcett, a " criticised the I my by Gazette, then edited The Mr late of the Committee, my management who lecturer in Political Henry curiously Economy Cambridge, wrote to Mr Greenwood and asked that " the H " should offer himself as a witness before Committee, wrote over that seeing initial that the contributor evidently knew more about the subject than most of the officials examined As I had who never been who had been in India, and PREFACE had acquired my come to now urge in the following because it industrious man to the arguments of the and ; I, of course, only mention I enforces the view which pages, about evidence of records, official forward this plenty almost entirely from information Blue Books and other declined v —that India master the official there to already is enable any and facts, I meet to apologists successfully Shortly afterwards Mr Knowles opened the pages of the Nineteenth Century I my to articles can only hope that, whatever defects of matter may be found or style have some volume, in this little it may effect in directing public attention to the irremediable mischief which must be done in India by a continuance of our present system I am well aware that in pointing to manifest decay and hopeless official where misery, and literary distinction But I that they have have at done written, and arguments are drawn from reports To problem is my highest to observe run the risk I and ignorance of presumption least us tell only improvement and prosperity, of being accused the of writers best read to nine-tenths their of all my own works and take the optimist view of the Indian far more pleasant, as it is assuredly PREFACE VI more profitable, am, however, firmly convinced I we are working trophe, 1847 I language plain in than to state disagreeable truths up to a hideous economical catas- beside which w iM seem mere believe that through the no official the great these work to few Irish Famine of child's play What unprejudiced man is words, the judgment to the same therefore, of the I more, can read evidence summarised volume without coming With India that in in this conclusion leave the public H M H io, Devonshire Street, Portland Place, London, W CONTENTS PACK Introduction I II III The Condition of India Controversy Bleeding to Death IV Continued V t Neglect The Silver Question - - - - • - - 35 78 115 1^4 198 — ; INTRODUCTION When Englishmen speak and write of the history of India, they too often forget what an insignificant of portion conquest and history the that domination record of our Three forms really thousand years ago the nations of India were a collection and, wealthy, of civilised peoples, with at in least a sense, highly- one great language, with an elaborate code of laws and social regulations, and taste and endowed ideas and philosophic thoughts which possessed of exquisite beautiful manufactures of with religious have greatly — we still many scarcely artistic kinds, know how greatly influenced the development of the most progressive races of the West Perhaps the noblest teacher and moralist that ever lived, Sakya Mouni, was a Hindoo the Code of Menu, of the ninth century ; before our era, jurist as Institutes the is still Laws as essential a study for the of the of Justinian Twelve Tables or the the philosophers of India ; men who had argued with and Alexander Akbar, the Mahommedan, was the greatest monarch that ever ruled the East while even in later times nations over whom we hold supremacy have proved that they have among them no unworthy descendants of the authors of the held their Aristotle own even with ; THE BANKRUPTCY OF 206 tisation of silver by Germany INDIA in followed 1872, by the cessation of the coinage of silver for legal tender by France in 1874 This has thrown an ever-increasing amount of the output of silver, which itself has increased largely, upon the market, while the Now, too, United it still has greatly diminished becoming uncertain whether the is States quantities price output of gold will continue of silver, which In lower say to what price its impossible to short, silver unlimited coin to necessarily reduces will is it not work fall if so-called Such have the continuous depreciation will eventually effect of limiting the quantity mined but since there is little likelihood of any cheaper gold supply, there will always be a danger in this direction The monometallists also ought to state how it is natural causes are left to their will ; that silver has only fallen so greatly since monetisation by Germany, due if the fall is its de- not largely India was very heavily indebted to that cause before 1874, yet the exchange value of the rupee was maintained should not Germany re- Why monetise silver we And ? if Germany, why should not remonetise silver by an international agreement An and half-dollars ? and gold coinage would be a great convenience, though, as already stated, no international agreement can by any possibility make gold and silver bullion sell at a lower or higher with reference to dollars international silver scale with reference to each other than their relative cost of production justified Yet, why should not a full dollar and half dollar, equal to two rupees and a rupee, as Mr Seyd proposed, be made current — THE SILVER QUESTION 207 at a specific ratio throughout Europe, the United States, England, and India? None of the evils foreshadowed by the monometallists could be worse than the present general uncertainty, which is becoming a serious stumbling-block, and is, as has already been shown, increasingly ruinous to India Anything which will even temporarily reduce the drain of produce from that country would be highly coin Though beneficial from every point of view present depreciation might right itself in the the long — run, and merchants need not care, in dealing with commodities whether the exchange be high or low, seeing that they ingly, — should it is make all have, as already more —produce if — or, at is shown on page 158, to home charges over one- \d the rupee, one-half more transmit on account of her third their calculations accord- a most terrible thing for India that she to this country than would be the case the rupee were maintained at or near par The two following tables Ernest Seyd's pamphlet Dr Soetbeer are The taken first — 1855 l86l — 1865 l866— 1870 1871 — 1875 /1851 in periods of five years j 1856— 1860 ^1876—1880 l88l 1882 1883 1884 1885 Kilos Gold I taken from : Kilos Average is from Mr Silver I97.SIS 206,058 185,123 191,900 170,675 172,800 157,900 146,900 143,94° 140,000 888,115 904,990 1,101,150 1.339.085 1,969,425 2,450,252 >59 39 2,769,065 2,895,520 2,860,000 , Percentage Gold Percentage 18-2 8i-8 81 -5 i8'5 14-4 Silver 85-6 I2'5 8-o 87-5 92*0 66 57 94 93"4 5'o 95 'o 47 47 95'3 95'3 95-8 4-2 THE BANKRUPTCY OF 208 Average for five years Gold per cent, weight Silver Average per Highest Lowest cent, 1851 to 1855 i860 to 1861 1862 14-4 85-6] 1863 1864 1865 6i tV 61 6if 6i tV 62^- 6ii 6if 6oi 62i 61 61 6ol§ 61 tV 6if 6i| 6i| 62* 6i| 58^ 58^ 55t 53t ( 6-6 93 "4 \ J ( For the year 5*7 5'o 47 47 4-2 - 94 95 "o 95 "3 95*3 95-8 j 61 62 6o£ 6o£ Discoveries gold in California Australia | I and ) / i | Period durn g which Ithe largest [amount f gold was produced I | ) Gold produc- tion > falling off i 6i TV 6o| 6o tV 6oi 60 6o£ 6i| 60A 6o£ 6o T5F 59i 59tf 57* 57* 59f 55^ 57* 54 of I 6xt* 1876 1877 1878 1879 1880 8-o 6of 6*if 62f 6o| 6i| \ 1884 1885 60* 6a| 6i| 6a| 1871 1872 '°\ 1873 1874 J 1875 ( t l88l 1882 1883 2i 62^ 6xf 6i| \ 1876 to 1880 60 62f 1866 1867 12-5 87*5^ 1868 1869 J < 1870 [ 1871 to 1875 6i| 1856 1857 ( 18-5 8r5i 1858 1859 ( i860 J ' 1866 to 1870 6i?r 60A 6i| 61l 6l TF 1854 1855 8r8< ( 1861 to 1865 6l 6if 61^ J ' 1856 60 59f 6o| 6of 1851 1852 1853 | Dr Soetbeer weight / 8-2 INDIA 46| 53t 49^ 48| 5*1 5*i 5°¥ 5*t* 50 52 TV 50 s4 5°fV 5° 46! 61A 6oi 6oyV 6oT9F \ Demonetisa- 59i s»A s4 5*1 54^ 5*A 54 52* I T5" 5*f 5°fV 5°f 48f tion by Germany i Panic in silver in and quick July, recovery THE SILVER QUESTION These 209 have the merit of putting the facts with regard to gold and silver production clearly before us, though the price of silver at the time of writing, reached tables 43^., It lower by is than any point yet be seen, however, that, whereas will far the production of silver has increased more than threefold since production of gold has 1851, the decreased nearly one-third that, ; moreover, the dis- two productions is going on in though the price of silver to-day is but 43d., as against 6od to id up to the date of the demonetisation of silver by Germany in 1872 It is certainly not a little remarkable as telling parity between the a heightened ratio, against the contentions of the monometallists, that, change between the silver produced which had taken place from 1851 to 1874, varying from "i per cent, of gold and 81.8 per cent, of silver in 1851-55 to per cent, of gold and 92 per cent, of notwithstanding relative great the amounts of gold and silver in 1874, the price of the inferior metal under- went no serious depreciation This, although, as drain from India was even before remarked, the then not less than ^"20,000,000 a year, according to the admission of Sir John Strachey, and the standard of the rupee has remained unchanged Without, therefore, attempting to lay down the law upon this subject, it may at least be said that it is highly desirable, sake of our great be remonetised that the for that silver should dependency, conclusively shown that silver it has never been that until it was deremonetised could not be monetised by Germany the fall in its value was comparatively trifling and had this not been done ; ; ; 14 THE BANKRUPTCY OF 2IO it spite of greatly possibly — — have remained comparatively might output INDIA in increased up to other departments trifling Here, as in the present time of business, an is opportunity for international though that any amount of international agreement will prevent periods of terrible stagnation of trade, so long as the producers themselves have no control over production and exchange, I not for one moment believe inquiry ; Recently the Government of India, despair by the fact that all its driven to small economies, as well and the amounts drawn from the provincial exchequers, threatened to be completely absorbed by the fall in the exchange, appointed Mr O'Connor to inquire into the effects of this fall in the value of silver upon India and as the proceeds of additional taxation Necessarily, he reports that this Indian producers most injurious to India in every way, seeing consequence of the fall in silver, not only, as has been so often repeated, is India obliged to remit to this country many millions more tons of agricultural produce in order to make up the amount of the drain for home payments in gold, but the agriculturists, in fall is that, in their ordinary dealings, are receiving a depreciated currency for their own produce, though this currency passes at the old level in India itself Mr O'Connor therefore enforces the arguments of Sir Auckland Colvin, the present Finance Minister, as to the great injury which India The only wonder to argue that suffering from this depreciation is is that sane India could benefited by the fall in silver the enormous amount of men by any To that metal could be found possibility be begin with, all now in India is THE SILVER QUESTION of less value relatively to was in all I I other commodities than the markets of the world it and, sooner or later, ; must make itself felt In addition, how can it be reasonably argued that the ryots gain by giving more of their produce for a less monetary rethis disparity we turn, if stop at the of their crop ? As first process of their disposal so often happens in these days of middle-class economy and superficial discussion, men's minds are completely confused by the merest abIt is said, for surdities example, that anything which tends to encourage exports because trade is beneficial to India, is thereby improved beneficial to starving ryots that Is wheat or it then which would feed them, should, to the amount of millions of tons, be shipped off to this country, because otherwise they could not make their payments or meet their assessments ? Manifestly not Yet that such increased export is beneficial is the rice, silly sort of argument which the Government of India has been obliged to answer through Mr O'Connor Beyond all question harmful to India and most time, and the in silver fall people at this common-sense would recognise plainest if its the is that at once, the old ideas did not obscure the fact that additional being sent out of the country for nothing danger now is, in regard to India, that this food is The silver depreciation, which, though by no means the most serious time, may serious, is, after difficulty at the all, present blind people to the real causes of Indian poverty The pressure being brought to bear from India in favour of the remonetisation of h is by influential classes at silver, home, is supported as now backed up THE BANKRUPTCY OF 12 INDIA from America and Germany In America Mr Evarts, the Secretary for Foreign Affairs in the Republican administration, has brought the matter forward and ; the "silver ring," which has of the Atlantic, is its agents on this side constantly urging the question upon the public outside the House of Assembly and Here in England it is said that Lord Randolph Churchill, the new Tory Chancellor of the the Senate Exchequer, is inclined to propose the appointment of a Royal Commission to examine into the whole an influential memorial has also been matter ; presented to Lord Salisbury on Mr Goschen has declared that the much subject ; and of the present due to the appreciation of gold All that nothing can be done unare agreed, If England and her colonies, less England moves depression is in fact, including concert a India, common line of action United States and Germany, then the countries forming the so-called Latin Union France, will gladly come in, and establish Italy, and Belgium a definite international agreement which would influence the whole civilsed world Such is the England, then, being the principal contention commercial country, and virtually the commercial with the — — clearing-house of the world, and holding, therefore, the key to the currency position, examine we we can briefly all see is how it is necessary to the appreciation of gold, which increasing rapidly on the average, look at the prices of commodities now and or thirteen years ago, affects this country In the first cidentally, that place, all it is clear, as if twelve itself already stated in- persons having fixed incomes pay- able in 'gold have gained enormously of late years THE SILVER QUESTION All the necessaries of life —bread, 213 butter, eggs, sugar, bacon, the metals worked and unworked, and even fresh meat and milk are from 20 to 75 per cent, cheaper than they were Thus the interest on the National Debt, say ^28,000,000, and the income from the railways, say ^"33,000,000, have a purchasing power of at least ^40,000,000 tea, coffee, clothing, — and ^"48,000,000 respectively, compared with what they had previously to the great fall in prices The same is of course true of interest on mortgages, and all other incomes receivable in gold But the great bulk of these incomes, from investment, are paid to the non-producing classes portion, indeed, that is what a neglectable quantity mean ? It means that, is ; so great a pro- received by the workers Now what does this really taking the two above instances only, the actual weight of the National Debt and the railway monopoly upon the community has increased measured in commodities, assuming that the purchasing power of gold has increased 40 per cent, with reference to the majority of commodities and this may be taken as a reasonable If retail average if wholesale prices are reckoned prices have not fallen in the same degree, then the large shopkeepers have pocketed the difference, and 40 per cent., as ; they, again, are a non-producing class Consequently, the effect of the fall in prices is to increase the relative wealth and influence of the rent and interest-receiving minority undoubted that a constantly descending scale of prices, though in one way it strengthens the Again, it is capitalist class, is not favourable to capitalist enterprise, as distinguished even from mere inflation In 214 THE BANKRUPTCY OF agriculture, for INDIA farmers instance, who have not make improve- already lost their capital are afraid to ments, to buy store beasts, or to launch out in any direction, because the prices they produce, may may get for their when grown, and their beasts, when fattened, not repay them for their original outlay, leaving The though as an eighth, and a twentieth of a pound respectively, and not as is Sd and 8^., which they would if their intrinsic though value determined their purchasing power, this token coinage which they the workers who use receive in wages are not injured directly, I say, and receive the benefit of the low prices of the necessaries of life, yet they are injured indirectly, by the stagnation of trade and the growing uncertainty of their aside profit altogether workers the half-a-crown and shilling buy in also, England — position It will be seen that it is not the deficiency of gold as currency which occasions all this disturbance, but the appreciation of gold as a standard of value, and therefore as the regulator of prices, which does the mischief, in so far as mischief is done There are those who argue that all is more than repaid to us by the low prices of raw material which for our manufactures and of our food, enable our capitalists to undersell the capitalists of I have shown, however, that the other countries increased drain, owing to the appreciation of gold, impoverishes some of our best customers in India; it certainly is one of the causes of the heavy pressure of rents in Ireland, in spite of the statutory reductions; it unquestionably helps to increase the distress of our own agriculturists ; and I cannot understand how any THE SILVER QUESTION 21 such action which impoverishes our fellow-subjects, by constant alterations in prices, due to the increased cost of production of gold, can in the long run be of advantage to ourselves That this should be so is common-sense, but to the whole argument of the laissez-faire school to which contrary not only to more vehement gold advocates belong conclusion, therefore, it would seem that, assuming it to be impossible to make any other the In arrangement, which certainly not yet proved, is would be better to monetise gold all it and demonetise continue a system silver the world over, than to enhances the weight of indebtedness and taxation at the expense of the producing classes, not which only in India, but in and all countries where the principal interest of indebtedness are payable in gold At the same time, no change in the currency or lowering of the standard of value affect the —raising of deep economical — prices, that is difficulties will which under- all questions relating to gold as currency, as a standard of value, or as payment for indebtedness ; these difficulties being due, as they are, to the lie and the national which have accompanied and assisted its capitalist debts system of production growth Meanwhile, as we debate, India, at any rate, is being reduced to bankruptcy with ever-increasing rapidity Printed by Hazell, Watson, & Viney, Ld., London and Aylesbury H46fi ... Mahabharat, of the architects of the Taj Mahal or Beejapore, of Toder Mull and Nana Furvana, of Baber and Hyder Ali Yet to read nine-tenths of what has been written on Indian life and administration of. .. It safe to is say, for example, that any period was the condition of India more anarchical than that of France, Germany, the Low Countries, and Italy during a great portion of the Middle Ages... indifference to the of economical causes are, as a rule, over- The terrible Afghan War, with its long legacy of debt and disaffection, the conquest of the 26 INTRODUCTION Punjab and the annexation of Scinde