INDIA AND BRITISH FINANCE.
Mx first and paramount subject connected with India is the great deficit. Whatever else is uncertain or doubtful in regard to the future of our strangely won and anomalous eastern empire, of this there cannot be a shallow of doubt, that, unless both ends are made to meet in the finance of India, she will become an un- endurable burden and opprobrium. Now there is really no diffi- culty in this if the subject be taken up with that large fore- thought and comprehensive wisdom which are never so necessary as in financial questions. In presence of an enormous deficit, people are apt to become reckless or frightened. However, the British Parliament and public have pledged themselves to give their earnest study to Indian affairs by the destruction of the Company's government. Perhaps the full redemption of that pledge may, notwithstanding present appearances, turn out plea- sant and profitable. In the first place, this inquiry should be manfully faced. What are the real responsibilities of -England in regard to the finance of India P If it be really true, as we confess it cannot but seem to us, that the credit of England and of India are now one and the same, if England's honour is really bound up in the balance sheet of the latter, the sooner the fact is admitted and made the ground of action the better. Because it is by anticipating the recognition of that truth, inevitable sooner or later, that the true financial restoration of India lies with results, it may be, of the highest benefit to this country. Some facts which the observer of financial events may have been noting with singular interest and surprise happen opportunely to give point and force to our remarks on this important subject. It is pretty nearly established as a certainty that neither by customs, nor excise, nor direct taxes, can India bear, either politically or eco- nomically, to be brought to paying standard. But there is one practically inexhaustible field of exertion, that of public works, in which bold outlay may realize so large a margin of profit as to make of the existing deficit, great as it is, a small matter. Ir- rigation is authentically stated to pay in India in no existing case less than about 50 and in some actually 120 per cent. And the field for employment of capital in this single direction is enor- mous. Now there has been lately issued to the London market the prospectus of a company formed for carrying out a plan of irrigation in Madras, which company proposes to raise a capital of 1,000,000/. sterling, and has the guarantee of the Secretary of State for India for 51. per cent. We desire to know whether that guarantee is equivalent in form, as well as it certainly must be in substance, to the guarantee of the _General Home Government upon the revenues of the em- pire. That it certainly must be so in substance may be perceived at once by those who have the slightest knowledge of what public credit intrinsically is. Any obligation of this nature contracted by the Secretary of State for India will certainly, if need come, be discharged by the people of Engh iii. But if this guarantee intrinsically is, and should be declareu to be an equi- valent security to that of the Three per Cents, it seems to indicate something very conventional and absurd in the workings of capital that there should be doubt, or difficulty, or delay in the applica- tion of a principle which is at once the only solvent of the India financial difficulty, and so profitable to the English capitalist. For it is ridiculous that any of the large Governments of Europe or the world should be able to command enormous sums in the English market, for which there is no security but the faith and existence of such Governments, and no larger return possible than a bare 5 or 6 per cent ; while undertakings as good in their security, with an immense margin of profit, and of the highest imperial importance, come in mere driblets upon the London market.
We can scarcely conceive a plainer case than this when fairly examined. Let it never be forgotten that this Indian deficit must sooner or later be regarded as an English deficit : that the most experienced authorities declare that there is no means of putting an end to it except by these highly profitable methods. The true practical conclusion from these premises appears to be unanswerably that by a bold application of the principle of guarantee the Government of India should, as rapidly as possible, attract capital for these so lucrative public works for the mutual benefit of government and capitalists, and in sufficient quantities to give buoyancy to the sinking revenue. Surely when patriotism and profit combine to urge English capital into such sources as these, it must ere long grow to be out of date to pour our millions into the lap of foreign despotisms, which are most likely to use them for our detriment.
We are not unaware' however, of the fact that the money- market is influenced by traditions, sympathies, conventionalities, just as other theatres of mere human activity. For the sense of profit, just as the sense of morality, becomes obscured and lulled in passing through the medium of human judgment and con- science. Men do not know, but have to learn their interests ; as
England with her free-trade history ought to understand by this time. It is a familiar thought to the Stock Exchange to lend millions to a foreign state, but India is as yet for many reasons a strange and weird land to English financiers. Besides, a certain amount of cliquerie and of personal prestiges and prejudices have grown up in the circle of European finance, the net result of which has been to make it more or less the ally of diplomacy in the
maintenance of the status quo. So that there is a certain body of opposition that will present itself to the ideas which we are at
present putting forth. But this must rapidly be dissipated. In matters of self interest resistance has its limits, and they are soon reached. A field of investment so lucrative as India must re- commend itself to the attention of thoughtful capitalists. And if the Government only have courage to apply sufficiently the excep- tional principle of guarantee to a case altogether exceptional, on the ground of the interest which the Government has in the case, and as avowed partner in the profits of the enterprise, we do not doubt that the finance of India may be placed upon a footing of permanent soundness.
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