THE FISCAL QUESTION IN INDIA. LTO TUB EDITOR OF Tag
"SPECTATOR."] Srn,—The weighty and sincere criticism of the arguments and conclusions of my recently published book on the Indian aspect of Imperial Preference that is offered by Lord Cromer in your issue of July 19th demands respectful acknowledgment and invites reply. I entirely admit the validity of the reasons assigned by you, Sir, in your editorial footnote, why it is impossible for you to open your columns just now to any general discussion of Indian fiscal policy, so I will only ask you now to admit a word or two from me merely to indicate briefly the very few points on which I would venture to join issue with Lord Cromer at a season more convenient to you.
Lord Cromer, who speaks with the highest knowledge and authority and with great fairness, admits that I am " unquestionably right " in demanding the " abolition both of the import duty on (British) cotton goods and the corre- sponding excise duty levied in India." He does not quite like my proposal to tax the imports, or some of them, from foreign countries. Yet he admits that such import duties would be immensely popular throughout India—and he also admits that it must always be absolutely impossible. for us to yield to the popular wish to impose protective duties against British goods. He also agrees with Sir Gangadhar Chitnavis and the Finance Minister that there is "a good prima fade case for supposing that India has relatively little to fear from retaliation" on the part of foreign nations.
Lord Cromer thinks that there will be need of very careful inquiry (1) as to the adequacy, and (2) as to the suitability, of the alternative taxation that I have suggested for meeting the loss of revenue occasioned by the remission of the Indian excise and of the import duties on Lancashire cotton goods and other British manufactures. But in this I entirely agree with him; and, what is far more important, Mr. Austen Chamberlain, in the introductory chapter with which he has honoured my little book, clearly indicates that these points will be subjected to the fullest and most exhaustive examina- tion by all the experts, of whom Lord Cromer himself would naturally be one of the most important.
It comes to this, then, that practically the only point on which I venture to differ from Lord Cromer is this, that I think that many imports of manufactured goods from foreign countries, especially those that hotly compete with the products of Indian or British industry, may properly be taxed, even though the competing Indian and British goods are untaxed. Lord Cromer very reasonably objects that this taxation may possibly raise some prices to the Indian consumer. But here comes in the peculiarity of the Indian situation, which I am sure Lord Cromer will entirely appreciate. He well knows that, out of the 315,000,000 Indian consumers, only an infinitesimal fraction (so small as to be practically negligible) consume any imported com- modity of any sort or kind, save one thing only, their little pieces of cotton cloth. And he will admit—remembering (1) that India and Lancashire between them provide very nearly the whole of this one imported necessary, and (2) that Imperial Preference will relieve the Indian and Lancashire cottons from the existing burden of taxation of 3} per cent. ad valorem—that it is quite certain that, under such a system of Imperial Preference, the toiling masses of the Indian con- sumers will get their necessaries at a price less than that which they now have to pay.—I am, Sir, &c.,
[We cannot refuse Sir Roper Lethbridge's courteous letter, but we must ask him not to regard its inclusion as a pledge that we shall open our columns later to a correspondence which involves a discussion of Tariff problems. As long as the present Ministers are in office, and as long as the Union and the Church are in danger, we will do nothing that may cause friction among Unionists. Lest, however, we give cause for any misunderstanding of our own position, we ought to say once more that on the merits of the question we are wholly with Lord Cromer. In our opinion his is the true Imperialist, quite as much as the true economic, position.—ED. Spectator.]
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