Skip to main content

East India Loans (Railways And Irrigation) Bill

Volume 15: debated on Thursday 17 March 1910

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."

A few nights ago when the Resolution on which this Bill is founded was passed through Committee after 11 o'clock, mainly owing to the generosity of the hon. Member for the City of London (Sir F. Banbury), I promised that I would make a statement explaining the Bill when we reached the Second Reading. As the hon. Member does not appear to have found it convenient to come to the House to-night I do not think it worth while detaining this House, which bears every resemblance to the usual House when Indian affairs are being discussed, with any long explanation of the Bill. Shortly speaking, the history of it is this. The Secretary of State for India possesses no power to raise money by loan in this country except with the consent of the Houses of Parliament, and so from time to time he comes down to the House of Commons with a Bill of this kind and asks for power to raise a limited sum of money. There were loans Bills passed into loans Acts, comparable to this, in 1893, 1898, 1901, 1905, and 1908. There are two kinds of these Bills. Sometimes power is sought to raise money for general purposes. Sometimes it is sought only for specified purposes. The Bill which is now under discussion is of the latter kind, and only seeks to raise money for the specified purposes of irrigation and railways.

General borrowing powers are only used to meet great emergencies, such as war or famine, and it is a matter of great rejoicing that since the Bill of 1908 no such emergency has arisen; and the Secretary of State still possesses unexhausted the whole of the borrowing power for general purposes granted by this House in 1908, together with an unexhausted portion of the borrowing powers granted by the Act of 1898, to the extent of sums amounting altogether to £6,371,699, so that it is absolutely unnecessary to ask for power in this Bill to borrow money for general purposes. The Government asks the House for power to raise £25,000,000 sterling for railways and irrigation. I may say that these powers are not to be exercised at once, but only during the years 1911, 1912, and 1913, and subsequent years, and they will only be exercised with due regard both to the necessity of the services involved and the conditions of the money market at the time. I may also say, having regard to the discussion in the previous Debate, that in the undertaking contemplated there is nothing military or strategic. All the work contemplated has to do with the development of the commercial prosperity of India. The subject of irrigation is only included in this Bill so as not to limit unduly the powers of the Secretary of State. But, as a matter of fact, the money required for irrigation is nearly always raised in India, and probably the money raised under this Act will be used entirely for railway purposes.

I will deal shortly with the subject of irrigation first. There can be no doubt as to the value of irrigation, and the success of expenditure under this head is one of the outstanding features of the recent development of India. It was in 1864 that the principle was accepted of constructing works of irrigation out of funds supplied by loans, and since that date various systems have been steadily pursued of supplying water to country previously arid or exposed to the danger of famine in seasons of occasional drought. The policy now governing this work is based on the approved report presented by Sir Colin Scott Moncrieff's Commission in 1903. The sum of £32,143,278 had been invested in major irrigation by the end of 1908-9, and £4,028,294 in minor works, irrigating together the enormous area of 16,435,527 acres. This showed increase over the preceding year of£1,628,541 capital expenditure, of£126,761 gross receipts, of£22,041 working expenses, of£104,720 net receipts, and of 358,639 acres irrigated. These figures are only the Departmental index of the general increase in the productivity of land and the effective protection of districts previously liable to famine in times of drought, and in some cases the settling on land previously uncultivated of large and prosperous populations. The major works only are constructed from borrowed money. The net receipts from these have increased from £1,711,000 in 1900-1 to an estimated net receipt of £2,350,000 in 1909-10. The capital liability at the same time has increased from £23,475,332 to £33,643,278, so that the percentage of net receipts to capital liability has remained practically constant throughout the ten years. We can therefore face the consideration of increased expenditure on irrigation with a confidence that the money spent is not only of immense profit to the population of India, but is spent on sound commercial undertakings, eminently satisfactory to the revenues of the Government of India.

Turning to railways, we are again occupied with work, the advantages of which are undoubted. The building of railways in India, dating from 1853, has been the foundation of the growing prosperity of its people, the basis of any war against famine, the fundamental support of law and order, the root of all progress. Thanks to railways, food can be supplied to distressed districts and good harvests do not entail the waste of crops. Railways have equalised prices and distributed food and produce; they have colonised new districts and led, so far as is possible, to establishing a greater community of interest among the various peoples of India. Turning to the more material question of profit to the Government of India again, we see a story of satisfactory investment. About 24,000 miles out of the 31,485 opened for traffic are now the remunerative property of the Government of India, yielding in 1909-10, which has not been a particularly favourable year, 4.41 per cent, of the money invested in them, which now amounts to about £300,000,000. The railway service gives employment to 525,000 persons, of whom 508,000 are Indians. The number of passengers rose from 161,000,000 in 1899 to 321,000,000 in 1908, and during the same period there had been an average increase of 790 miles opened per year. Loans raised under Bills such as we are now discussing are spent, first, in fulfilment of the railway programme for the year; and, secondly, in the discharge of capital liabilities. The railway programme for the year is decided by the Railway Board, which, subject to the approval of the Government of India and the Secretary of State, manages Indian railways. A portion of the money spent goes to improve the equipment of existing lines; increasing trade makes increasing demand on the lines built to meet the more modest requirements of earlier years. A great increase of goods carried necessitates the provision of more rolling stock and heavier waggons. This means new bridge girders, strengthening the permanent way, and new goods yards. By far the larger part of the money raised for capital expenditure is used for such purposes. Of the £20,900,000 included in the programme of capital outlay for this year 1909-10 and the coming year, £8,800,000 goes to open line works, £7,600,000 to rolling stock, and £4,500,000 to new lines and lines in progress. I may add that the Railway Board and the Indian railway companies themselves pay particular attention to the proper distribution of the charges for improved equipment between revenue and capital, and only such work as can properly be said to improve the revenue is charged to capital.

Continued representations were received from India some time ago as to the insufficiency of railway development to keep pace with the development of India to supply the needs of its trade and to enable the railways to be worked to the best possible advantage. A committee was appointed as a consequence of these representations, which was presided over by Sir James Mackay, and reported in 1908. The report recommends that a capital expenditure of £12,500,000 should be incurred annually on railways, on which £4,000,000 should be provided in India and the remainder in England. It is with a view to meeting the recommendations of this committee that expenditure has been increased, and this accounts for the shortness of the interval between this and the last Loan Bill. The full expenditure recommended, however, has not yet been attained, and may not be attained for some time to come. The resources of India in the near future may fall short of the £4,000,000 contemplate by the Committee, which was to be contributed from such sources as the Revenue Surplus, Rupee Loans, and Coin- age Profits. It is probable, therefore, that about £8,000,000 a year must be raised in this country for the purposes of the programme. Some part of this sum will be raised in the form of Capital Stock or Debentures of Guaranteed Railway Companies, for the creation of which the authority of Parliament is not required. It is not possible to give any accurate estimate, but, based on past experience, it may be suggested that about £6,000,000 a year will be raised for programme purposes by the Secretary of State. The amount raised for programme purposes under the Bill of 1908 has been £13,307,273.

As regards liabilities for the discharge of capital, most of the railways belonging to the State in India are worked by companies, guaranteed by the State, under contract. Termination of a contract with any company means the repayment of capital contributed by them; this, together with the repayment of terminable bonds, must be met by borrowed money. Under the Loans Act of 1908, £997,300 has been spent on the discharge of debentures; before the end of this year, when the contract between the Secretary of State in Council and the Indian Midland Railway Company comes to an end, it will be necessary to repay to that company £2,250,000; possibly, also, though I hope this will not be the case, £1,510,000 may be required for repaying capital and certain debenture bonds to the South Indian Railway Company. The loans for these purposes will be raised under-and, I may add, go far to exhaust-the borrowing powers of the Act of 1908. In 1911-12 £1,776,200 worth of bonds, originally issued by the Madras and Indian Midland Companies, will have to be discharged, and in 1912-13, £1,477,600 worth of similar bonds, and in 1913-14, £1,281,200. Accepting, therefore, the estimate of six millions as the amount to be raised annually under the present Bill for the railway programme, the House will see that it is possible to estimate the requirements of the Secretary of State in each of the next three years at about seven and a-half millions, and that the powers asked for under this Act will have to be renewed at the end of 1913–14.

There are only two other points which I should mention, rather by way of anticipating criticism, and they are not wholly unconnected. I have shown that railway undertakings have in recent years nearly always meant a considerable profit. This amounted to £9,770,000 during the last ten years, supplementing the revenue raised by taxation for meeting general administra- tive expenditure; but in 1908-9 there was a loss of £1,242,000. This was due to a decrease in gross earnings consequent on unfavourable agricultural and trade conditions, and an exceptionally high rate of working expenses, resulting partly from the necessity of giving special allowances to compensate for the high prices of food while the effects of famine were still felt, and partly from the large outlay on renewals. This brings me to say a word on the matter raised on discussion of the last Bill as to the passenger facilities of the railways, the improvement of which was responsible to some extent for the increase of working expenses in 1908. The Railway Board in 1905 issued a circular to the several railway administrations urging the necessity for providing (1) facilities for passengers to obtain their tickets a longer time before the departure of the trains, (2) facilities for examining tickets of third-class passengers so as to enable passengers to have proper access to the platform, and (3) proper accommodation for the third-class passengers to prevent overcrowding. There is every evidence that ample response has been made to this circular. Continuous booking at the principal stations, and the opening of town offices for the taking of tickets, deals with the first evil. As regards the second, the railway administrations are rearranging their waiting-halls and platforms. The only way of dealing with the third evil is to increase the supply of coaching stock. New third-class carriages of a modern type are being provided with every possible speed.

Finally, if there be any Member who thinks that we are proceeding too rapidly, I would remind him that, if we compare India with any of the advanced countries of the world, there is room and need for a great development of railways. To compare it with the United Kingdom, with one-fourteenth of the area and one-sixth of the population, you find that the United Kingdom has three times the mileage of railways. I would also point out that the productive debt of India makes up by far the larger portion of her debt. The total permanent debt on 31st March, 1909, amounted (in round figures) to £251,000,000. Of this total £182,000,000 represented railway debt, producing more than 4 per cent, interest; £31,000,000, irrigation debt, producing 8 per cent, interest; and £38,000.000, ordinary or unproductive debt. Few countries can show so favourable a record.

I wish it to be clearly borne in mind that it is for this remunerative debt, not for the unproductive debt, that I now ask for powers to raise money. Profitable as the expenditure of capital on railways is now, it will be more profitable in future. In the first place, the purchase of railways by the State has in the majority of cases been made by means of terminable annuities. When these are paid off, the railways in the possession of the Government of India will become an unburdened commercial property of enormous value. In the second place, a considerable number of railways have been built, not for immediate profit, but for the development of certain areas, and these will become remunerative in proportion as they achieve their object. Nor do the peoples of India have to pay highly for the inestimable benefit conferred upon them by railway development. Although during the four years ending 1907-8 the net annual gain to the State from this source was approximately £2,000,000, the rates charged for passengers are only one-fifth of a penny per mile and for goods a halfpenny per ton per mile. I think now I have laid before the House sufficient evidence of the necessity for this Bill and the purposes for which it is required. This House has granted to the Secretary of State in 1908 borrowing powers for railway and irrigation purposes, which have now been nearly exhausted on new construction, better equipment, and repayment of capital. I ask it with confidence to renew this power in order to give further assistance to the Government in providing for the continued improvement of the first necessity of the modern development of commerce, agriculture, and general prosperity-improved means of communication.

The Under-Secretary has, I think, made out a very strong case for the borrowing powers which he asks the House to sanction. I think he meets with no opposition at any rate from this side of the House. I remember the last occasion on which we had an East India Loans Bill before us. Some opposition was made to the measure, but that opposition did not come from this side of the House, but from the other side. A gentleman, who was then a Member of the House, but who is no longer so, and whom I have heard sometimes described, most inappropriately I think, as a friend of India, proceeded to vindicate his claim to that title by moving the rejection of the Bill. I hope we shall have no factious opposition of that kind upon this occasion. The Under Secretary pointed out that the debt of India was to a very large extent a productive debt. I think the value of borrowing money for the purposes for which it is now sought, to the extent of £25,000,000, can be made quite clear to the House. The debt of £70,000,000 under the Crown amounted to something like £97,000,000 in 1862, as a result of expenditure incurred in suppressing mutiny and reorganising the Administration. At the present moment the debt stands at approximately £250,000,000, which is an increase of £150,000,000 since 1862. It may sound rather like a paradox to say that this large increase in debt since 1862 has been responsible for relieving the Indian taxpayers of the whole burden of their National Debt, but, nevertheless, that statement is perfectly correct. Whereas in 1862 the only burden on the State was a debt of between six and seven millions sterling, the far larger debt of the present time not only entails no burden whatsoever, but it is actually responsible for the yield of about £400,000 to the Exchequer The explanation is quite simple. Since 1862 the policy of borrowing money for productive purposes-that is to say, for investing in railway and irrigation concerns -has been accepted; and since 1870 that policy has been steadfastly pursued, and has been crowned with financial success. The total of the productive debt has largely increased; but side by side with that the unproductive debt has equally steadily diminished, until at the present time out of a total of £250,000,000 of debt, only £38,000,000 is unproductive. That is a very satisfactory state of affairs.

The money we are now asked to give the Secretary of State power to borrow is, we are told, practically entirely for railway purposes. There are one or two questions I should like to ask with regard to the construction of railways in India at the present time. About eight years ago the amount of capital expenditure devoted to new construction in the course of the year was about the same as the amount devoted to improving the status of existing railways, purchasing railway stock, and so on; but since that time, the proportion of the total annual capital expenditure on railways devoted to existing railways has steadily increased to the detriment of new construction. Since 1902-3 the amount spent on existing railways has increased from £3,351,000 to upwards of £8,000,000 in the present day, whereas the sum spent on new construction has actually decreased in the same period from £3,800,000 to £1,333,000. I realise that the mere fact that you have to spend vast sums on existing railways is in itself a satisfactory feature. If you have to increase the capacity of existing railways for carrying goods it shows that you are experiencing a large and rapid expansion of commercial and industrial activity. It would be interesting to know, however, how soon we are likely to return to a more or less normal balance of expenditure in the course of the year between existing railways and new construction. The Under-Secretary referred to the Report of a Committee on Indian Railway Administration, issued in 1908. The recommendation as to expenditure contained in the Report was that a sum of not less than £12,500,000 should be spent on railways every year. I am sorry to understand that the Government of India have so far not seen their way to accept that recommendation.

9.0 P.M.

I think the hon. Member misunderstood me. What I said was that although we were anxious as quickly as possible to work up to the standard recommended by that Committee, it would be some years before the full amount of £12,500,000 would be included in the annual programme. There is no question of not accepting the recommendation.

The Government are obviously anxious to accept the recommendation, but on financial grounds they do not at present see their way to do so. But if the Secretary of State is to be given power to borrow the considerable sum of £25,000,000, surely it will be possible for him to accept the recommendation of the Committee and to spend the extra £2,500.000 per annum over and above what is at present proposed for railway construction. I know the Government of India are anxious to do what they can, and I suppose there are still financial reasons in the way of their accepting the recommendation in its entirety.

The Under-Secretary referred to the length of railways constructed in India up to the present time, and he pointed out that in India we have a length of approximately 31,000 miles of railway. When it is remembered that within the memory of many people still living railway communication in India was in much the same condition in which it is at present in Persia and Thibet, it will be seen that the performance of constructing 31,000 miles of railway is not altogether undeserving of praise. At the same time it is quite true, as the hon. Gentleman pointed out, that there is still a great deal to be done in that direction. He made a comparison between the Indian continent and this country. I will give him another comparison equally striking. France, with an area between one-eighth and one-ninth of the area of India, has nearly as many miles of railway as the Indian continent.

Does the Noble Lord think that that is a fair standard of comparison -to compare part of Asia with the most civilised countries of Europe?

No. I do not say the two cases are strictly comparable. I am merely pointing out that in a vast continent like that with which we are dealing, governed, as it is, by civilised Government, and having a vast population in a high state of civilisation, there is still a tremendous amount to be done in the way of railway construction. Take another comparison. The hon. Members present are probably all experts in Eastern questions, but many people outside the House do not realise the enormous extent of our Indian Empire.

For the benefit of those people, let me say that our Indian Empire is in extent about 100,000 square miles greater than the whole of Europe, excluding Russia. The whole of Europe, excluding Russia, has approximately 159,000 miles of railway; that is, more than five times the mileage possessed by India. I quite admit the force of the remark of the hon. Member for Montgomery Boroughs (Mr. Rees). You cannot strictly compare Asia with Europe. I merely quoted the figures to show that a considerable amount remains to be done before we can consider that our task in the matter of railway construction in India has been carried to a satisfactory issue. I do not think I need say much about irrigation works, because I understood the Under-Secretary to say that the work has been commenced for which we are asked to-night to sanction the money. That money is partly to be raised in India itself. That is a very satisfactory feature of our rule in India. I wish that more and more could be raised in India itself for productive purposes. Still, as it is not possible to raise all that capital in India, I give my hearty support to the hon. Gentleman in borrowing the money in this country. I hope, for the sake of India itself, and for the credit, reputation, and name of this House, that this Bill will be allowed to find its way on to the Statute Book without confronting any opposition.

The Under-Secretary—whom I congratulate on the very excellent speech he has made on his first appearance in this House in his present capacity and on a very important occasion-referred to the fact that the House was empty, and therefrom deduced the conclusion that the House was not interested in Indian affairs. May I submit to him and the House that any Debate on any subject that happens by fate to begin at half-past eight o'clock will invariably begin in an empty House; and that, on the whole, the present condition of the House is, I think, considering that it is now only five minutes past nine o'clock, satisfactory testimony that India possesses an increasing interest for the House of Commons and for the country. I must say also, by the way, that I think the greater interest now displayed in the Indian Debates in Parliament, and in the House, is due in a great measure to the manner in which they have been treated from the Treasury Bench. I think the predecessor of the hon. Gentleman, who has been advanced to a higher place, did a great deal in that respect to make these Debates interesting.

There was a, remark which my hon. Friend made in the beginning of his speech which might not have been superfluous, but which I am not altogether in accord with. He hastened to say in a somewhat apologetic strain that there was nothing strategical about these proposals. The strategical railways in India-the railways which we began on strategical grounds-have proved themselves to be very fair commercial speculations. I think military strategy and commercial policy in India go very well hand-in-hand-as they do in many other parts of the world. Then my hon. Friend, in speaking of the irrigation works, said that a small part of this loan would be required for irrigation, and he referred to the danger of famine. This I only allude to in passing to say how deeply I regret that this word "famine" is engraven in the discussion of Indian affairs. None of as can cut it out. Whereas, as a fact, under the extraordinarily able system of outdoor relief which is now automatically in force in India, there is practically no famine. A succession of bad seasons only leads to the greater application of one of the most magnificent systems of outdoor relief which have ever been elaborated by man. My hon. Friend referred to the railway programme and Railway Board. May I for a moment, as a director of one of the greatest railways in India, as well as a Member of Parliament, refer to this? I think what my hon. Friend said about the importance of proper equipment of the lines was very much to the point, and where he said that considerable sums of money were to be devoted to increasing the rolling stock he put his finger upon one of the greatest requirements of the railway system in India. There is no doubt that this is a very great requirement. I am extremely glad -and I congratulate him and the Secretary of State on the fact-that this matter is being properly dealt with. He referred also to Sir James Mackay's Committee. I may say I am not entitled to speak for any railway but my own, but I am sure that other boards have been as anxious as that of the South Indian Railway to carry out the recommendations of that Committee, and, above all, to improve the conditions under which third-class traffic is carried on. It is a very easy matter-I have heard it done in some quarters of this House-to suggest that third-class passengers are not properly treated. There is one hon. Member who always suggests that they should have the same accommodation for sleeping as first-class passengers. But the net result of that would be, if carried beyond a certain point, that these services could not be carried at the low price at which Indian passengers desire to be carried. These low rates have led to the enormous development of the Indian railways, and on the railways with which I am best acquainted really provide us, unlike English railways, with far greater part of our receipts. I should like to take this opportunity, as these matters seldom come before the House, to assure the House that the boards of the Indian railways-I am sure others are no less virtuous than my own-spare no pains to provide for the comfort of the third-class passengers. And it is probable that those boards, consisting of gentlemen who have spent their lives, I suppose, for the most part in India, are quite as well aware of what can be done and what is required by third-class passengers as gentlemen who take an altruistic, but a somewhat remote, interest in their welfare.

My Noble Friend in his very interesting speech showed how conscious he was, as a great traveler—as I know him to be—that you must compare Indiain Asia—with Asia, and with other countries in Asia—possibly, if you like, with other countries under European rule; but you must not compare it with other countries in Europe. But, I was really astonished to hear my Noble Friend, who is familiar with Persia, Thibet, and other countries, proceed to compare the mileage of that vast Indian Continent with the proportionate mileage of the French Republic and the United Kingdom.

Then all I can say is, with all my respect for the Front Bench, that the Noble Lord followed a bad lead. I mean to say that we ought to be most careful in our comparisons, for often the standard is forgotten, and India is compared with an absolute disregard of cosmic, geographical, and economic conditions with these islands. There is no more fertile source of error, and I am quite sure that the Noble Lord would not maintain the position which for the moment, and in the exigencies of debate, he took up. Neither do I desire for a moment to maintain that there is anything wrong about the statement of my Noble Friend.

The Noble Lord also said that he wanted to see the expenditure on new construction brought up to a higher figure. I should like to see that, too, but I am bound to say that I think that if there is a case as between the requirements of bringing up the existing lines to a proper standard in the matter of rolling stock, and the requirements of new construction, I do think that the cost of bringing the existing lines up to the proper standard of rolling stock ought to come first. Therefore, for my part. I approve of the policy of the India office in this behalf. Coming for a moment to the clauses of the Bill, I see references were made to the provision to repay part of the capital and certain Debentures of the South India Railway Company. I will pause for a, moment to say that the fact that the Secretary of State desires to continue the management by this Company, and by other companies, is a testimony to the successful management of Indian railways, even where the greater part is owned by the State. It is a testimony by the State to the successful management of these railways through the agency of companies; an agency which I sincerely hope will be maintained, believing as I do that there is no part of the world where private enterprise is not infinitely better for any concern than the management of any Government, however capable and efficient; and I believe the Indian Government to be one of the most capable and efficient that there is in the world. Then there is one remark upon this subject of repaying that I should like to make. Whenever there is a question of raising capital for India, and whenever the circumstances require that capital should be raised for railway purposes in India, I sincerely hope that every step that is possible will be taken to distribute that capital, so as to bring the great financiers and firms in England into this business of Indian railways. I should like to see it so distributed and as many great firms as possible interested in the business of railways in India. I should like that it should cease to be regarded as a special branch of finance, and I should like to see these securities, which are as good as any in the British Empire-there is no better security, and they pay far better dividends than the English railways-I should like to see them as popular in the City as any other railways or branch of finance. I should like to see them spread over as wide an area as possible, and not pressed into any particular groove or direction.

As regards irrigation, there is very little to be said about it in connection with this Bill, because the Under-Secretary for India told us that most of the money would be devoted to railways, irrigation being provided for by Rupee loans raised in India. The Under-Secretary told us that £32,000,000 had been spent for irrigation. I think it is just as well to cross the t's and dot the i's in regard to what has been done in the matter of irrigation. The report of Sir Colin Moncrieff's Committee afford an excellent answer to the criticisms which we have heard from time to time about irrigation. That report points out that only 3,000,000 or 4,000,000 acres more can with advantage be irrigated at a cost of some £8,000,000 or £9,000,000. It is not desirable to go further into these figures, because, of the fact that most of the loan is to be devoted to railways and very little to irrigation. Perhaps it would not be irrelevant to remark, in passing, that while India is generally supposed to be an over-occupied country, as a matter of fact less than two-thirds of the whole country are cultivated, and I for one am in entire accord with those who press for as great extension of irrigation as can be reasonably effected. For instance, take the Punjab; great comment was made upon the fact that the land revenues had risen by 80 per cent. That is a striking figure, and it might look as if the Government was screwing down the cultivator, but the cultivated area has increased 100 per cent., so that instead of a drastic Government screwing down the cultivator you have a Government charging 20 per cent, less than the amount to which it would be properly entitled.

The Under-Secretary gave some figures in his speech. They are, of course, later than any I could have, but the figures I have are of a most striking character as regards the public debt of India. They put it at £246,000,000, of which £177,000,000 has been incurred for railways, and £30,000,000 for irrigation works. All the expenditure is practically remunerative, except £38,000,000, so that the debt, which may be described as "drain," is about half a year's revenue. The return the Government gets on its railway investment is higher than that which the private investor in this country gets upon his railway stock. The unremunerative debt is only about half the normal year's revenue It seems to me to be very relevant at the moment to refer to the statement made by Lord St. Aldwyn, when he was Chancellor of the Exchequer in this House, to the effect that the finances of India are in a far better condition and are far better managed than the finances of this country. I make that observation without instituting any comparison at the present moment, but with a, series of years in mind. Upon this point of the allocation of this loan, most of which is to be devoted to railways, I regard it as quite material to refer to the criticisms which have been made upon the relative amounts devoted to railways and irrigation. There is no limit practically to the extension and the profitable extension of railways in India. We find that a railway, founded even for a strategic object, at once becomes remunerative, but there is an immediate limit to what may be spent upon irrigation, because the amount of land that can be improved by irrigation is limited, and if the land is not capable of being irrigated at a profit, it is unjust to the general taxpayer to charge him for irrigation which would be beneficial only to a few, but for which the taxpayers would have to find the money. That is a consideration that seems to me to be eminently material. It affords an answer to the shortsighted criticism which is frequently made in regard to the Government of India, but which is likely to be less frequent in this Parliament. Owing to the discrimination of the electors of the United Kingdom, these criticisms are considerably diminished in volume in the present Parliament, a circumstance which, while I recognise how fickle is popular favour, I cannot on public grounds regard with anything but with satisfaction. In a most valuable and interesting work recently published by Mr. Forrest there are some important documents given which were written by that great Governor-General, Warren Hastings. Warren Hastings says:—
"The Government of India will never be properly carried on unless that Government is treated in this country with the consideration which is due to it."
The words of that great man may very well, I think, be considered in this House on such an occasion as this when such a Bill is before us, and when nothing is said to which the Government of India or anyone concerned in it will take the slightest exception, and for my part I sincerely hope that nothing will transpire during these Debates of that sort. I hope this Bill will find its place upon the Statute book without opposition, believing it to be, as I do, a most valuable measure providing funds in a most satisfactory manner, because this money cannot be raised in India, The money is provided at a far cheaper rate of interest than that which would obtain if the money was raised in India, and it is provided for works in connection with railways upon which the average return is about 4¼ per cent., as against 3¼ per cent, in this country. I wish this Bill good luck, and for my part I shall heartily support it.

I should like to offer a few remarks on the financial side of this question. I would like to ask whether it is really necessary to find £25,000,000 now. I wish to congratulate my Noble Friend the Member for Hornsey (Lord Ronaldshay) upon the speech he has just made, and the useful information he gave to the House in that speech. I hope hon. Members opposite will bear that speech in mind. My Noble Friend stated that the result of the State management of railways and other productive enterprises in India was that there was actually a profit to the State of over £400,000, after the interest had been paid.

May I point out to hon. Gentlemen opposite that that profit has been made on the private management and not on the popularly elected body. If it had been under the management of a popularly elected body, instead of there being a profit of £400,000, there would probably have been a deficit of from £4,000,000 to £5,000,000. The representatives of labour in this House are always telling us that popularly elected bodies are the remedy for all evils. I wish it to be known that in India selected bodies manage to conduct the affairs of a great country at a profit, whereas in this country we generally find that popularly elected bodies have to draw upon the ratepayers to make up the deficits arising from bad management. I wish to ask one or two questions with regard to the finance of this Bill. I do not doubt that the £25,000,000 is necessary, and I am prepared to take the statement of the hon. Gentleman, which, I regret, I did not hear, to the effect that it is necessary; and I presume he said it was. All I wish to point out is that if the raising of this £25,000,000 is absolutely necessary at the moment, it is a bad time now to come on the market to borrow money. No doubt the Under-Secretary is aware that within the last two or three months the Indian Government tried to raise a large loan without any very great success. It is true that the money was obtained, but only by the underwriters. The loan was not floated when it was issued, and it does seem to me that immediately after a failure of that sort to come forward and ask for £25,000,000 within three years is, to use homely language, a strong order. Indian Three-and-a-Half per Cent, now stands at 95½, and that is the lowest price they have reached within the last thirty years. I am not making these criticisms in a party spirit. The position is the same as when the private individual who has rather overrun the constable, tries to obtain money on too many bills, and so depresses his credit. Just in the same way a country, however good its credit, if it is continually borrowing at unpropitious times, must suffer depreciation of its credit and must pay an increase in the interest for the accommodation it desires. I do not know whether it is absolutely necessary to obtain this £25,000,000 at once. If it is necessary I suppose the hon. Gentleman is doing the right thing, but if it is not I think it would be advisable to postpone the borrowing for two years until the credit of India has been re-established.

My next point is, How is the hon. Gentleman going to raise the money? Is he going to adhere to the plan carried out by both parties of guaranteeing the loan by railway companies instead of issuing stock by the Government itself. I remember a very considerable amount of profit being made by certain astute people in the City owing to the system of finance adopted by the Indian Government. I forget which particular Indian railway it was, but I know one Indian railway was purchased by the Government and the stock was guaranteed, and at the same time an option was given to the holders to exchange into Indian Three per Cent. Stock. There was a large margin between the guaranteed stock and the Indian Three per Cent. Stock, and these astute people in the City availed themselves of that knowledge, with great advantage to themselves and a corresponding disadvantage to the Government. I have never yet seen what the object of guaranteeing this stock was, because it always stands below the Government stock, and I do not see why this course has been taken instead of issuing the Government stock direct. Very large sums of money have been lost by that method of finance which has obtained for a good many years. I do not know why I should venture to give good advice to hon. Gentlemen opposite, but I cannot refrain from pointing out what seems to me an error in their financial management, and I hope the Under-Secretary will at any rate consider whether or not in obtaining this money it would not be more advantageous to obtain it by a Government loan instead of by guaranteeing it.

The hon. Baronet who represents the City of London (Sir F. Banbury) has asserted that railways and tramways managed by popularly-elected bodies are not so well managed as those conducted by private individuals. If the hon. Baronet will take the trouble, to read the papers issued by this House he will find that tramways and municipal undertakings are managed quite as well and quite as profitably as the railways of this or any other country. But there is something more to be considered. We find that under municipal management the employés get a great deal better conditions than the employés on the private management. That being so we are rather inclined to look at matters from a rather different standpoint. I would like to say a word or two in reference to what the hon. Member for Montgomery Boroughs (Mr. Rees) has said. I do not pose as an expert on Indian affairs, and after listening to the hon. Member's speech I am rather inclined to thank God that I am not one. I rose principally to ask a question with regard to the firms who are given the contracts for the iron work required for the railways and bridges in India. I want to know whether it is possible under this Bill, or by regulations to make conditions forbidding the contractors for such work in this country from getting these contracts unless they observe the Fair Wages Clause. I say without hesitation that when public money is being expended for work of this kind in India, the same conditions ought to apply wherever the work is done. That does not take place now, and I am told by people who have tendered that the ironwork required for the railways and bridges in India is nearly always given to people who do not observe the Fair Wages Clause, although the contractors who tender for such work in this country have to observe that clause. I want to know whether it is possible to compel those firms who are exploiting this work to conform to the Fair Wages Clause.

I wanted to ask one question with regard to what the Undersecretary said in his opening remarks. He mentioned that one of the reasons why this money was to be borrowed was that so much money had not come in from the profits of the coinage as was anticipated. I want to know if he could give the House any reason why these coinage profits are so extraordinarily spasmodic, why sometimes the mints are working at high pressure with the greatest profit, and why at other times the profits die away practically altogether. He said that a very large proportion of this loan is to be spent on the improvement of the equipment of the railways, and he particularly mentioned the third-class carriages. I believe he said that this was in consequence of the pressure which had been brought by certain Members below the Gangway to bear upon the Government with regard to the accommodation for the native passengers. It is due to the extraordinary fashion for railway travelling on the part of third-class passengers that wonderful profits are made on the Indian railways which are quite impossible over here. Although possibly the third-class accommodation is not all that the people in this country would certainly require, it is certainly worthy of consideration that it does, on the whole, amply satisfy the native population of India. They are perfectly willing to travel under the conditions which have hitherto obtained, and it is very doubtful whether, when this large sum of money has been spent in improving the third-class accommodation, it will bring in the same rate of interest.

With regard to the letting of contracts for the ironwork for the Indian railways, I certainly sympathise with what the hon. Member opposite said. If we have a Fair Wage Clause, it is certainly very undesirable that money raised by the Indian Government for ironwork let on contract should go to pay unfair wages in this country. The hon. Member suggested that the Under-Secretary should bring in a rigid interpretation of the Fair Wages Clause, and should see that only firms were allowed to contract who paid the full rate of wages paid in this country. I wonder he did not go one step beyond that, and ask that the Government of India should be precluded from purchasing its railway materials from other countries where the wages are infinitely lower than those paid even perhaps by those firms in this country who do not pay the full standard of wages here. It seems to me futile to ask the Government of India to insist upon special conditions which obtain in Government contracts in this country whilst they are left perfectly free, as, perhaps, hon. Members opposite probably think they ought to be left free to purchase their railway materials in any country of the world, and under any conditions of labour which may obtain in those countries, although the moneys for these railway materials are provided by loans authorised by this House.

After listening to the Under-Secretary and to the Noble Lord opposite, I think there is not very much more to be said with regard to this Bill from the Indian point of view. I would like, however, to say that I was infinitely pleased that attention has been paid, as regards third-class passengers, to the needs of the native population. It has been known for years to railway men in India and to the Government of India that the accommodation in the carriages was very often insufficient in many ways, and also uncomfortable, and that the people, not being much used, as we are, to railway travelling, often had difficulties, in the hurry of things, in getting tickets and in getting comfortably from the ticket office to the railway carriage. These matters may seem to hon. Members in this House of small concern, but as they affect millions of people, they are matters of grave concern. I have not the least doubt that the Indian Government, in its parental care of the people, has taken that same view, and I am glad that policy has been now successful. It is a very great gain indeed, politically and otherwise. If I might ask the question, I would like to know from the Under-Secretary how the system of the Railway Board managing all the railways of India is being worked, and whether it works without friction, both as regards the various State railways worked by the Government, and those that are being worked under contract by private companies. It was a big departure when that Railway Board was started, and I think it would be well that the House should have some information at this point as to how the system is now working.

I only rise because my hon. Friend cannot speak again, to give an answer to one or two questions put by the hon. Baronet opposite (Sir F. Banbury) upon specific points. I think the point as to the interpretation of the Fair Wages Clause raised by the hon. Member for West Houghton (Mr. Tyson Wilson), and the questions raised by the hon. Gentleman opposite, and by my hon. Friend who has just sat down (Sir John Jardine), would be better discussed on the Committee stage, when these smaller points can be raised, rather than upon the Second Reading of the Bill, which deals more with the general principles to which the hon. Baronet opposite has referred. He asked, in the first place, as to the time of borrowing. A good deal of information on this point is con- tained in the Memorandum which is on the same paper as the Bill. If he will look at the second part of that Memorandum, he will see it will be necessary in 1911 to issue a loan. It is obvious the Secretary of State cannot at this moment pledge himself as to the exact amount it will be necessary to raise, and still less to the exact rate of interest it will be necessary to pay a year and a-half hence, but he will have to raise during the next three years-I very carefully do not pledge the Secretary of State to any exact figure-a sum for the programme purposes to which my hon. Friend referred in his speech. He went very carefully into that programme and the purposes for which the money would be used. He also pointed out the necessity of taking in advance powers which it was not desired to exercise till 1911. The money will be raised, as regards India Stock, about £6,000,000, and £2,000,000 will be raised for the needs and requirements of the guaranteed companies. The distinction between the direct and the indirect responsibilities of the Secretary of State in railway matters are, I have not the slightest doubt, known to the hon. Baronet. He knows the narrow distinction drawn in Indian railway matters between railways which are worked direct by the State and those worked by guaranteed companies on a lease for a certain number of years. I think that answers the two points to which he referred. The other points are Committee points, which can be more properly dealt with in Committee, and I will only add for the information of the hon. Member for the West Houghton Division that the India Office is represented by a member on the Advisory Committee, with reference to which a pledge was given by the Secretary of State for War three or four days ago that any question of the payment or non-payment of fair wages which may arise in connection with the construction of railway stock or other material for the Government of India can be dealt with on the advice of and at the suggestion of the Advisory Committee, armed, as it will be, with new powers under the pledge given by my right hon. Friend.

Question, "That the Bill be now read a second time," put, and agreed to.

Question proposed, "That the Bill be committed to a Committee of the Whole House for to-morrow" [ Mr. Montagu], put, and agreed to.