duties were contrary to sound commercial policy,' and that the Government of India should carry out the complete abolition of these duties as being unjust alike to the Indian consumer and to the English producer.' A further Act of 1895 proved unworkable; and the Indian Cotton Duties Act of 1896 was the result of compromise following sharp controversy. The general tariff remained at 5 per cent. ad valorem, with certain variations and a free list, including machinery. The cotton duty was fixed at 3 per cent., while the further concession of an excise of the same amount upon the products of the Indian mills was made to the British exporters. Deficits in the Indian budgets of 1914-15 and 1915-16 necessitated the imposition of fresh taxation last year, raising the general tariff to 7 per cent. Faced with the added requirements of the war loan, the Government of India decided that this increased tariff must be applied to cotton goods.

The fiscal effect was a 4 per cent. protection of such Indian produce, except yarn, as competed with the import trade; and the demands of Lancashire were either the restoration of the status quo or an increase of the countervailing excise to 7 per cent. The first course would make a serious inroad into the required revenue; the second, while it would provide a certain increase of revenue, is absolutely impossible in view of opinion in India. How strong that opinion has become is only realised by those who have served in India; and the debates in both Houses should finally dispel all illusions as to the claims of India and their manifest justice. Lord Crewe deprecated the awakening of the 'sleeping dog'; but, in India, the animal has never slumbered and has frequently exhibited great activity. Lord Curzon spoke of the excise duty as an ancient wrong, for the redress of which India had always looked to the consideration and justice of her British rulers.' Mr Chamberlain stated with perfect truth that this grievance has offered a ready weapon to every ill-wisher of our rule; it has been the theme of every seditious writer; and it rankles as an injustice and an indignity in the mind of every loyal Indian who cares about these things.' He also pointed out that, after having taken Indians into our Councils, we 'must be willing to listen to them,' and that British and

Indian opinion was in complete agreement. There is not a Legislative Council in India which would not pass a unanimous vote for the abolition of the excise duties if the official members were free; and all who have held office in India deplored a measure which they could not defend, and which, as dictated by Parliament, they could not publicly condemn.

The sympathy of officials with the Indian view in this matter has called forth a remarkable comment from the Westminster Gazette,' which informs its readers that

'Our sympathies are entirely with the Indian in his desire to increase his control over his own affairs; but we confess we have somewhat different feelings towards the official world, which, while extremely cool and even hostile to other Indian demands, chooses this one for its special patronage. . . . This sudden zeal of officials for Indian autonomy in the one sphere in which it plainly conflicts with British interests seems to us somewhat gratuitous.'

It has not occurred to the writer that officials do not necessarily lose their sense of right and wrong, or that their apparent sudden zeal' is simply the revelation, forced by circumstances, of what has for twenty years been a commonplace in the official world' of India. Why they should forfeit the sympathies' of any one who undertakes to instruct opinion on Indian matters because they uphold what they regard as a just claim is not easily understood. The fact that they may be 'cool and even hostile' to some other Indian demands,' which are sectional only, cannot be a bar to their support of what they believe to be right. It is the first duty of British officials in India to further every demand which they believe to be in the best interests of the people, and to oppose what may endanger those interests. Their judgment in such matters may be right or wrong; but their knowledge of the conditions of the country entitles it at least to respect.

From the point of view of the Government of India, the first necessity was an increase of revenue. The

Stress was laid on this alliance of Indians and Anglo-Indian officials by Sir H. James in the debate of Feb. 21, 1895, in the House of Commons.

raising of the general tariff was inevitable; and this must affect other industries than those of Lancashire. Income tax already presses on very small incomes in India which escape direct taxation in this country. The imposition, for the first time, of a super-tax has been accepted without demur, and is calculated to produce 1,500,000l. a year. The raising in one case of an export duty and a small charge upon goods traffic within India' will help to make up the revenue now required. To such measures, taken to meet war needs, there is no reasonable objection; but an excise duty on home manufactures is a widely different matter. It falls upon the very poor, to whom coarse cotton clothing is a necessity, and its effects extend to non-British India. It entails inquisitorial methods, which are naturally disliked, in every mill. And, further, taxation in this form is generally confined to products, such as intoxicants, over which it is desirable that Government should maintain control. The vast mass of the people of India have no idea of what is meant by an excise duty; but, as the Maharaja of Bikanir stated most justly,

'informed opinion in India has been unanimous in holding that the measure was forced on India in the interests of the English manufacturer, and to the detriment of indigenous industrial enterprise.'

The proceedings in Parliament in 1895-6 justify the allegation that the interests of an Indian industry which is of great and growing importance did not prevail against the claims of its competitor; it is easy to understand the effective use that has been made of this fact in generalisations which are wholly unwarranted. The raising of the cotton excise to 7 per cent. would quickly have been felt in humble homes throughout the length and breadth of India, and must have led to an agitation the more serious because it would place Government in a false position. Sir S. P. Sinha significantly told the Lancashire deputation that

'he trusted the proceedings would not be reported in India until it was also possible to report, not merely that the

* From 1860 to 1886, income tax was levied on incomes of Rs. 500 and upwards. In 1903, the minimum taxed income was raised to Rs. 1000 (66l. 128.). Incomes derived from agriculture are exempt.

Secretary of State in Council had not yielded to the opposition, but that the opposition had been graciously and gracefully withdrawn.'

Unfortunately there is danger that, in some quarters, more importance may be attached to the somewhat injudicious statements made by the Lancashire deputation than to the division list, and to the strong desire expressed in both Houses to defer to Indian opinion.

The amendment did not directly suggest the increase of the excise duties, but sought to record the regret of the House that the provision for meeting' the war charges should include an alteration of the established system of duties on cotton goods, thereby throwing an unnecessary burden on the people of India.' The 4 per cent. increase of duty will mainly fall as a tax upon the Indian consumers of imported cotton goods; but the imposition of a countervailing excise duty would, as has been pointed out, affect the poorest classes. The resolution was carried in both Houses, with the addition proposed by Mr Asquith, declaring that

'such changes as are proposed in the Indian budget in the system of Indian cotton duties should be considered afresh when the fiscal relationship of the various parts of the Empire to one another and to the rest of the world comes to be reviewed at the close of the war.'

The analysis of the division in the House of Commons is as follows:

Of the Lancashire members, 17 voted for the Government and 23 against. The figures, in the circumstances in which the division was taken, have little political significance. A Unionist Government was responsible for the system now changed; and the Liberal majority in favour of the change does not necessarily imply any weakening of Free Trade principles. The Irish

Nationalists voted solidly against a measure which they might have been expected to favour.

The controversy in this country is closed for the time; but it must again present itself in an acute form and on a much wider field. It is, therefore, important that the main issues as between the competing industries of India and Lancashire should be clearly understood.

The handloom industry of India dates back to ancient times, and the hereditary skill of the weaver remains a marvel. Although his trade has been partly destroyed by the advent of the power loom, he can still compete in some articles; and the indigenous industry will remain, if it can be placed on an economic basis by the application of cooperative methods. The first mill was opened in Bombay in 1855, and the heavy import duties -amounting at one time to 20 per cent.-imposed to meet the deficiencies of revenue caused by the Mutiny, must have been effectively protective in their operation. In 1882, the duties were abolished; and their revival in 1894 was the starting-point of a controversy which has become chronic. It was stated by Sir Henry James in the debate of Feb. 21, 1895, that, between 1882 and 1895, the number of spindles had increased from 1,550,000 to 3,500,000; and that, while in the six years ending in 1882 the United Kingdom held two-thirds of the trade with Hongkong, China and Japan, in the four years ending in 1895 four-fifths of this trade had passed to India. The earlier proportion was reached under the operation of protective duties; but it was more than reversed in favour of India during the period of free trade.

Since the debates of 1895 and 1896, the situation has greatly changed; but the establishment in the latter year of what were, commercially speaking, free trade conditions does not appear to have checked the progress of the Indian industry. Between 1897 and 1914, the last year of peace, the number of spindles increased from 4,065,618 to 6,778,895, and that of looms from 37,584 to 104,179. Meanwhile the gross receipts from the countervailing excise grew to Rs. 54,39,043 in 1913-14, with a maximum of Rs. 56,17,969 (about 374,5317.) in 1912-13.*

* These figures are taken from the Indian Year Book, 1916.