the end of 1871 no less a sum of public money than £2,250,000 would have been advanced upon this private adventure. The Government had become responsible for £1,000,000 sterling. They were paying 5 per cent, interest on this sum, which would amount to £600,000 at the end of 1871, and by that time they would have besides advanced £600,000 on debentures secured on works that do not yield 18. profit. The Resolution he intended to propose would stigmatize that transaction. He would now turn to the East India Irrigation Works, the twin adventure with the Madras Works. The East India Irrigation Works were certainly in a better category than the Madras, because some effort was made to start it on the principle of a real and bond fide joint-stock company; 50,000 shares of £20 each were taken, making a paid-up capital of £1,000,000. Of that sum about £740,000 had been expended in works, and £150,000 had been spent out of capital to pay interest on advances for calls made to carry on the works. It was, however, unguaranteed; and unguaranteed works had always a shady look on the Stock Ex guarantee on the first £1,000,000, and that they could not sell a single share in the City. They, therefore, requested that they might be aided from the public purse to carry on their joint-stock speculation. The Secretary of State for India, finding himself in this unpleasant predicament did the best he could under the circumstances. He offered, in lieu of a guaranteed stock, to give the holders of this security £1,000,000 of Government paper, with 5 per cent interest, if the Company would hand over to the Government of India the works which nominally belonged to them, but which had really been executed with public money. But those crafty gentlemen declined to accept that offer. And why? Because the chairman, the directors, and the secretary were well-paid officers, and they knew they would have lost their salaries if they had assented to the transfer. They therefore declined to do anything of the kind, and again demanded to be subsidized with cash. The Secretary of State foolishly yielded to their demand, and the Under Secretary informed the House on the 15th May that a contract had been signed that after-change. Monied men disliked amazingly noon before he came down to the House, enterprizes which it was said would yield by which the Government undertook to 100 per cent per annum, and consefind £600,000 of the public money for the quently the stock had always been at a support of this private adventure, from small discount. The discredit of the stock which the shareholders were to derive 25 gradually increased till 1866, when it per cent profit, and the Government to get reached 25 per cent, at which price he nothing. It was a very strange proceeding, believed it was in the market in May, to say the least of it. The money was to 1866. On the 15th May-the funds of the be advanced in the shape of debentures Company exhausted and its credit shatfor five years, at 5 per cent interest, tered-he (Mr. Smollett) enquired of the secured upon works which up to 1865 Under Secretary of State what arrangehad not returned 1s. profit; which had ment he proposed to make with the adyielded no receipts up to the present time, venturers? In reply, the hon. Member for and which, from private accounts he had Halifax explicitly stated that there was received from Madras, he believed never not the smallest intention on the part of would return a profit. He would un- the Secretary of State either to purchase dertake to say that if the Secretary of the works or to supplement the ComState had advanced £600,000 on de- pany with Government money, and for the bentures to the London, Chatham, and obvious reason that it was an unguaranDover Company, financed by Peto, Betts, teed company. From the terms of that and Co., he would have made a better spe- Answer he believed that the Company culation than in advancing the money to would be left to stand or fall according to the Madras Company. The reason the its own resources, or he should have Secretary of State for India was able to brought the matter before the House, but do those things was because that House he was deluded and befooled. Twelve took no interest in the finances of India. months after there was a new Government, Those things were done in secresy and and a new Secretary of State for India silence. This was a gross job. It was came into office, who was as unscrupulous perpetrated on the very day the Question in dealing with the finances of India as his was to be put to the Secretary of State, predecessor. He (Mr. Smollett) found that and it was only known to the country an offer was made by the Government to when the jobbery was consummated. By purchase the works; not at the price they bore in the market, but at 25 per cent | Secretary of State for India had had the above it, and when that was not accepted, courage of a mouse, and had declined to a negotiation was entered into for grant- enter into negotiations with these advening a sum of money to this Company, in turers-if he had told them, "This is our the same manner that was adopted in the offer; it is the only one we will make, 80 case of the Madras Company. The offer you may make up your mind." Had he was made in this way. It appeared that done this, they would have accepted the on the 16th of May, 1867, the Governor offer. But Parliament was sitting at the General wrote from Simla a despatch, time, and the right hon. Baronet enwhich was signed by every member of tered, unfortunately, into negotiations with his Government. In that despatch Sir the directors. Public and private inteJohn Lawrence stated that he had never rests were brought to bear upon the right concealed the fact that he looked on con- hon. Baronet, and no doubt a great deal cessions granted to private parties for of "lobbying" went on. went on. Afterwards the irrigation purposes as mischievous; that right hon. Baronet was induced to give way they gave rise to the greatest complications. and to offer other terms which he will posUnless the Government had an absolute sibly explain to the House-terms which control, it was impossible to carry on the the Company consider more advantageous works. He had supplied the Company, he to their interests than an absolute pursaid, with upwards of £100,000, otherwise chase. Independently of any public or prithe works would have come to a perfect vate pressure, letters were inserted in the standstill, and the establishments have public prints setting forth the claims of the been dispersed over the country. The Company to compensation. On the 13th time, Sir John Lawrence said, had arrived of January a letter appeared in The Times, when something should be done in the from the practised pen of a gentleman who matter; and as the Company was in a state was supposed to exercise a great deal of of utter ruin, having no credit in India or influence in Indian matters, and who was England, he thought the opportunity was known in Manchester as a great authority favourable for the Government to propose upon all matters connected with irrigation mutually advantageous terms with them. and the spending of money-he meant Sir John Lawrence's proposition was that General Sir Arthur Cotton. That letter the Secretary of State should endeavour was written in a tone of arrogance which to purchase the stock at par, and give the deserved exposure; and he would endeadirectors £50,000 by way of bonus, to vour to expose it. The munificent offer of enable them to wind up creditably. That, the Government was actually denounced in his opinion, was a munificent offer. It by General Cotton as a conspiracy to dewas, in fact, an offer to put £250,000 into fraud the noble band of adventurers of the the pockets of the shareholders, with profits to which they were legitimately £50,000 more if they accepted the offer, entitled -&S a plot, boldly contrived to The letter containing the proposal came to drive away all interlopers from India, and the India Office towards the close of last to reverse the policy inaugurated by Lord year, and he would do the Secretary for Canning. Now, who was the arch plotter; India the justice to say that he appeared to who the base conspirator?-why, the Gohave acted with a great deal of forethought vernor General of India, a man whom Sir and honour in that particular instance. The Arthur Cotton spoke of with scorn, deright hon. Baronet kept the despatch a pro- scribing him as the last possible Viceroy found secret, thus preventing the jobbing of the "Old Indian School." Sir Arthur which might have occurred on the Stock Cotton proceeded to assail the Indian SeExchange (at that time the stock was at 25 cretary and his Council in similar terms of per cent discount), and he only communi- abuse; he spoke of them as worn-out and cated the offer to the public through the contemptible functionaries, whose existence medium of The Times newspaper on the could not be prolonged beyond the present 18th or 19th of November. The effect was spring; men who must be forcibly removed electric. The stock immediately jumped and their places filled by gentlemen whom up to par, which was tantamount to putting he almost designated gentlemen of the £250,000 into the pockets of these adven-" Young Indian School," men who looked turers. Surely the munificent offer of the Government ought to have been accepted with gratitude, and accepted as it would have been, if the right hon. Baronet the up to Sir Arthur as "their guide, philosopher, and friend." God protect an office filled with pupils of Sir Arthur Cotton! And why was all this vituperation levelled Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, the advance of £600,000 at Sir John Lawrence? Simply because | suit the private policy of these people ; that high functionary had made a sugges- and he proposed it in the true interests of tion which had had the effect of putting the India Office, which was surrounded by £250,000 into the hands of the share-jobbers, from whom the Council of the holders. This was the head and front of Secretary of State were unable to free his offending. But Sir Arthur knew well themselves, and whose importunities they the faint-heartedness of the Home Govern- could not resist. ment of India. The gentlemen of the India Office quailed under his castigation. They kissed the rod he had applied so mercilessly to their posteriors, and they gave these adventurers better terms than the Governor General had proposed. Acts of such great impropriety and injustice ought not to be tolerated. He had shown that works that were brought forward as calculated to pay cent per cent had not yielded anything for the last five or six or seven years, and that they were brought forward in the first instance under false pretences. He had also shown, in the course of his speech, that the first works, which were declared to be works brought forward by private enterprize, had cost the Government £2,250,000, for which they had no security but the works themselves, which were either valueless or were works from which, if they should ever prove remunerative, the private adventurers would receive dividends at the rate of 25 per cent, while they had been constructed without the expenditure of a shilling raised at the risk of the speculators. With reference to the East India Irrigation Works the offer to purchase stock at par had never been withdrawn; and probably, at no distant day the Government would take the works at that or at a larger price. He thought these were acts of great impropriety, and therefore he should move the following Resolution-not an abstract one, but one which went direct to the point : "That, in the opinion of this House, the advance of £600,000 of public money on loan to a private company of adventurers styling themselves the Madras Irrigation Company, granted on the 15th day of May 1866 for their sole benefit, and likewise the offer of a large loan on similar terms announced by the Secretary of State on the 20th day of February last as contemplated to be given to the East India Irrigation and Canal Company, are acts of impropriety, are mischievous in policy, and should be discontinued." He offered that Resolution, not in the spirit of party or of faction, but in the interest of honesty and straightforward dealing, of which he saw very little in the conduct of these adventurers. He offered it also to protect the just power of the Governor General of India, whose suggestions and recommendations had been set aside to Question proposed, "That the words proposed to be left out stand part of the Question." SIR STAFFORD NORTHCOTE said, he regretted that the hon. Member had changed the terms of the Resolution he had placed on the Paper. He regretted that the hon. Member had done so without giving notice of his intention to call attention in such a specific manner to the transaction which he had in the first instance referred to-namely, the loan of £600,000 to the Madras Irrigation Company. He regretted it the more because the hon. Member for Halifax (Mr. Stansfeld) was not in the House, and he had some reason to believe that that hon. Gentleman was under the impression that this particular transaction was not to be called in question. MR. SMOLLETT said, he had acquainted the hon. Member for Halifax with his intention of bringing in the matter under the notice of the House. SIR STAFFORD NORTHCOTE said, that if that were so it was not his hon. Friend's fault that the hon. Member for Halifax was absent. He (Sir Stafford Northcote) could only say that he was less able to give an explanation of the transaction than the hon. Member for Halifax, under whose authority and that of Earl De Grey and Ripon the loan was made; but he believed that the circumstances were substantially as follows:-The Madras Irrigation Company was originally established as a company guaranteed by the Government. It was formed for the purpose of undertaking a work of very | quently overburdened by the claims upon great importance to the interests of India, them, and great difficulty was experienced and the House should bear in mind that in finding money out of the taxation of the work performed by these Irrigation the country for carrying on works which Companies ought to be measured, not by were not likely to be immediately remunethe amount of the return they immediately rative; and it was felt that, if irrigation produce, but by the amount of the benefit was to be carried on on a really satisfacthey confer on India by the accomplish- tory footing, it would be desirable to introment of works of an important kind for duce private capital and private enterprize the improvement of agriculture and the into India, for the purpose of executing better sustentation of the people. That works, which would certainly be advanwas a point which the hon. Member for tageous to the people, and which might Dumbartonshire (Mr. Smollett) had too be profitable to the individuals who undermuch overlooked. Now, looking at the took them. This Company was therematter from this point of view, it was not fore formed by gentlemen who looked, so necessary for the Government to ask no doubt, to a large remuneration from whether this or that work would be imme- the capital they were about to expend, diately remunerative, as it was to ask but who, he thought, had also other whether it was a work which it would and higher objects, as they believed they be desirable to encourage, for the general were undertaking a work which would tend interests of the country committed to their to the advantage of a most important porcare. There could be no doubt that it tion of the population of India. They would have been well worth the while of advanced a sort of moral claim on the Gothe Indian Government to incur consider-vernment for such assistance as the Goable loss in the direct pecuniary expendi- vernment could give them. They asked ture, for the sake of accomplishing great for a concession and for a guarantee. It works which would be advantageous to the was not his present duty to discuss whether country. No one, for instance, would the Government were right in giving them have found fault if the Government of that support or not. Under all the circnmIndia had undertaken to construct canals stances, he hardly ought to say that the and irrigation works out of the public Government were wrong, though he conmoney, in the same way that they had fessed that his own opinion, formed on a constructed roads, for the general benefit good deal of experience during the last few of the country and no one could doubt years, was decidedly against the system of that those works would, in the long run, granting guarantees. Under such a sysbe extremely remunerative to the Govern- tem, if the works turn out very profitable, ment and to the people of India, though the company have all the advantage; while, it was quite possible they might not realize on the other hand, if they prove unprofit the sanguine expectations of those who able, the Government have to bear the undertook them. He supposed, however, loss. That was the rationale of the systhat the House had no desire to enter tem of guarantees, which he should be glad into a discussion of the merits or demerits to see either restricted or abolished. When, of works of irrigation; for he believed all however, this question was brought forward who had paid attention to the subject con- in 1858, experience had not been acquired curred in admitting the advantages arising in respect to the guarantee system, and the from them. The only question for con- Government had then to consider the mode sideration, therefore, was the best means in which they could best facilitate the obof carrying out such works. As the hon.ject of bringing private capital and enterMember for Dumbartonshire (Mr. Smollett) had truly remarked, this Company was established in 1858, under the auspices of his noble Friend the then Secretary of State for India; but he believed that, in point of fact, the system dated from a somewhat earlier period, and that it was under the old Court of Directors that the first Resolution was passed to the effect that works of this kind might be entrusted to a private company. As the House was aware, the finances of India were fre prise into India. They were told that if they gave a guarantee it was probable that the works would prove so profitable that other companies would follow the example of this, and would, without guarantee, bring private money into India and be able to execute these great works of irrigation. In this respect he believed the scheme was not unsuccessful, for it was in consequence of this Company having begun to work, and having at first held out encouragement to the public, that the se cond undertaking referred to by the hon. I should offer an explanation. The second Gentleman was set on foot without any undertaking was divisible into two. There guarantee. And certainly we owed to the was an undertaking by the Company, called gentlemen who took part in the forma- the East India Irrigation and Canal Comtion and promotion of the twin Com-pany, to irrigate a portion of Orissa, and panies a debt of gratitude for the exertions there was the further undertaking to irrigate they made in raising a sum approaching a portion of Behar. Now, the hon. Gentle£1,000,000 of capital without any guaran- man had lost sight of an important element tee on the part of the State. We are also in one part of the transactions—namely, the bound to acknowledge our obligations to concessions made to this Company with rethem for the character of the work they gard to the irrigation at Behar. While had accomplished in Orissa, and, he be- objecting upon principle to Government lieved, in the Madras Presidency; for the guarantees generally, he particularly obtwo Companies were, in fact, one, although jected to guarantees in the matter of irriit had two distinct and unconnected un- gation works; because, by allowing a dertakings. After the Company had com- company to undertake them, Government menced their works and carried them on to exposed itself to difficulty and embarrassa certain point, they made the unfortunate ment, and it was the duty of Government discovery that they had not capital enough to keep them in its own hands. Otherwise, to carry them on further in a proper man- difficult questions bearing upon the land ner, whereupon they asked Lord Halifax revenue, the condition of districts irrigated, (then Sir Charles Wood) for assistance; and the relations between ryots and landbut he declined to sanction an alteration owners and between landowners and the which they wished to introduce into the Government, were infinitely complicated by terms of the guarantee. Subsequently, the obligation of Government towards an however, Lord De Grey and Ripon con- irrigation company. Any one who would sented to advance them a loan on the se- follow up the matter would see that it was curity of their works, which were admitted almost impossible satisfactorily to work a to be good and well-executed works as far system of irrigation in a large district-esas they went. In taking the works as a pecially in one in which there was no persecurity the Government were of opinion manent settlement of the revenue-by that they were making a very good bar- means of a company. The questions gain. Indeed, if the Government had not raised, such as who was to have the control done so they would have been placed in a of the water, what was to be the price fixed, position of great difficulty. They had un- and what were to be the stipulations with dertaken to guarantee the Company, and the Zemindars as to the alteration of the aswere paying interest; and the question was sessment, were in themselves so difficult whether they were to be relieved from the and involved such delicate considerations, payment of that interest. It was clear that that it almost amounted to a dereliction of the Government could not be relieved till of duty on the part of Government to give the Company made profits; and it was made up the control of an irrigation system to a clear to Lord De Grey that the Company company, and particularly to a guaranteed would not make any profits without further company. He meant no disrespect to the assistance from the State. Lord De Grey Company in question by expressing these therefore thought it was for the interest of views; and his great regret that that Comthe Government that he should advance pany had obtained the concessions and the the loan. On this point, however, the hon. position it had obtained in Orissa and in Member for Halifax would be better able Behar, and more particularly in Behar, bethan he to give an explanation. He (Sir cause the Company had the exclusive right to Stafford Northcote) believed Lord de Grey irrigate a very important district, and they had exercised a sound discretion; and he had not the means of doing it. felt sure the hon. Member for Dumbarton- simply kept others out, and prevented the shire did not mean to impute anything like Government from undertaking the works. jobbing or improper conduct to his Lord- The Company, having obtained its concesship or to the hon. Member for Halifax. sion, laid out a large sum in works which With regard to the other undertaking, and had been warmly approved by the authothe transaction in which he (Sir Stafford rities and by the independent investigators Northcote) had been himself engaged, it of the Orissa famine, which was, no doubt, was of course due to the House, after the locally mitigated by the works, while the statement of the hon. Gentleman, that he Company's officers behaved with great VOL. CXCI. [THIRD SERIES.] 2 I They |