The Sun.
London, England, 1862-10-03 00:00:00

were first levelled against us and the complete suc-
cess and soundness of the principles on which these
sooieties were founded, I think it would well be-
come the landed interests of England to show to
the manufacturing labourers of the country that
they may count upon our sympathy at. d our sup-
port.

The right hon. gentleman sat down amid loud
cheers.

MR. LAIIVG'S VIEWS ON TIIE INDIAN
.ZARRIF ON COTTON GOODS AND YARNS.

Mr. Samuel Giles presents has compliments to
the Editor and will feel obliged by his inserting
the subjoined correspondence.
Manchester, Oct. 1.

TO THE RIGHT HON. SAMUEL LAING, LUTE rINNNCIAL
MINISTER FOR INDIA.
Sir,—At the close of the interview I had the
honour to have with you on Friday last, respecting
the remaining 5 per cent. on cotton goods, and 31
per cent. on cotton yarns, now levied under the
lately modified Indian tariff, you were so good as to
say I might make such private or public use of
that conversation, and of the very valuable sugges-
tions you then threw out, as I might thins proper.
Will yon be so good as to excuse my saying, that
if it is not too far taxing your kindness, I should
prefer your recording your views in a letter, as you
promised to do, as I am desirous to send them to the
newspapers in your own exact words rather than
trust to the accuracy of my memory to report a con-
versation of more than an hour's duration.—l have
the honour to remain, sir,
Your most obedient servant,
SAMUEL GILES,
Honorary Secretary to the Manchester Com-
mittee formed for the Abolition of the
Indian Tariff on Cotton Goods and Yarns.
Manchester, Sept. 22.

Edinburgh, Sept. 20.
Dear Sir,—l readily comply with your request
to repeat in writing the substance of what I stated
to you at our interview at Manchester. The object
of the association which you represent is to obtain
a total repeal of the remaining import duty of 5
and 31 per cent. on piece goods and yarns imported
into India.

I do not doubt that this is a considerable object
for England.
The cotton industry is the largest branch of Eng.
lish manfactures, and India is the largest market

in the world for cotton goods. India also has a
large native manufacture, which, although con-
ducted for the most part by primitive methods, still
enters into effective competition with the imported
article over a large area. India, moreover, is com-
mencing cotton manufactures with all the improve-
ments of modern science and machinery, under cir-
cumstances which hold out good hope of future
progress.
A cotton factory at Bombay has the advantage of
saving two freights—on the raw material home-
wards and the manufactured article outwards; and
her labour, even now after the great recent rise of

wages in India, is at about the same rate per month
as is paid per week in Lancashire. Coal is dearer,
but this is a comparatively small item in the total
cost of the production of a factory, and the main
disadvantage is the want of concentration of capital

and skill which is found in a district which has been
for years the metropolis of the cotton manufacturing
interest of the world. But this is a disadvantage
which diminishes with the erection of every new
factory, and, as regards the Indian market at least,
the comparative cheapness of labour and raw
material makes the rising factories of India rivals
not to be despised.

I admit, therefore, fully the importance, from an
English point of view, of a further reduction of the
5 per cent. import duty. But if India is to be re-
tained in peaceful and loyal allegiance to the British
Crown these matters must be looked upon in an

Indian as well as an English point of view, and the
interests, the wishes, and the feelings of its
150,000,000 of inhabitants must be the primary
consideration in deciding how to raise the necessary
revenue.

Now, in the first place, if the import duty on
yarns and piece goods were repealed, it is by no
means clear that the loss would be confined to the
£500,000 a year derived from this source. Unless

some special. reason could be shown for exempting
cotton goods and yarns, how could other customs
duties, as for instance, on iron, hardware, haber-
dashery, &c., be maintained; and still more, how
could export duties be maintained on Indian pro-
duce ? It would be manifestly unjust to Indian
cultivators to continue an export duty of 3 per cent.

on rice, &c., in order to repeal an import duty of 5
per cent. on English cotton goods.
It is by no means clear, therefore, that the ques-
tion at stake is not one not of £500,000 a year only,
but of our whole customs revenue, or of upwards of
£2,000,000.
Even, however, if it could be limited to £500,000
it is perfectly evident that £500,000 cannot be levied
in any other way with anything like the same satis-
faction to the people of India. Direct taxation is
the alternative, and the amount levied by this im-
port duty of 5 per cent. is almost exactly the same
as would have been raised by the linen tax, or as
was raised by the 2 per cent. income tax, on in-
comes below £5O a-year.
But the import duty is scarcely felt at all, while
the direct taxes involved an inevitable amount of
oppression, extortion, evasion, alarm, and discon-
tent, which made them intensely unpopular.
The remaining income tax, though two-thirds of
the payers have been relieved from it by the repeal
of the 2 per cent duty, is still very unpopular among
all classes, both Europeans and natives, and it is
borne patiently mainly because it is believed that
it will not be continued beyond the period of five
years, for which it was originally passed. I think
the faith of the Government is morally pledged not
to continue the income-tax beyond this period, un-
less absolutely necessary ; and I am satisfied that it
would be a most fatal political blunder to do any-
thing which put the Government in a worse posi-
tion for repealing this tax at or before the end of
three years from the present time, when it expires.
To the extent, therefore, of £1,500,000, which is
the annual revenue given by the income tax, I con-
sider that the resources of the Indian Government,
whether derived from improved revenue or from
further economy in expenditure, are, so to speak,
mortgaged and I am convinced that it would be
d as a fraud and as an injury by the
,
deeply resented
applied to an exclusively English
remains unrepealed.
whole population of India, if any portion of these
obi e
cobject resources
whilewere t
income-gag
xI
do not think
As a practical question, therefore,.
pressing for a repeal of the
it is of the slightest use p .
heincom
unless it can be made a
5 per cent. import duty, _
given
for it
special case, and a fair equivalent it to
India. Without this, I tell you frankly, I should
oppose it myself. I believe the Indian Government
and the whole Indian community would oppose it,
and I cannot for a moment imagine that any Secre-
taryan order to
of State would think of sending
India for a purely English object, overruling, in
such a manner the unanimous wish of India. If he
did, he would deserve to be impeached, for it is per-
fectly evident that he would be a far more formid-
able enemy to the British Crown in India than
Feroze Shah or Nana Sahib.
You say that the £500,000 might be saved b 7 a
further reduction of the Europen army in India.
I believe it is perfectly true that India, if well
governed and contented, might be held securely by
a smaller European force than 70,000 men, which
is about its present strength. But for some time
after the mutiny it will be a wise and merci-
ful policy to keep, not only a sufficient, but a
superabundant force, so as not only to suppress dis-
turbances if they arise, but to
make
£1,000,000 a year, which is
abe them impossible.
lit the difference
in cost between 60,000 and 70,000
l'7,uropens is not,
too much under present circumstances t spay for a
few years by way of extra insurance, t porlti;
temptation from unruly spirits in populous cities
all.
and in remote districts, and to give India what tsleis
most requires, a period of perfect tranquillity, un-
broken by even a rumour of political dangers.
Moreover, even it the money could be raised, it
is, as I have said, mortb aged for the redemption ce
the income tax, and my proposal to perpetuate that
tax in order to relieve Lancashire of the 5 per cent.

_
import duty would be the surest way to bring about
a state of things which must render military reduc-
tion impossible.
Practically, therefore, the question is narrowed to
this: Can England give India any equivalent which
would make it worth the while of India, as a fair
businesslike arrangement, to make a special excep-
tion in favour of English interests by repealing or
reducing this import duty.
An obvious equivalent might be found in Eng-
land assuming some portion of the cost of the home
depots of regiments serving in India.
This would be strictly just, as it is undeniable
that those soldiers are to some extent a reserve for
England as well as for India, and that in case of any
pressing emergency, such as an invasion,they would
not be sent to India, however great might be her
wants, until the danger nearer home was over.
It is certain also that the amalgamation of the
Indian local European with the Queen's army,which
was adopted mainly with reference to imperial con-
siderations, makes the home military charges for
maintaining a given efficient European strength in
India greater than it was formerly.
But although a more favourable partition for

India of the home military charges might be equit-
able, I doubt if you can look to this source for prac-

tical relief. The answer of the Chancellor of the
Exchequer to assume a fresh burden of £400,000 or
£500,000 would be that of the Pope, " Non pos-
sumus." The finances of England are in a state of
extreme tension ; for some years we have only made
both ends meet by war taxes in time of peace, and
by using up temporary resources like the malt
credits ; and the least falling of off revenue from
a deficient harvest or bad trade must apparently
oblige us to increase the income tax, or other-
wise to encroach still more largely on those re-
serves which ought to be carefully husbanded during
peace for a time of war. Ido not think, therefore,

there is much chance of any proposal being enter-
tained which involves additional charges on the
English Treasury.
There remains, therefore, one source only to which
it is possible to look for an equivalent, viz., a gua-
rantee by England of the credit of the Indian Go-
vernment, so as to enable it to raise money at a
lower interest.
This has often been discussed with reference to

the national debt of India, and there are strong
arguments why, when England and India are prac-
tically one concern (for the loss of our Indian empire
cannot be contemplated without a convulsion which
would shake the credit of England as well as of
India), it is extravagant to pay 5 per cent. for
money which might be readily had at 31 per cent.

Still I do not think that, practically, the time is
ripe for a proposal to the House of Commons to in-
crease the liability of England by upwards of
£100,000,000, even although that liability were ever
so remote. Nor am I sure that it would be for the
interest of India that England should assume a lia-
bility so great as to involve a temptation to the
English Government and House of Commons to in-
terfere largely with the financial affairs of India.
But there is a special capital, which stands on a
different footing from the national debt of India, to
which these considerations might possibly not
apply—viz., the guaranteed railway capital.
1. The amount is known and limited.
2. It is held exclusively in England.
3. It is applied exclusively to an object in which
English commerce has a vital interest.
4. The liability is slight, for it only extends to
guaranteeing a certain return in case the traffic
should be insufficient to pay it.
The capital spent on Indian railways may be
taken in round numbers at £40,000,000, and it will
probably take £25,000,000 or £30,000,000 more to
complete these railways thoroughly, with portions
of double line, rolling stock, and stations fit for a
large traffic, and with a few of the most indispen-
sable branch lines.

It is, I believe, probable that these railways,
when finished, will earn, on an average, 4 pE r cent.
or upwards on their cost, and morally certain that
they will earn not less than 21 or 3 per cent. If,
therefore, the £70,000,000 were raised under a gua-

rantee of 4 per cent. the liability under that gua-
rantee could not well exceed 1,000,000 f. a year, and
in all probability would be much less.
Now the risk to England of endorsing the
guarantee of the Indian Government to this extent
would be practically nothing. The finances
of India are on the soundest possible footing.
With a gross revenue of £43,000,000, which is
rapidly increasing, the interest of debt is not one-

seventh of the income, while that of England is

two-fifths. England has no reserve, and barely
meets the necessary expenses by the taxes of the
year. India invests annually out of surplus re-
venue at least £2,000,000 in reproductive public
works. England has no cash balance beyond what
is required to carry on current business ; India has
a reserve of at least £8,000,000 in hard cash in her
treasury: The risks, therefore, to England of en-
dorsing a guarantee by the Indian Government to
make up in case of deficient traffic a sum of, at the
outside, not above £1,000,000 a year to the sub-
scribers of railway capital, who, be it recollected,
are all English, is practically no risk at all.
Would it be worth the while of England to give
such an endorsement for the sake of securing free
access to the Indian market for her staple industry ?
This is a question for England to consider. All I
say is that, looking at it from an Indian point of
view, I think it would be not any great advantage
to India, but on the whole a fair reason for meeting
the wishes of England and admitting cotton fabrics
free, if she got such an equivalent. I think India
might either reduce the import duty on cotton fab-
rics prom 5 to 21; per cent., it England would enable
her to get the remaining £30,000,000 to complete
her railways at 4 instead of 5 per cent., or might
repeal the duty altogether, if England would carry
1 through some arrangement for the whole capital of
L 70,000,000, by which the existing shareholders
were induced to accept a guarantee of 4 per cent.
with an Imperial endorsement, instead of 5 per
cent, from India alone.
Of course you must be prepared for objections to
this. Other branches of industry will say, why
should cotton be relieved from a 5 per cent. duty
while we continue to pay in many cases 10 per cent.?
The only answer I know to this is that, practically,
cotton is the only great branch of industry in which
an effective competition exists between the native
and the imported article, and therefore when an
import duty, ho wever small, operates as a protection
against the British manufacturer it ought to be
abolished. Whether this answer would be sufficient
l i I do not know, nor do I pretend to express any po-
sitive opinion upon the suggestion from an English
point of view. All I say is that it is the only sug-
gestion which, after much consideration, strikes me
as being at least possible. It is an arrangement
which I think India might fairly be asked to accept,
while I do not think she could with fairness, and
without disastrous political results, be coerced into
giving up this duty without an equivalent while
the
I
incomethink
also tax
it
continues.is at
least worthy of consideration
whether, regard b • eing had to the exceptional state
of the cotton districts ; to the doubtful prospect of
a return to low price f
sothe raw material, and con-
sequent risk of permanent restriction of this great
branch of industry ; and,
of the cotton operatives
andthe truly admirable
manner in which their privations have been borne
—it might not be worth the while of England to
stretch a point and take a step Which, although op-
posed to ordinary routine, and making a novel prin-
ciple, would, in practice, b
e attended with no pre-
sent expense and no appreciable risk, while it would
undoubtedly be a considerable and Permanent boon
million half a of operatives to perhaps who are
dependent on the Indian
more or less depemarket for our
cotton
manufactures.—I remain, dear Sir, yours
faithfully, Manchester. S'LAING.
S. Giles, Esq.,

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