The atmosphere was thus cleared before the Assembly approached another and only less delicate question. Some time before the Budget disclosed the heavy military expenditure to be defrayed out of Indian revenues, the recommendations of the Committee appointed under the presidency of Lord Esher to inquire into the administration and organisation of the army in India had caused widespread alarm. There were peculiar circumstances connected with the Committee's Report which were calculated to excite Indian suspicion. The first part, which laid down the general principles in regard to organisation and administration, was drawn up in London and received the approval of the Secretary of State for India before the British members of the Committee proceeded to India, where their Indian colleagues for the first time joined them, whilst the President, Lord Esher, himself never went to India at all. To carry out these principles the Report stated that "the centre of gravity of probable military operations has shifted from West to East. In the future we must contemplate the possibility of our armies operating in the Middle East based partially in India and partially at home.... India has now been admitted into partnership with the Empire, and the Indian Army has fought alongside of troops from other parts of the Empire in every theatre of war. Its responsibilities have thus been greatly widened, and it can no longer be regarded as a local force whose sphere of activity is limited to India and the surrounding frontier territories. It must rather be treated as a part of the Imperial Army ready to serve in any part of the world." Indians interpreted the Report as an attempt on the part of the British War Office to throw upon the Indian Exchequer the cost of a larger army than would be required merely for Indian defence whilst keeping it under its own control for employment at the discretion of British Ministers far beyond the frontiers of India. Official assurances were given both in India and at home that an exaggerated construction had been placed on the meaning of the Report, to which, moreover, neither the British Government nor the Government of India was officially committed, and that in any case Indian troops would not be required to serve outside India except with the consent of the Government of India. These assurances did not prevent the Assembly from passing two Resolutions in which it embodied its strong protests. The second part of the Report, containing practical recommendations for the reorganisation of the Indian Army, and alone based on the results of the inquiry actually conducted in India, was far less criticised.

The army estimates themselves would have been enough to cause dismay even if the estimates of other departments, upon which the Indian public looks with more favour, had not clearly been pruned down with more than usual parsimony to meet the large increase in military expenditure. But Lord Rawlinson, who had done his utmost to reduce them to the extreme limit of safety as he conceived it in existing circumstances, wisely decided to take the Assembly as far as possible into his confidence, and to explain the requirements of the military situation not only from his seat on the Government bench but in private conferences, at which members were freely invited to meet him and his advisers. If he did not altogether convince them, he gave them food for reflection at a time when not only our own North-West Frontier but the whole of Central Asia is still in a state of turmoil, Persia a very doubtful quantity, and the Ameer of Afghanistan far more eager to sign a treaty of alliance with Soviet Russia than to bring to a friendly conclusion the long-drawn negotiations which the Government of India has sent the head of its foreign department to conduct at Kabul. The appointment of a Committee to visit the North-West Frontier and to study the situation on the spot was admirably calculated to carry the practical education of Indian legislators a long step farther. In regard to other matters, too, Government gave and gained time for reflection by referring them, before committing itself to any definite pronouncement of policy, to special committees in which points at issue could be thrashed out much more effectively and with less heat than if only discussed in full house.

Nothing, however, could alter the awkward fact that Government had been compelled to confront the Legislative Assembly at its first session with a Budget showing a deficit and making calls upon the Indian tax-payer absolutely unprecedented in the annals of British-Indian State finance. The deficit amounted to nearly 19 crores of rupees on a Budget of 130 crores,[3] and the Financial Member, Mr. Hailey, who had only recently succeeded to the financial department, had to admit that the deficit could only be met by increased taxation. That the estimates of the previous year had been so largely exceeded was due beyond dispute to the growth of military expenditure, which, for the current financial year, has been put down at 62 crores, or very nearly half the total expenditure for which provision has to be made. This Budget, moreover, not only came at a time of general economic depression, but coincided with the operation of the new financial arrangements between the Provinces and the Government of India, which have deprived the latter of the facilities it had formerly for mitigating its own financial necessities by adjusting to them the doles paid out of the Central Exchequer to the several Provincial Exchequers. Under the new system various revenues have been definitely allocated to the Provincial Governments for their own free disposal, and in return they have to make fixed annual contributions to the Central Exchequer. These contributions are in no case to be subject to increase in the future, but on the contrary to be reduced gradually and to cease at the earliest possible moment compatible with the irreducible requirements of the Government of India. The Act of 1919, it is true, transfers to the Indian Legislature no direct or complete statutory control over revenue and expenditure, and powers are still vested in the Government of India to override the Assembly in cases of emergency and to enact supplies which it refuses if the Governor-General in Council certifies them to be essential to the peace, tranquillity, and interests of India. But the fact that there was a deficit which could only be met by increased taxation offered exceptional opportunities which might easily have been used for embarrassing obstruction by a young and immature chamber naturally concerned for its own popularity. Even a direct conflict between the Government and the Assembly might not have been impossible, and the consequences would have been lamentable. For if the Government of India had been driven to use its statutory powers to impose taxation and secure supplies in opposition to the Legislature during its very first session, all the hopes of friendly co-operation based on the new constitution would have been wrecked far more disastrously and permanently than by any "Non-co-operation" movement. The Legislative Assembly was wise enough to exercise its rights with sufficient insistence to show that it was conscious of them, but never to strain them. It did not refrain from criticism of almost every department in turn or from motions to reduce the official estimates for them. Many of the criticisms were sound, and some of the reductions were accepted by Government. Mr. Hailey handled a delicate situation with unfailing patience and skill. Even in regard to new taxation he endeavoured to meet, as far as the exigencies of the Budget allowed, the objections of the Assembly to such increases as, for instance, higher postal rates, which press most heavily on the least well-to-do classes. Nothing, however, helped him so much to get his Budget through without a serious conflict as the decision of the Government to seek in an increase of the import duties over two-thirds of the new revenue to be raised to meet the deficit. For there Government took up common ground with Indian opinion on fiscal matters and carried into effect the principle laid down by the Select Joint Committee on the Reforms Bill, and endorsed by the Secretary of State, that the Government of India must be granted the same liberty to devise Indian tariff arrangements on a consideration of Indian interests as all other self-governing parts of the Empire enjoy. If the Assembly did not see altogether eye to eye with Government as to the necessity for all this increased expenditure and increased taxation, its objections were at least mitigated by a form of increased taxation in which it saw the first step towards fiscal autonomy. In this as in every other question with which the Legislature had to deal, the Government of India showed its willingness to accept as far as possible the guidance of Indian opinion and to act as a national Indian Government, and not merely as the supreme executive authority under the Government of the United Kingdom.

On those terms the Assembly was prepared to take into account the difficulties and responsibilities inherited by Government from past policies from which no sudden departure was possible, or desired even, by responsible Indians who recognise the present limitations of their experience as well as of their rights. Government and Legislature therefore parted in mutual goodwill and with increased confidence in the value of the new policy of co-operation. But the Legislature has only just commenced to realise the extent of its powers, expressed and implied. The latter stretch almost immeasurably farther than the former. Indian-elected members form a large majority in the Legislative Assembly, which has already so largely overshadowed the Council of State that it will probably be difficult for the upper house to exercise over the more popular chamber the corrective influence originally contemplated. The Government of India, of course, retains its great statutory powers, but these could hardly be exercised again in uncompromising opposition to the opinion of the majority of the Assembly now that out of eight members of the Viceroy's Executive Council, which, with him, forms the Government of India, no less than three are Indians, who would presumably be often more amenable than their British colleagues to the pressure of Indian opinion. Under the Act of 1919 the Government of India is not responsible to the Assembly. That may come in a later stage, it has not come yet. But one may rest already assured that only in extreme cases, and if the majority shows itself far more irresponsible than it has yet given the slightest reason to fear, is Government likely to risk a cleavage between British and Indian members of the Viceroy's Executive Council, or to rely on the fact that no vote of the Assembly can remove it from office, to provoke or face a conflict of which the consequences would extend far beyond the walls of the Legislature. This is a powerful lever of which Indians may quickly learn the use.

In another important direction the first session of the Legislature bore out Sir Thomas Munro's view, expressed, as we have already seen, a hundred years ago, that in India as elsewhere liberal treatment will be found the most effectual way of elevating the character of the people. Nothing perhaps has tended more to alienate the sympathies of Englishmen from the political aspirations which the founders of the Indian National Congress were bent upon promoting than the subordination of social to political reforms. There remained always some distinguished Indians who ensued both—notably Mr. Gokhale, who founded the society of "the Servants of India," dedicated chiefly to social reform, of which the beneficent activities have expanded steadily throughout a decade of political turmoil. His mantle fell on no unworthy shoulders, and it is a good omen that his chief disciple, Mr. Srinivasa Sastri, has become the leader of the Moderate party in the Council of State, as well as one of the Indian representatives at the recent Imperial Conference in London. A similar spirit informs the numerous associations that have addressed themselves, though with perhaps less success so far, to the more glaring evils of the Hindu religious social system, such as infant marriage, the prohibition of re-marriage of widows, the rigidity of caste laws in regard to inter-caste marriage, and to intercourse between the different castes even at meals. Many interesting experiments have been made by Indians for infusing into education a new moral tone and discipline on Indian lines, and it is due to Indian effort no less than to the encouragement of Government that female education has begun to bridge over the intellectual gulf that tended to separate more and more the men and the women of the Western-educated classes. In Madras, to quote only one instance, there is to-day a high school for girls—almost unthinkable two decades ago and only opened ten years ago—in which high-caste Brahman girls live under the same roof and are taught in the same class-rooms as not only Hindu girls of the non-Brahman castes, but Mahomedan and native Christian and Eurasian girls from all parts of the Presidency, and the only real difficulty now experienced is in the traditional matter of food, and it is circumvented, if not overcome, by providing seven different kitchens and seven different messes.

The last attempt on the part of the Government to promote social reforms by way of legislation was Lord Lansdowne's "Age of Consent" Bill thirty years ago, and though it was carried through in spite of the violent opposition of Hindu orthodoxy, which then brought Mr. Tilak into public life as its leader, an alien Government pledged to complete neutrality in social and religious matters shrank after that unpleasant experience from assuming the lead in such matters without having at least the preponderating bulk of Indian opinion behind it. Not the least noteworthy event of the first session of the Indian Legislature was the introduction by Dr. Gour, a Hindu member from the Central Provinces, of a private Bill legalising civil marriage which British Indian law so far recognises only between a Christian and a non-Christian, though the Indian States of Baroda and Indore have legalised them for all their subjects. Sir Henry Maine wished to move, as far back as 1868, in this direction when he was Law Member of the Government of India, but to meet even then a fierce orthodox opposition the provisions of the Bill finally enacted in 1872 were so whittled down as to make it practically useless, and it was almost nullified when it came up for interpretation by the Privy Council. The question does in fact involve many material as well as social and religious considerations, as matters of personal law are largely governed by ancient custom in the different communities, and the point at issue was whether it is possible for a Hindu to cease to be subject to Hindu law. More recent attempts to make civil marriage lawful have failed hopelessly. Dr. Gour has had the courage to appeal to the more liberal spirit for which the new reforms stand, and he defended his Bill, which is only a permissive Bill, on the grounds that any measure calculated to break down the ancient barriers between races and creeds and communities must tend to strengthen the sense of national solidarity of which the new Indian Legislature is the expression. It remains yet to be seen what will be the fate of his Bill, but its introduction is in itself not one of the least hopeful signs of the times.

If one turns from the Government of India to the new Provincial Governments and Councils the outlook is, on the whole, not less encouraging. The statutory powers of the Provincial Councils are more definite and can be brought more directly to bear upon Government, but they are not likely to be exercised in any extravagant fashion until time has shown how Indian Ministers discharge their responsibilities to the Councils and how the two wings of the new Provincial Governments work together. In fact, the policy, wisely adopted by Provincial Governors, of treating the two wings of their Government as equally associated with them in a common task of governance, has robbed the distinction between "reserved" and "transferred" subjects, if not of all reality, at any rate of the invidious appearance of discrimination which might otherwise have attached to the word "dyarchy." As one Provincial Governor remarked to me, "We are in reality skipping the dyarchy stage." Indian Ministers, kept fully informed and drawn into consultation on all subjects, are learning to understand the difficulties of government and administration of which, as outside critics, they had little notion, and to value the experience and knowledge which their European colleagues and subordinates freely place at their disposal, whilst the latter benefit both from hearing the Indian point of view and from having to explain and justify their own. Economic depression and financial stringency cannot, however, but react unfavourably upon the new system in the Provinces as well as at Delhi, for all the more practical reforms in which the ordinary Indian elector, whether politically minded or otherwise, is most closely interested, and for which he has been looking to the new Provincial Councils, require money, and a great deal of money. There is a universal demand for more elementary schools, more road-making, more sanitation, a more strenuous fight against malaria, a greater extension of local government and village councils' activities, and the demand cannot be met except by more expenditure. The Indian Ministers and Indian members of the Provincial Councils have to face unpopularity whether by postponing much-needed reforms or by imposing new taxation in order to carry them out. A great many of the best men have naturally been attracted to Delhi, but though the proceedings in the Provincial Councils have more frequently betrayed impatience and inexperience, and sometimes required the monitory intervention of the Governor, they have played on the whole creditably the important part allotted to them in this great constitutional experiment.

It is far less easy to appraise the value of the attempt which has been made at the same time to bring that large part of India which lies outside the sphere of direct British administration into closer touch with it by the creation of a Chamber of Princes, which will at least sit under the same roof with the Council of State and the Legislative Assembly in the great hall of Parliament to be erected in New Delhi. The moment when the Government of India is departing from its autocratic traditions and transferring a large part of its powers throughout British India into the hands of representative assemblies which are to pave the way towards the democratic goal of responsible government, seems scarcely well chosen for the creation of a Chamber which must give greater cohesion, and potentially greater power to resist the spirit of the age, to a body of ruling Princes and Chiefs who all stand in varying degrees for archaic forms of despotic government and whose peoples have for the most part stood hitherto entirely outside the political life of British India.

The Native States, as they are commonly called, scattered over nearly the whole length and breadth of the Indian Empire, cover altogether more than a third of its total area and include nearly a quarter of its total population. Some of them can compare in size and wealth with the smaller States of Europe. Some are but insignificant specks on the map. Great and small, there are several hundreds of them. Their relations with the Paramount Power, which have been not inaptly described as those of subordinate alliance, are governed by treaties and engagements of which the terms are not altogether uniform. The essence is in all cases the maintenance of their administrative autonomy under their own dynastic rulers whose hereditary rights and privileges are permanently guaranteed to them, subject to their loyalty to the British Crown and to reasonably good government. The Princes and Chiefs who rule over them—some well, a few rather badly, most of them perhaps indifferently; some Hindus, some Mahomedans; some still very conservative and almost mediaeval, some on genuinely progressive lines; some with a mere veneer of European modernity—are all equally jealous of their rights and their dignity. The Native States cannot, however, live wholly in water-tight compartments. They must be more or less directly affected by what goes on in British India just across their own often very artificial boundaries. Their material interests are too closely bound up with those of their British-Indian neighbours. In many matters, e.g. railways, posts, telegraphs, irrigation, etc., they are in a great measure dependent upon, and must fall into line with, British India. Their peoples—even those who do not go to British India for their education or for larger opportunities of livelihood—are being slowly influenced by the currents of thought which flow in from British India.

Political unrest cannot always or permanently be halted at their frontier, though His Exalted Highness the Nizam of Hyderabad, whose ways are still largely those of the Moghuls, has not hesitated, albeit himself a Mahomedan Prince, to proscribe all Khilafat agitation within his territory. The Extremist Press has already very frequently denounced ruling Princes and Chiefs as obstacles to the democratic evolution of a Swaraj India which will have to be removed, and if the Nagpur Congress pronounced against extending its propaganda to the Native States, it did so only "for the present" and on grounds of pure and avowed expediency. Apart from the menace of Indian Extremism, there must obviously be a fundamental conflict of ideals between ruling Chiefs bent on preserving their independent political entity and the aspirations towards national unity entertained by the moderate Indian Nationalists whose influence is sure to predominate over all the old traditions of Indian governance if the new reforms are successful. Some Princes are wise enough to swim with the current and have introduced rudimentary councils and representative assemblies which at any rate provide a modern facade for their own patriarchal systems of government. But all are more or less conscious that their own position is being profoundly modified by constitutional changes in British India, which must, and indeed are intended to, alter the very character of the Government representing the Paramount Power to whose authority they owe their own survival since the beginning of British rule. Their survival has indeed always been an anomaly, though hitherto, on the whole, equally creditable to the British Raj that preserved them from extinction in the old days of stress and storm and to the rulers who have justified British statesmanship by their fine loyalty. But in a democratised and self-governing India it might easily become a much more palpable anomaly.

How was this new situation to be dealt with? Some of the ruling Princes and Chiefs whose views appear to have prevailed with the Secretary of State and the Government of India, came to the conclusion that they should combine together and try to secure as a body a recognised position from which their collective influence might be brought more effectively to bear upon the Government of India, whatever its new orientation may ultimately be under the influence of popular assemblies in British India. Some, doubtless, believed that once in such a position they would be able to oppose a more effective because more united front to interference from whatever quarter in the internal affairs of their States. Circumstances favoured their scheme for the loyalty displayed by all the Native States, and the distinguished services rendered in person by not a few Chiefs inclined Government to meet their wishes without probing them too closely, and in the first place to relax the control hitherto exercised by its political officers on the spot—often, it must be confessed, on rather petty and irritating lines. The leading Princes were encouraged to come to Delhi during the winter season, and those who favoured a policy of closer combination amongst themselves were those who responded most freely to these official promptings. Conversations soon assumed the shape of informal conferences, and, later on, of formal conferences convened and presided over by the Viceroy. The hidden value of these conferences must have been far greater than would appear from the somewhat trivial record of the subjects under discussion, for it is out of these conferences that the new Chamber of Princes has been evolved as a permanent consultative body for the consideration of questions affecting the Native States generally, or of common concern to them and to British India and to the Empire generally.

The conception is in itself by no means novel and appeals to many upon whom the picturesqueness and conservative stability of the Native States exercise a strong attraction. It can be traced back at least as far as Lord Lytton's Viceroyalty over forty years ago, and the steadily growing recognition of the important part which the Native States play in the Indian Empire culminated during the war in the appointment of an Indian Prince to represent them specially at the Imperial War Conferences held in London during the war, and again, after the war was over, at the Paris Peace Conference.

But the creation of a Chamber of Princes at this particular juncture raises very difficult issues. In the first place, though it has been engineered with great skill and energy by a small group of very distinguished Princes, mostly Rajput, it is viewed with deep suspicion by other chiefs who, not being Rajputs, scent in it a scheme for promoting Rajput ascendancy, and it has received no support at all from other and more powerful Princes such as the Nizam of Hyderabad, the Gaikwar of Baroda, the Maharajah of Mysore. Some have always held aloof from the Delhi Conferences and have intimated plainly that they have no desire to see any alteration introduced into their treaty relationships with the Paramount Power. Without their participation no Chamber of Princes can pull its full weight, and even if most of them considered themselves bound out of loyalty to the Sovereign to attend an inaugural ceremony performed by the Duke of Connaught in the name of the King-Emperor himself, it would be premature to infer that their opposition has been permanently overcome. The Supreme Government has of course reiterated the pledges already embodied in the treaties that there shall be no interference with the ancient rights and privileges of the Native States and their rulers, but its eminent right to interfere in cases of extreme urgency has not and cannot be surrendered. It has been exercised very rarely, and only when administration and government have fallen flagrantly short of certain standards, established by usage and generally understood and accepted, which it is perhaps easier to describe negatively than positively. Misrule cannot be tolerated when it amounts to a public scandal or takes the form of criminal acts. The whole question has always bristled with difficulties, and still does. The tendency, since Lord Curzon's time, has been to relax the control of the Supreme Government even in matters of slighter moment on which it had been accustomed to tender advice not always distinguishable from commands. That some of the Native States, and not the least powerful, are badly governed is of common notoriety. But if the Supreme Government has been sometimes inclined to turn a blind eye in such cases, and even to forget that it has moral obligations towards the subjects as well as towards the rulers of the Native States, it has been free hitherto to obey considerations of political expediency which may conceivably not weigh so much in the future. For the same forces that have obtained the surrender of the autocratic principle in British India, may demand with equal insistency its surrender throughout the Native States. Should the more irresponsible chiefs rely on the solidarity of a Chamber of Princes to secure for them greater immunity than ever from the just consequences of misgovernment, they would merely hasten a conflict which undoubtedly most of their caste have begun to dread between their own archaic methods and the democratic spirit which the Government of India Act of 1919 has quickened in British India.

There are many other thorny points. Obviously there could be no room for all the seven or eight hundred ruling chiefs, great and small, in any assembly reasonably constituted to represent the Native States. Nor have they ever enjoyed any uniform status or received any uniform treatment. Some of them, the most important, have maintained direct relations with the Government of India; the majority only indirect relations through the Provincial Governments within whose sphere their territories are situated. The creation of the Chamber of Princes has necessitated a new classification of major and minor States, the former entitled to direct, the latter only to indirect representation, which has naturally caused a vast amount of jealousy and heartburning. Another consequence still under discussion is the substitution in most cases of direct relations with the Government of India for those in which the smaller Native States now stand to provincial governments. Such transfer must involve innumerable difficulties and complications, especially in a Presidency like Bombay, within whose boundaries there are over 300 Native States inextricably bound up with it by common interests and even by common administrative needs. Many of them are at first sight inclined to welcome such a transfer as enhancing their prestige; some of them, remembering the old saying that "Delhi is a long way off," hope that it will lessen the prospect of outside interference in their own administration, however bad it may be or become. But these are hardly arguments to justify a transfer which can only import a new element of confusion into an already sufficiently confused situation.

The Chamber of Princes was opened with all the glitter of oriental pomp and magnificence, but it only held a few meetings and the proceedings were veiled in secrecy. Only enough transpired to show that personal jealousies and clan rivalries were rife even at that early stage. Its very constitution denies it the assistance for which the Indian Councils and the Indian Ministers have been wise enough to look from the co-operation with them of British elements, whose authority in government and administration is still maintained by statute and so far undisputed. To the Chamber of Princes the Viceroy alone is in a position to give guidance, and to shape that illustrious assembly to useful purposes is one of the many difficult tasks in front of Lord Reading.

FOOTNOTES:

[3] At the "stabilised" rate of exchange a crore, or ten million rupees = one million gold pounds sterling. One hundred lacs make a crore.



CHAPTER XIII

ECONOMIC FACTORS

If the war has wrought great changes in the political life of India, in its status within the Empire and in its constitutional relations with the United Kingdom, it has produced equally important changes in its economic situation and outlook. The Montagu-Chelmsford Report had not failed to note how largely economic factors entered into the political situation which the Secretary of State and the Viceroy were primarily concerned to study. India is, and probably must always remain, essentially an agricultural country, and its economics must always suffer from the exceptionally unstable conditions to which, except within the relatively small areas available for irrigation, dependence upon a precarious rainfall condemns even the most industrious agricultural population. Many circumstances had combined to retard the development of its vast natural resources and the growth of modern manufacturing industries. Few British administrators during the last half-century had realised their importance as Lord Dalhousie had done before the Mutiny, until Lord Curzon created a special department of commerce and industry in the Government of India. The politically minded classes, whose education had not trained them to deal with such questions, were apt to lose themselves in such blind alleys as the "doctrine of drain." But as they perceived how largely dependent India was on foreign countries for manufactured goods, whilst her own domestic industries had been to a great extent crushed in hopeless competition with the products of the much more highly organised and equipped industries of European countries, they rushed to the conclusion that an industrial revival might be promoted by a crude boycott of foreign imported goods which would at the same time serve as a manifestation of their political discontent. The Swadeshi movement failed, as it was bound to fail. But failure intensified the suspicion that, as India's foreign trade was chiefly with the United Kingdom, her industrial backwardness was deliberately encouraged in the interests of British manufactures, and it was not altogether unjustified by the maintenance of the excise duty on locally manufactured cotton goods, which protected the interests of Lancashire in the one industrial field in which Indian enterprise had achieved greatest success. The introduction of an annual Industrial Conference in connection with the Indian National Congress was the first organised attempt of the politically minded classes to link up with politics a movement towards industrial independence. It assumed increased bitterness with the disastrous failures of Indian banks started on "national" lines in Bombay and the Punjab. The cry for fiscal freedom and protection grew widespread and insistent before the war broke out. Then, under the pressure of war necessities, the Government of India explored, as it had never done before, the whole field of India's natural resources and of the development of Indian industries. At the same time an opportunity arose for a group of Indian "merchant-venturers"—to use the term in its fine old Elizabethan sense—who had set themselves to give the lead to their countrymen, to show what Indian enterprise was capable of achieving. What it has already achieved deserves to be studied as the most pregnant illustration of what the future may hold in reserve.

It is a somewhat chastening reflection that the creation of the one great metallurgical industry in India has been due not to British but to Indian capital and enterprise, assisted in the earliest and most critical stages not by British but by American skill, and that, had it not been created when it was, our Syrian and Mesopotamian campaigns could never have been fought to their victorious issue, as Jamsheedpur produced and could alone at that juncture supply the rails for the construction of the railways essential to the rapid success of those great military operations. Equally chastening is the reflection that from its very inception less than twenty years ago, the pioneers of this vast undertaking had constantly to reckon with the indifference and inertia of Anglo-Indian officialdom, and with the almost solitary exceptions of Sir Thomas Holland, then at the head of the Geological Survey, and Sir Benjamin Robertson, afterwards Chief Commissioner of the Central Provinces where the first but unavailing explorations were made, seldom received more than a minimum of countenance and assistance. Not till Messrs. Tata's American prospectors had explored this region did the Government of India realise that untold mineral wealth lay there within 150 miles of Calcutta, almost on the surface of the soil, and not until the pressure of the Great War and the inability of India to draw any longer upon British industry for the most vital supplies compelled them to turn to Jamsheedpur do they seem to have at all appreciated what an enterprise that owed little or nothing to them meant to India and the Empire. When the war was over, Lord Chelmsford paid a visit to Jamsheedpur and generously acknowledged that debt. "I can hardly imagine," said the Viceroy, "what we should have done if the Tata Company had not been able to give us steel rails which have provided not only for Mesopotamia, but for Egypt, Palestine, and East Africa." One may therefore hope that the lesson of the war will not be forgotten, and that Sir Thomas Holland, who has now exchanged the Munitions Board for the portfolio of Industry, will prevent a relapse into the old traditions of aloofness now that the war pressure is over.

The cotton-mills of Bombay, the jute-mills of Calcutta, the goldfields of Mysore each contribute their own remarkable chapter to the story of British industrial enterprise in India, but none can compare in point of romance with the story of the iron and steel industry of Jamsheedpur. It need only be very briefly recalled. In 1902 Mr. Jamsheedji Tata, a veteran of the great Parsee community of Bombay and one of the founders of the Bombay cotton industry, visited the United States. His active mind had already for some time been busy with the idea of starting a metallurgic industry in India, and he had received in the course of conversation with Lord George Hamilton, then Secretary of State for India, about the only encouragement he ever did receive in England. He fared better in America. In New York he called with a letter of introduction from Lord Avebury on Mr. C. Page Perin, an eminent mining engineer, who was at once impressed both with his visitor and with the schemes which he unfolded, though they were still quite visionary. Mr. Perin, who is still the consulting engineer of the Tata Company, agreed to send a party of American prospectors, and followed them in 1904 to India. Long was the search and many the hardships undergone, and Mr. Jamsheedji Tata himself passed away before he could see the fulfilment of his dream. But Sir Dorab Tata proved himself not unworthy to follow in his footsteps, and when an area hitherto almost unknown and unexplored had been definitely located, combining in an extraordinary degree the primary requisites of adequate coalfields, vast ore deposits of great wealth, a sufficient water supply, a suitable site for a large industrial town with good railway communication though still badly needing development, he and a small group of his Bombay friends tried to find in London the financial support which they imagined would hardly be denied to an enterprise of such immense importance for our Indian Empire. But they failed. It was then that, largely on the advice of Sir George Clarke, now Lord Sydenham, who was then Governor of Bombay—whose great services to the economic advancement of India and to Indian technical education latter-day politicians are too apt to forget—they appealed to their own fellow-countrymen for the capital needed. Never had such an appeal been made, but the response was immediate and ample. The Tata Iron and Steel Works Company was launched as an Indian Company, and to the present day all the hard cash required has come out of Indian pockets. In 1908 the first clearance was effected in what had hitherto been a barren stretch of scrub-jungle sparsely inhabited by aboriginal Sonthals, one of the most primitive of Indian races, and in 1910 the first works, erected by an American firm, were completed and started. As far as the production of pig-iron was concerned success was immediate, but many difficulties had to be overcome in the manufacture of steel which had never before been attempted in a tropical climate. These too, however, had been surmounted by the end of 1913 in the nick of time to meet the heavy demands and immense strain of the Great War, towards the end of which Government took as much as 97 per cent of the steel output and obtained it from the Company at less than a quarter of the price that it would have commanded in the Indian open market.

To-day, just twelve years after the first stake was driven into the ground, Jamsheedpur is already a town of close on 100,000 inhabitants, pleasantly situated on rising ground between a considerable river which flows down sometimes during the rainy season in a devastating torrent from the lofty plateau of Chota Nagpur into the Bay of Bengal and a minor affluent whose waters mingle with it close by. The climate is dry and therefore healthy, though the shade temperature rises in hot weather to 116, and a finely scarped range of hills over 3500 feet high provides within easy distance the makings of a small hill station as a refuge, especially valuable for women and children, from the worst heat of the torrid season. During the "cold" weather, when the thermometer falls to between 40 deg. and 50 deg. at night, there can be no more delightful climate in the world. The war gave a tremendous impetus to the Company's operations and stimulated the rapid expansion of the works on a far larger scale than had ever been anticipated, until they now need not fear comparison with some of the largest and best-equipped works of the same kind in the West. No doubt is entertained as to the demand for the enormous output from such a plant. Nor is it contemplated that it will meet anything like the full needs of India, which are growing apace. Before the war India imported annually about 1,000,000 tons of steel products, of which Germany furnished a large and increasing percentage direct or through Belgium. Equally little room is there to question the continued supply of either coal or ore. The life of the coal mines which the Tata Company possess within one hundred miles of their works is estimated at two hundred years, and they form only a very small portion of the great carboniferous area known as the Gondwana measures. They produce the best coking coal in India, and though much inferior as such to most British coal mines, against this disadvantage can be set off the much greater richness of the iron ore deposits, carrying between 60 and 67 per cent of metallic iron. These non-titaniferous deposits are practically inexhaustible, and those at present used are within forty to fifty miles of Jamsheedpur. This favoured region supplies also most of the fluxes required for the manufacture of steel, and even clays for firebricks.

Of equal promise for the future prosperity of India is the force of attraction which Jamsheedpur is exercising on other kindred or subsidiary industries which are establishing themselves in large numbers, and with Indian as well as European capital behind them, throughout the same region.

To keep pace with the growth of the population which such huge and rapid extensions involve is no easy task, and the Tatas aim at making Jamsheedpur a model industrial town not unworthy of the high standard which they have reached in their works. It is to an Englishman, a son of the late Archbishop Temple, formerly in the Public Works Department, that the task has been entrusted. The Company own twenty-seven square miles of land, which is none too little for a town that already has nearly 100,000 and may in the near future have a quarter of a million inhabitants. Fortunately the lie of the land, which is undulating and rises gradually from the level of the river beds, adapts itself both to aesthetic and sanitary town-planning. There is plenty of scope for laying out round the existing nucleus a number of new and separate quarters in which suitable provision can be made for the needs of different classes of Europeans and Indians, and for applying new scientific principles which should secure for all, including especially the children, the light and air so much needed in a large industrial centre. Many, too, are the novel problems arising out of the governance of a great heterogeneous community in a town which, though within the British Indian province of Behar and Orissa, is in many respects autonomous; and to another Englishman, Mr. Gordhays, who has for the purpose retired from the Indian Civil Service, Messrs. Tata have entrusted this equally responsible task.

How soon such a vital undertaking can be Indian-run as well as Indian-owned is a question upon the answer to which the future of India in the economic sphere depends as much as upon the success or failure of the new Councils in the sphere of political advancement.

The operations of a steel and iron foundry call for high scientific attainments, grit, and the power to control large bodies of labour. In addition to these qualities others are required at Jamsheedpur to deal with the many physical and social problems which the rapid growth of a very heterogeneous population and its harmonious and healthy governance present. What augury can be drawn for the future from the results already achieved? The board of directors, with whom the ultimate responsibility rests, has always been exclusively Indian. But, being sane business men, they realised from the first that they must for some time rely on Western management, Western technical knowledge, and even to some extent on Western skilled labour. Having met with little encouragement in British official quarters in India, or in British unofficial quarters in England, they turned in the first place to America. Many Americans occupy responsible posts in the works. The erection of the first plant was committed to Americans. The Indian directors never attempted to exclude Englishmen from their employ, nor did they hesitate to have recourse to British industry when it could best supply their needs. To keep the balance even they turned before the war to Germany also. Much of the machinery was purchased from German firms, who, like the Americans and the British, sent out their own parties to set up and work the plant which they supplied. In August 1914 the Germans numbered 250. But they were soon eliminated, and their places for the most part filled by Englishmen, the smelters from Middlesbrough importing not only their fine Yorkshire physique and dialect, but their Trade Union ideas.

During the war, Government, both in Delhi and in London, were constantly pressing for an increased output, which meant a large extension of the works; and as nothing could be obtained from England or brought out except at extreme risk from submarines, large orders for new plant for the extensions now in progress had therefore to be placed in America. The total number of covenanted employees of the Company to-day is 137, of whom ninety-three are English and forty-four American, and there are in addition sixty locally employed Europeans. The number of Indians employed is about 44,500. Nearly half the population of Jamsheedpur is directly employed by the Company, and almost the whole owes its means of livelihood to it in less direct forms. It comprises Indians of many races and creeds and castes and tongues. There are Bengalees and Madrasees of the educated classes, some of them Brahmans, who are chiefly engaged in clerical, technical, and managerial work. There are rougher Pathans and Punjabee Mahomedans, as well as Sikhs, who take more readily to heavy skilled manual labour. There are artisans and small traders and shopkeepers from all parts of India, and even a few picked carpenters from China as pattern-makers. The bulk of the unskilled labour is drawn from the Sonthal aboriginal population, industrious, docile, and cheerful as a rule, but abysmally ignorant and credulous, and liable to sudden gusts of emotion and passion.

The question of the employment of Indians on the actual processes of manufacture is largely a question of technical and physical training, and it has not been lost sight of in Jamsheedpur. Schools have been started for the education of the Indian children, and though in a community still largely composed of people who are themselves young, the number of children of a school-going age is necessarily small, a secondary school under a Bengalee graduate in science, who was himself originally trained in Rabindranath Tagore's remarkable school at Bolpur, already has over 140 boys, and a training institute for higher technical studies is to follow in due course. Nor are the adult men and women neglected, for social welfare in all its aspects plays an important part in the life of Jamsheedpur.

As to the actual employment of Indians, nowhere has the principle been more carefully applied that Europeans—a term which in this connection must be taken to include Americans—are only to be employed when and so long as no Indian can be found competent to perform the particular work required. The proportion of Europeans to Indians works out to-day approximately as 1 to 230, but this figure is in itself somewhat misleading. Out of the total of 197 Europeans, no fewer than seventy-five are the highly skilled mechanics who are still absolutely indispensable as supervisors at the steel-smelting furnaces and the rolling-mills. Work of this kind requires a powerful physique, long experience, and plenty of pluck. One has only to look at the muscular, hard-bitten Americans and Englishmen who stand round the furnaces to see that they represent a type of humanity which in India is still extremely rare. The Company have tried eighteen Indians, carefully selected, but only three have stayed. The up-country races, physically more promising, lack the training. It will take, it is believed, twenty-five years to bring on Indians who can be trusted to replace Europeans in these arduous jobs.

Nevertheless, in the steel-smelting furnaces there are only forty European supervisors to 2000 Indian workmen, and in the rolling-mills only thirty-five to 2200. In other departments much more rapid progress has been achieved, and the results are already remarkable. Indians do excellent work as machinists, cranemen, electricians, etc., and even in the rolling-mills they do all the manual work. The best of them make reliable gangers and foremen. In the blast furnaces there are only eight Europeans to 1600 Indians, in the mechanical department only six to 3000, and in the traffic department only one to 1500. In two other important departments it has been already found possible to place an Indian in full charge. One of these is the electrical department, which requires unquestionably high scientific capacity. Another is the coke ovens, on which 2000 Indians are employed under the sole charge of an Indian who seemed to me to represent an almost new and very interesting type—a young Bengalee of good family, nephew to Sir Krishna Gupta, who was recently a member of the Secretary of State's Council in Whitehall. He had studied at Harvard, had worked afterwards right through the mill, and had acquired the habit of organised command, which is still rare amongst Indians. If Jamsheedpur may be not inaptly regarded as a microcosm of India, in which the capacity of Indians for self-government in a wider sense than any merely political experiment connotes is being subjected to the closest and most severe test, it assuredly holds forth high promise for the future.

Yet at the very time when the future of Indian industries seemed to be at last almost assured, and largely thanks to Indian enterprise, it was gravely compromised by the miserable breakdown of the most important of all the services on which the very life of industry depends. The Indian railways proved altogether incapable of meeting the new demands made upon them. Even in the essential matter of coal supplies, though the output of the Indian coal mines suffices for present requirements, huge dumps of coal accumulated round the mines and could not be moved owing to the lack of rolling-stock and to the general inadequacy of the existing railway system. The breakdown may have been due in the first place to the rapid deterioration of rolling-stock and permanent way that could not be made good during the war, and has not been made good yet, but the real causes must be traced much farther back to the parsimonious and short-sighted railway policy of the Government of India for years past. Apart from the economic consequences, it is particularly unfortunate, even from the political point of view, that such a revelation of inefficiency should have occurred in a field which has been hitherto most jealously preserved for British enterprise, and just in the very sphere of Western activity which has appealed most strongly to Indians of all classes.

Of all the Western inventions which we have brought to India, the railway is certainly the most popular, perhaps because the modern love of travel has developed largely out of the ancient practice, still continued, of pilgrimages en masse to popular shrines, near and far. During the great days when the worship of Juganath reaches its climax and half a million pilgrims pour into Puri from all parts of India, the terminus of the branch-line from the Calcutta-Madras railway is busier than Epsom Downs station on Derby Day. A big Indian railway station—the Howrah terminus in Calcutta, the Victoria Terminus in Bombay, the Central Station in Delhi—is in itself at all times a microcosm of India. It is never empty, never silent by day or by night. It is always alive, always crowded, always full of Indian sounds and smells. It is a camping ground not only for those who are actually going to travel but also for those who merely come to give their friends a send-off or to greet them on arrival. No Indian of any position can be allowed to depart or to arrive without a party of friends to garland him with flowers, generally the crude yellow "temple" marigolds. The ordinary Indian to whom time is of little value cares nothing for time-tables. He goes to the station when he feels moved to do so, and waits there patiently for the next train that will take him to his destination or bring the friends he wants to meet. He does not in the least mind waiting for two, three, or four hours—sometimes in more remote parts of the country for the best part of twelve or even of twenty-four hours. Only the Europeans and a few Western-educated Indians who have learnt business habits ever think of "catching" a train. So the Indian railway station has a constant and generally dense floating population that squat in the day-time in separate groups, men, women, and children together, according to their caste, hugging the slender bundles which constitute their luggage, chattering and arguing, shouting and quarrelling, as their mood may be, but on the whole wonderfully good-humoured and patient. At night they stretch themselves out full length on the ground, drawing their scanty garments well over their heads and leaving their legs and feet exposed, or, if the air is chilly and they possess a blanket, rolling themselves up in it tightly like so many shrouded corpses in long and serried rows, till the shriek of an incoming train arouses them. Then, whether it be their train or not, there is a din of yelling voices, a frenzied rush up and down the platform, and, even before those who want to get out have had time to alight, a headlong scramble for places—as often as not in the wrong carriages and always apparently in those that are already crammed full, as the Indian is essentially gregarious—and out again with fearful shouts and shrill cries if a bundle has gone astray, or an agitated mother has mislaid her child, or a traveller discovers at the last moment that it is not after all the train he wants. In nine cases out of ten there is really no need for such frantic hurry. Even express trains take their time about it whenever they do stop, and ordinary trains have a reputation for slowness and unpunctuality to which they seldom fail to live up. But, as if to make up for the long hours of patient waiting, the struggling and the shouting go on crescendo till the train is at last under way again. For, besides the actual passengers coming and going, the platforms are alive with hawkers of all sorts who minister to their clamorous needs—sellers of newspapers and of cigarettes and of the betel-nut which dyes the chewer's mouth red, of sweetmeats and refreshments suited to the different castes and creeds, Mahomedan water-carriers from whom alone their co-religionists will take water to fill their drinking-vessels, and Brahman water-carriers who can in like manner alone pour out water for Hindus of all castes. And all have their own peculiar cries, discordant but insistent.

Who that has passed at night through one of the great junctions on the Upper Indian railways, say Saharampur or Umballa or Delhi, can ever forget such sounds and sights of pandemonium? Or who would care to miss during the daylight hours the open window on to the kaleidoscopic scenes of Indian life at every halt? Here a turbaned Rajput chief with his whiskers fiercely twirled back under his ears descends from the train to be greeted and garlanded by a throng of expectant retainers who look as if they had stepped straight out of an old Moghul picture. Or a fat and prosperous Mahomedan zemindar in a gold-embroidered velvet coat and patent-leather boots struts along the platform convoying his fluttering household of heavily veiled ladies, all a-twitter with excitement, to the purdah carriage specially reserved for them. Or a band of mendicant ascetics, their almost naked bodies smeared all over with fresh ashes and the trident of Shiva painted on their foreheads, return with well-filled begging-bowls from some favourite shrine. Or an excited crowd, all wearing the little white Gandhi cap, rend the air with shouts of Mahatma Gandhi-ki jai! in honour of some travelling apostle of "Non-co-operation." And all over India the swarm of humbler travellers, who lend their own note of varied colour even to the smallest way-side stations, seems to increase every year, whether one crosses the vast drab plains of Upper India or climbs the steep face of the Western Ghats on to the sun-scorched plateau of the Deccan, or is unmercifully jolted through the gentler and more verdant landscapes of Southern India.

One change, however, since pre-war days none can fail to mark. Travelling is far less comfortable. Trains are fewer and far more crowded. The rolling-stock is war-worn and dilapidated, for it could not be renewed during the war, as, although a great deal of railway material can be produced in Indian workshops, some absolutely essential parts have always been imported from England—as many Indians believe for the purpose of subordinating Indian railways to the industrial interests of Great Britain. Even the permanent way has deteriorated. But the mere discomfort inflicted upon travellers is a small matter, and it is chiefly on grounds of racial feeling that Indians are beginning to cry out against the many outward and visible forms of discrimination in favour of European travellers. What the most moderate and thoughtful Indians are concerned about is the futility of talking of the development of Indian industries and the starting of new ones when railroads and rolling-stock can no longer handle even the existing traffic or move the essential raw materials. The problem brought to the front by the grave crisis through which the Indian railway system is now passing is neither new nor accidental. It is the outcome of antiquated methods of railway administration and finance, of which it was possible to disguise the defects so long as they were not subjected to any searching strain. The war provided that strain, and the system showed, it must be admitted, wonderful endurance under it so long as the war lasted. But since the end of the war it has betrayed such grave symptoms of imminent collapse that Government have been compelled to appoint an independent Committee of Inquiry, with a fair proportion of Indian members on it, which with a man like Sir William Acworth as Chairman will, it may be hoped, not be content merely to pass judgment upon it, but will be able also to point to a better way in the future. The evidence produced before the Committee furnishes ample material for a scathing indictment of the system.

There are altogether only some 35,000 miles of railroad in India to-day, or about as much as before the war in European Russia, the most backward of all European countries, whose population was little more than a third of that of India. The Government of India may claim that this is a magnificent return for the L380,000,000 of capital expenditure that these railways represent to-day in its books, and that the profits which they have yielded for the last twenty years with steadily increasing abundance to the State show the money to have been well invested. But how if these results have been achieved only by a short-sighted and narrow-minded policy which sacrificed the future to the present?

Of the Indian railways some are owned and worked by the State, some are owned by the State and worked by companies, some are owned and worked by companies under contracts with the State. The companies that own and work their own lines are for the most part domiciled in England, and the evidence already taken before the Committee shows how little power is left by the London Boards to the local agents who manage them, and how often the interests of the public and of the country appear to be subordinated to the narrow view taken at home of the companies' own interests. But however flagrant the special shortcomings of the company-owned railways may be, the root of the evil common to all lies in the policy laid down by and for the Government of India, in whom the supreme control has always been vested as a professedly necessary consequence of the financial guarantees given by the State and the right of ultimate purchase reserved to it. That control, which has passed through many different incarnations in the course of the last half-century, has been exercised since 1905 by a Railway Board of three members outside of, but subordinate to, the Government of India. It is represented in the Viceroy's Executive Council by the Member for Commerce and Industry, but its real master and the ultimate authority in all matters of railway policy is and always has been the Finance Member of the Government of India, who in turn has to adapt himself to the exigencies of Whitehall. The Finance Member, who lays down the annual amount that can be allocated to railway expenditure out of revenue, cuts the cloth of the Railway Board in accordance not so much with the needs of the railways themselves as with the requirements of his annual budget. For when the yield of the Indian railways began to constitute an important source of Government revenue, the Finance Member, instead of devoting it to the equipment and expansion of railways, however essential to the future prosperity of the country, was easily prevailed upon to regard it, in part at least, as a convenient lucky-bag to draw upon, especially in difficult times, for meeting the demands of other departments, and especially of the Army Department, always the most insatiable of all. In the same way, however clear a case could be made out from the point of view of the railways for capital expenditure to be met by raising loans at home or in India, the decision was not based so much on the intrinsic merits of such an operation as on the immediate effect it was likely to have on the British or Indian money market in respect of other financial operations with which the Secretary of State was saddled. The result has been that before the war the Indian railways were kept on the shortest possible commons, and that having been inevitably starved during the war, without any reserves to fall back upon, they are clamouring to-day for financial assistance for the mere upkeep of open lines and the renewal of rolling-stock, without which they are threatened with complete paralysis, whilst the Government of India, confronted on the one hand with the categorical imperative of the Esher Committee and the fantastic extravagance of the Army Department since the Afghan war, and on the other with the appalling losses already incurred in consequence of Whitehall's currency and exchange policy, has never been in a worse position to give such assistance.

The keen searchlight of the war has been turned effectively on many weak points in the government and administration of India besides railway policy, and the Indian currency and exchange policy stands out now as one of the most disturbing factors in the economic situation.

India played her part in the war, and played it well, but she was never called upon to bear any crushing share in its financial burdens. The Indian Legislature unanimously and spontaneously granted L100,000,000 in 1917 towards Imperial war expenditure, and another L140,000,000 of Indian money went into the two Indian war loans and issues of Treasury notes. But the increase in India's actual military expenditure during the war was small, as the Imperial Exchequer continued to bear all the extra cost of the Indian forces employed outside India, and the last Indian war budget, 1918-19, showed an excess of only about L23,000,000 over the last pre-war budget, 1913-14—an increase easily met by relatively small additional taxation. Moreover, the Indian export trade, after a temporary set-back on the first outbreak of hostilities, received a tremendous impetus from the pressing demand for Indian produce at rapidly increasing prices, and the lucrative development of many new as well as old industries and of natural resources too long neglected. The balance of trade which before the war had generally been slightly against India then shifted rapidly, and the scale turned heavily in her favour till the end of the war. The total value of the supplies of all sorts, foodstuffs, raw materials, and manufactured products, sent out from India to other parts of the British Empire and to Allied countries has been estimated at some L250,000,000.

For India as a whole the war years were fat years, though the wealth poured into the country was, as usual, very unevenly distributed, and some sections of the population were very hard hit by the tremendous rise in the cost of living. Lean years were bound to come in India as elsewhere when the war was over. But the reaction would hardly have led to such a serious crisis had it not been for complications which have arisen out of the peculiarities of a unique exchange and currency system. This system presumes a gold standard, but it is in reality a gold exchange system by which, in the absence of an Indian gold currency, the exchange as between the Indian silver rupee and the British gold sovereign has to be kept at the gold point of the legally established rate of the rupee to the sovereign by delicately balanced operations directed from Whitehall. These consist in the sale of "Council bills" at gold point by the Secretary of State for India when the balance of trade is in favour of India, and in the sale of "Reverse Councils" at gold point by the Government of India when the balance of trade is against India.

The system worked fairly well until the second year of the war, when the balance of trade turned in favour of India and soon assumed unprecedented proportions. The enormous Indian exports could not be paid for in goods, as the Allied countries had neither goods nor freight available for maintaining their own export trade. Nor could they be paid for in bullion, as gold and silver were taken under rigid control. Nor could internal borrowings in India (though the success of the Indian war loans was a phenomenon hitherto undreamt of) suffice to finance the expenditure incurred in India on behalf of the Imperial Government. The Government of India made very large purchases of silver, which combined with the stimulated world-demand to drive the price of the white metal up to inordinate levels, and to keep pace with this rise and avoid an intolerable loss on the coining of rupees the rate of exchange—i.e. the rate at which the Secretary of State sells "Council bills" in London—was raised until it actually reached 2s. 5d. for the rupee. To meet the balance of Imperial expenditure in India the Government of India issued currency notes against London Treasury bills.

The result of these operations was that at the end of the war the funds standing to the credit of the Government of India in London had been swollen to the unprecedented figure of L106,000,000, a large proportion of which had to be paid back to India when, with the cessation of the abnormal conditions induced by the war, the balance of trade turned against her, and the rate of exchange had been raised from the legal standard of sixteenpence to the rupee to 2s. 5d. The very important question then arose of the future legal ratio of the rupee to the sovereign or the L1 sterling. A Committee was appointed to advise the Secretary of State as to the best means of securing fixity of exchange under the new conditions; it took evidence in London during the year 1919 and reported towards the end of the year. A majority of the Committee recommended that the rupee should be linked with the gold sovereign and not with the L1 sterling, which had become divorced from gold under the pressure of war finance, and that the legally established ratio of 1s. 4d. or fifteen rupees to the sovereign should be raised to 2s., i.e. ten rupees to the sovereign. The Secretary of State accepted the recommendations of the majority of the Committee, and in February 1920 steps were taken to establish the new ratio regardless of the fact that signs were indubitably discerned in the previous month showing that the economic current had turned against India. The rupee was to be "stabilised" at 2s. gold. The only dissentient voice in the Currency Committee had been that of the one Indian member, a Bombay bullion broker, Mr. D. Merwanji Dalal, who probably had more practical knowledge and experience of the problem than all the ten signatories of the Majority Report, and he had pleaded in vain for the retention of the old ratio of fifteen rupees to the sovereign. The event was soon to demonstrate his sagacity. The Secretary of State in order to establish the new ratio sold "Reverse Councils" at rates from 2s. 11d. downwards. The attempt failed egregiously, for the rupee fell steadily, and has now fallen to and under 1s. 4d. The money represented by the Indian balances with the Secretary of State had been put down in London at 1s. 4d. upwards, and India had to pay at the rate of 2s. 11d. downwards to get it back. The difference between the two rates represents, it is calculated, a loss to the Indian tax-payer of thirty-five crores of rupees, or L35,000,000 at the "stabilised" rate ordained by Government.

But the actual loss to India on these exchange transactions is not the worst outcome of these conjuring tricks, as they have been contemptuously called by Indian critics of Whitehall. Faith both in the omnipotence and in the honesty of Government was by no means extinct in Indian business circles, and when Government undertook to "stabilise" the rupee at 2s. gold Indian merchants assumed that Government could and would do what it said it was going to do. Their stocks of imported goods had been completely depleted during the war, and prosperity had bred, as usual, a spirit of excessive optimism. Enormous orders for cotton piece-goods and other British manufactures were placed in England on the basis of a 2s. rupee just when prices there had soared to their dizziest heights. By the time the British manufacturers had fulfilled their contracts and the goods were delivered in India, not only had the rupee fallen headlong but prices too had declined, and the Indian importer found that he had made both ways a terribly bad bargain, of which in many cases he could not possibly fulfil his share. There was L15,000,000 worth of Manchester piece-goods alone lying in India at one time last winter on board the ships that brought them out or in the docks. Of these the Indian importer simply refused to take delivery, because to do so would have meant ruin, as, what with the depreciation of the rupee and the fall in market prices, they seldom represented one-half, sometimes not a quarter, of the cost to him, if he took them up. It was useless to preach to him about the sanctity of contract, for had not Government itself, he declared, set the example of a gross breach of contract by undertaking and then failing to "stabilise" its own rupee currency? Government pleaded that it had given no undertaking that could be construed as a contract, but the Indian retorted that the Government's word had been hitherto held as good as its bond, and Indian Extremists found only too ready hearers when they imputed the exchange policy of Whitehall not so much to mere incompetence as to unholy influences behind Whitehall which robbed India in order to fill British pockets.

A wiser spirit ultimately prevailed, and merchants and buyers came together and agreed to compromise, and large stocks were gradually cleared. If this year's monsoon is followed by good harvests, and the European markets recover something of their former activity, Indian trade will be gradually restored to more normal conditions. But the ordeal which it has passed through will have taught some enduring lessons.

Remembering, too, the large profits which London firms used to make on silver purchases for the Government of India, and the enormous Indian balances kept in London in pre-war times which were supposed to be essential to the maintenance of Indian credit but were still more clearly of great convenience for London bankers who had the use of them, Indians who are by no means Extremists ask themselves not unreasonably why, instead of leaving the ordinary laws of supply and demand to work through the ordinary channels of financial and commercial enterprise, the Secretary of State should persist in carrying on big financial operations connected with the adjustment of the balance of trade or any purpose other than his official requirements in regard to what are known as "home charges," i.e. payments to be made in England on account of the Government of India.

That the effects of the present system as it has worked recently have been deplorable from a political as well as from an economic point of view is shown by the large number of recruits made by Mr. Gandhi from what one might have regarded as the most unlikely classes. Indian merchants whose interests would seem to be bound up with the maintenance of order and public tranquillity, Bombay Banias and Calcutta Marwaris, have thrown themselves into the "Non-co-operation" movement out of sheer bitterness and loss of confidence in British good faith, boycotting British imported goods and supplying a large part of the funds without which even a Mahatma cannot carry on a prolonged political agitation.



CHAPTER XIV

SHOALS AND ROCKS AHEAD

Unless the economic situation improves again with a rapidity beyond even sanguine expectations, Government will have to lay before the Indian Legislature next winter a budget scarcely less unpleasant than the last one. Even if expenditure does not outrun the estimates, revenue can hardly fail to fall short of them. Mr. Hailey, with perhaps forced optimism, seems to have reckoned upon taxation old and new continuing to yield at much the same rate during a year which began and is likely to end in great depression as during the preceding year, a great part of which had been a "boom" year. In the same way he budgeted on a 1s. 8d. rupee, though the rate of exchange for the rupee was then under, and has only quite recently[4] risen above, 1s. 4d. This means an inevitable and considerable loss to the Government of India on all the home charges which it has to remit to London. Another deficit to be met by another increase of taxation would be a strain upon the Assembly far more trying than that to which this year's Budget subjected it. Indian opinion will press for further steps towards complete fiscal autonomy. Scarcely a single Indian is a convinced free trader. In the old Indian National Congress the desire not to estrange the sympathies of the Liberal party in England, and the lack of interest then taken by Indian politicians in economic questions, kept the issue somewhat in the background until the Extremists raised it in the form of Swadeshi and in an attempt to organise a boycott of British imported goods. The immense development of Indian industries during the war has made protection once more a very live issue, for if that development is arrested or languishes as the result of the general economic situation, the louder will be the demand for protection. Even the outcry at first raised last winter in Lancashire against the increase of the Indian import duties as an intolerable blow to British textile industries, though at once firmly checked by the Secretary of State, provoked enough irritation in India to show how deeply engrained is the suspicion that, from the days of the East India Company onward, the industrial and commercial interests of India have always been deliberately or instinctively sacrificed to those of Great Britain. Indians regard complete fiscal autonomy as one of the first steps towards the fulfilment of the pledge of self-government, and indeed as the logical consequence of the recommendation already made by the Joint Select Committee of both Houses of Parliament. To believe that in such matters the Government of India would now place itself in opposition to the views of the Indian Legislature is to ignore the whole spirit of the constitutional changes.

To the economic factors that react unfavourably upon a difficult political situation must be added the growth of labour troubles, which Extremist agitators know how to exploit to the utmost even when they do not actually foment them. Strikes are as common to-day in India as they are in England, and the epidemic has sometimes spread from industrial workers to those employed by municipalities and by the State. There have been strikes not only in the big cotton mills and jute mills and other large manufacturing industries, but also amongst postmen, and amongst railwaymen on State as well as on private-owned lines, amongst tram-car drivers and conductors, and even amongst city scavengers. Lightning strikes without any notice are of growing frequency. Some are short-lived, others very obstinate, dragging on for weeks and months. Some are grotesquely frivolous, others by no means lack justification or excuse. Intimidation often not unaccompanied by violent assaults on non-strikers is an ugly feature common to most of them. They sometimes lead to very serious riots and bloodshed. They have played a prominent part in the worst disorders of the last few years. Nowhere have they assumed at times a more threatening shape than in the Bombay Presidency, for in the cotton mills of Bombay itself and of the Ahmedabad district, which employ over 200,000 hands, are collected the largest agglomerations of factory workers in India.

Labour troubles were bound to come with the introduction of Western methods of industrial development and Western machinery. It has led, and very rapidly, to a demand for labour which the urban population could not supply. But the wages soon attracted immigrants from the more or less distant countryside, where at certain seasons of the year there is little work to be done on the land. It became the custom for an increasingly large number of rural districts to send their men into the towns, where they worked for a few months. Then they went away after they had put by a little money and came back again when they had exhausted their hoard. These migrations became more and more regular and on a larger scale as the demand for labour increased, and they constitute to-day the feature which radically differentiates the problem of Indian labour from that of British labour. There has not yet grown up in India an industrial population permanently rooted in the towns. It is still largely migratory, returning from time to time for more or less lengthy periods to field-work in the villages, which remain the real home. The Indian factory operative has not yet ceased to be a man of the country rather than of the town. Hence perhaps the conditions under which he is sometimes content to live whilst he is working in a town—in Bombay, for instance, for the most part in huge overcrowded blocks, known as chawls, ill lighted, ill ventilated, in a foul atmosphere and unspeakable dirt—may seem to him less intolerable as he can look forward to exchanging them again some day for the light and air which surround even the most squalid village hovels. If there were reason to believe that improved housing conditions such as are now assured to Bombay by the huge city improvement schemes which, under Sir George Lloyd's energetic impulse, are expanding the limits and transforming almost beyond recognition the appearance of the most congested quarters of the most congested of modern Indian cities, or even that increased wages would substantially affect the temper of Indian labour, one might look forward to the future in this respect with less apprehension. But in Bombay labour troubles have been scarcely less rife in the best- than in the worst-conducted mills. In Calcutta the British jute-mill owners have set a splendid example to Indian employers of labour, and the mill-hands, now largely imported from other provinces, not only work under the best possible conditions of light and air, but are housed in spacious quarters specially built for them, well ventilated and scientifically drained, with playing-fields and elementary schools for the swarms of children who certainly look healthy and well-fed and happy. The Birmingham mills in Madras are recognised to be, from the same point of view, second to none in the world. But the most humane and generous employers—whether European or Indian—are as liable as the most grasping and callous to see their workers suddenly carried away by a great wave of unreasoning discontent and passion.

The greater the general unrest amongst these excitable and terribly ignorant masses, the more urgent is the need for the establishment of some effective means of determining the social and economic justice of the claims of labour, as well as for the adjustment of actual conflicts by bringing employers and employed together in a friendly atmosphere. A real organisation of labour in its own sphere of interests and the constitution of responsible trades unions would probably go far to prevent labour from turning for encouragement and support to agitators who have never been workers themselves, who have no personal knowledge of its processes or of its needs, and who exploit its discontent, reasonable or unreasonable, for purposes as disastrous, if fulfilled, to its permanent interests as to those of the employers and of the whole community. A Congress which called itself the first "All-India Trades Union Congress" met this year in Bombay. The present organisation of labour in India can hardly be said to justify the title it assumed, and in answer to a deputation which waited on the Governor, Sir George Lloyd expressed a legitimate desire for more information than was contained in its high-flown address as to the status of these unions, their method of formation, their constitution, their system of ballot and election, and the actual experience in the several trades of those who claimed to represent them. That information was not and could not be furnished, because the ninety-two Trades Unions alleged to have been represented are at present little more than embryonic. Their spokesmen have not risen to the leadership of labour out of its own ranks by superior industry and knowledge. Their organisation has not been a spontaneous growth from within, but artificially promoted from without. The vast majority of unskilled workers are illiterate, and even amongst ordinary skilled labour the level of education is still extremely low. The actual workers are therefore quite unable to organise, or even to think out the simplest labour problems for themselves, and they easily become the dupes and tools of outsiders—frequently lawyers or professional politicians—who are not always disinterested sympathisers, but more often stimulate and exploit grievances which may in themselves be legitimate for purposes which have little to do with the real interests of labour.

The economic causes of the growing frequency of strikes during recent years have not yet been all explored, and Sir George Lloyd responded to a crying need when, in his reply to the deputation, he announced that the Bombay Government was about to establish a Labour Bureau under a competent official from the British Board of Trade to advise it in the interests of labour. One of the greatest difficulties in dealing with industrial disputes in India is, the Governor rightly observed, the absence of all trustworthy materials for forming an accurate judgment on the actual cost of living for the working man, and the ever fluctuating relations between the wages he receives and the expenditure he has to incur even for the mere necessaries of life.

With a two-and three-fold appreciation, during and especially since the war, in the cost both of the cotton stuffs which the working man needs even for his scanty apparel and of the foodstuffs which constitute his meagre fare, discontent grew steadily more acute, and wages, though more than once enhanced, did not always keep pace with that appreciation. If in circumstances, often of undoubted hardship, labour had been sufficiently equipped to state its own case, or had found disinterested friends to state it clearly and temperately, it would have been easier to admit that economic causes sufficed, in some cases at least, to explain, and perhaps even to justify, the increasing use of the strike weapon. But there is unhappily very abundant evidence to show that strikes would not have been so frequent, so precipitate, and so tumultuous, had not political agitation at least contributed to foment them as part of a scheme for promoting a general upheaval. The Extremists, who, with few exceptions, have no part or lot in labour, either as employers or as workers, began to carry on in Mr. Tilak's days amongst the mill-hands of Bombay an active propaganda which originally had little to do with labour. The mill-hands played an evil part in the worst excesses committed during the outbreak in and around Ahmedabad in April 1919, and twice within the last two years they have seriously threatened the peace of Bombay itself and held up for weeks together the normal life of the great city, necessitating the employment of large military forces to overawe them, and to avert through the exercise of disciplined forbearance collisions with which the police alone would have been unable to cope, and which, when once started, could probably have been quelled only at the cost of considerable bloodshed. Mr. Gandhi has a great personal hold over the factory workers, especially in Western India. Sometimes he uses it to restrain them, sometimes, though one may hope less deliberately, he works dangerously on their emotions. His influence when he preaches temperance to them on temperate lines may be all to the good, and except that, when he denounces tea also, because it is tainted with Western capitalism, he is waging war against a popular substitute for spirits, one need not quarrel with the solemn processions of mill-hands proceeding to a favourite shrine to break a symbolical teapot in the presence of the deity as a pledge of renunciation. But not all Mr. Gandhi's followers can be credited with his earnest sympathies for labour, largely inspired by his detestation of a "machine age," and he himself lapses into language that seems to preach more rigid abstention from drink than from violence.

Factory legislation has never been neglected in India, though until recently the chief impulse has had to proceed from Government itself. A great increase of public interest has taken place in the last years, and in India perhaps even more than anywhere else the activity in this respect of the League of Nations and of the International Labour Office has elicited prompt and vigorous response. The Secretary of State has created at the India Office a new department for dealing with labour and industry. India has had her own representation at international labour conferences, and the Government of India is now engaged on a new Factory Act in accordance with the draft covenants and recommendations of the Washington Conference. Indeed in some directions the Bill is in advance of Washington. The statutory definition of a child presents special difficulties in India, where physical development is more precocious than in Western countries, but, instead of making the general limit of age for juvenile work lower, the Bill proposes to raise it not to fourteen but to fifteen years, whilst still permitting the employment of younger children on special and very stringent conditions. Provisions are also made for securing longer daily intervals during the working hours as well as a weekly holiday. Further legislation will be introduced for the benefit of industrial workers, more particularly as regards Trade Union rights and compensation for accidents. But however excellent such measures may be, only the spread of education and the better organisation with it of labour itself can be expected to give any real stability to large struggling masses invested by the new economic forces that have sprung so rapidly into existence with tremendous powers for mischief, but with no individual or collective sense of responsibility.

But the most dangerous rocks ahead are the questions which directly or indirectly raise the racial issue. Even during the first session of the Indian Legislature it could be seen underlying the attitude of Indian members towards military expenditure, and military expenditure, not likely to diminish, will be a sore subject again when the next budget is introduced at Delhi. If one looks merely at the growth of such expenditure, the enormously increased cost of the British Army which, in respect of the British forces serving in India, falls upon the Indian exchequer, furnishes Indians with a specious plea for reducing the number of British troops as a measure of mere economy. But even if one could concede the Indian argument that, in a contented India marching towards self-government under the new constitution, there can no longer be the same necessity for large British garrisons to guarantee the safety of British rule, any considerable reduction of the proportion of British to Indian forces in India would disturb the foundations of our own military organisation in peace time, based for the last fifty years on a certain fixed proportion of British regulars serving at home and abroad. That an Indian territorial army would, on paper at least, be less costly is beyond dispute, and if ultimately officered entirely or almost entirely by Indians, it would meet the Indian demand for a military career for those of the educated classes who regard themselves now as shut out in practice from the profession of arms. That demand cannot be met merely by the granting of British commissions to a few Indian officers, which is already raising many difficult regimental problems not easily grasped by Indians familiar only with the civil administration. The difficulties do not arise so much out of objections taken by the British officers, however repugnant still is to most of them the idea of ever having to take orders from an Indian superior officer, as out of the feelings, even if they be mere prejudices, of the existing class of native officers and of the rank and file who belong to the old and have no liking for the new India. Most of the politically minded Indians are beginning, too, to measure the demands made upon India for her military contribution to the needs of the Empire by those that are made upon the self-governing Dominions. "We are quite willing," they say, "to bear our share of the military burdens of the Empire as equal partners in it, and"—as some at any rate add—"we recognise that in view of our geographical position, which lays us almost alone amongst the Dominions open to the dangers of invasion on our land frontiers, we require a larger army for our own defence. But even taking that into account, as well as our inability at present to make any contribution in kind to the naval defence of the Empire, can we be expected to submit to military expenditure absorbing almost half our revenues? Can you point to a single Dominion that is asked to make an annual sacrifice comparable to that? Are we not at least entitled to claim that the Indian tax-payer's money should not be spent merely on the maintenance of British garrisons that are here to-day and gone to-morrow, and of an Indian army that is so constituted as to lack all the essentials of a national army, but should go to the building up of an army really worthy to take its place on equal terms when India attains to self-government with the other armies of a commonwealth of free nations?"

The racial issue dominates in a far graver form the whole question of the status and treatment of Indians in the Dominions and Crown Colonies. For there it enters a much larger field which extends far beyond India. In India so far, in speaking of the racial issue, Indians and Europeans alike have hitherto had in mind chiefly the relations between the ruling and the subject race. When the rulers all belong to one race and come from a far distant country not to settle permanently but chiefly to maintain, each one in his own sphere and during his appointed time, the continuity of rulership over millions of subjects of another and very different race with a different civilisation, an additional element of discord is introduced into their relations. But since Great Britain achieved dominion over India the main issue between rulers and ruled has been how far on the one hand British rulers should devolve on to their Indian subjects a share in the government and administration of the country, and how far on the other hand their Indian subjects could hasten such devolution by various forms of pressure. Whatever part any purely racial antagonism may have played in the controversy, the British rulers of India have at least since 1833, and still more since the Queen's Proclamation in 1858, debarred themselves from basing on racial differences their refusal or reluctance to meet the growing aspirations of their Indian subjects. They have been content to plead the political immaturity of the Indian people and the lack of individual qualifications amongst all but a few Indians, and even these disabilities they had deliberately undertaken and expressed their anxiety to remove by the introduction of Western education. Neither colour nor descent, it was specifically declared, were to constitute any barrier. It is quite otherwise with the question of the right of Indians to immigrate into other parts of the Empire, and of the measure of rights they are to enjoy as settlers there. It brings us face to face with the racial issue pure and simple and in its widest aspects. There is an open and declared conflict between the claims of the Dominions to exclude or to restrict the rights of Indian settlers on grounds of colour and descent for the avowed purpose of maintaining the paramount ascendancy of one race over another, and the claims put forward by Indians as British subjects to have access to all parts of the Empire and to possess the same rights as other British subjects already enjoy there. Some of the arguments employed to justify the attitude of the Dominions allege inferior social standards of Indian life, but behind them and quite undisguised is the supreme argument that Indians belong to a coloured race and, in consequence, have no interests or rights that can possibly prevail against those of a superior white race.