complete freedom of trade was announced. A declaration on the part of the Government of India was then made by myself of the principles which it was intended to carry out gradually as circumstances allowed :

'It is not necessary to discuss the advantages to a country of free trade, and the disadvantage of protective duties. It is sufficient to say that these have been admitted for many years by the statesmen who, of whatever party, have guided the policy of the United Kingdom. . . . The principles on which the customs legislation of the United Kingdom has been based are now admitted axioms by all who recognise the theoretic advantages of free trade. These principles are, as regards imports:

1. That no duty should exist which affords protection to native industry; and, as a corollary, that no duty should be applied to any article which can be produced at home without an equivalent duty of excise on the home production; also, that no duty should be levied except for purely fiscal purposes.

2. That, as far as possible, the raw materials of industry and articles contributing to production should be exempt from customs taxation.

3. That duties should be applied only to articles which yield a revenue of sufficient importance to justify the interference with trade involved by the machinery of collection.

'As regards exports: That duties should be levied on those commodities only in which the exporting country has practically a monopoly of production.

'These principles are of general application, but in the case of India they possess a peculiar significance. India is a country of unbounded material resources, but her people are a poor people. Its characteristics are great power of production, but almost total absence of accumulated capital. On this account alone the prosperity of the country essentially depends on its being able to secure a large and favourable outlet for its surplus produce. But there is a special feature in the economic conditions of India which renders this a matter of yet more pressing, and even of vital importance. This is the fact that her connection with England, and the financial results of that connection, compel her to send to Europe every year about 20,000,0001.

sterling worth of her products without receiving in return any direct commercial equivalent. This excess of exports over imports . . . is really the return for the foreign capital, in its broadest sense, invested in India, including, under capital, not only money, but all advantages which have to be paid for, such as the intelligence, strength, and energy on which good administration and commercial prosperity depend.'

Excluding the duties levied on salt and liquors, which corresponded to the internal excise duties imposed on those articles, the Indian import duties yielded at that time (1876-77) 1,275,000l.; and 811,000l. of this was derived from cotton goods. Apart from the latter sum there remained, therefore, only 464,000l. levied from a multitude of articles, many of which yielded an insignificant revenue. It was clear that after the abolition of the duties on cotton goods it would be mpossible to maintain the rest of the import tariff, and the intention was declared of getting rid of all import duties as soon as the state of the finances permitted. The first step was at once taken, in March 1878, by the remission of duties on a great number of minor articles, and on some of the coarser descriptions of manufactured cotton goods. In the following year, in March 1879, a more important measure was adopted by the resolution to remit the duty on all so-called grey cotton goods, except those of the finer qualities.

None of the previous steps towards the abolition of customs duties had been taken by the Government without difficulty, and this further measure, which it was obvious must lead before long to the destruction of the whole fabric of the customs tariff, met with much opposition. Popular opinion in India has always, in regard to questions of fiscal reform, been obstructive and ignorant; and the fact that the abolition of customs

duties would be favourable to English manufacturers was enough, in the belief of many, to prove that the party purpose of obtaining political support in Lancashire, and not any care for the interests of India, was the real motive of the Government. This opposition, as I have said elsewhere, satisfied Lord Lytton that he must carry out the measure himself, or acquiesce in nothing being done at all. He believed that the essential interests of India required it, and he was not to be deterred by the imputation of base motives. The case was one of those which had either to be settled by a bold and enlightened Viceroy, or be allowed to drift on, to the serious discredit of the Government and injury of the country. The measure was held by Lord Lytton to be so necessary that it could not rightly be delayed, and it was carried into effect on March 13, 1879. This step was taken by Lord Lytton, in opposition to the opinion of a majority of his Council, but on the advice of Sir John Strachey, the financial member. It was approved, on April 4, 1879, by the House of Commons in the following resolution:

'That the Indian import duty on cotton goods, being unjust alike to the Indian consumer and the English producer, ought to be abolished, and this House accepts the recent reduction in these duties as a step towards their total abolition, to which her Majesty's Government are pledged.' '

If the object in view had been the reduction and not the total abolition of import duties, a different method would have been adopted in dealing with these duties. The result of the plan actually followed was, as had been foreseen and desired, the speedy collapse of the whole fabric of the customs tariff. It soon

1 Finances and Public Works of India, p. 287.

became obvious that it was not reasonable that certain cotton goods should be admitted free while others. of almost the same character in everything but name remained liable to duty. Both manufacturers and importers complained, and, as the condition of the Indian finances had by this time become highly prosperous, it was impossible to justify the retention of the remaining duties on the finer qualities of goods; and, as I have already explained, when the cotton duties were given up, the rest of the import duties must go with them.

The history of these proceedings, and the forecast of the future which had become inevitable was summed up in the year 1881 in the following passage which I quote from the 'Finances and Public Works of India : '

"The policy followed by the Government of India during the viceroyalty of Lord Lytton was one of absolute free trade, without reservation or qualification, and financial necessities alone prevented that policy from being carried out to the fullest extent. These proceedings have rendered inevitable the almost total abolition of customs duties, which of all Indian taxes are probably the worst. The cotton duties are virtually dead, and the other import duties cannot long survive them. How long a period may elapse before such a consummation is reached cannot be predicted; but the time is not very far distant when the ports of India will be thrown open freely to the commerce of the world.

"The people of India consume at present hardly any foreign luxuries; and cotton goods, which are among the necessaries and not among the luxuries of life, are the only articles of foreign production which come largely into their consumption. There is no present possibility of deriving a large customs revenue from anything else. . . . The reforms which have been described will be remembered hereafter in the economical history of India, and they will be set down among the honourable titles of Lord Lytton's and Lord Salisbury's administration. They

will be remembered, not only because they were the first application to India of the principles of free trade, but also because they have been carried out in a manner which has made the adoption of any other policy virtually impossible in the future, and has rendered it almost a matter of certainty that, within a short period of time, the absolute freedom of Indian commerce will be accomplished.

"The authors of this book may be pardoned for recollecting the part they have taken in this work, and while on public grounds they must regret the almost universal opposition and disapproval in spite of which the policy they have so long maintained has been carried out, they cannot pretend that their personal satisfaction in the success which has been gained already, and in the greater future success which is inevitable, has been diminished by such considerations.

'Non tam portas intrare patentes Quam fregisse juvat.'1

This was written early in 1881, and in March 1882 the anticipations of the authors were verified by the abolition of all the remaining import duties, on the advice of Sir Evelyn Baring, by the Government of Lord Ripon.

In January 1886 the financial member of the Governor-General's Council, Sir Auckland Colvin, gave, in the Legislative Council, the following summary of the results that followed :

'The value of imports of manufactured goods, treasure, and Government imports apart, which in the ten years before 187879 averaged 35,000,000l., was, in 1884-85, 53,000,000l. The average of the four years from 1878-79, when the first duties were remitted, to 1881-82, the year before the final abolition, was 47,000,000l.; the average of the three years from 1882-83 to 1884-85 has been 51,000,000l. The percentage of increase from 1878-79 to 1881-82 was 28; from 1878-79 to 1884-85

1 The Finances and Public Works of India, by Sir John Strachey and Lieut.-General Richard Strachey.