It is impossible to foresee whether the future productiveness of these mines will increase or diminish, and it may of course happen that silver mines may be discovered in other parts of the world. It has, however, been shown that a powerful effect is being exerted at the present time in depreciating the value of silver by the large amount of bills which have to be sold by the Indian Government in England to provide for the home charges. The amount of the home charges has increased to a most serious extent in recent years. Nothing, moreover, can avert a still further increase, if the expenditure is permitted so habitually to exceed the revenue that money has to be borrowed to make good the deficit. The loans being chiefly raised in England, it is obvious that the interest on these loans represents so much more which has to be transmitted from India to England, or, in other words, so much added to the home charges.

It is important to direct particular attention to the influence exerted by each increase in the home charges in adding to the loss by exchange which India has to bear, since under any circumstances it would be a cause for apprehension to see a constantly augmenting proportion of the revenue of a country not spent in the country itself; but this circumstance becomes more serious when it can be shown that this expenditure of the revenues of India out of India exerts a direct influence in depreciating the value of silver, and in thus lessening the value of all that large part of the Indian revenue which, either permanently or temporarily, is received in the form of a fixed payment made in silver.

With regard to the fourth and last branch of expenditure to which I have called attention-namely, the interest on loans - it is manifest that this subject is closely connected in many of its aspects with the question which has just been considered. The largest portion of the money which has been borrowed in recent years by the Indian Government has been obtained by loans raised in England; and the additional amount which has to be provided to meet the interest on these loans represents so much added to the home charges. In 1856 the sum annually required to pay the interest on the Indian Debt was 2,190,000l., in 1870-71 it was 3,200,000l., and in 1876-77 it was 4,350,000l. From these figures it appears that in twenty years the annual charge for interest on the Indian Debt increased by about 100 per cent. Nothing can be more certain than that, in the present financial condition of India, this indebtedness must continue steadily to increase. The figures which have already been quoted, conclusively show that the ordinary revenue of India is only barely sufficient to meet the ordinary expenditure, and that consequently, in the words of one who speaks with official authority, every fresh contingency and every new charge involve some addition to the debt of India. Thus, within the last few years, 16,000,000l. has been spent in famine relief, and nearly the whole of this amount has been obtained by loans, the interest on which involves an annual charge of about 700,000l. Money, however, is not borrowed by the Indian Government simply to meet such charges as these; it has for some time been their settled policy to borrow each year not less than 4,000,000l. for the construction of railways and works of irrigation.

The public works, which are thus constructed out of borrowed money, are no doubt undertaken by the Indian Government with the idea that they will be reproductive, or, in other words, that they will yield a net revenue sufficient to pay the interest on the capital expended. The experience of the past, however, proves that, although it is intended that these public works should be reproductive in the sense just described, yet, regarding the transaction simply as a financial one, the money thus spent is really embarked in a most speculative and uncertain investment. Lord Salisbury, speaking at Manchester in January 1875, when he was Secretary of State for India, said: -

"The difficulties which surround the question of irrigation are very great. We can scarcely yet be said to have had one genuine instance of financial success. The irrigating projects that have been carried out, if they have had for their basis the former works of native rulers, have in many instances been a financial success; but then of course that favourable appearance of the account has been obtained by not charging the former expenditure of the native ruler. In those cases where we have begun the projects of irrigation for ourselves we have not reached, I believe, in any one instance, the desired result of a clean balance-sheet."

Although I think that Lord Salisbury, in making this sweeping assertion about the unsatisfactory financial results of these irrigation works, somewhat overstated the case, yet it is impossible for any one to deny the absolute correctness of the conclusion which has been officially arrived at, that on the 9,000,000l. which has been spent in recent years on schemes of irrigation in Bengal, the return which is yielded is only ½ per cent.1 When it is remembered that every one of these particular works, at the time it was undertaken, was regarded as reproductive, nothing more need be said to show that, however useful or desirable public works may be in India, it is more than probable that they will not yield a return sufficient to meet the interest on the capital expended; and consequently there will be a deficit which will represent another item of expenditure, another charge upon the revenues of India. It therefore appears that at the present time the indebtedness of India must almost inevitably continue to be augmented by two distinct causes.

In the first place, as there is no surplus of ordinary revenue beyond ordinary expenditure, every such contingency as war or famine is certain to lead to the debt being increased; and, secondly, so long as the present policy is continued of constructing public works out of borrowed money, the loans which are raised for these works represent constant additions to the debt of India.

1 See Speech of Lord G. Hamilton, when Under-Secretary of State for India, in the House of Commons, January, 1878. Hansard, vol. ccxxxvii. p. 331.