Although, therefore, from the considerations just adduced, it appears to be of the first importance not to attempt artificially to regulate the supply of silver, yet much can undoubtedly be done by Government action to affect the demand for silver, and consequently to influence its value; and I believe it can be shown that the Indian Government can exert a special influence on the demand for silver. Allusion has already been made to the heavy duty, amounting in some instances to 10 per cent., that is imposed on so important an article of Indian export as rice. If the state of Indian finance permitted this duty to be repealed, the export trade of India might be considerably developed, and the extra amount which would be required to pay for the additional quantity of produce exported would proportionately increase the demand for silver. But this is by no means the only way in which the demand for silver may be influenced by the action of the Indian Government. With regard to various proposals which are from time to time brought forward to deal with the Indian currency, it may be remarked that they one and all labour under the fatal defect, that instead of increasing, they would materially diminish the demand for silver, and thus ultimately lower its value.

It has, for instance, been suggested that a gold currency should take the place of silver in India, and that the amount of the silver coinage should be restricted. But if these measures were carried out, it is evident that one of the largest of the existing sources of demand for silver would be to a great extent closed, and silver might become indefinitely more depreciated in value than it is even at the present time. As previously explained, the chief cause of the falling-off in the Indian demand for silver arises from the curtailment of her export trade, and from the constant increase in the amount which India has annually to remit for payments in England. The only legitimate method, therefore, which can be adopted to increase her demand for silver is to stimulate her export trade, and to diminish the amount of the home charges. Unfortunately, the course which is now being taken by the Indian Government, instead of diminishing, will seriously augment these home charges. If sanction is given to the proposal to raise a loan of 10,000,000l. in England, provision will have to be made to pay the interest on this loan; an additional sum of at least 400,000l. a year will consequently have to be transmitted from India to England, and the demand for silver will be lessened by this amount.

Again, the 2,000,000l. which during the present year is to be advanced by England to India to assist her in defraying the expenses of the Afghan war will give her some temporary relief, but the relief can only be temporary; it will add to her difficulties in the future, because, as the money advanced is to be repaid in seven equal annual instalments, India will, during each of the next seven years, in addition to the other home charges, have to transmit about 300,000l. Such an arrangement only affords another example of the many that may be given to show that at the present time the difficulties of Indian finance, instead of being fairly faced, are merely being trifled with; but it cannot be too distinctly stated that, however heavily and recklessly the future may be discounted, a day of reckoning must inevitably come. Unless all considerations of prudence are to be completely set aside, it is evident that as the excessive amount of the home charges is embarrassing Indian finance by causing the serious loss by exchange, the greatest care should be taken, not only that another shilling should not be added to these charges, but that effectual measures should at once be adopted to diminish their amount.

It is often stated that the home charges do not admit of any important reduction, because, to a great extent, they represent payments for liabilities which have already been incurred. Thus, it is said, the interest must be paid on money which has been borrowed, and faith cannot be broken with those who are entitled to pensions. No one, of course, can be so unreasonable as to suggest that a policy of repudiation should be adopted, and that India should not meet the obligations which have been incurred on her behalf. Such considerations as these, however, do not in the slightest degree affect the importance of preventing in the future that which has happened in the past. Nothing can more conclusively show the peril involved in adding to the debt of India, than the fact that the interest which she has annually to pay on the debt already incurred imposes on her a burden which she finds it difficult to bear. The pensions and allowances which she has undertaken to grant must of course be paid; but if these pensions and allowances throw upon her a charge altogether disproportionate to her resources, an irresistible argument is at once supplied in favour of a fundamental change in the system.

Taking the figures of the actual expenditure in 1876-77, the latest year for which they are available, it appears that no less an amount than 2,800,000l. of the revenues of India has annually to be paid in England in pensions, and furlough, compassionate, and absentee allowances. The real significance of this drain upon the resources of the country will be understood, when it is remembered that her entire net or available revenue is not more than 38,000,000l. The home charges for the army are constantly increasing. In December, 1877, the present Finance Minister, in bringing forward his financial measures for the creation of a famine fund, said: "I examined in some detail, in my minute laid before the Council on the 15th of March, the accounts of the army. I showed that it now costs upwards of 17,000,000l. a year; that its cost has increased by upwards of 1,000,000l. since 1875-76; and that a large share of this increase is in the expenditure recorded in the Home Accounts."Sir John Strachey added: "I do not assert that the whole of the additional expenditure on the army has not been incurred for excellent objects, or that it could have been avoided; but that the Indian revenues are liable to have great charges thrown upon them without the Government of India being consulted, and almost without any power of remonstrance, is a fact the gravity of which can hardly be exaggerated." Serious as is the state of things just disclosed, it is not difficult to understand how it has been brought about.