guarantee on the first £1,000,000, and | the end of 1871 no less a sum of public that they could not sell a single share in money than £2,250,000 would have been the City. They, therefore, requested that advanced upon this private adventure. they might be aided from the public purse The Government had become responsible to carry on their joint-stock speculation. for £1,000,000 sterling. They were payThe Secretary of State for India, finding ing 5 per cent, interest on this sum, which himself in this unpleasant predicament did would amount to £600,000 at the end of the best he could under the circum- 1871, and by that time they would have stances. He offered, in lieu of a guaranteed besides advanced £600,000 on debentures stock, to give the holders of this security secured on works that do not yield 18. £1,000,000 of Government paper, with profit. The Resolution he intended to pro5 per cent interest, if the Company would pose would stigmatize that transaction. He hand over to the Government of India would now turn to the East India Irrigation the works which nominally belonged to Works, the twin adventure with the Madras them, but which had really been exe- Works. The East India Irrigation Works cuted with public money. But those were certainly in a better category than crafty gentlemen declined to accept that the Madras, because some effort was made offer. And why? Because the chair- to start it on the principle of a real and bond man, the directors, and the secretary fide joint-stock company; 50,000 shares were well-paid officers, and they knew they of £20 each were taken, making a paid-up would have lost their salaries if they had capital of £1,000,000. Of that sum about assented to the transfer. They therefore £740.000 had been expended in works, and declined to do anything of the kind, and £150,000 had been spent out of capital again demanded to be subsidized with cash. to pay interest on advances for calls made The Secretary of State foolishly yielded to to carry on the works. It was, however, their demand, and the Under Secretary in- unguaranteed; and unguaranteed works formed the House on the 15th May that had always a shady look on the Stock Exa contract had been signed that after-change. Monied men disliked amazingly noon before he came down to the House, enterprizes which it was said would yield by which the Government undertook to 100 per cent per annum, and consefind £600,000 of the public money for the quently the stock had always been at a support of this private adventure, from small discount. The discredit of the stock which the shareholders were to derive 25 gradually increased till 1866, when it per cent profit, and the Government to get reached 25 per cent, at which price he nothing. It was a very strange proceeding, believed it was in the market in May, to say the least of it. The money was to 1866. On the 15th May-the funds of the be advanced in the shape of debentures Company exhausted and its credit shatfor five years, at 5 per cent interest, tered-he (Mr. Smollett) enquired of the secured upon works which up to 1865 Under Secretary of State what arrangehad not returned 1s. profit; which had ment he proposed to make with the adyielded no receipts up to the present time, venturers? In reply, the hon. Member for and which, from private accounts he had Halifax explicitly stated that there was received from Madras, he believed never not the smallest intention on the part of would return a profit. He would un- the Secretary of State either to purchase dertake to say that if the Secretary of the works or to supplement the ComState had advanced £600,000 on de- pany with Government money, and for the bentures to the London, Chatham, and obvious reason that it was an unguaranDover Company, financed by Peto, Betts, teed company. From the terms of that and Co., he would have made a better spe- Answer he believed that the Company culation than in advancing the money to would be left to stand or fall according to the Madras Company. The reason the its own resources, or he should have Secretary of State for India was able to brought the matter before the House, but do those things was because that House he was deluded and befooled. Twelve took no interest in the finances of India. months after there was a new Government, Those things were done in secresy and and a new Secretary of State for India silence. This was a gross job. It was came into office, who was as unscrupulous perpetrated on the very day the Question in dealing with the finances of India as his was to be put to the Secretary of State, predecessor. He (Mr. Smollett) found that and it was only known to the country an offer was made by the Government to when the jobbery was consummated. By purchase the works; not at the price they

enter into negotiations with these adventurers-if he had told them, "This is our offer; it is the only one we will make, so you may make up your mind." Had he done this, they would have accepted the offer. But Parliament was sitting at the time, and the right hon. Baronet entered, unfortunately, into negotiations with the directors. Public and private interests were brought to bear upon the right hon. Baronet, and no doubt a great deal of "lobbying" went on. Afterwards the right hon. Baronet was induced to give way and to offer other terms which he will possibly explain to the House-terms which the Company consider more advantageous to their interests than an absolute purchase. Independently of any public or private pressure, letters were inserted in the public prints setting forth the claims of the Company to compensation. On the 13th of January a letter appeared in The Times, from the practised pen of a gentleman who was supposed to exercise a great deal of influence in Indian matters, and who was known in Manchester as a great authority upon all matters connected with irrigation and the spending of money-he meant General Sir Arthur Cotton. That letter was written in a tone of arrogance which deserved exposure; and he would endeavour to expose it. The munificent offer of the Government was actually denounced by General Cotton as a conspiracy to defraud the noble band of adventurers of the profits to which they were legitimately entitled As a plot, boldly contrived to drive away all interlopers from India, and to reverse the policy inaugurated by Lord Canning. Now, who was the arch plotter; who the base conspirator?-why, the Governor General of India, a man whom Sir Arthur Cotton spoke of with scorn, describing him as the last possible Viceroy of the "Old Indian School." Sir Arthur Cotton proceeded to assail the Indian Secretary and his Council in similar terms of abuse; he spoke of them as worn-out and contemptible functionaries, whose existence could not be prolonged beyond the present spring; men who must be forcibly removed and their places filled by gentlemen whom he almost designated gentlemen of the

bore in the market, but at 25 per cent | Secretary of State for India had had the above it, and when that was not accepted, courage of a mouse, and had declined to a negotiation was entered into for granting a sum of money to this Company, in the same manner that was adopted in the case of the Madras Company. The offer was made in this way. It appeared that on the 16th of May, 1867, the Governor General wrote from Simla a despatch, which was signed by every member of his Government. In that despatch Sir John Lawrence stated that he had never concealed the fact that he looked on concessions granted to private parties for irrigation purposes as mischievous; that they gave rise to the greatest complications. Unless the Government had an absolute control, it was impossible to carry on the works. He had supplied the Company, he said, with upwards of £100,000, otherwise the works would have come to a perfect standstill, and the establishments have been dispersed over the country. The time, Sir John Lawrence said, had arrived when something should be done in the matter; and as the Company was in a state of utter ruin, having no credit in India or England, he thought the opportunity was favourable for the Government to propose mutually advantageous terms with them. Sir John Lawrence's proposition was that the Secretary of State should endeavour to purchase the stock at par, and give the directors £50,000 by way of bonus, to enable them to wind up creditably. That, in his opinion, was a munificent offer. It was, in fact, an offer to put £250,000 into the pockets of the shareholders, with £50,000 more if they accepted the offer, The letter containing the proposal came to the India Office towards the close of last year, and he would do the Secretary for India the justice to say that he appeared to have acted with a great deal of forethought and honour in that particular instance. The right hon. Baronet kept the despatch a profound secret, thus preventing the jobbing which might have occurred on the Stock Exchange (at that time the stock was at 25 per cent discount), and he only communicated the offer to the public through the medium of The Times newspaper on the 18th or 19th of November. The effect was electric. The stock immediately jumped up to par, which was tantamount to putting £250,000 into the pockets of these adventurers. Surely the munificent offer of the Government ought to have been accepted with gratitude, and accepted as it would have been, if the right hon. Baronet the

Young Indian School," men who looked up to Sir Arthur as "their guide, philosopher, and friend." God protect an office filled with pupils of Sir Arthur Cotton! And why was all this vituperation levelled

Amendment proposed,

To leave out from the word "That" to the end of the Question, in order to add the words "in

the opinion of this House, the advance of £600,000 of public money on loan to a private company of adventurers styling themselves the Madras Irrigation Company, granted on the 15th day of May 1866 for their sole benefit, and likewise the offer Secretary of State on the 20th day of February of a large loan on similar terms announced by the last as contemplated to be given to the East India Irrigation and Canal Company, are acts of impropriety, are mischievous in policy, and should be discontinued,”—(Mr. Smollett,)

at Sir John Lawrence? Simply because | suit the private policy of these people; that high functionary had made a sugges- and he proposed it in the true interests of tion which had had the effect of putting the India Office, which was surrounded by £250,000 into the hands of the share-jobbers, from whom the Council of the holders. This was the head and front of Secretary of State were unable to free his offending. But Sir Arthur knew well themselves, and whose importunities they the faint-heartedness of the Home Govern- could not resist. ment of India. The gentlemen of the India Office quailed under his castigation. They kissed the rod he had applied so mercilessly to their posteriors, and they gave these adventurers better terms than the Governor General had proposed. Acts of such great impropriety and injustice ought not to be tolerated. He had shown that works that were brought forward as calculated to pay cent per cent had not yielded anything for the last five or six or seven years, and that they were brought forward in the first instance under false pretences. He had also shown, in the instead thereof. course of his speech, that the first works, which were declared to be works brought forward by private enterprize, had cost the Government £2,250,000, for which they had no security but the works themselves, which were either valueless or were works from which, if they should ever prove remunerative, the private adventurers would receive dividends at the rate of 25 per cent, while they had been constructed without the expenditure of a shilling raised at the risk of the speculators. With reference to the East India Irrigation Works the offer to purchase stock at par had never been withdrawn; and probably, at no distant day the Government would take the works at that or at a larger price. He thought these were acts of great impropriety, and therefore he should move the following Resolution-not an abstract one, but one which went direct to the point :

"That, in the opinion of this House, the advance of £600,000 of public money on loan to a private company of adventurers styling themselves the Madras Irrigation Company, granted on the 15th day of May 1866 for their sole benefit, and likewise the offer of a large loan on similar terms announced by the Secretary of State on the 20th day of February last as contemplated to be given to the East India Irrigation and Canal Company, are acts of impropriety, are mischievous in policy,

and should be discontinued."

Question proposed, "That the words proposed to be left out stand part of the Question."

SIR STAFFORD NORTHCOTE said, he regretted that the hon. Member had changed the terms of the Resolution he had placed on the Paper. He regretted that the hon. Member had done so without giving notice of his intention to call attention in such a specific manner to the transaction which he had in the first instance referred to-namely, the loan of £600,000 to the Madras Irrigation Company. He regretted it the more because the hon. Member for Halifax (Mr. Stansfeld) was not in the House, and he had some reason to believe that that hon. Gentleman was under the impression that this particular transaction was not to be called in question.

MR. SMOLLETT said, he had acquainted the hon. Member for Halifax with his intention of bringing in the matter under the notice of the House.

SIR STAFFORD NORTHCOTE said, that if that were so it was not his hon. Friend's fault that the hon. Member for Halifax was absent. He (Sir Stafford Northcote) could only say that he was less able to give an explanation of the transHe offered that Resolution, not in the spirit action than the hon. Member for Halifax, of party or of faction, but in the interest under whose authority and that of Earl of honesty and straightforward dealing, of De Grey and Ripon the loan was made; which he saw very little in the conduct of but he believed that the circumstances these adventurers. He offered it also to were substantially as follows:-The Maprotect the just power of the Governor dras Irrigation Company was originally General of India, whose suggestions and established as a company guaranteed by recommendations had been set aside to the Government. It was formed for the

quently overburdened by the claims upon them, and great difficulty was experienced in finding money out of the taxation of the country for carrying on works which were not likely to be immediately remunerative; and it was felt that, if irrigation was to be carried on on a really satisfac tory footing, it would be desirable to introduce private capital and private enterprize into India, for the purpose of executing works, which would certainly be advantageous to the people, and which might be profitable to the individuals who undertook them. This Company was therefore formed by gentlemen who looked, no doubt, to a large remuneration from the capital they were about to expend, but who, he thought, had also other and higher objects, as they believed they were undertaking a work which would tend to the advantage of a most important portion of the population of India. They advanced a sort of moral claim on the Government for such assistance as the Gc

purpose of undertaking a work of very great importance to the interests of India, and the House should bear in mind that the work performed by these Irrigation Companies ought to be measured, not by the amount of the return they immediately produce, but by the amount of the benefit they confer on India by the accomplishment of works of an important kind for the improvement of agriculture and the better sustentation of the people. That was a point which the hon. Member for Dumbartonshire (Mr. Smollett) had too much overlooked. Now, looking at the matter from this point of view, it was not so necessary for the Government to ask whether this or that work would be immediately remunerative, as it was to ask whether it was a work which it would be desirable to encourage, for the general interests of the country committed to their care. There could be no doubt that it would have been well worth the while of the Indian Government to incur considerable loss in the direct pecuniary expendi-vernment could give them. They asked ture, for the sake of accomplishing great for a concession and for a guarantee. It works which would be advantageous to the was not his present duty to discuss whether country. No one, for instance, would the Government were right in giving them have found fault if the Government of that support or not. Under all the cirenmIndia had undertaken to construct canals stances, he hardly ought to say that the and irrigation works out of the public Government were wrong, though he conmoney, in the same way that they had fessed that his own opinion, formed on a constructed roads, for the general benefit good deal of experience during the last few of the country and no one could doubt years, was decidedly against the system of that those works would, in the long run, granting guarantees. Under such a sysbe extremely remunerative to the Govern- tem, if the works turn out very profitable, ment and to the people of India, though the company have all the advantage; while, it was quite possible they might not realize on the other hand, if they prove unprofitthe sanguine expectations of those who able, the Government have to bear the undertook them. He supposed, however, loss. That was the rationale of the systhat the House had no desire to enter tem of guarantees, which he should be glad into a discussion of the merits or demerits to see either restricted or abolished. When, of works of irrigation; for he believed all however, this question was brought forward who had paid attention to the subject con- in 1858, experience had not been acquired curred in admitting the advantages arising in respect to the guarantee system, and the from them. The only question for con- Government had then to consider the mode sideration, therefore, was the best means in which they could best facilitate the obof carrying out such works. As the hon.ject of bringing private capital and enterMember for Dumbartonshire (Mr. Smollett) had truly remarked, this Company was established in 1858, under the auspices of his noble Friend the then Secretary of State for India; but he believed that, in point of fact, the system dated from a somewhat earlier period, and that it was under the old Court of Directors that the first Resolution was passed to the effect that works of this kind might be entrusted to a private company. As the House was aware, the finances of India were fre

prise into India. They were told that if they gave a guarantee it was probable that the works would prove so profitable that other companies would follow the example of this, and would, without guarantee, bring private money into India and be able to execute these great works of irrigation. In this respect he believed the scheme was not unsuccessful, for it was in consequence of this Company having be gun to work, and having at first held out encouragement to the public, that the se

cond undertaking referred to by the hon. I should offer an explanation. The second Gentleman was set on foot without any undertaking was divisible into two. There guarantee. And certainly we owed to the was an undertaking by the Company, called gentlemen who took part in the forma- the East India Irrigation and Canal Comtion and promotion of the twin Company, to irrigate a portion of Orissa, and panies a debt of gratitude for the exertions there was the further undertaking to irrigate they made in raising a sum approaching a portion of Behar. Now, the hon. Gentle£1,000,000 of capital without any guaran- man had lost sight of an important element tee on the part of the State. We are also in one part of the transactions-namely, the bound to acknowledge our obligations to concessions made to this Company with rethem for the character of the work they gard to the irrigation at Behar. While had accomplished in Orissa, and, he be- objecting upon principle to Government lieved, in the Madras Presidency; for the guarantees generally, he particularly obtwo Companies were, in fact, one, although jected to guarantees in the matter of irriit had two distinct and unconnected un- gation works; because, by allowing a dertakings. After the Company had com- company to undertake them, Government menced their works and carried them on to exposed itself to difficulty and embarrassa certain point, they made the unfortunate ment, and it was the duty of Government discovery that they had not capital enough to keep them in its own hands. Otherwise, to carry them on further in a proper man- difficult questions bearing upon the land ner, whereupon they asked Lord Halifax revenue, the condition of districts irrigated, (then Sir Charles Wood) for assistance; and the relations between ryots and landbut he declined to sanction an alteration owners and between landowners and the which they wished to introduce into the Government, were infinitely complicated by terms of the guarantee. Subsequently, the obligation of Government towards an however, Lord De Grey and Ripon con- irrigation company. Any one who would sented to advance them a loan on the se- follow up the matter would see that it was curity of their works, which were admitted almost impossible satisfactorily to work a to be good and well-executed works as far system of irrigation in a large district-esas they went. In taking the works as a pecially in one in which there was no persecurity the Government were of opinion manent settlement of the revenue-by that they were making a very good bar- means of a company. gain. Indeed, if the Government had not raised, such as who was to have the control done so they would have been placed in a of the water, what was to be the price fixed, position of great difficulty. They had un- and what were to be the stipulations with dertaken to guarantee the Company, and the Zemindars as to the alteration of the aswere paying interest; and the question was sessment, were in themselves so difficult whether they were to be relieved from the and involved such delicate considerations, payment of that interest. It was clear that that it almost amounted to a dereliction of the Government could not be relieved till of duty on the part of Government to give the Company made profits; and it was made up the control of an irrigation system to a clear to Lord De Grey that the Company company, and particularly to a guaranteed would not make any profits without further company. He meant no disrespect to the assistance from the State. Lord De Grey Company in question by expressing these therefore thought it was for the interest of views; and his great regret that that Comthe Government that he should advance pany had obtained the concessions and the the loan. On this point, however, the hon. position it had obtained in Orissa and in Member for Halifax would be better able Behar, and more particularly in Behar, bethan he to give an explanation. He (Sir cause the Company had the exclusive right to Stafford Northcote) believed Lord de Grey irrigate a very important district, and they had exercised a sound discretion; and he had not the means of doing it. They felt sure the hon. Member for Dumbarton- simply kept others out, and prevented the shire did not mean to impute anything like Government from undertaking the works. jobbing or improper conduct to his Lord- The Company, having obtained its concesship or to the hon. Member for Halifax. sion, laid out a large sum in works which With regard to the other undertaking, and had been warmly approved by the authothe transaction in which he (Sir Stafford rities and by the independent investigators Northcote) had been himself engaged, it of the Orissa famine, which was, no doubt, was of course due to the House, after the locally mitigated by the works, while the statement of the hon. Gentleman, that he Company's officers behaved with great VOL. CXCI. [THIRD SERIES.]

2 I

The questions