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INDIA AND THE 
 TARIFF PROBLEM 
 
 BY 
 
 H. B. LEES- SMITH M.A. 
 
 PROFESSOR OF PUBLIC ADMINISTRATION IN THE UNIVERSITY OF 
 
 BRISTOL; LECTURER TO THE LONDON SCHOOL OF ECONOMICS 
 
 AND POLITICAL SCIENCE; ASSISTANT EDITOR OF THE 
 
 "ECONOMIC JOURNAL"; CHAIRMAN OF EXECUTIVE 
 
 COMMITTEE OF RUSKIN COLLEGE, OXFORD 
 
 LONDON 
 
 CONSTABLE & COMPANY LTD 
 
 1909 
 
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PREFACE 
 
 This essay is based upon a series of 
 lectures delivered for the Government of 
 Bombay. Some of the subjects with which 
 it deals are discussed more fully in " Studies 
 in Indian Economics," which will be issued 
 by the Government of Bombay at the same 
 time as this little book. 
 
 The last two chapters discuss the recent 
 proposals for preferential tariffs with India. 
 There is one question which can be treated 
 more appropriately here than in the body 
 of the essay. I have been asked by a 
 number of the leaders of educated opinion 
 in India to state clearlvwhat I consider their 
 attitude should be towards the proposals for 
 preferential tariffs. I was informed that the 
 reason that the Indian National Congress 
 had pronounced no opinion on the subject 
 was, not that they failed to realise its 
 
vi PREFACE 
 
 importance, but that they were waiting for 
 more light. My opinion on this point 
 can be easily deduced from the last two . 
 chapters of this essay. By preferential */ 
 tariffs Great Britain will lose heavily in 
 her Indian market. India, however, has 
 little either to lose or gain from preferences 
 by themselves. Nevertheless, the proposals 
 for preferences are of the highest importance 
 to her. If they are ever adopted by the 
 United Kingdom, they will undoubtedly be 
 accompanied by a return to protection. 
 India will then have a unique opportunity 
 of gaining her fiscal freedom. Although I 
 have not disguised my suspicions of the 
 prevailing protectionist sentiment of India, 
 I wish to see her freely adopting the fiscal 
 policy which she considers most for the good 
 of her own people. India, of course, means 
 for this purpose the Indian Government, 
 acting, I sincerely hope, in conjunction with 
 the educated opinion of the country. My 
 advice to the leaders of Indian opinion is 
 simple. They should make it plain that if 
 
PREFACE vii 
 
 a preferential scheme is adopted, they are 
 willing that India should have a place in it. 
 One fact, however, must stand out clearly. 
 Should Great Britain adopt protection she 
 must honourably face the consequences of 
 her conversion, and allow to India the right 
 to follow in her footsteps, if Indian adminis- 
 trators and thinkers consider it to be for 
 the country's good. 
 
 Professor Edwin Cannan has kindly read 
 through the manuscript of this essay, and 
 has saved me from more than one mistake. 
 
 H. B. LEES SMITH. 
 
 Bombay, 
 
 February, 1909. 
 
CONTENTS 
 
 CHAP. PAGE 
 
 I. DIVERSITY OF INDUSTRY .... I 
 
 II. THE NATURAL RESOURCES OF INDIA . . 10 
 
 III. A SURVEY OF INDIAN INDUSTRIES . . 23 
 
 IV. SWADESHI AND THE DEMAND FOR PRO- 
 
 TECTION IN INDIA .... 49 
 
 V. AN EXAMINATION OF INDIAN PROTECTIONISM 6l 
 
 VI. THE POSITION OF THE UNITED KINGDOM 
 UNDER A SCHEME OF PREFERENTIAL 
 
 TARIFFS WITH INDIA 8$ 
 
 VII. THE POSITION OF INDIA UNDER A SCHEME 
 
 OF PREFERENTIAL TARIFFS . . . I03 
 
INDIA AND THE 
 TARIFF PROBLEM 
 
 CHAPTER I 
 
 DIVERSITY OF INDUSTRY 
 
 A discussion of the position of India 
 under protection and preferences must be 
 based upon her special conditions. Since 
 many British readers are not familiar with 
 these conditions, the first three chapters of 
 this book will be devoted to the "descriptive 
 economics " of India. 
 
 From two-thirds to three-fourths of the 
 population of India are engaged in agricul- 
 ture. Of the remainder a large number are 
 weavers, carpenters, blacksmiths, and other 
 village artisans who are as dependent upon 
 the chances and fluctuations of agriculture 
 
 i.t.p. b 
 
2 INDIA AND THE TARIFF PROBLEM 
 
 as are the tillers of the soil. It is difficult 
 for a British observer to grasp the full 
 significance of the fact that the majority 
 of Indians are scattered over nearly three- 
 quarters of a million villages, each with less 
 than five thousand inhabitants. One result, 
 however, he can readily understand. No 
 sooner are Western ideas introduced into 
 such a land than there sets in an over- 
 whelming tide of opinion against the 
 continued ruralisation of the people. The 
 United States, Germany, and our self- 
 governing colonies have all refused to 
 remain in a position in which they were 
 producers of food and raw material — " hewers 
 of wood and drawers of water " — for the 
 nations with a more advanced industrial 
 development. It is not surprising, therefore, 
 that the cry that manufactures must be 
 built up should be as loud in India as in 
 these other countries. It indeed expresses 
 one of the few opinions on which all thinkers 
 in India, whether they are " moderates " or 
 ''extremists" or Government officials, are ., 
 
DIVERSITY OF INDUSTRY 3 
 
 unanimous. To the highest type of Indian 
 thinker the economic reason does not come 
 first. His eyes are fixed upon the distant 
 day when his countrymen, no longer a 
 subject race, will be in their country what 
 an Englishman or a Canadian is in his. 
 There is no hope of achieving this high 
 purpose until Indians have infused Western 
 ideas into their national life. They must 
 not, however, adopt them blindly, but must 
 so mould them to their own character- 
 istics as to transform them into truly Indian 
 ideas. Such a task cannot be carried out 
 by an almost entirely rural population. 
 Agricultural peoples have many virtues, but 
 readiness to grasp new ideas is not usually 
 one of them. Where the rural type of mind 
 predominates there is danger of stagnation. 
 If, therefore, the pioneers in the new paths / 
 which are being disclosed by Western 
 influences are to be drawn from India's own 
 sons, she needs the quick intelligence and 
 the progressive spirit developed by manu- 
 facturing industries of the modern type. 
 
 b 2 
 
4 INDIA AND THE TARIFF PROBLEM 
 
 This was the lesson taught to the present 
 generations of Indians by the foremost 
 economic thinker that India has yet 
 produced — Justice Ranade. " This depen- 
 dency," he says, " has come to be regarded 
 as a ' plantation ' growing raw produce to 
 be shipped by British agents in British 
 ships, to be worked into fabrics by British 
 skill and capital, and to be re-exported to 
 the dependency by British merchants to 
 their corresponding British firms in India 
 and elsewhere. Except in the large Presi- 
 dency towns, the country is fed, clothed, 
 warmed, washed, lighted, helped and 
 comforted generally by a thousand arts and 
 industries, in the manipulation of which its 
 sons have every day a decreasing share. 
 The political domination of one nation by 
 another attracts far more attention than the 
 more formidable, though unfelt, domination 
 which the capital enterprise and skill of 
 one country exercise over the trade and 
 manufactures of others. This latter domi- 
 nation has an insidious influence which 
 
DIVERSITY OF INDUSTRY 5 
 
 paralyses the springs of all the varied 
 activities which together make up the life 
 of a nation. The progress of ruralisation 
 in India means its rustication, i.e., a loss of 
 power and intelligence and self-dependence. 
 Foreign competition is transferring the 
 monopoly, not only of wealth, but what is 
 more important, of skill, talent, and activity, 
 to others." 1 
 
 Arguments of this kind apply with equal 
 force to other nations. But one feature of 
 the position is peculiar to India. The fear 
 of drought is the curse which Nature has 
 laid upon the land. India lives by the 
 
 1 " Essays in Indian Economics," by Mahadev 
 Govind Ranade (Nateson & Co., Madras). Ranade 
 deserves to be better known in England. He was far 
 more than an economic thinker. Many of those who 
 are urging on those reforms in Indian social life, such 
 as the loosening of caste restrictions, which will pro- 
 foundly modify the present Hindu system, were 
 inspired by him. The leading spirit of the modern 
 nationalist movement looks back to his memory with 
 emotion. The mention of his name before an audience 
 of educated Hindus, especially in Western India, will 
 produce a thrill deeper than that which would answer 
 to any other name of the last generation. 
 
 / 
 
6 INDIA AND THE TARIFF PROBLEM 
 
 monsoons. If the rains fail during July, 
 August, and September, the tillers of the 
 soil are face to face with disease, starvation 
 and death. This terrible reason for building 
 up manufactures is one which presses more 
 heavily upon India than upon the other 
 nations whose example she wishes to follow. 
 The amount of weight, however, which is 
 to be attached to it will be better understood, 
 if we first make a survey of the present 
 position of famine relief. 
 
 The outstanding fact in the problem of* L 
 famine is that it is no longer insoluble. It 
 has been transformed into a problem of 
 acute unemployment. Drought will never 
 be prevented, but we may look forward to 
 the time when deaths from famine in India 
 will be as unnecessary as deaths from 
 unemployment in Great Britain. This 
 transformation has been effected within the 
 last fifty years. Before that period a severe 
 drought meant inevitable death. There 
 was no food, and all the wealth of the world 
 could not procure it. Owing to the "im- 
 
DIVERSITY OF INDUSTRY 7 
 
 mobility of foodstuffs " when crops failed in 
 one district, death from starvation was 
 certain, although harvests might be abun- 
 dant one hundred miles away. Charity was 
 of little use, for sufficient food was not to be 
 procured. The position now is altogether 
 different. Food is dear, but food is to be 
 had. The difficulty is not lack of food, but, 
 owing to the fact that all are thrown out of 
 their usual employment, lack of money. 
 Hence the problem is soluble, for the people 
 can be given money where previously no 
 human power could give them food. 
 
 The secret of the change is to be found 
 partly in irrigation, but chiefly in the develop- 
 ment of the railways. In India, as in the 
 rest of the world, they are vitally altering 
 not only the economic but also the political 
 and social life of the country. At the out- 
 break of the Mutiny there were only 270 miles 
 of railway lines in India. The only roads 
 were military ones, beyond which there 
 were nothing but unmetalled tracks impass- 
 able in the monsoons. Now, however, the 
 
8 INDIA AND THE TARIFF PROBLEM 
 
 railway mileage of India amounts to over 
 30,000 miles. The result is that the districts 
 where the crop has not failed can come to 
 the help of those that need their aid. 
 These "great reserves of the country at 
 large " are attracted readily to the districts 
 which need them by the ordinary economic 
 force of a rise in price. One of the remark- 
 able features of the famines which have 
 occurred since 1896 has been the slightness 
 of the differences in the price of food all 
 over the country. 
 
 Nevertheless, although the problem is 
 soluble, it still remains one of intolerable 
 difficulty. This is due to the enormous 
 numbers that have to be relieved at the 
 same time. These numbers have, on one 
 occasion, reached a total of six and a half 
 million persons. Thus we are brought back 
 to the cry for the development of Indian 
 manufactures. It is claimed that India, 
 more than other countries, needs diversity 
 of industry. The famine problem might 
 then be brought within manageable propor- 
 
DIVERSITY OF INDUSTRY 9 
 
 tions, for the numbers confronted by 
 starvation would not be so overwhelming. 
 This reasoning is not confined to Indians, 
 but has been adopted by the Government. 
 The Famine Commissioners in the Report 
 of 1880 laid it down that, " No remedy for 
 present evils can be complete which does 
 not include the introduction of a diversity of 
 occupations through which the surplus 
 population may be drawn from agricultural 
 pursuits and led to find the means of sub- 
 sistence in manufactures, or in some such 
 employments." In all Government reports 
 issued since that date this policy has been 
 accepted. It is not surprising that, as will 
 be seen later, the general adoption of this 
 principle has led to the demand that it 
 should be secured, as in other countries, by 
 a protective tariff. 
 
CHAPTER II 
 
 THE NATURAL RESOURCES OF INDIA 
 
 We have next to inquire what are the 
 special difficulties which confront India in 
 her efforts to build up her manufactures. 
 We shall thus be in a position to discuss 
 whether these difficulties will be increased 
 or reduced by protection and preferences. 
 The question whether India will succeed in 
 becoming an industrial country will be 
 largely determined not by the acts of man, 
 but by the gifts of Nature. We must, there- 
 fore, first examine her natural resources. 
 
 Coal. — This is the mineral most essential 
 to India, and fortunately its production shows, 
 up to the present, the best record of expan- 
 sion. The coal-bearing strata, lying chiefly 
 in the central districts of the peninsula, 
 cover about 35,000 square miles. This is 
 not a very extensive area, considering the 
 vast size of India, but within this area the 
 
NATURAL RESOURCES OF INDIA u 
 
 coal is by no means poor. The output 
 during the last ten years has increased 
 steadily from 4,600,000 tons in 1898 to 
 11,200,000 tons in 1907. 1 These figures 
 may appear insignificant compared to those 
 of Great Britain, but they mean that India 
 now produces for herself practically all the 
 coal that she uses. Its importance to Indian 
 manufacture can be estimated from the fact 
 that the great jute industry of Bengal, in 
 spite of its overwhelming natural advantages 
 in possessing the practical monopoly of raw 
 jute, remained undeveloped until the opening 
 up of the Bengal coal-field. About 90 per 
 cent, of the Indian coal comes from this one 
 field. The smallness of the area from which 
 the supply comes is a grave defect, as the 
 cost of carriage from Bengal to distant parts 
 of India is heavy. The essential fact, how- 
 ever, remains that for a considerable period 
 in the future India can rely upon the supreme 
 advantage of indigenous coal. 
 
 1 "Statistical Abstract for British India for 1908," 
 p. 260. 
 
12 INDIA AND THE TARIFF PROBLEM 
 
 Iron and Steel. — Proceeding to the other 
 fundamental minerals, the story of India's 
 production of iron is one of many vicissi- 
 tudes. Her manufactures of steel and 
 wrought iron had reached high perfection 
 at least two thousand years ago. The 
 famous iron pillar at Delhi, which is cer- 
 tainly fifteen hundred years old, is still a 
 marvel to those who see it, and consists of 
 a mass of wrought iron which, within modern 
 times, could only have been produced by 
 the largest factories. The Damascus blades 
 were fashioned from iron brought from 
 a remote Indian village which has now 
 passed into obscurity. Indian steel was at 
 one time used for cutlery, even in England. 
 Yet at the present moment there is, in a 
 commercial sense, nothing but the begin- 
 nings of an iron industry. There seem to 
 have been two causes of its disappearance. 
 The first was that by the time that India had 
 to face the competition of modern systems 
 of production the methods which had created 
 the iron pillar at Delhi had been lost. The 
 
NATURAL RESOURCES OF INDIA 13 
 
 other cause recalls the history of the trade 
 in England. Indian furnaces always used 
 charcoal. This was very expensive, and the 
 Indian trade died out, as the English one 
 was in danger of doing during the seven- 
 teenth century, on account of the scarcity of 
 the same fuel. At the present time, how- 
 ever, high hopes are being felt for the future 
 of the industry. As in England it was saved 
 by coal, so in India there is every prospect 
 that it will be revived by the opening of the 
 Bengal coal-fields. There is a great abun- 
 dance of iron ore, while limestone and fireclay 
 usually accompany the coal formations. 
 The failure of a number of undertakings 
 during the last half-century has taught 
 Indian capitalists the lesson that success 
 can only be achieved by a firm which com- 
 mands vast capital and undertakes all pro- 
 cesses up to the finished steel. The recently 
 established Tata works, the greatest single 
 enterprise in India, fulfil these conditions. 
 Their fate will do much to determine the 
 progress of Indian industry in the near future. 
 
14 INDIA AND THE TARIFF PROBLEM 
 
 These are the fundamental minerals, and 
 the others can be considered more shortly. 
 Sir V. Ball points out in " The Economic 
 Geology of India " that " were India wholly 
 isolated from the rest of the world or were 
 her mineral productions protected from com- 
 petition, there cannot be the least doubt that 
 she would be able, from within her own 
 boundary, to supply very nearly all the 
 requirements, in so far as mineral wealth is 
 concerned, of a civilised community." 
 Nevertheless it will be seen that at present 
 India derives from her own soil only a very 
 small part of the minerals that she needs. 
 
 Petroleum. — This industry requires 
 special consideration, as it might play a 
 considerable part in any manipulation of 
 tariffs. Its development during the last ten 
 years has been more rapid than that of any 
 other Indian mineral industry. The produc- 
 tion has risen from ig, 000,000 gallons in 1898 
 to 152,000,000 gallons in 1907, an increase 
 of 800 per cent. Almost the whole supply 
 comes from Burmah, and the remainder 
 
NATURAL RESOURCES OF INDIA 15 
 
 from Assam. The impetus to the trade 
 was given by the annexation of Burmah, as 
 a result of which the methods of the here- 
 ditary oil diggers were supplanted by those 
 of the Burmah Oil Company. In spite, 
 however, of the progress made, India still 
 imports mineral oil to a total value more 
 than twice as great as that of her own 
 output. If, therefore, the sources of the 
 supply hold good, there are great possi- 
 bilities of expansion at the expense chiefly 
 of Russia and the United States. 1 
 
 Manganese. — Sixteen years ago no man- 
 ganese was produced in India. To-day in 
 her production of this metal she stands 
 second in the world. In spite of this 
 position, however, the smallness of the 
 industry is indicated by the fact that only 
 about 7,000 men are employed in quarrying 
 the ore. 2 
 
 1 See " Statistical Abstract for British India for 
 1908," pp. 149, 260. 
 
 2 "Statistical Abstract for British India for 1908," 
 p. 260. 
 
16 INDIA AND THE TARIFF PROBLEM 
 
 Mica. — In the production of this mineral 
 India is first among nations, and is respon- 
 sible for more than half the world's supply. 
 Again, however, the fact that only 10,000 
 men are employed in mining it should prevent 
 any exaggerated ideas of its importance. 1 
 The future of this industry depends largely 
 upon the enterprise of those who control it. 
 The system of working in Bengal still 
 remains primitive, the best veins are being 
 exhausted, and modern methods will have 
 to be introduced if the remaining veins are 
 to be profitably exploited. 
 
 Saltpetre. — At one time India was the 
 chief source of the world's supply of this 
 mineral, and, as it was an essential element 
 of gunpowder, it gave the country a peculiar 
 political importance. Other explosive com- 
 pounds, however, have now been discovered, 
 and the potassic nitrate of India has been 
 largely displaced by the sodic nitrate of Chili. 
 The result is that though it still employs 
 
 1 " Statistical Abstract for British India for 1908," 
 p. 260. 
 
NATURAL RESOURCES OF INDIA 17 
 
 50,000 men, 1 the production and exports of 
 it show a tendency to diminish. 2 Its pros- 
 pects depend largely upon the possibility 
 of turning it to its natural use as a fertiliser. 
 Experiments in this direction are being 
 made by the Agricultural Department. If 
 they are successful the future is assured, for 
 the conditions for its production in Behar, 
 from which almost all of it comes, are 
 pronounced by geologists to be ideal. 3 
 
 Salt. — It is very unlikely that this article 
 would be selected either for protection or a 
 preference. As it is a necessity which enters 
 into the daily consumption of the mass of 
 the people, any increase in the duty on it 
 which was not essential for revenue would 
 be regarded with the utmost hostility. 
 Between a fourth and a third of the salt 
 
 1 " Statistical Abstract for British India for 1908," 
 p. 258. 
 
 2 See (1) " Financial and Commercial Statistics of 
 British India for 1907," p. 458; (2) " Statistical 
 Abstract for British India for 1908," p. 156. 
 
 3 See " The Development of the Mineral Resources 
 of India," a paper to the Benares Industrial Con- 
 ference, 1905 (Indian Press, Allahabad). 
 
 I.T.P, C 
 
18 INDIA AND THE TARIFF PROBLEM 
 
 consumed in India is imported. The imports 
 are chiefly to Bengal and Burmah. 1 Bengal 
 at one time produced salt for itself, but it is 
 at a disadvantage owing to the dampness ot 
 the climate and the amount of fresh water 
 discharged into the Bay of Bengal from the 
 Ganges and the Brahmaputra. Cheshire 
 supplies Bengal with nearly half its salt. 
 Import and excise duties are already levied 
 on this article, and furnish a revenue which 
 has varied during the last ten years from 
 four million to six million pounds. 
 
 Copper. — Not an ounce of this metal is 
 produced at present, but we include it in the 
 survey because it illustrates a very important 
 factor in the prospects of Indian industry. 
 Many chemical industries are only rendered 
 profitable by the utilisation of by-products. 
 Copper smelting furnishes an example. 
 Copper ores occur in India in large quanti- 
 ties and were once extensively smelted. 
 Several attempts to revive the industry have 
 
 1 " Financial and Commercial Statistics of British 
 India for 1907," p. 38. 
 
NATURAL RESOURCES OF INDIA 19 
 
 been made where the lodes were reputed to 
 be rich. The lodes have not been disap- 
 pointing, and yet the endeavours have failed. 
 The reason is that no attempt has been 
 made to utilise the copper sulphides, whereas 
 elsewhere the ores have only been worked 
 successfully by the sale of these by-products. 
 In England, for example, during the last 
 seventy years the price of sulphuric acid has 
 been reduced to about one-sixth of its pre- 
 vious level. The difficulty in India is that 
 there are not enough local industries which 
 demand sulphuric acid. In order, again, 
 that such industries should be established, 
 others which demand their by-products 
 must also be present. Hence chemical 
 and metallurgical industries need to exist 
 in family groups. The group is gradually 
 being completed in India. The develop- 
 ment of industries connected with cotton, 
 jute, and paper forms a market for chemical 
 by-products. The increase of bleaching 
 works, for example, raises the demand for sul- 
 phuric acid and soda ash. In the chemical 
 
 c 2 
 
20 INDIA AND THE TARIFF PROBLEM 
 
 and metallurgical industries of India, there- 
 fore, after a certain stage is reached, the 
 expansion may be unexpectedly rapid. 
 
 The remaining minerals of India are tin, 
 graphite, rubies, jade and gold. The pro- 
 duction of tin and graphite, however, is so 
 insignificant, that it does not merit a special 
 description. 1 Rubies are, at present, the 
 most profitable of Burmese minerals next to 
 petroleum. The Burmese Ruby Mines 
 Company has had a chequered career, but 
 since new conditions were introduced into 
 its lease in 1899, it has become more pros- 
 perous. The rubies produced in 1907 were 
 worth £n5,ooo. 2 Burmah is also the centre 
 for jade. The production is increasing 
 gradually, and in 1907 its value reached 
 £74,ooo. 3 The Mysore gold mines, from 
 which almost the whole of the Indian supply 
 
 1 See " Financial and Commercial Statistics of 
 British India for 1907," pp. 456, 458. 
 
 2 " Statistical Abstract for British India, 1908," 
 p. 261. 
 
 3 " Statistical Abstract for British India for 1908," 
 
 p. 260. 
 
NATURAL RESOURCES OF INDIA 21 
 
 is derived, are well known on stock ex- 
 changes ; but this commodity is not of 
 importance to the subject that we have to 
 consider. 
 
 Our review will have made it clear that, 
 comparing the mineral wealth of India with 
 the vast area over which it is distributed, she 
 has not been as richly endowed as Great 
 Britain. Her geographical position is not 
 so favourable for international trade as it at 
 first sight appears to be. She possesses a 
 vast extent of sea-board, but it contains only 
 five good harbours, and on the west coast 
 the monsoons beat furiously from July to 
 September. It is difficult to believe that 
 she can ever become a great manufacturing 
 nation in the British sense of the term, or 
 that the average wealth of her population 
 can approach that of the people of these 
 islands. This conclusion, however, is not 
 a depressing one. She can secure a reason- 
 able diversity of industries and a large 
 enough manufacturing population to form a 
 fertile soil for new ideas without becoming so 
 
22 INDIA AND THE TARIFF PROBLEM 
 
 entirely urbanised as Great Britain. Nature, 
 moreover, has endowed her with a climate 
 which should enable her people to lead a 
 full and worthy life with much less wealth 
 than is necessary in our own country. 
 
CHAPTER III 
 
 A SURVEY OF INDIAN INDUSTRIES 
 
 Any discussion of the proper fiscal system 
 for India to adopt must take into account 
 the actual industries at present existing, and 
 examine the effect of various tariff proposals 
 upon them. This involves a knowledge ot 
 the main features of their position. These 
 features we shall describe now in order to 
 avoid over-burdening the discussion when 
 we reach the actual schemes to be examined. 
 A part of our work has been already accom- 
 plished in the review of the mineral resources 
 of India. 
 
 India is still witnessing the struggle, in 
 England almost past, between the factory 
 system and the system by which the artisan 
 works in his own home. In cotton weaving, 
 for example, the weaver working at home with 
 
24 INDIA AND THE TARIFF PROBLEM 
 
 a loom very little better than that which was 
 used hundreds of years ago, still holds his 
 own tenaciously against the Bombay mill 
 equipped with the latest machinery from 
 Lancashire. The same conflict is being 
 waged in silk weaving, dyeing, tanning, boot 
 and shoe manufacture, oil pressing, and rice 
 cleaning and husking — in fact throughout 
 the whole range of Indian manufactures. In 
 England it has been long decided in favour 
 of the factory system. But in India the 
 more primitive methods still hold the field. 
 In cotton mills, for example, the number of 
 hands employed is only a little over two 
 hundred thousand, whereas the hand-loom 
 weavers number over two and a half million. 1 
 If the cotton and jute trade be excluded, 
 there is no factory industry throughout 
 India which employs 20,000 hands. There 
 is, at present, one very serious obstacle to 
 the rapid development of a factory system. 
 Labour is very difficult to secure. The 
 
 1 "Statistical Abstract for British India for 1908," 
 pp. 17, 257. 
 
A SURVEY OF INDIAN INDUSTRIES 25 
 
 Indian labourer does not readily adapt him- 
 self to the new methods. In factories, in 
 hand-loom workshops, and in coal mines 
 there is the same complaint — that the wages 
 are higher than can be earned anywhere 
 else, and yet there is a strange unwill- 
 ingness to be tempted by them. In order to 
 induce an Indian workman to enter a factory 
 he has to be allowed a freedom from dis- 
 cipline which will soften the contrast with 
 his older methods of work. A visitor to a 
 Bombay cotton mill at any hour of the 
 day will find a large number of the hands 
 smoking in the compound. The Report of 
 the Indian Factory Labour Commission of 
 1908 points out that " meals are generally 
 eaten during the working hours of the 
 factory ; the mid-day interval is sometimes 
 devoted to sleep, and the operative leaves 
 his work frequently throughout the day in 
 order to eat, smoke, bathe, and so on. In 
 the cotton textile mills in India the average 
 operative probably spends from one and a 
 half to two hours each day, in addition to 
 
26 INDIA AND THE TARIFF PROBLEM 
 
 the statutory mid-day interval, away from 
 his work." 1 
 
 In the same Report it was calculated that, 
 taking the whole staff of a cotton spinning 
 and weaving mill, one hand in Lancashire 
 will produce more than two and a half 
 times the output of a hand in India. 2 Simi- 
 larly the average output of the workmen 
 employed in the Indian coal mines for 1902 
 was 75 tons, 3 while for the rest of the British 
 Empire it was 285 tons, or almost four 
 times as great. 
 
 In spite of these facts, however, there is 
 every reason to believe that the Indian 
 operative will eventually adapt himself to 
 modern conditions. A distinct class of 
 factory workers, detached from the older 
 conditions, is beginning to be formed. In 
 some of the older mining districts, a popula- 
 tion with mining as their caste occupation is 
 
 1 " Report of Factory Commission, 1908," p. 20 
 (Government Press, Simla). 
 
 2 Page 19 of the Report. 
 
 3 " Imperial Gazetteer of India," Vol. III., p. 164. 
 
A SURVEY OF INDIAN INDUSTRIES 27 
 
 being evolved. A good deal of the ineffi- 
 ciency in the cotton mills is undoubtedly 
 due to the excessive hours of labour. The 
 average in most of them at present is from 
 thirteen to thirteen and a half hours a 
 day. Moreover, the Factory Labour Com- 
 mission pointed out that " in the latter 
 portion of the year 1905 the Bombay mills 
 worked for fourteen and a half hours a day. 
 There is no guarantee that this will not 
 recur, and we find it prevailing permanently 
 in the mills in Agra and other industrial 
 centres in Northern India." It is a sound 
 instinct of self-preservation that under these 
 conditions prompts the operative to loiter 
 over his work. The workers in the Cal- 
 cutta jute mills working short hours by 
 shifts do not idle away time to anything 
 like the extent noticed in Bombay. In the 
 engineering shops throughout India, where 
 an eight hours day is the rule, there is very 
 little idling. The Factory Labour Commis- 
 sion comes to the conclusion that " where 
 the hours are short and the supervision 
 
28 INDIA AND THE TARIFF PROBLEM 
 
 is good the operative can be trained to 
 adopt fairly regular habits of working." ' 
 We may, then, expect with confidence that 
 Indian labour will gradually adapt itself to 
 its new tasks. Indeed, one of the witnesses 
 before the Factory Commission considered 
 that the Indian labourer would become a 
 better textile operative than any in the world, 
 except the Lancashire mill hand. The im- 
 portant fact, however, for our discussion is 
 that the process must be a gradual one. 
 This consideration is often neglected in the 
 natural impatience of many Indians to force 
 on the growth of manufactures by means of 
 a protective tariff. 
 
 We shall now proceed to consider the 
 industries of India one by one, and to 
 describe the main conditions which need to 
 be remembered in the subsequent discus- 
 sion. We shall deal first with those which 
 may be described as " mill and factory 
 industries," although in most of them the 
 factory system still plays only a small part. 
 
 1 Report, p. 21. 
 
A SURVEY OF INDIAN INDUSTRIES 29 
 
 The remainder consist of tea, coffee, sugar, 
 indigo and tobacco, which may be classified 
 as " industries connected with agriculture." 
 Cotton Spinning and Weaving. — It has 
 already been explained that, although this is 
 the premier mill industry in India, more than 
 nine-tenths of the cotton weavers are still 
 " home-workers." Many of those who wish 
 to preserve them from being crushed out by 
 the factories are trying to devise improved 
 hand looms to displace their present exceed- 
 ingly primitive contrivances. 
 
 It can be predicted with confidence that 
 these experiments will succeed. It is not 
 unlikely, however, that the effects of this 
 success will be the opposite of those intended. 
 A new competitor, the hand-loom factory, is 
 now entering the field. This is an example 
 of " the workshop system," which in Great 
 Britain still competes with the factory 
 system in the clothing trade, boot and shoe 
 - making, and other industries. In India the 
 cheapness of labour power gives it a much 
 greater chance of holding its own in the 
 
3 o INDIA AND THE TARIFF PROBLEM 
 
 conflict with steam than it has in England. 
 Improved hand looms will stimulate hand- 
 loom factories as much as they will the 
 weaver in his own home. These factories, 
 with the advantage of collective production, 
 may prove to be yet another fact tending to 
 drive the old hand-loom weaver out of 
 existence. Already young men are being 
 urged to embark on the new system. 1 The 
 need of India at the present juncture in her 
 development is that her sons should devote 
 themselves to commerce instead of crowding 
 into professions already overstocked. Hand- 
 loom factories offer an opportunity for young 
 Indians to prove their mettle. The capital 
 required is small, and to increase it beyond 
 a narrow limit will bring no corresponding 
 advantage. This field is not, therefore, 
 likely to attract British firms, which usually 
 prefer to work on a large scale. 
 
 These, however, are speculations. When 
 we turn to the mill industry we find a record 
 
 1 See Morison's " Indian Industrial Organisation," 
 p. 184. 
 
A SURVEY OF INDIAN INDUSTRIES 31 
 
 of accomplished results. Forty years ago 
 there were only thirteen cotton mills in 
 India, while at present there are 217. 1 The 
 progress has been steady and continuous. 
 This is the more creditable as the trade has 
 met with a number of reverses which were 
 no fault of its own. Within the last few 
 years, for example, it has suffered from the 
 effects of famine and from one of the fiercest 
 plagues of modern times, which almost 
 stopped the working of the mills. Yet 
 throughout the years that these calamities 
 were occurring the capital invested in the 
 industry was steadily increasing. Another 
 feature which is a cause of legitimate pride 
 is that, in contrast to the jute trade, it is 
 a truly " swadeshi " industry, for the capital 
 and management are chiefly in Indian 
 hands. Three-fourths of the production 
 issues from Bombay, the home of native 
 enterprise. There is still, however, a large 
 home market to be captured, as the Indian 
 
 1 " Statistical Abstract for British India for 1908, 
 P- 257- 
 
 i) 
 
32 INDIA AND THE TARIFF PROBLEM 
 
 output amounts to only about a quarter ot 
 the imports. The chief weakness is in the 
 production of the higher counts of yarn. 
 But the outlook is promising, for the produc- 
 tion of yarn is steadily rising, and this 
 increase is due mainly to the growth in the 
 counts above twenty. 1 The future of the 
 industry largely depends upon whether it is 
 possible to introduce a high class of raw 
 cotton into India. Although the area under 
 this crop is steadily expanding, 2 the cotton 
 is of low grade and short in the staple. The 
 results of the experiments of the Bombay 
 Government in the introduction of Egyptian 
 cotton into Sind will mean much to the 
 future of the trade. 
 
 Jute. — We proceed to the only other 
 great mill industry that India possesses. 
 Bengal is the home of the jute trade. Unlike 
 the cotton trade, the bulk of the capital 
 and the management is in British hands, 
 
 1 "Statistical Abstract for British India for 1908," 
 P- 257- 
 
 2 " Statistical Abstract for British India for 1908," 
 p. 123. 
 
A SURVEY OF INDIAN INDUSTRIES 33 
 
 although lately the proportion of Indian 
 capital has been increasing. Here again 
 the conflict between the artisan and the 
 factory systems is to be witnessed ; but in 
 this case the victory of the factories is almost 
 complete. Their progress has been as 
 uninterrupted as that of the cotton mills. 
 The number of persons employed has risen 
 during the last ten years from 95,000 in 
 1897 to 167,000 in 1906. 1 At the same time 
 it should be pointed out that progress would 
 have been difficult to avoid. The industry 
 has no severe competition to face in the 
 Indian market, while there have been no 
 outside causes of disturbance such as have 
 harassed the cotton industry in Bombay. 
 Most important of all, Bengal has a monopoly 
 of the world's supply of raw jute. With all 
 these advantages, it is probable that Calcutta 
 will ultimately hold the world's markets in 
 the coarser kinds of manufacture. 2 One 
 
 1 "Statistical Abstract for British India for 1908," 
 
 P- 257. 
 
 2 During the last nine years the value of the exports 
 
 rose from £"4,000,000 in 1897 — 8 to ^"10,500,000 in 
 I.T.P. D 
 
34 INDIA AND THE TARIFF PROBLEM 
 
 danger, however, looms ahead. The fact 
 that all the raw jute of the world is found in 
 Bengal indicates that the supply of it is not 
 very great. Even during the last few years 
 there has been a significant rise in its price, 
 and if this were to continue other fibres could 
 be substituted for the purposes now fulfilled 
 by jute. These facts will be of great 
 importance when we discuss the subject of 
 export duties. 
 
 We have now considered the only important 
 factory industries in India. Those to which 
 we proceed may contain great possibilities, 
 but their present scale is insignificant. 
 
 Tanning and Leather Manufactures. — 
 These should be among the most flourishing 
 of Indian industries, for their natural advan- 
 tages are unusual. India produces quantities 
 of raw hides and skins. The skins are of 
 the best quality, but the proportion of first- 
 class hides is not so great. Her supply of 
 
 !go6 — 7. A part of this increase is accounted for by 
 a rise in price. But if instead of values the quantities 
 of jute bags and jute cloth are considered the growth 
 is nearly as great.—" Statistical Abstract for British 
 India for 1908," pp. 154, i5 6 > l8 4- 
 
A SURVEY OF INDIAN INDUSTRIES 35 
 
 the other necessary materials — acacia pods, 
 bark, cutch, Indian sumach, tanner's cassia, 
 mangroves, and myriabolams — is also excel- 
 lent. Yet her exports of tanned hides and 
 skins are small and practically stationary, 1 
 while, on the other hand, those of raw hides 
 and skins are great and have more than 
 doubled in the last nine years. 2 The ex- 
 planation is to be found in the notorious 
 crudity of the methods of tanning. Again 
 we come upon the conflict between the 
 artisan and the factory systems, but here the 
 older system holds the greater part of the 
 field. Village tanners yearly convert vast 
 quantities of fairly good hides into inferior 
 leather. The annual waste of materials 
 for which they are responsible represents a 
 loss of hundreds of thousands of pounds. 
 
 1 The exports of tanned hides and skins amounted 
 to a value of ^"2,500,000 in 1897 — 8, and nine years 
 later (in 1906 — 7) to ^"2,900,000. — "Statistical Abstract 
 for British India for 1908," p. 187. 
 
 2 The exports of raw hides and skins have increased 
 during the last nine years from a value of ^"3,000,000 
 in 1897 to over £"7,000,000 in 1906 — 7. — " Statistical 
 Abstract for British India for 1908," p. 187. 
 
 D 2 
 
36 INDIA AND THE TARIFF PROBLEM 
 
 Tanneries of the factory type have, however, 
 made their appearance, chiefly in Madras, 
 and are beginning to supplant the indigenous 
 ones. In 1906 they employed 10,000 men. 1 
 Even these, however, have no great reputa- 
 tion for enterprise. 2 We shall recur to these 
 facts when we consider the claim that Indian 
 industries cannot develop without a protective 
 
 tariff. 
 
 For the same reason that we should expect 
 a flourishing tanning industry we should also 
 look for large leather manufacture. A con- 
 siderable internal demand is growing up for 
 cheap machine-made boots and shoes, but it 
 is met by an increase of imports. The factory 
 system is still in its infancy. Even the 
 factories which exist are largely dependent 
 upon the support of the military and other 
 Government departments. Cawnpore is the 
 headquarters of the modern manufacture of 
 
 1 " Statistical Abstract for British India for 1908," 
 
 p. 258. 
 
 2 See " Chrome Tanning in Madras," by Mr. Alfred 
 Chatterton, Director of Industries in Madras, a paper 
 read before the Calcutta Conference in 1906. 
 
A SURVEY OF INDIAN INDUSTRIES 37 
 
 boots and shoes, saddlery, trunks, and military 
 
 equipment. On the other hand, there are 
 
 immense local manufactures of boots 
 
 and shoes under the older system. Almost 
 
 every village has its shoemaker, while in the 
 
 larger towns the trade occupies entire streets. 
 
 Silk Mills. — The competition between 
 
 the different methods of production is clearly 
 
 shown in silk weaving. The home workers, 
 
 with one or two looms, still represent the 
 
 dominant system, and are to be found all 
 
 over the country. The beginnings of a 
 
 factory system, of which Bombay seems 
 
 likely to be the centre, are to be seen in four 
 
 large silk mills worked by steam power. The 
 
 workshop system is represented by about 
 
 thirty hand-loom factories (most of them in 
 
 Bengal), which do not employ European 
 
 machinery. In spite of the high skill of the 
 
 Indian weavers the industry is losing ground. 
 
 The exports of silk manufactures have shown 
 
 a continuous decline during the last decade, 1 
 1 The value of the exports has diminished from 
 £86,000 in 1897—8 to £45,500 in 1906 — 7. — "Statis- 
 tical Abstra t for British India for 1908," p. 155. 
 
38 INDIA AND THE TARIFF PROBLEM 
 
 while the imports are rapidly increasing. 1 
 Silk filatures also show a tendency to decline 
 in numbers. 2 
 
 Woollen Mills. — There are only six 
 woollen mills throughout India, and the 
 trade shows no signs of expansion. Even 
 the existing mills produce chiefly for the 
 army and the police. Yet the demand for 
 woollen goods in India is appreciable. The 
 imports are increasing rapidly. 3 
 
 Paper Mills. — This industry is in much 
 the same position as the woollen trade. 
 There are eight mills in India, and the trade 
 gives little indication of growth. 4 The 
 Government supports the existing mills by 
 obtaining from them most of the foolscap, 
 
 1 The imports of " piece goods" and " mixed " 
 have increased from 14,000,000 yards in 1897 — 8 to 
 20,500,000 yards in 1906 — 7. — " Statistical Abstract for 
 British India," p. 150. 
 
 2 ''Imperial Gazetteer of India," Vol. III., p. 209; 
 and " Statistical Abstract for British India for 1908," 
 p. 250. 
 
 3 During the last nine years their value has increased 
 from ^750,000 in 1897 — 8 to ,£"1,350,000 in 1906 — 7. 
 
 4 " Statistical Abstract for British India for 1908," 
 p. 258. 
 
A SURVEY OF INDIAN INDUSTRIES 39 
 
 blotting paper, note paper and envelopes 
 required for the public offices. The trade 
 has every opportunity for expansion, as is 
 shown by the fact that the imports have 
 doubled within the last nine years. 1 Until 
 the industry adopts more modern methods 
 and materials it cannot hold its own against 
 the cheap wood pulp paper imported from 
 Europe. 
 
 The remaining industries which come 
 within the category, with which we are at 
 present dealing do not deserve any detailed 
 description, either because tariffs will not 
 affect them, or because they are only repre- 
 sented by one or two firms. They consist 
 of iron and brass foundries, railway works, 
 breweries, dyeing works, chemical works, 
 tile factories, rice mills, cotton ginning and 
 cleaning mills, lace factories, soap works, 
 pottery works, aluminium works, printing 
 
 1 The imports of paper and pasteboard have 
 increased from ^"220,000 in 1897 — 8 to ^"534,000 in 
 1906 — 7. — " Statistical Abstract for British India in 
 1908," p. 148. 
 
4 o INDIA AND THE TARIFF PROBLEM 
 
 presses, rope works, glass works, works for 
 the production of matches, umbrellas and 
 felt caps. 
 
 We now come to the second division into 
 which the industries of India may be classi- 
 fied — those connected with agriculture. The 
 industries coming under this head consist of 
 sugar, indigo, coffee, tea, and tobacco. As 
 each of these might play a considerable part 
 in any scheme of tariffs, they require careful 
 examination. 
 
 Sugar. — The history of this industry 
 during the last few years is full of surprises, 
 which are by no means creditable to the 
 Indian producers. The consumption of 
 sugar in India is rapidly increasing. Yet 
 the area under cultivation is stationary with 
 a tendency to diminish, 1 while the imports 
 are increasing rapidly so as to capture the 
 expanding Indian market. 2 The explanation 
 
 1 The areas under cultivation during the last nine 
 years have diminished from 2,648,000 acres in 1897 — 8 
 to 2,623,000 acres in 1906 — 7. — " Statistical Abstract 
 for British India for 1908," p. 123. 
 
 2 The imports have increased during the last nine 
 
A SURVEY OF INDIAN INDUSTRIES 41 
 
 at one time appeared simple. The foreign 
 bounties given to beet sugar were held to be 
 responsible. The Government of India 
 therefore passed the Countervailing Sugar 
 Duties Act of 1899, by which, in addition to 
 the ordinary duty, a special duty was imposed 
 in the case of bounty-fed sugar, of the same 
 amount as the bounty. This counterstroke 
 was expected to revive the Indian produc- 
 tion, but the imports, instead of declining, 
 went on increasing more rapidly than before. 1 
 Again the explanation appeared easy. The 
 foreign manufacturers were now bringing 
 into play cartel bounties, by which the 
 advantage secured to them in their home 
 markets by their high import duties was used 
 for assisting the sale of the sugar abroad. 
 
 years from the value of £% 200,000 in 1897 — 8 to 
 ^5,800,000 in 1906 — 7. — " Statistical Abstract for 
 British India for 1908," p. 149. 
 
 1 Value of imports of sugar, 1890 — 1900, ^2,250,000 
 (countervailing duties imposed) ; value of imports of 
 sugar 1900 — 1, ^3,700,700; 1901 — 2, ^"3,900,000. — 
 "Statistical Abstract for British India for 1908," 
 p. 183. 
 
42 INDIA AND THE TARIFF PROBLEM 
 
 Again the Government stepped in and 
 imposed further countervailing duties. 
 Nevertheless, the imports still continued to 
 increase, and are now higher than ever 
 before, while throughout the period the 
 home production has remained stationary. 1 
 How can these results be explained ? The 
 failure of the Indian industry to take advan- 
 tage of its opportunities is due not to causes 
 which tariffs can cure, but to its own 
 notorious want of enterprise. On the other 
 hand, the beet sugar manufacturers have not 
 relied upon their bounties. Those who 
 ascribe their progress to bounties alone 
 should remember that by scientific work the 
 sugar which the beetroot yielded has been 
 increased from 9 per cent, to 16 or 18 per 
 cent. The best machinery has been adopted 
 for extracting the sugar ; chemical processes 
 obtain the last traces of crystallisable sugar 
 
 1 Value of imports of sugar 1902 — 3, ^3,300,000; 
 1903—4,^4,000,000; 1904—5,^4,600,000; 1905—6, 
 ^"5,200,000; 1906 — 7, ^5,800,000. — "Statistical Ab- 
 stract for British India for 1908," p. 183. 
 
A SURVEY OF INDIAN INDUSTRIES 43 
 
 from the molasses ; and the waste products 
 — at one time a positive expense — are con- 
 verted into salts of potash, ammonia, and 
 other valuable chemical products. 1 The 
 Indian industry is now demanding protec- 
 tion, but the best remedy for its misfortunes 
 will be to accept the warning of the S-urat 
 Industrial Conference that "it is absolutely 
 necessary to encourage the cultivation of 
 healthier and more prolific varieties of cane, 
 to employ greater care in cultivation, to use 
 more economical processes for extracting 
 the juice, and above all to adopt the most 
 modern and efficient methods of refining." 2 
 Indigo. — This industry presents a gloomy 
 picture, but not, as in the case of sugar, 
 through faults of its own. Indian vegetable 
 colours have for centuries held a foremost 
 place in the markets of the world, but again 
 
 1 See a paper on " The Development of the Mineral 
 Resources of India," read to the Benares Industrial 
 Conference, 1903, by Sir Thomas Holland (Nateson 
 & Co., Madras). 
 
 2 Resolution 7 of the Surat Industrial Conference, 
 1907 (Nateson & Co., Madras). 
 
44 INDIA AND THE TARIFF PROBLEM 
 
 we are met by the competition between the 
 older methods and the results of modern 
 science. The story of the extraction of a 
 wonderful colouring material from coal tar 
 is one of the romances of modern industry. 
 The effect of the competition of this new 
 product is seen from the fact that the area 
 under indigo in India at present has shrunk 
 to less than one-third the area of nine years 
 ago. 1 
 
 The committee appointed in igoo did not 
 conceal its view that the days of the industry 
 were numbered. " Without taking too pes- 
 simistic a view of the future of indigo, it is 
 reasonable to anticipate that the competition 
 of synthetic indigo will prevent any future 
 increase in the price of vegetable indigo, 
 that it will soonest and most injuriously 
 affect the finest and most expensive indigo, 
 which is that of Behor, and cause a further 
 reduction of price which would hardly clear 
 
 1 In 1897 — 8 the area under indigo was 1,400,000 
 acres; by 1906 — 7 it was reduced to 450,000 acres. — 
 " Statistical Abstract for India in 1908," p. 123. 
 
A SURVEY OF INDIAN INDUSTRIES 45 
 
 the planter in a good season, while a bad 
 season would be ruinous to him. In the 
 end — though we trust the end is a long way 
 off — the competition of synthetic indigo may 
 bring about the supersession of vegetable 
 indigo, as the competition of alizarine dyes 
 ended in the supersession of madder." l 
 
 In spite of these facts, however, in the 
 publication expressing the "Views of the 
 Government of India on the Question of 
 Preferential Tariffs," we find in the memo- 
 randum of Sir Edward Law, the Finance 
 Minister, the following statement : — " If the 
 United Kingdom were to impose a reason- 
 able duty on synthetic indigo whilst admitting 
 natural indigo free, the difficulties of our 
 indigo planters would disappear as by 
 magic." 2 This is an example of the lack of 
 perspective which expects very large results 
 from very small causes. 
 
 1 See the " Decennial Statement exhibiting the 
 Moral and Material Progress of India," p. 332, issued 
 in 1903. 
 
 2 See p. 21 of the publication. 
 
46 INDIA AND THE TARIFF PROBLEM 
 
 Tea. — We now come to an industry whose 
 future is full of hope, and whose growth 
 during the last generation has been remark- 
 able. 1 The expansion, in fact, was so rapid 
 as to lead to a fall in prices which involved 
 the trade in great difficulties. The diffi- 
 culties were in this case a stimulus to pro- 
 gress, and vigorous efforts to push the sale 
 of Indian tea were undertaken. For this 
 purpose a small duty on tea has been im- 
 posed, and the proceeds of it are used by a 
 representative committee to open up new 
 markets. 
 
 Large plantations have been established, 
 and machinery has taken the place of 
 manual labour. One result has been that 
 the freedom of Indian tea from the adultera- 
 tion and impurity incidental to Asiatic hand 
 labour has enabled it practically to oust 
 Chinese tea from the British market. Ninety 
 per cent, of the tea imported into the United 
 
 1 In 1885 the area under tea in India was 440 square 
 miles. By 1903, a little less than twenty years later, 
 it had increased to 820 square miles. 
 
A SURVEY OF INDIAN INDUSTRIES 47 
 
 Kingdom in 1907 came from India and 
 Ceylon, while only 3 per cent, came from 
 China. We shall return to these facts when 
 we are considering the proposals that Great 
 Britain should grant a preference to Indian 
 tea. 
 
 Coffee. — The prospects of this industry 
 are by no means so bright as those of tea. 
 There is only a small home demand for it, 
 while the foreign markets have been devas- 
 tated by the competition of the cheap 
 Brazilian product. The average London 
 price sank, for example, from 101s. per cwt. 
 in 1894 to 47s. per cwt. in 1901. 1 The effect 
 of this competition is shown by the steady 
 decrease of the area under coffee. 2 We 
 shall indicate later that this seems to be an 
 industry to which a preference in the British 
 markets might be of some real assistance. 
 
 1 See the " Decennial Statement exhibiting the 
 Moral and Material Progress of India" for 1903, 
 
 P- 233- 
 
 2 This has shrunk during the last nine years from 
 
 151 acres in 1897 — 8 to 96 acres in 1906 — 7. — " Statis- 
 tical Abstract for British India for 1908," p. 122. 
 
48 INDIA AND THE TARIFF PROBLEM 
 
 Tobacco. — The area under tobacco has 
 remained stationary during the last nine 
 years at about a million acres. 1 The exports 
 are increasing steadily. 2 It has, moreover, 
 a considerable prospect of an expanding 
 home consumption. Indians, in many parts, 
 smoke from early youth, but the " hukka " 
 is gradually being abandoned for cigars and 
 cigarettes. These are imported in great 
 quantities, and the prospects of the Indian 
 tobacco industry depend largely upon its 
 success in taking their place. The exports 
 to Great Britain are, at present, insig- 
 nificant, 3 a fact which is of importance in 
 the discussion of preferences. 
 
 1 " Statistical Abstract for British India for 1908," 
 P. 123. 
 
 2 The value of the exports has risen from ^"197,000 
 in 1897 — 8 to ^"206,000 in 1906 — 7. — "Statistical 
 Abstract for British India for 1908," p. 123. 
 
 3 See " Annual Statement of the Sea-borne Trade 
 and Navigation of British India for 1907," Vol. I., 
 pp. 441, 442. 
 
CHAPTER IV 
 
 SWADESHI AND THE DEMAND FOR PROTECTION 
 
 IN INDIA 
 
 Public opinion in India is overwhelmingly 
 protectionist. If she were granted her fiscal 
 freedom there is no doubt that she would 
 use it to erect a high tariff which from the 
 nature of her trade would be directed chiefly 
 against British goods. Among the educated 
 and commercial classes free trade is regarded 
 as a policy forced upon India against her 
 best interests by Great Britain. Those who 
 sympathise with the reasons given in the 
 first chapter for building up manufactures 
 will not be surprised at this attitude. The 
 latest expression of it is to be found in the 
 Swadeshi movement. This has received the 
 support of " moderates," " extremists," the 
 business community consisting of non- 
 political men, and even of the Government. 
 i.t.p. e 
 
5 o INDIA AND THE TARIFF PROBLEM 
 
 As the term, however, is used in more than 
 one sense, an explanation of its real signifi- 
 cance is needed. Swadeshi means strictly 
 " my own country." This spirit chiefly 
 manifests itself in practice by the purchase 
 of home-made articles in preference to 
 foreign ones. Swadeshi, therefore, is volun- 
 tary protection. It seeks to secure by the 
 willing action of patriotic purchasers what 
 nations with their fiscal freedom secure by 
 means of protective tariffs. The fact that 
 Indians of all shades of thought are unani- 
 mous in accepting this doctrine indicates 
 the strength of the protectionist sentiment. 
 As British observers do not often have the 
 opportunity of hearing the views of repre- 
 sentative Indians in their own words, we 
 quote a number of the statements of the 
 Swadeshi principle from various schools of 
 Indian thought. 
 
 The point of view of those who are 
 interested in economic rather than in 
 political questions is best expressed by the 
 Industrial Conference which meets annually. 
 
SWADESHI AND PROTECTION 51 
 
 We therefore select the passages bearing on 
 this subject from the presidential address 
 delivered at the last three sessions of the 
 Conference. 
 
 Mr. Romesh Chunder Dutt, the most 
 copious writer on Indian economics, pointed 
 out in the presidential address at Benares 
 in 1905 that British politicians were them- 
 selves advocates of the Swadeshi principle : 
 — " The Swadeshi movement is one which 
 all nations on earth are seeking to adopt in 
 the present day. Mr. Chamberlain is seek- 
 ing to adopt it by a system of protection. 
 Mr. Balfour seeks to adopt it by a scheme 
 of retaliation. France, Germany, and the 
 United States and all the British colonies 
 adopt it by building up a wall of prohibitive 
 duties. We have no control over our fiscal 
 legislation ; and we adopt the Swadeshi 
 scheme, therefore, by a laudable resolution 
 to use our home manufactures, as far as 
 practicable, in preference to foreign manu- 
 factures. If we succeed in this noble en- 
 deavour, we shall present to the world an 
 
 E 2 
 
52 INDIA AND THE TARIFF PROBLEM 
 
 instance unparalleled in the history ol 
 modern times of a nation protecting its 
 manufactures and industries without pro- 
 tective duties." 
 
 Sir Vibhaldas Damodar Thackersey, a 
 prominent Bombay business man, presided 
 over the next Conference, held in Calcutta 
 in 1906. He also pointed out that Swadeshi 
 was not peculiar to India. " Swadeshism is 
 enforced in many civilised countries by means 
 of prohibitive tariffs and bounties to home 
 producers. We are only following the 
 example of these nations by making volun- 
 tary efforts to encourage indigenous indus- 
 tries. There is nothing wrong in this. On 
 the contrary, it is all the more creditable to 
 us that what in other countries requires to 
 be enforced by the State is undertaken here 
 by the spontaneous action of the people." 
 
 Similarly, Dewan Bahadur Ambalal Desai, 
 the President of the third Conference, held 
 at Surat in 1907, argued as follows: " The 
 protection of new or nascent industries by 
 means of high import duties and by bounties 
 
SWADESHI AND PROTECTION 53 
 
 is held to be allowable by some of the highest 
 authorities of the Free Trade school. If 
 the State in India had been identified in 
 economic interests with the Indian people, 
 some measure of protection might have 
 been adopted by it long ago. But the 
 Government in India being the represen- 
 tative in India of free trade, Britain is not 
 at liberty, at present, to afford economic 
 protection in any form to Indian industries. 
 The people of India ought, therefore, to 
 step into the vacuum and do by voluntary 
 protection what the State might have 
 achieved in an easier way by tariffs and 
 bounties.'' 
 
 Turning to the leaders of political thought, 
 M. G. K. Gokhale, the leader of the Indian 
 " moderates," bases his defence of Swadeshi 
 on the orthodox argument from " infant 
 industries " : " By ensuring the consump- 
 tion of indigenous articles in their early 
 stage, when their quality is inferior and 
 their price is higher, or when they labour 
 under both these disadvantages, we can do 
 
54 INDIA AND THE TARIFF PROBLEM 
 
 for our industries what protectionist Govern- 
 ments have done for theirs by means ol 
 State protection. ... In course of time the 
 quality of Swadeshi articles is bound to 
 improve and their cost of production to 
 become less and less." 1 Finally, M. Tilak, 
 the leader of the " extremists," speaking 
 at the Indian National Congress of 1906 
 in Calcutta, argued in much the same 
 spirit that, " since this Government is not 
 going to stop the drain by imposing a 
 protective duty, it becomes imperatively 
 necessary to adopt a measure by which 
 we can do ourselves what the Government 
 ought to have done long ago." 
 
 While in this way Swadeshi encourages 
 home producers, it at the same time enjoins 
 upon them the need of rising to their oppor- 
 tunities. We have pointed out, and shall 
 have to do so again, that the essential 
 weakness of Indian industry is the lack of 
 
 1 From an address at Lucknow in 1907. See 
 " Speeches of the Hon. M. G. K. Gokhale, CLE.," 
 p. 818 (Nateson & Co., Madras). 
 
SWADESHI AND PROTECTION 55 
 
 initiative. Swadeshi preaches the courage 
 and mutual confidence which will enable 
 Indians to strike out fresh paths for them- 
 selves. Although many of the enterprises 
 started under its stimulus have failed, and 
 doubtless will fail, the first step towards over- 
 coming a fault is to recognise its existence. 
 
 Swadeshi also claims that it will offer 
 those who are still too poor and ignorant to 
 understand the larger problems of political 
 life the opportunity of doing something for 
 their country, and of thus beginning to feel 
 the spirit of nationalism. This has been well 
 expressed by the great Bengalee orator, 
 Surendranath Banerjee : " The Deccan 
 peasant or the Bengalee rustic may find 
 some difficulty in understanding the merits 
 of a system of representative government. 
 The subtleties of the question involved in 
 the separation of judicial from executive 
 functions may elude the grasp of his un- 
 trained mind. But when you tell him that 
 the wealth of the country must be kept in 
 the country, that it is to his advantage that 
 
56 INDIA AND THE TARIFF PROBLEM 
 
 it should be so kept, and that for this pur- 
 pose he must purchase country-made articles 
 in preference to foreign articles, he opens 
 wide his eyes and ears and drinks in the 
 lesson." 1 
 
 So far all Indian thinkers are agreed. 
 Our purpose, which is merely to illustrate 
 the strength of the protectionist sentiment 
 in India, does not necessitate entering 
 deeply into the later developments of 
 Swadeshi. For the sake of clearness, how- 
 ever, a few words with regard to them may 
 be useful. A section of Indian opinion took 
 up the Swadeshi movement as a means ot 
 inflicting injury on Great Britain. It was 
 argued that only by this method could 
 British people be roused into taking an inter- 
 est in India, and listening to her complaints. 
 The following statement of this position was 
 given by Mr. Lajpat Rai : — 
 
 " The British people are not a spiritual 
 
 1 Speech before the Swadeshi Vastu Pracharini 
 Sabha, Bombay, 1906. See " Swadeshi Movement," 
 p. 20 (Nateson & Co., Madras), 
 
SWADESHI AND PROTECTION 57 
 
 people. They are either a fighting race or 
 a commercial people. It will be like throw- 
 ing pearls before swine to appeal to them in 
 the name of higher morality, or justice, or 
 on ethical grounds. They are a self-reliant, 
 haughty people who can appreciate self- 
 respect and self-reliance even in their oppo- 
 nents. It is, then, for the Indians to decide 
 whether they mean to continue to appeal to 
 them in the name of political justice and fair 
 play, or whether they intend to attract their 
 attention to the existing intolerable condition 
 of things in India by inflicting losses in busi- 
 ness and by adopting an attitude of retalia- 
 tory self-reliance." x 
 
 Such a policy as this is not easily distin- 
 guished from "boycott." So it came about 
 that among a certain section Swadeshi came 
 to mean abstention from British goods in 
 particular rather than from foreign goods in 
 general. The next step was equally easy. 
 The boycott of British goods was extended, 
 on the model of the Senn Fein policy in 
 
 1 From the Indian Review, 
 
58 INDIA AND THE TARIFF PROBLEM 
 
 Ireland, to the boycott of all British institu- 
 tions. This was ths policy which finally led 
 the Indian National Congress to break up in 
 uproar at Surat. The " moderates " insisted 
 on confining the Swadeshi movement to 
 its original purpose of protection. As 
 President of the Congress in 1905, M. 
 Gokhale had already pointed out that "the 
 term ' boycott ' has got unsavoury associa- 
 tions, and it conveys to the mind before 
 anything else a vindictive desire to injure 
 another. Such a desire on our part, as a 
 normal feature of our relations with England, 
 is out of the question." 
 
 As a result of the disgraceful scenes of 
 violence at Surat, the Indian National Con- 
 gress has been reconstituted. All delegated 
 have now to sign a declaration which ex- 
 cludes the " extremist" section. The latter 
 party have found the ground cut away from 
 under their feet by the reforms initiated by 
 Lord Morley. Swadeshi in future will there- 
 fore revert to its original meaning, and " boy- 
 cott" is not likely to be much heard of further. 
 
SWADESHI AND PROTECTION 59 
 
 The argument for protection in India is 
 now easy to state. It is in fact contained in 
 what has already been written. In the first 
 chapter it was explained that there is one 
 conclusion which forms a common ground 
 for all schools of thought in India, from 
 " extremists " to the Government — that the 
 manufactures of the country must be built 
 up. The arguments by which this view is 
 supported are similar to those used by 
 Alexander Hamilton and List. The future 
 of India depends upon her power to assimi- 
 late Western ideas and scientific methods. 
 This power will not be easily acquired by 
 a people who are almost entirely agricul- 
 tural.^? rogress comes from the towns, for in 
 them active social intercourse and the contact 
 of mind with mind create mental keenness 
 and adaptability. ! The Government lays 
 more emphasis upon the purely economic 
 reason. If a large proportion of the agricul- 
 tural population can be diverted into manu- 
 factures, it will be easier for future adminis- 
 trators to grapple with the awful problem of 
 
60 INDIA AND THE TARIFF PROBLEM 
 
 famine. The question then arises as to how 
 the manufactures are to be created. The 
 answer in India is the same as in all other 
 countries in an apparently similar position. 
 While they are " infant industries " they 
 need the shelter of protective tariffs. After 
 they have secured the advantages of produc- 
 tion on a large scale, they will be able to 
 vStand upon their own feet. 
 
CHAPTER V 
 
 AN EXAMINATION OF INDIAN PROTECTIONISM 
 
 It must not be imagined that the discus- 
 sion on which we are about to enter is of 
 merely academic interest. If protection for 
 the United Kingdom is within the range of 
 practical politics, protection for India is in 
 the same position, for, as will be explained 
 later, the one will certainly lead to the other. 1 
 
 A discussion of Indian protectionism must 
 start from certain generally accepted truths 
 which here must be merely stated. The 
 reader who wishes to examine them further 
 will find them explained at length in any text- 
 book of economics. An industry which 
 secures protection obtains the right of levy- 
 ing a tribute upon the community. It is 
 enabled to increase the price of its product 
 
 1 See pp. 96 — 101. 
 
62 INDIA AND THE TARIFF PROBLEM 
 
 and so to lay a burden on the consuming 
 public. The argument that this does not 
 happen, because the protective duty is paid 
 by the foreign producer, will not bear exami- 
 nation. If the foreign manufacturer pays 
 the duty and sends the goods at the same 
 price as before, there is no advantage to the 
 industry which is being protected. If it was 
 being undersold before, and the price is not 
 raised, it is being undersold still, and the 
 protective duty has failed in its object. 
 Protection therefore can only be effective in 
 so far as it raises prices. 1 Whatever efforts 
 may be made to escape from this conclusion 
 during mere arguments, its truth is always 
 tacitly accepted when the practical business 
 of devising a tariff has to be faced. In the 
 
 1 No economist would deny that there are certain 
 cases in which protective tariffs fall, to a greater or 
 less extent, upon the foreign producer, and that there- 
 fore the prices are not raised to the full extent of the 
 duty. These instances are of importance when duties 
 for revenue are being considered. But they are not 
 of importance when duties for protective purposes are 
 under consideration, because in this case, in so far as 
 they fail to raise prices, they fail to give protection. 
 
INDIAN PROTECTIONISM 63 
 
 existing Indian tariff, for example, coal, raw 
 wool, raw cotton, wood pulp, machinery, and 
 many other articles are placed upon a free 
 list. The reason is, of course, that it is taken 
 for granted that an import duty will raise 
 their price, and they are too important to 
 other industries to permit this to occur. 
 For the same reason iron, steel, and many 
 articles made from them are admitted at 
 nominal duties. 
 
 The chief remaining argument in the 
 armoury of popular protectionism is that it 
 " gives employment." This doctrine is, of 
 course, recognised as a fallacy by all 
 instructed opinion. Nevertheless its hold 
 upon the public mind is so powerful that it 
 has swept before it the democracies of all 
 countries except the United Kingdom. In 
 India, however, its foolishness ought to be 
 plainly evident. There is no need to " give 
 employment," for the industries of the 
 country are already crying for labour which 
 they cannot obtain. 
 
 Indian protectionists do not deny the 
 
64 INDIA AND THE TARIFF PROBLEM 
 
 truth of these arguments. Their answer to 
 them is that they only ask that their indus- 
 tries should be protected during their " infant" 
 stages. The tribute, it is argued, is worth 
 paying for this short period, and should be 
 regarded as an investment of capital. When 
 the industries have grown to maturity they 
 will be able to stand by their own strength. 
 The country will then be repaid many times 
 over for the tribute that has been expected 
 from it, because a new industry will have 
 grown up whose products the public can 
 obtain more cheaply than if they were still 
 dependent upon foreign supplies. This 
 argument does not contain any such logical 
 impossibilities as are found in the case for 
 popular protection. Nevertheless, Indian 
 thinkers do not yet realise how perilous it is. 
 Infant industries do not grow to maturity. 
 The argument has always been merely the 
 thin end of the wedge. When it has served 
 its purpose in overcoming the opposition to 
 protection it has been stultified, for the indus- 
 tries have been treated as if they remained 
 
CF 
 
 l* UFOgg ) 
 
 INDIAN PROTECTIONISM 65 
 
 infants for ever. The difficulties which 
 confront a Government which wishes to use 
 the argument honestly are indeed overwhelm- 
 ing. Behind the tariff wall a number of 
 industries establish themselves which can 
 never, perhaps, exist without it. It is better 
 that they should perish than live to be a 
 burden upon the nation. But the agitation 
 on their behalf is very strong. Similarly 
 even those industries which can stand by 
 themselves have become inflated beyond 
 their natural limits. The removal of the 
 tariff wall means the extinction of the weaker 
 firms and a heavy blow to others. If, for 
 example, the Indian cotton mills had obtained 
 a protective duty of 20 per cent, twenty years 
 ago, does anyone believe that it would have 
 been taken away now that the industry has 
 secured all the advantages of production on 
 a large scale ? Those who are threatened 
 with loss form a compact interest bringing 
 concentrated pressure to bear upon the 
 Government. On the other hand, the interests 
 of the public are diffused over too wide an 
 
 I.T.P. F 
 
66 INDIA AND THE TARIFF PROBLEM 
 
 area to be powerful as a political force. The 
 tribute which each consumer pays is so 
 small that it is not worth the while of any 
 organised body to press the Government very 
 hard. The temptation of the Government 
 to follow the line of least resistance is in- 
 creased by the fact that it has grown to 
 depend upon the protective duties as a source 
 of revenue. Thus one industry after another 
 imposes a permanent burden upon the com- 
 munity. Finally the " infant industry" 
 argument is forgotten, and popular protection 
 has established itself. 
 
 When we consider the special conditions 
 of India the dangers appear more serious 
 still. Protection tends to sap the vitality of 
 industry. Economic progress is dependent 
 upon the pressure of keen competition. 
 Industries which are in a position of 
 unhealthy security because they are sheltered 
 behind a tariff wall lose the spirit of improve- 
 ment. The advocates of Indian protection 
 are in the habit of pointing to the United 
 States, Germany, and the self-governing 
 

 INDIAN PROTECTIONISM 67 
 
 colonies. Their position, however, does not 
 furnish a true analogy to that of India. 
 Each of them is a nation remarkable for the 
 natural vigour of its people, and it is difficult 
 for even protection to damp their energy. 
 The position of India is exactly the opposite, 
 for her great danger is inertia. The resources 
 of the country are not being opened out 
 by Indian initiative. Indian manufacturers 
 follow faithfully in the paths already trodden 
 by British enterprise. Everywhere there is 
 a noticeable desire to depend upon the 
 Government rather than upon personal effort. 
 Indian thinkers are continually pointing out 
 these weaknesses to their fellow-countrymen. 
 No one insisted upon them more strongly 
 than Justice Ranade : — 
 
 " Our habits of mind are conservative to 
 a fault. Capital is scarce, immobile, and 
 unenterprising. Co-operation on a large 
 scale of either labour or capital is unknown. 
 The desire for accumulation is very weak, 
 peace and security having been almost 
 unknown over large areas for any length of 
 
 f 2 
 
68 INDIA AND THE TARIFF PROBLEM 
 
 time till within the last century. Our laws 
 and institutions favour a low standard of 
 life, and encourage subdivision and not con- 
 centration of wealth. The religious ideals 
 of life condemn the ardent pursuit of wealth 
 as a mistake to be avoided as much as 
 possible. These are old legends and in- 
 herited weaknesses. Stagnation and depen- 
 dence, poverty and depression — these are 
 written in broad characters on the face of 
 the land and its people." * 
 
 It would be unfair to leave this subject 
 without pointing out that these statements 
 need not make Indian patriots too despon- 
 dent. The genius of the Indian peoples has 
 not in the past been in the direction of 
 
 1 " Essays on Economics," p. 26. 
 
 Similarly the Gekwar of Baroda, who has earned 
 distinction by his great interest in the commercial 
 development of India, pointed out to the Industrial 
 Conference at Calcutta that " the pursuit of new truth 
 is the first concern of every stalwart mind in the West, 
 while the mass of our people are content to live stolid 
 conventional lives, blindly following the precepts of 
 their fathers, rather than emulating the example they set 
 of intellectual independence and constructive energy." 
 
INDIAN PROTECTIONISM 69 
 
 Western scientific methods. The system of 
 caste has concentrated their best trained 
 minds upon speculation, while industry has 
 been regarded as an inferior calling. Pro- 
 vidence has entrusted the British race with 
 the task of guiding them in the unfamiliar 
 paths of Western industry. Justice Ranade, 
 although he was addressing his own country- 
 men, pointed us to a high conception of our 
 duties : " It cannot well be a mere accident 
 that the destinies of this country have been 
 entrusted to the guidance of a nation whose 
 characteristic strength is opposed to all our 
 weaknesses, whose enterprise in commerce 
 and manufacture knows no bounds, whose 
 capital overflows the world, whose view of 
 life is full of hope, and whose powers of 
 organisation have never been surpassed." l 
 The extent to which the industries of 
 India are controlled by her own sons will be 
 the measure of the degree to which we have 
 fulfilled our trust. We have no right to 
 expect, however, that on the unfamiliar road 
 1 " Essays in Economics," p. 25. 
 
7 o INDIA AND THE TARIFF PROBLEM 
 
 that they are now treading they should 
 easily strike out into fresh directions. The 
 capacity of the Indian peoples to adapt 
 themselves to Western methods can only 
 be judged after they have had full time to 
 assimilate them. 
 
 We return to the question whether pro- 
 tection, with its demoralising effects, will 
 furnish the most favourable influence for 
 training the Indian peoples in their new 
 tasks. Yet the survey that we made of the 
 chief industries of the country showed that 
 in most of them the greater part of the 
 production was still carried on by obsolete 
 methods. This conservatism is the funda- 
 mental weakness of the trade of India. If 
 it can be overcome her industries will develop 
 without any protective tariff quite as fast as 
 is healthy in the present unprepared condi- 
 tion of her labour. Conservatism is, however, 
 the very fault which protection is calculated 
 to perpetuate. 
 
 We shall now take the chief industries of 
 
 1 " Essays in Economics," p. 25. 
 
INDIAN PROTECTIONISM 71 
 
 India and examine the probable effects of 
 protection upon each of them. The survey 
 which has been made of the conditions of 
 the industries renders the task an easy one. 
 Before it can be undertaken, however, some 
 forecast must be attempted of the probable 
 nature of an Indian protective tariff. It 
 could be drawn up on one of two principles. 
 It might be either a general tariff on imports 
 as a whole, or a special tariff for the benefit 
 of only a few industries with peculiar claims. 
 The foundations of a tariff on the first 
 principle have already been laid. India 
 possesses a general tariff of 5 per cent., 
 which, although it has been levied for 
 revenue, has within its limits a distinctly 
 protective effect. Moreover, the modifica- 
 tions necessary to it have also been worked 
 out. There is a free list for commodities 
 essential to other industries, such as coal, 
 machinery, raw cotton, cotton twist and 
 yarn, wood pulp, raw wool, and railway 
 materials, while on the same principle com- 
 modities almost, but not quite, as necessary, 
 
72 INDIA AND THE TARIFF PROBLEM 
 
 such as iron and steel, are admitted at a 
 nominal rate. 1 A protective tariff would 
 naturally follow the lines already laid down. 
 The preliminary work has been accom- 
 plished, and the Government would not be 
 willing to relinquish revenue by freeing the 
 commodities already paying duty. An idea 
 of the protective system which India would 
 probably adopt can, therefore, be obtained 
 by imagining that the duties in the existing 
 tariff are raised from 10 to 20 per cent., 
 and that the unpopular excise duties on 
 cotton manufactures are repealed. 
 
 If, therefore, on the second principle, a 
 special tariff to protect select industries is 
 adopted, it will probably be as a supplement 
 to the one which has just been sketched. 
 The " infant industry " argument indeed 
 leads to the conclusion that those nascent 
 manufactures which give special promise of 
 eventual success ought to be granted a special 
 protection. At the end of the chapter we 
 
 lu The Statistical Abstract for British India for 
 1908," p. 266. 
 
INDIAN PROTECTIONISM 73 
 
 shall be able to select the industries to which 
 the argument applies in India. 
 
 An Indian protective tariff, however, would 
 not consist solely of import duties. India is in 
 a specially favourable position for imposing 
 export duties, as she produces certain com- 
 modities of which the exports are large, and 
 of which she is the only source of supply. 
 
 An export duty has already been laid upon 
 rice to meet the needs of Indian revenue. 
 This, however, is by no means the most 
 suitable article that could have been selected. 
 
 At one time, perhaps, India and Burmah 
 enjoyed something like a monopoly of its 
 supply for the European markets. But this 
 is no longer the case, while other grains are 
 being substituted for rice in distillation and 
 the manufacture of starch. On the other 
 hand, raw jute fulfils all the conditions needed 
 for an effective export duty 7 . India possesses 
 the monopoly of it, while it is the raw material 
 of industries which compete with her own 
 jute manufactures. As a source of revenue 
 it should be more profitable than the duty on 
 
74 INDIA AND THE TARIFF PROBLEM 
 
 rice, for the value of the exports of raw jute 
 amounted in 1906 — 7 to nearly £18,000,000, 
 while that of rice reached only £12, 500, ooo. 1 
 Moreover, the chief danger to the future of 
 the jute industry is the possibility that the 
 supply of raw jute may not prove equal to 
 the demand for it. The price has already 
 been rising in a significant manner. If, there- 
 fore, India were granted her fiscal freedom, 
 it is probable that she would substitute a 
 duty on jute for the existing one on rice. 
 Lac and til are also commodities which sug- 
 gest themselves as suitable for export duties. 
 In 1906 — 7 the value of the exports of lac 
 was £2,300,000 and of til £1,700, 000. 2 
 
 In considering the chief industries sepa- 
 rately we shall adopt the same order as in 
 our original survey and examine the effect of 
 a protective system, first upon the develop- 
 ment of India's mineral resources, next upon 
 her manufactures, and lastly upon the 
 
 1 " Statistical Abstract for British India for 1908/' 
 
 P- *55- 
 
 2 " Statistical Abstract for British India for 1908," 
 pp. 155, 186. 
 
INDIAN PROTECTIONISM 75 
 
 industries connected with agriculture. The 
 minerals which were included in the survey 
 were coal, iron and steel, petroleum, 
 manganese, mica, saltpetre, salt, copper, tin, 
 graphite, rubies and jade, and gold. 
 
 (1) No protection is feasible for coal, salt- 
 petre, manganese, mica, graphite, rubies and 
 jade, as the imports of them are either very 
 small or non-existent. Coal, moreover, is an 
 essential to production on which no duty 
 would be tolerated. It is on the free list of 
 the existing tariff. Saltpetre is a mineral of 
 which the production certainly needs to be 
 stimulated, as it shows a tendency to decline. 
 The stimulus cannot, however, be applied by 
 protection, as the imports in 1906 — 7 only 
 reached a value of ^o. 1 
 
 (2) Iron and steel only pay nominal duties 
 of 1 per cent, in the existing tariff. They are 
 of such importance to other industries that 
 the Indian Government has not ventured in 
 the past to impose effective duties upon them. 
 
 1 " Statistics of the Sea-borne Trade and Navigation 
 of British India," 1907, Vol. I., p. 121. 
 
76 INDIA AND THE TARIFF PROBLEM 
 
 It has, however, given the industry protection 
 in the form of subsidies. If the Tata works 
 fulfil the hopes of their founders, this policy 
 might be revived. 
 
 (3) Salt is a necessity to the masses of the 
 Indian peoples. It is already subject to an 
 excise duty and to a corresponding import 
 duty. But these are watched with the utmost 
 vigilance, and an additional import duty for 
 protective purposes is scarcely within the 
 bounds of discussion. 
 
 (4) The output of tin is on too insignificant 
 a scale to entitle it to protection, while no 
 copper at all is produced. 
 
 (5) We are thus left with petroleum. 
 Although its output has increased more 
 rapidly during the last ten years than 
 that of any other mineral product, India's 
 imports of it are still twice as valuable as 
 her own production. 1 A protective tariff 
 therefore might reduce the value of these 
 imports. 
 
 Turning to the second group, the factory 
 
 1 Compare p. 15. 
 
INDIAN PROTECTIONISM 77 
 
 industries, the only ones which have at 
 present reached a scale which is more than 
 insignificant are cotton, jute and silk manu- 
 factures, tanning, boot, shoe, and leather 
 manufacture, woollen weaving and paper- 
 making. 
 
 In spite of the remarkable advance of the 
 cotton trade, India still imports cotton goods 
 to four times the value of her own output. 
 A protective duty, therefore, might lead to 
 an expansion of this industry. 1 
 
 The jute manufacturers, on the other 
 hand, have little to hope for from protection. 
 The total value of the imports of jute goods 
 in 1906 — 7 amounted to less than ninety 
 thousand pounds. 2 As the exports for the 
 same year amounted to ten and a half million 
 pounds, 3 it will be seen how small a propor- 
 tion of the trade would be affected by a duty. 
 
 Tanners and leather manufacturers would 
 
 1 Compare p. 32. 
 
 2 " Statistics for the Sea-borne Trade and Naviga- 
 tion of British India for 1907," Vol. I., p. 199. 
 
 3 " Statistical Abstract for British India for 1908," 
 p. 184. 
 
78 INDIA AND THE TARIFF PROBLEM 
 
 probably insist that their " infant industries " 
 had a special claim for protection. Our 
 survey of their position, however, has shown 
 that they deserve little sympathy. Nature 
 has showered its advantages upon their 
 trade, but they fail to rise to their oppor- 
 tunities. Their weakness is due to causes 
 which protection will only encourage. We 
 realise, however, such considerations are 
 not likely to be taken into account when a 
 tariff is being drawn up, and these industries 
 would doubtless be included with the rest. 
 
 Similar reflections arise when we consider 
 the woollen and paper mills. They already 
 receive a species of protection, as they are 
 largely dependent upon Government support. 
 They would certainly claim and obtain their 
 share of protective duties, but the methods 
 of both are unprogressive. Silk manufac- 
 tures also would doubtless be included in 
 the general scheme, although the factory 
 system is in its infancy and the bulk of the 
 production is carried on by less advanced 
 methods. 
 
INDIAN PROTECTIONISM 79 
 
 We are now left with the third group of 
 industries: those connected with agriculture, 
 consisting of sugar, indigo, tea, coffee, and 
 tobacco. Those which, at first sight, have 
 the strongest claim to protection are indigo 
 and coffee, declining industries whose mis- 
 fortunes are continually being pressed upon 
 the public of India. But an examination of 
 their imports proves that tariffs will be of 
 practically no avail. India consumes only 
 the inferior grades of indigo, and the value 
 of the imports in 1906 — 7 came to only 
 ^6,500. x Similarly there is little demand for 
 coffee, and in 1906 — 7 the imports were 
 valued only at £ i8,ooo. 2 
 
 The sugar planters are already demanding 
 protection, not as part of a general scheme, 
 but as a privilege apart from other producers. 
 No industry deserves it less, and the demand 
 is an attempt to throw upon the public the 
 
 1 " Annual Statement of the Sea-borne Trade and 
 Navigation of British India for 1907," Vol. I., p. 134. 
 
 3 " Annual Statement of the Sea-borne Trade and 
 Navigation for British India for 1907," Vol. I., p. 47. 
 
80 INDIA AND THE TARIFF PROBLEM 
 
 penalty for the faults of the planters them- 
 selves. It has been shown that they have 
 signally failed to take advantage of the 
 countervailing duties which were imposed 
 for their protection. The remedy does not 
 lie in further protection, but in their own 
 efforts. If, however, a general tariff is 
 adopted, this particular industry is not 
 likely, in the common agitation, to be 
 excluded. 
 
 The two remaining industries are tea and 
 tobacco. The tea planters, in contrast to 
 the sugar planters, have equipped their 
 estates with the most modern machinery, 
 and by such means have already driven 
 China tea almost entirely out of the British 
 market. The home market also is likely to 
 expand, since the tea-drinking habit is grow- 
 ing among the town populations of India. 
 As a large part of this home market is still 
 held by Chinese tea, a duty might lead to a 
 further expansion of the Indian industry. 
 The tobacco growers also might receive con- 
 siderable assistance from a tariff. Vast 
 
INDIAN PROTECTIONISM 81 
 
 quantities of cheap cigars and cigarettes are 
 imported, the place of which might be taken 
 by the products of India herself. 
 
 From this survey, it appears that the 
 industries which a tariff might assist are those 
 which produce iron and steel, petroleum, 
 cotton manufactures, tanned hides and 
 skins, leather goods, silk and woollen manu- 
 factures, paper, sugar, tea, and tobacco. 
 The arguments of Indian protectionists, 
 however, have no application to petroleum, 
 cotton manufactures, sugar and tea. These 
 are established industries already enjoying 
 the full benefits of production on a large 
 scale. Any advantage that they received 
 would merely represent the proceeds of a 
 tribute levied from the public, without the 
 excuse that they were in the " infant stage." 
 We are left, therefore, with tanned hides and 
 skins, leather, silk and woollen manufactures, 
 paper, tobacco, and perhaps iron and steel. 
 These may claim to come within the cate- 
 gory of nascent industries. If a tariff on 
 
 the second principle that we described were 
 i.t.p. g 
 
82 INDIA AND THE TARIFF PROBLEM 
 
 adopted these are the trades which would be 
 selected for it. But, as was pointed out in 
 our survey, the tanning and leather industries 
 are being kept back by their own inertia, 
 while silk and woollen manufactures and 
 paper-making also suffer from the con- 
 servatism of their methods. Protection will 
 merely pander to these weaknesses. We 
 are therefore reduced to tobacco and perhaps 
 iron and steel, as the industries which 
 emerge from our examination. 
 
 Our general conclusion is that India needs 
 a strong free trade school among her thinkers 
 and administrators. The tangible benefits of 
 protection reduce themselves on examina- 
 tion to such small proportions that they do 
 not justify the running the serious risks 
 which the policy entails. Nevertheless, if 
 India were once granted her fiscal freedom 
 we have no doubt that protection would 
 be adopted. The movement of opinion is 
 already so strong, and the example of other 
 countries whose position appears to be 
 similar to her own is so powerful, that no 
 
INDIAN PROTECTIONISM 83 
 
 arguments seem likely to hold her back. 
 But there is no reason why the present 
 uncritical protectionism should hold the 
 field for want of opposition. Nowhere in 
 the Indian literature on the subject are the 
 weaknesses that we have been discussing 
 emphasised. Here would be the work of 
 a free trade school. If then a protective 
 tariff were adopted they could free it from 
 its worse abuses. India with her eyes open 
 to the dangers of her course would be left 
 with no excuse for stultifying the c< infant 
 industries" argument by allowing one trade 
 after another to become a burden on the 
 community. Under present conditions no 
 industry should remain in the infant stage 
 for more than fifteen, or at the most twenty, 
 years. It should be clearly laid down from 
 the beginning that this was to be the limit 
 of the protection. India indeed may prove 
 to be the one country strong enough to con- 
 sistently carry out a policy of this kind. Her 
 government, because it is still to a large 
 extent absolute, can override "the clamorous 
 
 G 2 
 
8 4 INDIA AND THE TARIFF PROBLEM 
 
 importunity of partial interests " more 
 firmly than is possible in more democratic 
 States. If it used its strength protection 
 would be robbed of many of its possibilities 
 of evil. 
 
CHAPTER VI 
 
 THE POSITION OF THE UNITED KINGDOM UNDER 
 A SCHEME OF PREFERENTIAL TARIFFS WITH 
 
 INDIA 
 
 We now come to a discussion of the effect 
 upon British trade with India of a system of 
 preferential tariffs within the Empire. There 
 is one preliminary question which needs to 
 be discussed. The advocates of protection 
 and preference have continually insisted 
 that the United Kingdom is not maintain- 
 ing its position in the Indian markets. The 
 Tariff Commission has published its statistics 
 on the subject, and comes to the conclusion 
 that our share of Indian trade shows a 
 " continuous decline." 1 Since these may be 
 regarded as the most authoritative figures 
 by which this view can be supported, we 
 
 1 Memo. 38 of the Tariff Commission, entitled 
 " The Trade Relations of India with the United 
 Kingdom, British Possessions, and Foreign Countries," 
 Part I, 
 
86 INDIA AND THE TARIFF PROBLEM 
 
 shall examine them. The following are the 
 statistics of the import trade of India for 
 1906 — 7. 1 
 
 Value of total imports of private 
 
 merchandise from all countries into 
 
 British India ... ... ... ... ^72,205,000 
 
 Value of total imports of private 
 
 merchandise from United Kingdom 
 
 into British India ... ^48,199,000 
 
 The United Kingdom therefore holds 
 67 per cent, of the import trade of India. 
 This appears, at first sight, to be a highly 
 satisfactory position. It is, however, re- 
 garded by the advocates of a preferential 
 system as furnishing causes for grave alarm. 
 The reason for this opinion is that they 
 compare it with our position a generation 
 ago. The Tariff Commission, for example, 
 points out that in 1885 the statistics were 
 as follows : — 
 
 Value of total imports of private 
 merchandise from all countries into 
 British India ... ... ... ... £"4i,557,ooo 2 
 
 1 " Statistical Abstract for British India for 1908," 
 p. 147. 
 
 2 Memo. 38 of Tariff Commission, p. 4, 
 
TARIFFS WITH INDIA 
 
 87 
 
 Value of total imports of private 
 merchandise from United Kingdom 
 into British India ... ;£"33>4Hj00o 
 
 In 1885, therefore, the United Kingdom 
 
 held 80 per cent, of the import trade of 
 
 India compared with 67 per cent, in 
 
 1906 — 7. This is the " continuous decline " 
 
 which the Tariff Commission has revealed, 
 
 while another authority invites us to view 
 
 these figures with " horror and alarm.'' 1 
 
 Before accepting this invitation, let us 
 
 compare our position with that of our more 
 
 serious competitors. The following table 
 
 makes this clear : — 
 
 Imports of Private Merchandise into British 
 India from Principal Countries. 
 
 
 1805—6. 
 
 1906 — 7- 
 
 Increase. 
 
 United Kingdom 
 Germany . 
 Belgium . 
 Austria- Hungary 
 United States . 
 
 £ 
 
 33,414,000 
 
 96,000 
 412,000 
 362,000 
 660,000 
 
 £ 
 
 48,199,000 
 
 3,861,000 
 2,904,000 
 2,046,000 
 1,698,000 
 
 £ 
 
 14,785,000 
 
 3,765,000 
 2,492,000 
 1,684,000 
 1,030,000 
 
 Japan 
 
 All foreign countries 
 
 19,000 
 3,865,000 
 
 1,073,000 
 18,448,000 
 
 1,054,000 
 14,583,0002 
 
 1 " India and Imperial Preference," by Sir Roper 
 Lethbridge, p. 21. 
 
 2 Memo. 38 of Tariff Commission, p. 4. 
 
88 INDIA AND THE TARIFF PROBLEM 
 
 The increase of our imports, therefore, 
 has been four times as great as that of any 
 other nation, and slightly greater than that 
 of all the other nations of the world taken 
 together. These are figures on which we 
 might well look with pride. Yet they are the 
 same as those used by the Tariff Com- 
 mission to prove the steady decrease of our 
 trade. The explanation is that the statistics 
 of the Tariff Commission are based upon a 
 false premise. It is assumed that British 
 imports, starting from a base of £33,000,000, 
 ought to increase in the same proportion as 
 those of nations which started from a base 
 of a few thousand pounds. If they fail to 
 do this they are held to exhibit a " con- 
 tinuous decline." This is an example of the 
 error well known to statisticians of using 
 percentages without reference to amounts. 
 " In the beginning of things percentages 
 may be large, as we all know, but the real 
 growth may be largest where the percentage 
 is least, in consequence of the greater 
 amount at which the percentage is calcu- 
 
TARIFFS WITH INDIA 89 
 
 lated." 1 This warning against a very obvious 
 mistake is continually neglected in our tariff 
 discussions, and the figures that we are 
 criticising furnish an unusually glaring 
 example of the error. 
 
 We can now proceed to our main task and 
 estimate the effect of preferences with India 
 upon British trade. For this purpose we shall 
 examine first Great Britain's possibilities of 
 gain, next her possibilities of loss, so that 
 we shall then be in a position to conclude 
 which of the two appear the greater. The 
 statistics of Indian imports for 1906 — 7 were 
 as follows : — 
 
 Total imports of private merchandise 
 into British India, £72,205,000. 
 
 Imports from United Kingdom, 
 £48,199,000. 
 
 Imports from British colonies, £5,558,000. 
 
 Imports from foreign countries, 
 £18,448,000.2 
 
 1 Giffen, " Economic Studies and Enquiries," Vol. I., 
 p. 286. 
 
 2 " Statistical Abstract for British India for 1908," 
 p. 147. 
 
go INDIA AND THE TARIFF PROBLEM 
 
 The sum of £18,448,000 due to imports 
 from foreign countries represents all the 
 trade which might be diverted to the United 
 Kingdom by a preference in her favour. A 
 large proportion, however, of these imports 
 are of such a nature that even with a pre- 
 ference the United Kingdom could not take 
 the place of the existing source of supply. 
 The following come within this category : — 
 
 Dyeing and tanning materials 
 
 Fruits and vegetables 
 
 Grain and pulse 
 
 Gums and resin 
 
 Hides and skins, pressed and tanned 
 
 Horses 
 
 Oil ... 
 
 Raw silk 
 
 Spices 
 
 Sugar... 
 
 j. ea . . . 
 
 Wood and manufactures of 
 
 Raw wool ... 
 
 Value of Imports 
 
 from outside 
 British Empire. 
 
 ^631,000 
 
 60,000 
 188,000 
 139,000 
 178,000 
 
 68,000 
 
 1,529,000 
 
 323,000 
 
 16,000 
 4,151,000 
 
 89,000 
 574,000 
 
 58,000 
 
 ^"8,oo4,ooo 1 
 
 1 These figures are calculated from those given in 
 the "Statistical Abstract for British India for 
 1906 — 7," pp. 149 and 167 — 180. 
 
TARIFFS WITH INDIA 91 
 
 The value, therefore, of the imports of which 
 the supply from the United Kingdom can 
 be effective is reduced to £10,444,000. But 
 what proportion of these imports would be 
 captured by British merchants in conse- 
 quence of the preference ? To this question 
 no definite answer is possible, but the general 
 result is clear. As foreign countries hold 
 less than a quarter of the import trade, 
 and as even of this proportion 43 per 
 cent, consists of commodities in which the 
 United Kingdom cannot effectively compete, 
 the gain from a preference cannot be very 
 substantial. The Government of India has 
 come to the same conclusion. In the official 
 statement of their views they lay down their 
 opinion that " a preference of one-fourth 
 calculated on a very low rate of duty would 
 be of very little material advantage to British 
 manufacturers," and they go on to point out 
 that this represents as much as India can 
 offer. 1 
 
 1 "Views of the Government of India on the 
 Question of Preferential Tariffs," p. 8. 
 
92 INDIA AND THE TARIFF PROBLEM 
 
 The next step in our enquiry is to estimate 
 what the United Kingdom would lose inpay- 
 ment for the preference in India. The 
 British position is difficult, for the bulk of 
 the commodities for which India would 
 justly demand a reciprocal preference are 
 exactly of the kind to which we cannot afford 
 to offer anything appreciable. The following 
 are our chief imports from India : — 
 
 Imports into Great Britain from India 
 
 for 1906 — 7. 
 
 Raw jute ... 
 
 Wheat 
 
 Hides, raw, pressed and tanned. 
 
 Oil seeds ... 
 
 Raw wool ... 
 
 Jute manufactures 
 
 Raw cotton 
 
 rviLc ■•• • • • • • • ••• 
 
 J— / cl L ••• ••• •«• » • • 
 
 £7,700,000 
 
 5,000,000 
 
 4,400,000 
 
 3,200,000 
 
 2,200,000 
 
 1,500,000 
 
 1,200,000 
 
 860,000 
 
 840,000 
 
 600,000 
 
 These ten articles represent go per cent, 
 of the total value of British imports from 
 
 1 u Statistical Abstract for British India for 
 1907 — 8," p. 168, 
 
TARIFFS WITH INDIA 93 
 
 India. They can be divided into three 
 classes : — 
 
 (1) Articles in which a preference is a 
 practical impossibility — 
 Raw jute. 
 Lac. 
 Tea. 
 
 Jute manufactures. 
 India possesses a practical monopoly of 
 raw jute and lac. There are no competitors 
 to defend her against, and a preference is 
 therefore impossible. 
 
 The position of her tea industry is some- 
 what similar. It has been pointed out that 
 Chinese tea has been almost entirely driven 
 out of the British market. Of the tea 
 imported into the United Kingdom in 1907, 
 59 per cent, came from India. 
 31 per cent, came from Ceylon. 
 3 per cent, came from China. 
 7 per cent, came from other countries. 1 
 Thus India's only serious competitor is 
 
 1 " Annual Statement of the Trade of the United 
 Kingdom," Vol. I., p. 314. 
 
94 INDIA AND THE TARIFF PROBLEM 
 
 Ceylon, which would, of course, be included 
 equally with her in any preferential scheme. 
 Again, therefore, India has practically 
 nothing to gain. 
 
 Almost the same reasoning applies to her 
 jute manufactures. Eighty-nine per cent, 
 of our imports of jute manufactures comes 
 from India. 1 Her only effective rival, there- 
 fore, is Dundee, but as, of course, no prefer- 
 ence will give her an advantage over British 
 goods again, we have nothing substantial to 
 offer her. 
 
 The four commodities that we have 
 considered represent 46 per cent, of the 
 value of British imports from India. If the 
 United Kingdom is to offer any substantial 
 preference it must be in the remaining 
 imports. These, however, consist either of 
 raw materials essential to British industries 
 or of articles of food : — 
 (2) Hides. 
 Oil seeds. 
 
 1 " Annual Statement of Trade of United Kingdom 
 for 1909," Vol. I., p. 194. 
 
TARIFFS WITH INDIA 95 
 
 Raw wool. 
 
 Raw cotton. 
 Each of these is a necessity to our manu- 
 factures of which an appreciable rise in price 
 would not be tolerated. This, indeed, is a 
 conclusion inherent in the reasoning of the 
 Tariff Commission and of other advocates of 
 preference. They have continually insisted 
 that India has nothing to fear from the 
 retaliation of foreign nations, for her exports 
 to them consist of raw materials of which 
 they cannot afford to raise the price. 1 We 
 accept this reasoning, as will be seen in the 
 next chapter ; but it applies to the United 
 Kingdom with no less force than to foreign 
 countries. The articles are as essential to 
 our industries as to those of our competitors, 
 and a rise in the price would be equally 
 injurious. India's only remaining exports of 
 importance are — 
 (3) Wheat. 
 
 Rice. 
 They, however, are articles of food of 
 
 1 Tariff Commission, Memo. 30, p. 17. 
 
96 INDIA AND THE TARIFF PROBLEM 
 
 which no substantial rise in price will be 
 permitted in Great Britain. Besides, in the 
 case of wheat such small preference as is 
 proposed is offered equally to Canada and 
 other colonies. 
 
 The position of Great Britain is, therefore, 
 that she cannot offer any fair reciprocal 
 advantage to India without a substantial rise 
 in the price either of raw materials, on which 
 some of her important industries depend, or 
 of food stuffs. 1 This is the first item of her 
 payment for a preference in India. If she 
 proposes honestly to offer a fair return she 
 must face a serious loss in this direction. 
 This is not a very hopeful situation, but we 
 come now to further consequences of the 
 utmost gravity which in all discussions up 
 to the present have been relegated to the 
 background. 
 
 India, it has been explained, is intensely 
 protectionist. The arguments in favour of 
 
 1 There are a few other minor imports on which it 
 has been argued that we might offer a preference. 
 These are considered in the next chapter. 
 
TARIFFS WITH INDIA 97 
 
 protection in India are, indeed, much stronger 
 than in the United Kingdom. In any scheme 
 of preference the first question which will 
 confront Great Britain is whether India is 
 to be allowed to follow the example of the 
 self-governing colonies. Is she to be per- 
 mitted to erect a protective tariff against 
 British goods ? Permission to do this has 
 been refused up to the present, but we must 
 examine the reasons given for this action. 
 s/Great Britain has always maintained, as 
 her honour demanded, that she would never 
 subordinate the good of India to the selfish 
 interests of British manufacturers. She has 
 been able to force free trade upon India 
 because she has argued, with complete con- 
 sistency, that she believed that it was for 
 India's good and that she applied the same 
 principles to herself. Our position has been 
 clearly defined during the course of the pro- 
 tracted negotiations over the cotton duties. 
 When the cotton industry began to assume 
 large proportions Great Britain insisted that 
 it should not grow up under a protective tariff. 
 
 I.T.P. h 
 
/ 
 
 g8 INDIA AND THE TARIFF PROBLEM 
 
 After a length) 7 discussion the principles on 
 which we were acting were laid down in 1876 
 in a despatch from Lord Salisbury, the Secre- 
 tary of State for India. He did not deny that 
 the interests of British manufacturers were 
 concerned, but he insisted that this fact 
 would not have determined the decision of 
 it if it had not been that free trade was 
 essential to India herself. He argued that 
 the duties would encourage the cotton 
 industry to grow up under unhealthy con- 
 ditions instead of in the bracing atmosphere 
 of free trade, and would thus expose it to 
 future injury. "Whether," he concluded, 
 " the question be regarded as it affects the 
 consumer, the producer, or the revenue, I 
 am of opinion that the interests of India 
 imperatively require the removal of a tax 
 which is at once wrong in principle, injurious 
 in its practical effect, and self-destructive in 
 its operation." 
 
 In the same spirit the House of Commons 
 based their support of this decision on the 
 general principle that free trade was as 
 
TARIFFS WITH INDIA 
 
 99 
 
 applicable, in their opinion, to India as to 
 Great Britain. 
 
 " The duties now levied upon cotton 
 manufactures imported into India, being pro- 
 tective in their nature, are contrary to sound 
 commercial policy, and ought to be repealed 
 without delay so soon as the financial 
 condition of India will permit." 
 
 The duties were practically abolished in 
 1879. Although the Viceroy, Lord Lytton, 
 had to act in opposition to the majority of 
 his Council, he was supported by his finance 
 minister, Sir John Strachey. It is instructive 
 to read Sir John Strachey \s repudiation of 
 the charge that the interests of India were 
 being sacrificed to those of Great Britain : — 
 
 " Popular opinion in India had 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 manufactures was 
 enough, in the belief of many, to prove that 
 the party purpose of obtaining political sup- 
 port in Lancashire, and not any care for the 
 
 h 2 
 
ioo INDIA AND THE TARIFF PROBLEM 
 
 interests of India, was the real motive of the 
 Government. This foolish calumny deserved 
 no notice nor reply. The opposition to the 
 reform of the cotton duties satisfied Lord 
 Lytton that he must carry out the measure 
 himself or acquiesce in nothing being done 
 at all. He believed that the interest of 
 India required it, and he was not to be 
 deterred by the imputation of base motives." 1 
 It is not necessary to quote the declara- 
 tions which have since been made by 
 Government, or the resolutions passed by 
 the House of Commons. Throughout them 
 we have maintained, as we were in honour 
 bound to do, that we should not force India 
 to adopt free trade if we did not believe 
 that we were acting for her good. This 
 attitude was perfectly justifiable as long as 
 Great Britain herself upheld free trade. But 
 what will her position be if she herself aban- 
 dons it ? British statesmen will be faced by 
 two alternatives. It is possible for them to 
 assert unashamedly that India is merely a 
 1 " India," by John Strachey, p. 178. 
 
TARIFFS WITH INDIA 101 
 
 " plantation" whose good must be sacrificed 
 to the interests of British capital. They 
 can acknowledge that their arguments and 
 pledges in the past were mere hypocrisy 
 which, having served their purpose, can now 
 be abandoned. This alternative is, of course, 
 inconceivable. The only other is to grant 
 India her fiscal freedom and to allow her to 
 erect a protective tariff. 
 
 There can no longer be any doubt whether ■/ 
 the balance lies on the side of loss or gain. 
 The very fact that Great Britain holds such 
 a predominant position in the Indian market 
 now turns against her. As only one-fourth 
 of the imports of India comes from foreign 
 nations, an Indian tariff must from the 
 nature of the conditions strike chiefly at 
 British goods. Taking the imports from each 
 country as a rough measure of its loss, the 
 damage inflicted upon Great Britain will be 
 more than twelve times as great as upon 
 any other nation, and from twice to three 
 times as great as upon all other nations put 
 together. In all proposals for the reversal 
 
102 INDIA AND THE TARIFF PROBLEM 
 
 of our fiscal system India has been kept in 
 the background, and attention has been 
 concentrated upon the markets in the self- 
 governing colonies. Yet the Indian market 
 Tor our goods is not much smaller than that 
 iof all the self-governing colonies taken 
 together. 1 
 
 VThe effect of tariff reform upon our trade 
 ith India would therefore be one of the 
 governing factors which would determine 
 the ultimate result of the scheme. There 
 is no doubt that it would strike a heavy blow 
 at our trade in the best market which the, 
 ; world now offers to us. 2 
 
 1 In 1907 our exports to all the self-governing 
 colonies taken together were worth ^64,069,696, while 
 our exports to India were worth ^52,103,796. — 
 "Statistical Abstract for United Kingdom for 1909," 
 
 P- J 53. 
 9 Our exports to India are greater than to any 
 
 * other country in the world. 
 
CHAPTER VII 
 
 THE POSITION OF INDIA UNDER A SCHEME 
 OF PREFERENTIAL TARIFFS 
 
 Is India likely to obtain any advantage 
 from preferences within the United King- 
 dom ? Most of the work needed to answer 
 this question has been done in the last 
 chapter. We have seen that, as regards the 
 ten chief exports from India to the United 
 Kingdom, representing go per cent, of the 
 total, no preference is possible unless we are 
 willing to raise the price of raw materials 
 essential to our industries or of food stuffs. 
 From the nature of our conditions, there- 
 fore, we have nothing substantial to offer. 
 What our proposals would actually be can 
 only be conjectured until a definite tariff is 
 laid before us. It would probably be found 
 that Great Britain had no intention of 
 
ioj. INDIA AND THE TARIFF PROBLEM 
 
 imposing any handicap upon her industries 
 by raising the prices of materials necessary 
 to them. Our offer would thus reduce itself 
 to a preference on wheat and rice to be 
 shared with the remainder of the Empire. 
 
 This is the conclusion so far as India's 
 important exports to us are concerned. As 
 a result, however, of the poverty of any 
 possible offer from us on their account, much 
 stress has been laid upon the advantages 
 that we could give to certain other Indian 
 exports. These consist of sugar, indigo, 
 tobacco, and coffee. 1 All of them occupy 
 minor positions in our list of imports from 
 India, but we will examine their prospects 
 of gain. 
 
 We have already pointed out more than 
 once that the stationary condition of the 
 sugar industry is due to causes which tariffs 
 will not cure. The imports into the United 
 Kingdom are rapidly decreasing. Their 
 
 1 See Sir Edward Law's memorandum on "Views 
 of the Government of India on the Question of 
 Preferential Tariffs." 
 
PREFERENTIAL TARIFFS 105 
 
 value in 1897—8 was £126,000, but by 
 1906—7 it had sunk to £37,000. A pre- 
 ference would need to have very remarkable 
 effects to counteract the deep-seated causes 
 of this decline. The results which we have 
 seen to follow from the direct protection 
 given by the countervailing duties have not 
 been of a character which leads us to expect 
 much from the indirect protection of a 
 preference in the United Kingdom. 1 
 
 The expectations formed of the effect of 
 preferences upon the indigo industry appear 
 extravagant. Here we have an example of 
 the conflict between the older methods of 
 production and the wonderful achievements 
 of modern science. There can be little 
 doubt of its eventual result. The area 
 under indigo in India has, during the 
 last nine years, shrunk to one-third of its 
 former size. The exports to the United 
 Kingdom have steadily diminished during 
 the same period, and their value now is 
 only one-quarter of what it was nine years 
 
 1 See pp. 40 — 43. 
 
106 INDIA AND THE TARIFF PROBLEM 
 
 ago. 1 A preference may have some little 
 effect in making inevitable decline slightly 
 less rapid, but Sir Edward Law's opinion 
 that as the result of it " the difficulties of our 
 indigo planters would disappear as by 
 magic," is clearly extravagant. 
 
 Such exaggerated claims have not been 
 put forward on behalf of the two remaining 
 commodities — coffee and tobacco. The area 
 under coffee in India is steadily declining, 
 while the exports to the United Kingdom 
 exhibit great fluctuations, with a tendency 
 to diminish. 2 The trade has been severely 
 damaged by the competition of cheap 
 Brazilian coffee, and a preference might be 
 of some assistance to it. It would, besides, 
 be comparatively easy to give, as it would 
 not involve the imposition of any fresh 
 duties, but merely the remission or lowering 
 of the existing duty on the Indian import. 
 
 1 The value has decreased from ^435,000 in 1897 — 8 
 to ;£" 1 10,000 in 1906. — "Statistical Abstract for 
 British India for 1908," p. 168. 
 
 2 " Statistical Abstract for British India for 1908," 
 p. 168. 
 
PREFERENTIAL TARIFFS 107 
 
 Apart from any claim for preference, the 
 Indian tobacco industry has a legitimate 
 grievance. The British duty is charged at 
 a certain rate per pound instead of ad 
 valorem. As the Indian tobacco is of low 
 value, the effect is to compel it to pay a 
 higher ad valorem duty than its competitors. 
 If this grievance were removed, and at the 
 same time a preference were given to it, the 
 Indian industry ought certainly to be stimu- 
 lated to some extent. It is, however, 
 impossible at present to judge whether the 
 effect would be of any great importance, as 
 the exports to the United Kingdom are quite 
 insignificant. Their total value in 1906 — 7, 
 including that of both manufactured and 
 unmanufactured tobacco, amounted to only 
 a little over /16.000. 1 
 
 Whatever may be the precise result of * 
 preference upon these four minor exports, 
 the prospects which the policy offers to India 
 must be judged mainly by its effects upon 
 
 1 " Statistics of the Sea-borne Trade and Navigation 
 of British India," Vol. I., pp. 441, 442. 
 
io8 INDIA AND THE TARIFF PROBLEM 
 
 the staple exports, which are of real signi- 
 ficance. We therefore return to the fact 
 that, so far as they are concerned, the United 
 Kingdom is not in a position to make an 
 offer worth serious consideration. Our 
 general conclusion is that India has little 
 either to lose or gain by being included 
 in a preferential scheme with the United 
 Kingdom. 
 
 We have not yet examined the position 
 of the colonies and dependencies, because 
 they would only hold a very minor place in 
 any scheme of preferences with India. The 
 self-governing colonies would probably have 
 no place at all, as their trade with India is 
 too small. In 1902 the value of India's 
 imports from Canada was less than £2,000, 
 from New Zealand less than £6,000, from 
 Cape Colony less than £2,000, and from 
 Natal less than £4,000.* No preference is 
 possible on such figures as these, and we 
 are left with Australia, whose imports were 
 
 1 " Statistical Abstract for British India for 1908," 
 PP- J 73> *74> l8 °- 
 
PREFERENTIAL TARIFFS iog 
 
 worth £467,000, as the one self-governing 
 colony whose trade with India is not 
 negligible. The only large item in this 
 £467,000 is the import of horses, which 
 represents £231,000. Australia, however, 
 already holds 85 per cent, of the sea-borne 
 trade in horses, so that there is little room 
 for preference here. 1 
 
 Turning to the dependencies, the imports 
 from most of them into India are too 
 insignificant to furnish a basis for preference. 
 With four of them, however — British East 
 Africa, Ceylon, the Straits Settlements and 
 Mauritius — the trade assumes proportions 
 large enough to demand consideration. 
 
 The imports from British East Africa in 
 1906 were worth £141,000. Of this sum 
 £105,000 was due to spices, which are the 
 only imports of sufficient value to make any 
 preference effective. The only serious com- 
 petitors, however, are Ceylon and the Straits 
 Settlements. The value of their combined 
 
 1 " Statistical Abstract for British India for 1907," 
 p. 180. 
 
no INDIA AND THE TARIFF PROBLEM 
 
 imports of spices into India amounts to 
 £835,000, while only £16,000 worth comes 
 from countries outside the Empire. As any 
 preference would include Ceylon and the 
 Straits Settlements, it is evident that British 
 East Africa has practically nothing to 
 
 gain. 1 
 
 Ceylon, for the same reason, has nothing 
 to expect from a preference for her exports 
 of spices to India. Her remaining export of 
 importance is cocoanut oil. India receives 
 this to the value of £117,000, and at the 
 same time buys from foreign countries 
 vegetable oils worth £110,000. A duty on 
 the latter, therefore, might be of some slight 
 advantage to Ceylon. 2 
 
 Putting out of account, for reasons already 
 given, the spices of the Straits Settlements, 
 we are left with mineral oil as their only 
 other export to India of sufficient importance 
 
 1 "Statistical Abstract for British India for 1908," 
 
 pp. H9, i73> J 77. J 79- 
 
 2 " Statistical Abstract for British India for 1908, 
 
 pp. 149, 176. 
 
PREFERENTIAL TARIFFS in 
 
 to make preference worth considering. 
 Since, however, India's imports of this 
 commodity from the Straits Settlements are 
 worth £112,000, while the value of her 
 imports from foreign countries amounts to 
 £1,400,000, it will be seen that preference 
 would necessitate the dislocation of a large 
 foreign trade for the sake of a comparatively 
 small trade from the Straits Settlements. 1 
 If preference only were involved it is 
 doubtful whether such a dislocation would 
 be justified. But it has already been 
 explained that a protective duty on mineral 
 oil is not improbable. If this were imposed 
 it would be easy to introduce into it a 
 preference for the oil from the Straits 
 Settlements. 
 
 The case of Mauritius is the simplest of 
 the group. India imports sugar to the value 
 of £1,400,000 from Mauritius, as compared 
 with a value of £4,150,000 from foreign 
 
 1 " Statistical Abstract for British India for 1908,' 
 pp. 149, 179. 
 
ii2 INDIA AND THE TARIFF PROBLEM 
 
 countries. 1 There is thus a strong basis 
 for preference, while the precedent for it 
 has already been established by the counter- 
 vailing duties. If, therefore, the Indian 
 sugar planters succeed in enforcing their 
 demand for protection, a preference for 
 Mauritius would be a natural accompani- 
 ment. The Straits Settlements, Mauritius, 
 and perhaps Ceylon, thus emerge as the 
 dependencies which would reap an advan- 
 tage from a preference. 
 
 The next question which arises is, whether 
 they can offer any reciprocal benefit to India. 
 They all draw large supplies of rice from 
 India for their plantation coolies. But she 
 already has a practical monopoly in the 
 supply of this article in Ceylon and Mauritius. 
 We are therefore left with the Straits Settle- 
 ments as the only colony in which Indian 
 trade might be assisted by a preference. 
 
 The introduction of the colonies into our 
 discussion of the subject has not caused us 
 
 1 " Statistical Abstract for British India for 1908,' 
 PP- H9> I 7h i7 8 « 
 
PREFERENTIAL TARIFFS 113 
 
 to move away from the conclusion already 
 reached, that India has equally little 
 either to lose or gain from a scheme of 
 preferential tariffs within the Empire. The 
 results for Great Britain can be more 
 definitely stated. British trade will suffer 
 a staggering blow, for we shall be con- 
 fronted by a protective tariff in the only 
 great free market which we now enjoy. 
 
 1 The proper action for Indian administrators and 
 publicists to take in view of the conclusions of this 
 chapter is discussed in the Preface. 
 
 I.T.P. 
 
INDEX 
 
 Agra, factory labour, 27. 
 
 Agricultural department of British 
 India, experiments with salt- 
 petre, 17. 
 
 Agriculturists, 1,2. 
 
 Ambalal Desai, Dewan Bahadur, 
 opinion of, on protection for 
 India, 52, 53. 
 
 Annual statement of Sea-borne 
 Trade 1907, 79. 
 
 " Annual statement of the Trade of 
 the United Kingdom " quoted, 
 
 93,94- 
 Artisans, conflicting with factory 
 
 workers, 23, 24, 33, 35. 
 Assam, petroleum, 14, 15. 
 Australia, exports to India, value, 
 
 109. 
 Austria-Hungary, exports to India 
 
 from, statistics, 87. 
 
 Balfour, Rt. Hon. Arthur. 
 
 opinions of, referred to, 51. 
 Ball, Sir V., "The Economic 
 
 Geology of India" by, quoted, 
 
 14. 
 Banerjee, Surendranath, opinion 
 
 of, on Swadeshi, 55. 
 Baroda, Gekwar of, opinion of, 
 on Indian national characteris- 
 tics, 68. 
 Behar : 
 
 indigo industry, 44. 
 saltpetre industry, 17. 
 Belgium, exports to India from, 
 statistics, 87. 
 
 Bengal : 
 
 coal-fields, 11, 13. 
 
 jute trade, 11, 32, 33. 
 
 mica industry in, 16. 
 
 salt, import and export, 18. 
 
 silk industry, 37. 
 Bengal, Bay of, 18. 
 Bombay : 
 
 factory labour, hours, 27. 
 
 proportion of cotton manu- 
 factured in, 31. 
 
 silk mills, 37. 
 Brahmaputra River, 18. 
 British Colonies, total amount 
 from imports to India from, 
 89. 
 British East Africa, imports to 
 
 India from, value, 109, no. 
 British Empire, average output of 
 
 coal in, 26. 
 British India, see India. 
 British trade with India, 85. 
 Burmah : 
 
 jade industry, 20. 
 
 petroleum, 14, 15. 
 
 rice trade, 73. 
 
 ruby industry, 20. 
 
 salt imported to, 18. 
 Burmah Oil Company, 15. 
 Burmese Ruby Mines Company, 
 20. 
 
 Calcutta : 
 
 cotton exportation from, 33. 
 jute mills, 27. 
 
n6 
 
 INDEX 
 
 Canada, exports to India, value 
 
 of, 108. 
 Cape Colony, exports to India, 
 
 value, 108. 
 Cawnpore, leather manufactories, 
 
 36, 37- T v . 
 
 Ceylon, imports to India from, 
 
 109, no. 
 Chamberlain, Rt. Hon. Joseph, 
 
 opinions of, referred to, 51. 
 Cheshire, salt exported to India, 
 
 18. 
 Chili, sodic nitrate, 16. 
 " Chrome tanning in Madras," by 
 
 Alfred Chatterton, referred to, 
 
 36. 
 Coal : 
 
 average outputs compared, 26. 
 in India, see under India. 
 Coffee : 
 
 Brazilian, 106. 
 
 industry in India, see under 
 India. 
 Cotton, Egyptian, 32. 
 
 raw, considered unsuitable 
 for tariff, 95. 
 Countervailing Sugar Duties Act, 
 
 1899, referred to, 41. 
 Cutlery, Indian steel used for, 12. 
 
 Damascus steel blades, 12. 
 
 Delhi, iron pillar at, 12. 
 
 ' ' The Development of the Mineral 
 Resources of India," by Sir 
 Thomas Holland, referred to, 
 
 17. 43- 
 
 " Economic Studies and En- 
 quiries," quotation from, 89. 
 
 "Financial and Commercial 
 Statistics of British India for 
 1907," referred to, 17, 18. 
 
 Foreign countries, value of im- 
 ports from, to India, statistics, 
 87, 89. 
 
 Ganges River, 18. 
 
 Germany, imports to India from, 
 
 statistics, 87. 
 Giffen's " Economic Studies and 
 
 Enquiries," quotation from, 89. 
 Gokhale, M. G. K., quotations 
 
 from, 53, 58. 
 Great Britain, see the United 
 
 Kingdom. 
 
 Hamilton, Alexander, referred to. 
 
 59- 
 Hides : 
 
 imported to Great Britain 
 
 from India, value, 92. 
 unsuitability for tariff, 95. 
 House of Commons, opinion of, 
 on free trade for India, 98, 99. 
 
 " Imperial Gazetteer of India," 
 
 quoted, 26. 
 India : 
 
 agricultural industries, 79 — 
 
 81. 
 bleaching works, 19. 
 boot and shoe manufacture, 
 
 24. 
 boycotting of British goods, 
 
 57. 58. 
 British trade with, 85. 
 Canadian imports, 108. 
 caste, as affecting character, 
 
 69. 
 charcoal, 13. 
 
 coal, 75. 
 
 coal mines, average output, 
 
 26. 
 cocoanut oil imported to, no. 
 coffee industry : 
 
 condition of, 47, 79. 
 
 exported from India, 104. 
 
 state of trade, 106. 
 commodities : 
 
 on the free list, 71. 
 
 suitable for export duty, 
 
 73. 74- 
 
INDEX 
 
 117 
 
 India (cont.) : 
 
 copper, prospects of industry, 
 
 18, 19. 
 cotton : 
 
 duty on, 98, 99. 
 
 imports and exports, 77. 
 
 industry, 19, 98. 
 
 manufactures, 81. 
 cotton mills : 
 
 hours of labcur, 27. 
 
 number employed in, 
 
 243. 
 cotton, raw : 
 
 imported to Great Britain 
 
 from India, value, 92. 
 
 quality, 32. 
 
 unsuitability for tariff, 
 
 95- 
 spinning and weaving, 
 
 hand looms, 29, 30. 
 
 dyeing, 24. 
 
 economic position of, 4, 5. 
 
 export duties, 73. 
 
 exports from, to United King- 
 dom, 92. 
 
 factory industries and the 
 tariff question, 76, 77 
 
 Factory Labour Commission, 
 see " Indian Factory Labour 
 Commission." 
 
 factory workers, charac- 
 teristics, 23—29. 
 
 Famine Commissioners' Re- 
 port, 1S80, quoted, 9. 
 
 famine.developments counter- 
 acting, 7, 8. 
 
 famine problem, 6 — 9. 
 
 fireclay, 13. 
 
 geographical position as re- 
 gards trade, 21. 
 
 gold, 20. 
 
 graphite, 20, 75. 
 
 hand-loom weavers, numbers, 
 24. 
 
 home work and factory work 
 compared, 23. 
 
 immobility of foodstuffs, 6, 7. 
 
 India (cont.) : 
 imports : 
 
 from United Kingdom, 
 
 87. . 
 
 proportion coming from 
 
 foreign countries, 101. 
 
 trade, statistics, 86 — 91. 
 
 value of, from countries 
 other than British, 90. 
 
 value of private mer- 
 chandise, 86. 
 indigo, 79. 
 
 exported, 104, 105. 
 
 industry, condition of, 
 
 43—47- 
 industries : 
 
 difficulty in obtaining 
 labour, 63. 
 
 probable effects of pro- 
 tection upon, 71. 
 
 protected, rights of, 61. 
 
 unsuitable for protection, 
 
 75- 
 various, 39. 
 
 weakness of, 54, 55. 
 iron ore, 13. 
 iron and steel industry, 12 — 
 
 14, 75, 81, 82. 
 irrigation as affecting famine 
 
 problem, 7. 
 jade, 20. 
 jute : 
 
 artisans and factory 
 
 workers, 33. 
 import and export, 77. 
 industry, 19, 32, 33 
 manufactures, imported 
 to Great Britain from, 
 value, 92,93, 94. 
 raw : 
 
 imported to Great 
 Britain, value, 92, 
 
 93- 
 
 present trade, 73, 74. 
 
 labour, difficulty in securing, 
 
 24. 25. 
 
 labourers, slackness of, 25, 26. 
 
n8 
 
 INDEX 
 
 India (cont.) : 
 
 lac, 74, 92, 93. 
 
 leather goods industry, 81, 82. 
 
 leather materials, 35. 
 
 limestone, 13. 
 
 manganese, 15, 75. 
 
 manufacturers, character of, 
 
 67. 
 manufactures, necessity for 
 
 development of, 8, 9. 
 mica, 16, 75. 
 
 minerals, various, 20 — 22. 
 monsoons, 6, 7. 
 natural resources, 10 — 22. 
 oil : 
 
 import and export, 15. 
 pressing, 24. 
 seeds : 
 
 considered unsuit- 
 able for tariff, 95. 
 imported to Great 
 Britain, value, 92. 
 paper industry, 19, 81, 82. 
 paper mills, condition of 
 
 trade, 38, 39, 78. 
 percentage of import trade 
 held by United Kingdom, 
 86. 
 petroleum industry, develop- 
 ment of, 14, 15, 76, 81. 
 population, distribution and 
 
 occupations, 1,2. 
 potassic nitrate, 16. 
 present policy of free trade, 
 
 97- 
 proposed free trade school, 
 
 82—84. 
 protection : 
 
 argument for, 59, 60. 
 demand for, 49. 
 railway development, 7, 8. 
 rice : 95. 
 
 cleaning and husking, 
 
 24. 
 exported, 92, 112. 
 present trade in, 73, 
 
 74- 
 
 India (cont.) : 
 
 rubies, 20, 75. 
 salt industry, 17, 18, 76. 
 saltpetre industry, 16, 17, 75. 
 silk manufactures, present 
 
 condition of trade, 78. 
 silk weaving, 24, 37, 38. 
 silk and woollen manufac- 
 tures, 81. 
 sugar : 
 
 exported from, 104. 
 imported to, value, in, 
 112. 
 sugar industry, condition of, 
 
 40—43, 79, 81, 104, 105. 
 sugar planters, 79. 
 tanning and leather manu- 
 factures : 
 
 condition of trade, 24, 
 34—37. 77. 78. 81, 82. 
 exports, 35. 
 tariff, 63, 66, 67. 
 tea: 
 
 imported to Great Britain 
 from India, value, 92, 93. 
 industry, 46, 47, 79 — 81. 
 tin, 20. 
 tobacco industry, 48, 81, 82, 
 
 104, 107. 
 trade, weakness, causes, 70. 
 unemployment, 6. 
 wheat imported to Great 
 
 Britain, value, 92. 
 woollen mills, present con- 
 dition of trade, 38, 78. 
 wool, raw : 
 
 considered unsuitable for 
 
 tariff, 92, 95. 
 imported to Great Britain, 
 92. 
 yarn, production of, 32. 
 See also place-names. 
 " India," by John Strachey, 
 
 quotation from, 99, 100. 
 " Indian Factory Labour Com- 
 mission," Report, 1908, quoted, 
 25, 26. 27, 28. 
 
INDEX 
 
 ng 
 
 " India and Imperial Preference, 11 
 
 by Sir Roper Lethbridge, 
 
 quoted, 87. 
 Indian National Congress at Surat, 
 
 referred to, 58. 
 Indigo, India, see under India. 
 •'Infant'' industries, 53, 60, 64 — 
 
 66. 
 Industrial Conference, excerpts 
 
 from presidential addresses, 51 
 
 —54- 
 
 Industries : 
 
 by-products of, 18, 19. 
 chemical and metallurgical, 
 interdependency of, 19. 
 
 Ireland, Senn Fein policy in, 57. 
 
 Iron and steel, see under India. 
 
 Japan, value of imports to India 
 
 from, statistics, 87. 
 Jute : 
 
 Dundee, 94. 
 
 in India, see under India. 
 
 Lancashire workmen as com- 
 pared with Indian, 26. 
 
 Law, Sir Edward, memorandum 
 of, on "Views of the Govern- 
 ment of India on the Question 
 of Preferential Tariffs, 11 referred 
 to, 104, 106. 
 
 Lethbridge, Sir Roper, quoted, 
 
 87. 
 List, referred to, 59. 
 Lytton, The Earl of, Viceroy of 
 
 India, referred to, 99, 100. 
 
 Madras, tanning factories, 36. 
 Manganese, see under India. 
 Mauritius, sugar imported from, 
 
 to India, value, ill, 112. 
 Mica, see under India. 
 Morison's " Indian Industrial 
 
 Organisation, 11 referred to, 30. 
 Morley, Lord, reforms of, referred 
 
 to, 58. 
 
 Mr. Lajpat Rai, on British in- 
 fluence in India, 56, 57. 
 Mysore gold mines, 20, 21. 
 
 Natal, exports to India, value, 
 
 108. 
 New Zealand, exports to India, 
 
 value of, 108. 
 
 Oil 
 
 cocoanut, export from Ceylon, 
 
 no. 
 mineral, imported to India, 
 
 value, no, 111. 
 vegetable, imported to India, 
 
 value of, no. 
 
 Petroleum, see under India. 
 
 Ranade, Mahadev Govind, 
 " Essays in Indian Econo- 
 mics," by, quoted, 4, 5. 
 opinion of, on Indian charac- 
 ter, 67, 69. 
 Rice : 
 
 exported from Ceylon, 112. 
 exported from Mauritius, 112. 
 Indian, see under India. 
 Romesh Chunder Datt, on 
 
 Swadeshi, quoted, 51, 
 Ruralisation, 2. 
 
 Salisbury, Lord, Secretary of 
 
 State for India, referred to, 98. 
 Salt in India, see under India. 
 Saltpetre in India, see under 
 
 India. 
 Sind, raw cotton imported to, 32. 
 Soda ash, 19. 
 Spices, imported to India, 109, 
 
 no. 
 " Statement exhibiting the Moral 
 
 and Material Progress of India, 1 ' 
 
 referred to, 45. 
 
120 
 
 INDEX 
 
 15. i6, 17, 
 72, 74, 86, 
 
 Sea-borne 
 
 " Statistical Abstract for British 
 India," references to : 
 1906 — 7, 11, go. 
 1907—8, 92. 
 
 1908, referred to 
 
 20, 31—43. 44) 
 89, 106, 112. 
 
 1909, 102. 
 "Statistics of the 
 
 Trade and Navigation of British 
 India," quoted, 75, 77, 107. 
 Strachey, Sir John, on customs 
 
 duties, quoted, 99, 100. 
 Straits Settlements : 
 
 imports from, to India, value, 
 
 109, no. 
 mineral oil exported from, 
 in, 112. 
 Sugar, India, see tinder India. 
 Sulphuric acid, ig. 
 Surat, Indian National Congress 
 
 at, 45, 58. 
 " Swadeshi," movement, explana- 
 tion, 49, 50. 
 Swadeshi Vastu Pracharini Sabha, 
 Bombay, 1906, quotation from, 
 56. 
 
 Tariff Commission, 85—89, 95. 
 Tariff for India, impracticability, 
 103. 
 principles of, 71 —73. 
 Tariff protection : 
 
 arguments against, 66. 
 arguments in favour of, 61 — 
 
 67. 
 effective method of, 62. 
 Tata (iron and steel) works, 13, 76. 
 Tea, Ceylon, proportion imported 
 to United Kingdom, 93. 
 
 Tea, Chinese, proportion imported 
 to United Kingdom, 93. 
 Indian, see Tea, under India. 
 " The Trade Relations of India 
 with the United Kingdom, 
 British Possessions, and Foreign 
 Countries," referred to, 85. 
 Til, 74. 
 Tilak, M., on protection for India, 
 
 54- 
 Tobacco, Indian, see Tobacco, 
 under India. 
 
 United Kingdom : 
 
 estimate of loss to, in pay- 
 ment for preference, 92 — 96. 
 
 exports to India, proportion 
 and value, 86 — 89, 102. 
 
 imports from India, 89, 92. 
 
 probable results to, of an 
 Indian tariff, 101. 
 
 tea, proportions imported 
 from different countries, 
 
 93- 
 total amounts by imports to 
 India from, 89. 
 United States of America, value 
 of imports to India from, 
 statistics, 87. 
 
 Vibhaldas, Damodar Thackersey, 
 Sir, on Swadeshism, 52. 
 
 " Views of the Government of 
 India on the Question of Pre- 
 ferential Tariffs," referred to, 
 
 45- 
 "Views of the Government of 
 India on the Question of Pre- 
 ferential Tariffs," 91. 
 
 Wheat, 92, 95. 
 
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