vernment had to agree to levy a
countervailing Excise duty of 5 per cent on cotton fabrics manufactured
in Indian power mills. After a good deal of heated correspondence the
Government of India were induced in February, 1896, to reduce the duty
on cotton manufactured goods imported from abroad to 3-1/2 per cent., with
the same reduction of the Indian Excise duty, whilst cotton yarns were
altogether freed from duty. This arrangement is still in force.

Rightly or wrongly, every Indian believes that the Excise duty was
imposed upon India for the selfish benefit of the British cotton
manufacturer and under the pressure of British party politics. He
believes, as was once sarcastically remarked by an Indian member of the
Viceroy's Legislative Council, that, so long as Lancashire sends 60
members to Westminster, the British Government will always have 60
reasons for maintaining the Excise duty. To the English argument that
the duty is "only a small one" the Indian reply is that, according to
the results of an elaborate statistical inquiry conducted at the
instance of the late Mr. Jamsetjee N. Tata, a 3-1/2 per cent Excise duty on
cotton cloth is equivalent to a 7 per cent duty on capital invested in
weaving under Indian conditions. The profits are very fluctuating and
the depreciation of plant is considerable. Equally fallacious is
another argument that the duty is in reality paid by Englishmen. The
capital engaged in the Indian cotton industry is, it is contended, not
British, but almost exclusively Indian, and a large proportion is held
by not over-affluent Indian shareholders.

There is nothing to choose between the records of the two great
political parties at home in their treatment of England's financial and
fiscal relations with India, and English Tariff Reformers have as a rule
shown little more disposition than English Free Traders to study Indian
interests. In fact, until Mr. M. de P. Webb, a member of the Bombay
Legislative Council, published under the title of "India and the Empire"
an able exposition of the Tariff problem in relation to India, very few
Tariff Reformers seemed even to take India into account in their schemes
of Imperial preference. I hope, therefore, to be absolved from all
suspicion of party bias in drawing attention to a question which is, I
believe, destined to play in the near future a most important--perhaps
even a determining--part in the relations of India to the British
Empire.

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