CHAPTER XXII.

SWADESHI AND ECONOMIC PROGRESS.

Was it not Talleyrand who said that speech had been given to man in

order to enable him to disguise his thoughts? Indian politicians are no

Talleyrands, but they sometimes seem to have framed their vocabulary on

purpose to disguise political conceptions which most of them for various

reasons shrink from defining at present with decision. We have already

seen how elastic is the word _Swaraj_, self-government, or rather

self-rule. In the mouth of the "moderates" of the Indian National

Congress it means, we are assured, only a pious aspiration towards the

same position which our self-governing Colonies enjoy within the Empire.

For the "advanced" politician _Swaraj_ means a transition stage which he

hopes and believes must infallibly lead to a complete severance of the

ties that unite India to the Empire. For the "extremists" it means the

immediate and violent emancipation of India from British rule, and

absolute independence. So it is with the term _Swadeshi_, which means

anything from the perfectly legitimate and commendable encouragement of

Indian trade and industry to the complete exclusion of foreign, and

especially of British, goods by a "national" and often forcible

"boycott" as part of a political campaign against British rule.

Political _Swadeshi_ bases itself upon a Nationalist legend that a

"golden age" prevailed in India before we appeared on the scene, and

that British rule has deliberately drained India of her wealth. Even if

we have to, admit that Indian home industries have suffered heavily from

the old commercial policy of the East India Company and from the

formidable competition of the organized and scientific processes of

British industry, this legend hardly deserves to be treated seriously.

The _reductio ad absurdum_ of the argument has certainly been reached

when Mr. Keir Hardie alleges that Indian loans raised in England

constitute "a regular soaking drain upon India because the interest is

paid to bondholders in this country [England], and is not therefore

benefiting the people from whom it is taken." I can only commend this

sapient contention to our self-governing Colonies, who have all had

recourse in turn to British capital for the development of their

resources, and paid interest on their loans to British bondholders

without being apparently conscious of any "soaking drain." The supposed

"drain" is estimated in various ways, but a common method adopted is to

lay stress upon the excess of exports over imports[22]. Lord Curzon has

rightly pointed out that economically this test is quite fallacious; and

that in the richest country in the world, America, the value of the

exports exceeds the imports by over £100,000,000 per annum. Home charges

represent three-fourths of the "drain," and these may be calculated at

about £18,000,000 annually. Of this sum, £6,750,000 is paid in interest

on railway capital; but the railways are a source of profit, and the

payment comes from the railway passenger. Moreover, in course of time,

the Indian railways will become, and are becoming, a property of

enormous value to the State. The interest on India's public debt is

£3,000,000, but it has to be remembered how much India has benefited by

expenditure which has proved reproductive. Sir Bampfylde Fuller has

stated that the lowest estimate of the increase in produce obtained

through irrigation works alone is estimated at £30,000,000 annually. In

the last 50 years the total volume of Indian trade, imports and exports,

has increased from £40,000,000 to £200,000,000. The remaining items are

roughly, home military charges, £2,000,000; India Office, &c., £250,000;

leave allowances, £750,000; pensions, £4,000,000. A considerable part of

these pensions represent merely deferred pay. Moreover, unlike some

other countries, e.g., the United States, where £32,000,000 are spent

on pensions, mostly unearned, India has had good value, brimming over,

for her pensions. The private remittances to England, which must be

added to these sums, are not treated in any other country as an economic

loss. No American economist would so regard the enormous annual sums

remitted by immigrants to Ireland, Italy, and other European countries,

or the vast annual expenditure of American tourists in Europe. Indian

immigrants remit £400,000 annually to India from the Straits Settlements

and Malay States alone, and considerable sums must be sent from East and

South Africa and Ceylon, as well as smaller sums from Mauritius and the

West Indies. Yet these colonies do not apparently complain about a

"drain" to India.

What India is entitled to ask is whether Indian loans have been expended

for the benefit of the Indian people, and the answer is conclusive.

India possesses to-day assets in the shape of railways, irrigation

canals, and other public works which, as marketable properties,

represent more than her total indebtedness, without even taking into

account the enormous value of the "unearned increment" they have

produced for the benefit of the people of India. If, therefore, we look

at the Government of India for a moment as merely a board of directors

conducting a great development business on behalf of the Indian people,

they can certainly show an excellent balance-sheet. Let us admit that

some of the "home charges" may be open to discussion, and I shall have a

word or two or say about them later on. But taken altogether they may

fairly be regarded as the not unreasonable cost of administering a

concern which, if we wished to liquidate it and to retire from business

to-morrow, would leave a handsome surplus to India after paying off the

whole debt contracted in her name. The case was stated very fairly by

the late Mr. Ranade, whose teachings all but the most "advanced"

politicians still profess to reverence, when he delivered the inaugural

address at the first Industrial Conference held just 20 years ago at

Poona:--

There are some people who think that as long as we have

a heavy tribute to pay to England which takes away nearly

20 crores of our surplus exports, we are doomed, and can

do nothing to help ourselves. This is, however, hardly a

fair or manly position to take up. A portion of the burden

represents interest on moneys advanced to, or invested in,

our country, and so far from complaining, we have reason

to be thankful that we have a creditor who supplies our needs

at such a low rate of interest. Another portion represents

the value of stores supplied to us, the like of which we cannot

produce here. The remainder is alleged to be more or less

necessary for the purpose of administration, defence, and

payment of pensions, and, though there is good cause for

complaint that it is not all necessary, we should not forget

the fact that we are enabled by reason of this British connexion

to levy an equivalent tribute from China by our opium

monopoly.

If India must now forgo this tribute from China, it is not at any rate

the fault of the Government of India that the whole cost of the

awakening of the national conscience in England to the iniquity of the

opium traffic is being thrown upon India.

The question is not whether we have done well, but whether we might not

have done better, and whether the economic development of India,

industrial, commercial, and agricultural, has kept pace with that of the

rest of the world. If the answer in this case is more doubtful, we have

to bear in mind the idiosyncrasies of the Indian people and especially

of the educated classes. Indians have been as a rule disinclined to

invest their money in commerce or industry or in scientific forms of

agriculture. It is estimated that the hoarded wealth of India amounts,

at a conservative calculation, to £300,000,000, and this probably

represents gold alone. The annual absorption of gold by India is very

great. Lord Rothschild remarked to the Currency Commission that none of

the smooth gold bars sent to India ever came back. There is, in

addition, an enormous sum hoarded in silver rupees and silver ornaments.

It is no uncommon sight, in the cities of Upper India, to see a child

wearing only one ragged, dirty garment, but loaded with massive silver

ornaments. Indians who have money and do not merely hoard it prefer to

lend it out, often at usurious rates of interest, to their needy or

thriftless fellow-countrymen. Until quite recently the educated classes

have held almost entirely aloof from any but the liberal professions.

Science in any form has been rarely taken up by University students, and

for every B.Sc. the honours lists have shown probably a hundred B.A.'s.

The Indian National Congress itself, as it represented mainly those

classes, naturally displayed the same tendencies, and for a long time it

devoted its energies to so-called political problems rather than to

practical economic questions. Hence the almost complete failure of the

Western-educated Indian to achieve any marked success in commercial and

industrial undertakings, and nowhere has that failure been more complete

than in Bengal, where it would be difficult to quote more than one

really brilliant exception. Hence also no doubt some of the political

bitterness which those classes display. Within the last few years,

however, the politician has realized that, whilst commercial and

industrial development was steadily expanding and the demand for it was

increasing on all sides, he was left standing on a barren shore. He has

done his best, or rather his worst, to convert _Swadeshi_ into a

political weapon. His efforts have only been temporarily and partially

successful. But we may rest assured that long after this spurious

political _Swadeshi_ has disappeared, the legitimate form of _Swadeshi_

will endure--the _Swadeshi_ that does not boycott imported goods merely

because they come from England, but is bent on stimulating the

production in India of articles of the same or of better quality which

can be sold cheaper, and can, therefore, beat the imported goods in the

Indian markets.

To this form of _Swadeshi_ it is undoubtedly the duty and the interest

of the Government of India to respond. We are bound as trustees for the

people of India to promote Indian trade and industry by all the means in

our power, and we are equally bound to help to open up new fields of

activity for the young Indians whom our educational system has diverted

from the old paths, and who no longer find for their rapidly increasing

numbers any sufficient outlet in the public services and liberal

professions which originally absorbed them. No reforms in our

educational system can be permanently effective unless we check the

growth of the intellectual proletariat, which plays so large a part in

Indian unrest, by diverting the energies of young India into new and

healthier channels. At the same time there can be no better material

antidote to the spread of disaffection than the prosperity which would

attend the expansion of trade and industry and give to increasing

numbers amongst the Western-educated classes a direct interest in the

maintenance of law and order. There are amongst those classes too many

who, having little or nothing to lose, are naturally prone to fish in

the troubled waters of sedition.

In regard to agriculture, which is, and is bound to remain, the greatest

of all Indian industries, for it supports 70, and perhaps 80, per cent,

of the whole population, the Government of India have no reason to be

ashamed of their record. Famines can never be banished from a country

where vast tracts are entirely dependent upon an extremely uncertain

rainfall, and the population is equally dependent upon the fruits of the

soil. But besides the scientific organization of famine relief, the

public works policy of Government has been steadily and chiefly directed

to the reduction of famine areas. Not only has the construction of a

great system of railways facilitated the introduction of foodstuffs into

remote famine-stricken districts, but irrigation works, devised on a

scale and with a skill which have made India the premier school of

irrigation for the rest of the world, have added enormously both to the

area of cultivation and to that where cultivation is secured against

failure of the rainfall. The arid valley of the Indus has been converted

into a perennial granary, and in the Punjab alone irrigation canals have

already added 8,000,000 acres of unusual fertility to the land under

tillage, and have given to 5,000,000 acres more the protection against

drought in years of deficient rainfall which they formerly lacked.

Plantations of tea, coffee, cinchona, &c., and the cultivation of jute

have added within the last 25 years some £30,000,000 a year to the value

of Indian exports. Jute alone covers the whole of the so-called "drain."

The fact, nevertheless, cannot be denied, though it is an unpleasant

admission, that a large proportion of the immense agricultural

population of India have remained miserably poor. Indian, politicians

ascribe this poverty to the crushing burden of the land revenue

collected by Government--a burden which has been shown to work out only

to about 1s. 8d. per acre of crop and is being steadily reduced in

relation to the gross revenue of the country--but they say nothing about

the exactions of the native landlord, who has, for instance in Bengal,

monopolized at the expense of the peasantry almost the whole benefit of

the Permanent Settlement. Some very significant facts with regard to

_rayatwari_ landlords were brought out in a debate this year in the

Legislative Council of Madras, when Mr. Atkinson, in reply to one of his

Hindu colleagues who had been denouncing the Government assessments in

certain villages, produced an overwhelming array of figures to show

that in those very villages the rents exacted by native landlords varied

between eight and eleven times the amount which they paid to Government.

Nor do Indian politicians say much about the native moneylender, who is

far more responsible than the tax-gatherer for the poverty of the

peasant. Still less do they say about the extravagance of native

customs, partly religious and partly social, which makes the peasant an

easy prey to the moneylender, to whom he is too often driven when he has

a child to marry or a parent to bury or a Brahman to entertain.

Indebtedness is the great curse of Indian agriculture, and the peasant's

chief necessity is cheap credit obtained on a system that will not cause

him to sink deeper into the mire. Here again it is not Indian

politicians, but the British rulers of India who have found a solution,

and it is of such importance and promise that it deserves more than mere

passing mention.

It has been found in the adaptation to Indian requirements of the

well-known Raffeisen system. Sir William Wedderburn was, I believe,

actually the earliest advocate of this movement, but the first practical

experiments were made in Madras as a result of exhaustive investigation

by Sir Frederick Nicholson and in the United Provinces when Sir Antony

(now Lord) MacDonnell was Lieutenant-Governor, and one of the many

measures passed by Lord Curzon for the benefit of the humbler classes in

India, with little or no support from the politicians and often in

despite of their vehement opposition, whilst Nationalist newspapers

jeered at "a scheme for extracting money from wealthy natives in order

that Government might make a show of benevolence at other people's

expense," was an Act giving legal sanction to the operations of a system

of co-operative banks and credit societies. It found a healthy basis

ready made in the Indian village system, and though it would never have

succeeded without the informing energy and integrity of "sun-dried

bureaucrats" and the countenance given to it by Government, it has had

the cordial support of many capable native gentlemen. It is now only

eight years old, but it has begun to spread with amazing rapidity. The

report of the Calcutta Conference of Registrars last winter showed that

the number of societies of all kinds had risen from 1,357 in the

preceding year to 2,008, and their aggregate working capital from 44

lakhs to nearly 81 (one lakh or Rs.100,000=£6,666). The new movement is,

of course, still only in its infancy, but it is full of promise. The

moneylender, who was at first bitterly hostile, is beginning to realize

that by providing capital for the co-operative banks he can get, on the

whole, an adequate return with much better security for his money than

in the old days of great gains and, also, great losses. One of the

healthiest features is that, notwithstanding the great expansion of the

system, during the last twelve months, the additional working capital

required was mainly provided by private individuals and only a very

small amount by Government. Another hopeful feature is that the money

saved to the peasant by the lower interest he has to pay on his debts

pending repayment is now going into modern machinery and improved

methods of agriculture. The new system appeals most strongly to poor and

heavily indebted villages, and in the Punjab, where the results are

really remarkable, especially in some of the backward Mahomedan

districts, it is hoped, that within a few years nearly half the peasant

indebtedness, estimated at 25 to 30 millions sterling, will have been

wiped off.

Practical education is, however, as urgently needed for Indian

agriculture as for any other form of Indian industry. The selection of

land and of seeds, the use of suitable manures, an intelligent rotation

of crops, the adoption of better methods and less antiquated implements

can only be brought about by practical education, and the demand for it

is one that Government will hear put forward with growing insistency by

the new Councils on which Indian landowners have been wisely granted

the special representation that the agricultural interests of India so

abundantly deserve.

It was the "sun-dried bureaucrat" again who in regard to Indian

industries as well as to Indian agriculture preached and practised sound

_Swadeshi_ before the word had ever been brought into vogue by the

Indian politician. The veteran Sir George Birdwood, Sir George Watt, Sir

Edward Buck, and many others have stood forth for years as the champions

of Indian art and Indian home industries. As far back as 1883, a

Resolution was passed by Government expressing its desire "to give the

utmost encouragement to every effort to substitute for articles now

obtained from Europe articles of _bona fide_ local manufacture or

indigenous origin." In 1886, a special Economic Department was created

to keep up the elaborate survey of the economic products of India which

Sir George Watt had just completed under State direction. But the most

important administrative measure was the creation under Lord Curzon of a

separate portfolio of Commerce and Industry in the Government of India,

to which a civilian, Sir John Hewett, was appointed with very

conspicuous success. It was also under Lord Curzon that the most

vigorous impulse was given to technical education of which the claims

had already been advocated by many distinguished Anglo-Indian officials,

such as Sir Antony MacDonnell and Sir Auckland Colvin. The results of an

exhaustive inquiry conducted throughout India by a Committee of

carefully selected officers were embodied in the Educational Resolution

of 1904. Particular stress was laid upon the importance of industrial,

commercial, and art and craft schools as the preparatory stages of

technical education, for which, in its higher forms, provision had

already been made in such institutions as the engineering colleges at

Sibpur, Rurki, Jubbulpore, and Madras, the College of Science at Poona,

and the Technical Institute of Bombay. Until then the record of

technical schools had too often resembled the description which Mr.

Butler, the new Minister of Education, tersely gave of that of the

Lucknow Industrial School--"a record of inconstant purpose with breaks

of unconcern." Not only did the question of technical education receive

more systematic treatment, but a special assignment of Rs.244,000 a year

was made in 1905 by the Government of India in aid of the provincial

revenues for its improvement and extension. It was not, however, until

the liberality of the late Mr. J.N. Tata and his sons, one of the best

known Parsee families of Bombay, recently placed a considerable income

for the purpose at the disposal of Government that steps have been taken

to establish an "Indian Institute of Science" worthy of the name, to

which the Mysore Government, who have given a site for it in Bangalore,

as well as the Government of India, have promised handsome financial

assistance.

Whilst the encouragement given to Indian technical education has until

quite lately proceeded far more from the British rulers of India than

from any native quarter, it has been also until quite lately British

capital and British enterprise that have contributed mostly to the

development of Indian industry and commerce. The amount of British

capital invested in India for its commercial and industrial development

has been estimated at £350,000,000, and this capital incidentally

furnishes employment for large numbers of Indians. Half a million are

employed, on the railways alone. Another half million work on the tea

estates. The Bombay and Ahmedabad cotton mills represent at the present

day the only important and successful application of Indian capital and

Indian enterprise to industrial development. The woollen, cotton, and

leather industries of Cawnpore, which has become one of the chief

manufacturing centres of India, and the great jute industry of Bengal

were promoted almost exclusively by British, and not by indigenous

effort. Real _Swadeshi_, stimulated by British teaching and by British

enterprise, was thus already in full swing when the Indian politician

took up the cry and too often perverted it to criminal purposes, and,

though he may have helped to rouse his sluggish fellow countrymen to

healthy as well as to mischievous activity, it may be doubted whether

any good he has done has not been more than counterbalanced by the

injurious effect upon capital of a violent and often openly seditious

agitation. Mr. Gokhale himself seems to have awakened to this danger,

when in an eloquent speech delivered by him at Lucknow, in support of

_Swadeshi_ in 1907, he protested, rather late in the day, against the

"narrow, exclusive, and intolerant spirit" in which some advocates of

the cause were seeking to promote it, and laid stress upon the

importance of capital as well as of enterprise and skill as an

indispensable factor of success. British investments are large, but not

so large as they might and should be, and the reluctance to invest in

India grows with the uneasiness caused by political unrest.

That an immense field lies open in India for industrial development need

scarcely be argued. It has been explored with great knowledge and

ability in a very instructive article contributed last January to the

_Asiatic Quarterly Review_ by Mr. A.C. Chatterjee, an Indian member of

the Civil Service. Amongst the many instances he gives of industries

clamouring for the benefits of applied science, I will quote only the

treatment of oil seeds, the manufacture of paper from wood pulp and wood

meal, the development of leather factories and tanneries, as well as of

both vegetable and chemical dyes, the sugar industry, and metal

work--all of which, if properly instructed and directed, would enable

India to convert her own raw materials with profit into finished

products either for home consumption or for exportation abroad. It is at

least equally important for India to save her home industries, and

especially her hand-weaving industry, the wholesale destruction of

which under the pressure of the Lancashire power loom has thrown so

many poor people on to the already over-crowded land. Here, as Mr.

Chatterjee wisely remarks, combination and organization are badly

needed, for "the hand industry has the greatest chances of survival when

it adopts the methods of the power industry without actual resort to

power machinery." The articles on the Indian industrial problem in

_Science Progress_ for April and July, by Mr. Alfred Chatterton,

Director of Industries, Madras, are also worth careful attention. He

remarks quite truly that her inexhaustible supplies of cheap labour are

"India's greatest asset"; but he too wisely holds that the factory

system of the West should only be guardedly extended and under careful

precautions. The Government of India have at present under consideration

important legislative measures for preventing the undue exploitation of

both child and adult labour--measures which are already being denounced

by the native Press as "restrictive" legislation devised by the "English

cotton kings" in order to "stifle the indigenous industries of India in

their infancy"!

What Government can do for the pioneering of new industries is shown by

the success of the State dairies in Northern India and of Mr.

Chatterton's experiments in the manufacturing of aluminium in Madras.

There is an urgent demand at present for industrial research

laboratories and experimental work all over India, and above all for

better and more practical education. But it would seem that, in this

direction, the impetus given by Lord Curzon has somewhat slackened under

Lord Minto's administration, owing, doubtless, to the absorbing claims

of the political situation and of political reforms.

In speaking in the Calcutta Council on a resolution for the

establishment of a great Polytechnic College, the Home Member was able

to point to a fairly long list of measures taken at no small cost by the

State to promote technical education in all parts of India, and he

rightly urged that there would be little use in creating a sort of

technical University until a larger proportion of students had qualified

for it by taking advantage of the more elementary courses already

provided for them. His answer would, however, have been more convincing

could he have shown that existing institutions are always adequately

equipped and that considered schemes which have the support of the best

Indian as well as of the best official opinion are not subjected to

merely dilatory objections at headquarters. Three years ago, after the

Naini Tal Industrial Conference, the most representative ever perhaps

held in India, Sir John Hewett, who had been made Lieutenant-Governor of

the United Provinces after having been the first to hold the new

portfolio of Commerce and Industry, developed a scheme for the creation

of a Technological College at Cawnpore, which met with unanimous

approval. Nothing has yet been done to give effect to it, and it was not

only the Indian but many of the European members, official as well as

unofficial, of the Viceroy's Legislative Council who sympathized with

Mr. Mudholkar's protest when he asked with some bitterness what must be

the impression produced in India by the shelving of a scheme that was

supported by men of local experiences by the head of the Provincial

Government, and by the Government of India, because people living 6,000

miles away did not consider it to be absolutely flawless.

In one direction at any rate, India can rightly demand that Government

should be left an entirely free hand--namely, in regard to the very

large orders which have to be placed every year by the great spending

departments. It has now been laid down by the Secretary of State that

Indian industry should supply the needs of Government in respect of all

articles that are, in whole or in part, locally manufactured. But Indian

industry would be able to supply much more if the Government of India

were in a position to give it more assured support. The case of the

Bengal Iron and Steel Company has been quoted to me, which was

compelled to close down its steel works and to reduce the number of its

iron furnaces in blast from four to two because the promises of support

received from Government when the company took over the works proved to

be largely and quite inexcusably illusory. For works of this kind cannot

be run at present in India unless they can depend upon the hearty

support of Government, which, through the Railways and Public Works

Department, is the main, and, indeed, the only, consumer on a large

scale.

At the present moment, Messrs. Tata are making a truly gigantic

endeavour to acclimatize the iron and steel industry in India by the

erection of immense works at Sakti in Bengal, where they have within

easy reach a practically unlimited supply of the four necessary raw

materials iron ore, coking coal, flux, and manganese ore. To utilize

these, plant is being set up of a yearly capacity of 120,000 tons of

foundry iron, rails, shapes, and merchant bars, and plans have been

drawn out for an industrial city of 20,000 inhabitants. The enterprise

is entirely in Indian hands with an initial share capital of £1,545,000

administered by an Indian board of directors, who have engaged American

experts to organize the works. Government has granted various railway

facilities to the company and has placed with them an order for 200,000

tons of rails for periodical delivery. Upon the future of these works

will probably depend for many years to come the success of the

metallurgical and other kindred industries of India, and it is to be

hoped that Government will be allowed to give them all reasonable

assistance without interference from home. Another purely Indian

enterprise--also under the auspices of Messrs. Tata--is a great scheme

for catching the rainfall of the Western Ghats and creating a

hydro-electric supply of power which will, amongst other uses, drive

most of the Bombay mills.

In regard to minor Indian industries, hints have, I am assured, too

frequently been sent out from England that the claims of British

industry to Government support must not be forgotten. Even now no change

has been made in the regulations which compel the Government of India to

purchase all articles not wholly or partly manufactured in India through

the Stores Department of the India Office. The delay thus caused in

itself represents a serious loss, for it appears to take an average of

nine months for any order through that Department to be carried out, and

further delays arise whenever some modification in the original indent

is required. Nowadays merchants in India keep for ordinary purposes of

trade such large collections of samples that in nine cases out of ten

Government Departments could settle at once upon what they want and

their orders would be carried out both more quickly and more cheaply.

The maintenance of these antiquated regulations, which are very

injurious to Indian trade, is attributed by Indians mainly to the

influence of powerful vested interests in England.

The time would also seem to, have arrived when, with the development of

Indian trade and industry, private contracts might with advantage be

substituted for the more expensive and slower activities of the Public

Works Department. Work done by that Department is bound to be more

expensive, for its enormous establishment has to be maintained on the

same footing whether financial conditions allow or do not allow

Government to embark on large public works expenditure, and when they do

not, the proportion of establishment charges to the actual cost of works

is ruinous. When the Calcutta Port Trust and other institutions of the

same character put out to contract immense works running every year into

millions, why, it is asked, should not Government do the same? Some

works like irrigation works may properly be reserved for the Public

Works Department, but to mobilize the Department whenever a bungalow has

to be built or a road made by Government, is surely ridiculous.

Indian opinion is at present just in the mood when reasonable

concessions of this kind would make an excellent impression; and, if

they are not made spontaneously, the enlarged Indian Councils will soon

exert pressure to obtain them.

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