alone are consumed by the Indian peoples at large, from which it will be seen that, while the continuance of the bounties unchecked by Countervailing Duties would have exercised a progressively injurious effect on the sugar industry of India, the Countervailing Duties can have no protective effect whatever on the vast bulk of the sugar industry of the country; and the small quantity of highclass refined sugar which alone will be relieved from the unfair competition of the bounty-fed article is only consumed by the English residents and a few of the richest natives, and is not in any sense a "material" that is worked up in any other manufacture, or a food of the people.

Both in the speech of Lord George Hamilton in the debate of June 15, and in that of Mr. Chamberlain on the same occasion, the fanciful notion that a Countervailing Duty is a violation of Free Trade was exhaustively disposed of. Lord George, in dealing with the arguments of Sir Henry Fowler and Mr. Maclean on this point, said:

"The two preceding speakers did not seem to thoroughly grasp and analyze the difference between Free Trade and Protection. The essential difference between the two is this, that the object of Free Trade is to try and establish by a fiscal system equality of conditions, equality of treatment, and equality of opportunity for all producers in whatever part of the world they may live, and thus by encouraging production and increasing competition to benefit the consumer, who gets the advantage of lower prices in consequence of the increased production; and the object of Protection is the reverse-it is to establish inequality, so that the home producer always may have a certain advantage to enable him to compete with others. Free Trade and Protection, therefore, are antagonistic; they are irreconcilable. These two fiscal systems are in operation all over the world, fighting one another, and the most aggressive form which Protection can assume is the bounty system as associated with the production of sugar. What does the bounty system do? In the first place, the foundation of the bounty system is the drawing of an impenetrable barrier round the country in which the bounty is given, so that no sugar from outside can come in and compete with the home production. The open door is permanently and hermetically sealed; and then the door is opened in order that the bounty-fed sugar exporter may go forth and, with the resources of a great system of national taxation behind him, make war on indigenous industries, and on the enterprise of Free Trade nations engaged in the production of sugar. It is nothing more nor less than a deliberate act of economic aggresion against the principles of Free Trade."

And Mr. Chamberlain, in winding up the debate, spoke with not less force and clearness to the same effect. He denied altogether that the cheapness of sugar was entirely, or even mainly, due to the bounties; it was due principally to the reduction of the cost of production. And he then proceeded to come to close quarters with his assailants on the main question at issue. He said:

"Our opponents in this debate, and generally, claim that their principles, which they associate with the doctrine of Free Trade, absolutely preclude the consideration of Countervailing Duties or prohibition. . . . Now, sir, we say, on the contrary, that Countervailing Duties are not opposed to Free Trade. We absolutely deny it, and we allege that bounties are the very worst form of Protection, because they protect the foreigner, not in his own market, for which there might possibly be some sort of justification, at all events in exceptional circumstances, but they protect the foreigner in our market, in which he has no claim whatever to Protection. And we say, in the second place, that cheapness is not, and never has been in the view of the high priests of Free Trade, the primary object of Free Trade, and our contention is that we can counteract bounties by Countervailing Duties, or procure their abolition by prohibition, without in the slightest degree derogating from our character of orthodox Free Traders.

*

"I maintain that there is no justification whatever in the writings or speeches of any of the great Free Traders of the doctrine that Countervailing Duties are opposed to the principles of Free Trade. That is a challenge. Mr. Cobden gave two definitions of Free Trade. He defined it as being the abolition of Protective Duties. Countervailing Duties are not Protective. A Countervailing Duty, as its name implies, is a duty strictly confined to countervailing the advantage given by a bounty; it does not go beyond that, and it does not protect the industry to which it applies. Another definition that Mr. Cobden gave was that Free Trade was to enable the consumers in every country to obtain what they desire in the cheapest -(Opposition cheers)—yes, and the best, market. Yes, but that is not all. That is where you stop. But Mr. Cobden added, 'at its natural price.' That is what hon. members opposite have forgotten. They have remembered the cheapness, but have forgotten the natural price. Now, the main object of the great Free Traders was to secure the natural course of production and of exchange. That was the argument again and again elaborated. Their ideal was that each country should produce what it was naturally best fitted to produce, and to exchange it without artificial arrangements. The great Free Traders denounced all artificial arrangements which turned their trade into unnatural channels. They disapproved of Protection whenever it turned labour and capital into operations which might be considered to be artificial and unnatural, and which would be unremunerative under ordinary and natural conditions. But they advocated

Countervailing Duties in cases where it was necessary in order to restore equality.

"Let us consider this question of cheapness more closely. How much does the consumer gain by the bounties in regard to cheapness? I think he gains very little. . . . Suppose that the cost of cane-sugar is £8, and that the cost of German beet-sugar is £9. Suppose the German bounty is 30s. That enables the German to undersell the cane-sugar. In the first place, 1 of the bounty goes to cover the increase of cost of the beetsugar. That leaves 10s. which the German producer has in hand, and he may give it if he likes to the English consumer. Is he such a fool? All that is necessary for him is to give a trifle above the cane-price. If he can sell his sugar at £7 19s., he would cut out the sugar which would come in at £8, and all that he has to give away is is. a ton. The rest either goes to meet the difference in the natural price between the beet and the cane, or it goes into the pocket of the producer."

It is impossible, I think, not to feel the force of this argument, which, indeed, would go a long way towards the justification of a system of Countervailing Duties for the United Kingdom, a question at which I cannot even glance in this place, much as I should like to do so.

The Secretary of State for India, in his speech on June 15, adverted briefly to some of the results to be expected from the operation of these Countervailing Duties in India. He pointed out that the Currency Reforms now imminent as the result of Sir Henry Fowler's Committee would attract large quantities of English capital to India for investment that had hitherto been excluded by the difficulties of exchange, and he expressed a decided opinion that there was no better field for these investments open than the Indian sugar industry, provided it be kept free and unfettered by foreign Protection.

By the passing of this Act, the freedom of trade desiderated by Lord George Hamilton, and advocated more or less by every authority, has been actually established in India for the sugar industry, and the natural advantages possessed by the country for this purpose will now have full scope. So long as the European Continental Powers continue to pay these bounties, the Indian duties will divert them from their work of destroying Indian industry; and

they will, during that period, be altogether unfelt in India, or will contribute a little to the Indian exchequer. The Indian refineries, under a system of trade thus rendered absolutely free, will doubtless hold their own during this. period; and when the bounty-giving Powers consider that the bounties have done their work in killing the sugar trade in those countries that are defenceless, and in thoroughly establishing the German, Austrian, and other piratical monopolies in those countries, it may fairly be expected that the Indian refineries, and the Indian sugar industry generally, having been safeguarded during the time of stress by the timely action of the Government, will be enabled by this wise measure to reap substantial advantage from the very attacks that had been intended to ruin them. What will then happen in England, in that inevitable time of reaction, to the "cheap breakfast-table," the jam-making, the confectionery, and the other industries in whose interests we are permitting the destruction of our English and Scotch refineries, and the ruin of our West Indian colonies by the pirates, it is not within the scope of this paper to predict. One thing is certain after the passing of this Act, and that is, that the United Kingdom will then have reason to be thankful that the great sugar-producing and sugar-refining capabilities of India have been preserved, and will be an important factor that the Continental monopolists will have to reckon with, even in the hour of their triumph; and for that, England and India alike will be indebted to the courage and the prescience of Lord George Hamilton, Mr. Chamberlain, and Lord Curzon.

THE INDIAN GOLD STANDARD.

By L. C. PROBYN.

LORD GEORGE HAMILTON'S despatch of the 25th of July, and the law which has just been passed at Simla to give effect to his instructions, put the seal on the report of Sir Henry Fowler's committee, and will, it may be hoped, set at rest, at least for many years, the question as to the metal by which the monetary transactions of India are to be measured. Readers of this Review will not be surprised to learn that I hail with complete satisfaction the positive pronouncement that India is to have a gold standard. In 1886 I was one of the few who held that theoretically and practically the right remedy for what was known as the exchange difficulty lay in the adoption by India of a gold standard, and ever since I have urged this view to the utmost of my poor power. It is gratifying to find not only that its correctness has been confirmed by the course of events, but that at last a body of unprejudiced gentlemen, who have had unrivalled opportunities for studying the question, have, as I have always done, put back from the fore-front the so-called "loss by exchange" suffered by the State (which has been generally the principal, and occasionally the sole, argument advanced by responsible officials for the change of standard), and have laid special stress on the fact that "the effective establishment of a gold standard is of paramount importance to the material interests of India. Not only will stability of exchange with the great commercial countries. of the world tend to promote her existing trade, but also there is every reason to anticipate that, with the growth of confidence in a stable exchange, capital will be encouraged to flow freely into India for the further development of her great natural resources" (para. 70).

As to the particular manner in which the change is to be introduced, the scheme recommended by the committee and