77 



by Englishmen temporarily resident here ; that the trade is to 

 a great extent monopolized by foreigners, who have ousted the 

 natives of the soil from their legitimate fields of enterprise ; 

 that the destruction of indigenous manufactures has had the 

 effect of impoverishing the artisan classes and driving them 

 to crowd on agriculture, which, owing to the capriciousness 

 of the seasons, is a precarious industry ; and that the result is 

 that the population as a whole is growing poorer and poorer 

 every day, and losing in stamina. It is, therefore, necessary to 

 examine whether there is any truth in these serious statements ; 

 to what extent the evils complained of are real, and how far 

 they are temporary and incidental to a period of transition from 

 a lower to a higher stage of industrial development, and whether 

 they are not outweighed by unquestionable benefits enjoyed by 

 the general population. In considering the above questions, 

 the trade of India must be dealt with as a whole. 



34. The question of the international indebtedness of India 

 , , . is one of great complexity, and a full con- 



Balance of traae. • t , • p • i • '. • i -n 



sideration oi it m its various phases will 

 require more space than can be afforded in this memorandum. 

 I will therefore content myself with mentioning its most salient 

 features without entering into the minutiae of the subject. It 

 is a well known fact that the value of the exports of India 

 habitually exceeds the value of the imports, the excess being 

 due mainly to remittances which India has to make to England, 

 not with a view to redress balances accruing in the ordinary 

 operations of commerce, but on account of (1) payment of 

 interest due on loans contracted by the Government of India 

 for the ordinary purposes of Government and for the construc- 

 tion of productive works, and (2) payment for services of a 

 political and non-commercial character rendered by England to 

 India. The payments made under these heads amount to li- 

 millions sterling, equivalent at the rate of exchange prevailing 

 during the last few years to about 21 crores of rupees. Besides 

 these, there are the remittances on account of private capital 

 invested in commercial and industrial undertakings by Euro- 

 peans temporarily resident in India, as also of savings out 

 of income made by them in India in the various professions. 

 The amount of these latter remittances is not ascertainable, 

 there being no data for making even a rough estimate. All 

 these payments are made in commodities and not in money, 

 according to a well known law applicable to international trade, 

 the operation of which may be briefly explained as follows. 

 The passage of money from one country to another lessens the 

 stock of money material in the remitting and increases the 



