I am as desirous as you can be, perhaps even more desirous, to give no excuse for the charge of cooking accounts, or making things look pleasanter than they ought, because I am quite confident, that if we can keep the peace and show an unimpeachable balance-sheet, we shall soon have more capital sent to India than we know what to do with.  I could not help giving, a few days ago, a hint concerning my Canadian experience on this point.  When I was appointed to Canada, the first Canadian official to whom I was introduced was the Finance Minister, who was walking about the streets of London with L60,000 of Canadian 6 per cent. debentures in his pocket, which nobody would take.  In 1849, two years later, the Montreal merchants drew up an elaborate address recommending annexation to the United States, alleging as one of their principal reasons that so long as they remained colonists, they could obtain no credit in England for public objects, and citing, in proof of this allegation, the fact that in the United States several thousand miles of railway had been constructed, in Canada only thirty miles.  Within three years from the date of this address, we had 2,000 miles of railway in Canada in course of construction, and our Government debentures (6 per cent.) were selling in London at 119, higher than those of the United States Government; in fact, we had more credit than we could always employ properly.  Now, how was this change effected?  Simply by showing a good balance-sheet, an improving country, and a contented people, and leaving capitalists to draw their own inferences from these phenomena.  I do not despair of seeing a similar state of things in India; and it was with the view of giving an impulse in this direction that I stated publicly, at Benares the other day, that we must look for the further development of our railway system to bona fide private enterprise, aided, perhaps, where circumstances required it, by Government, but not to the extension of Government guarantees.  Unguaranteed companies cannot get money while guaranteed companies are competing with them as borrowers.  Therefore, if we intend to encourage the former, we must let capitalists know that a limit will be put on the operations of the latter.

[Sidenote:  Seat of Government.]

As to the seat of Government question, I am strongly of opinion that the proper thing to do at present is to give practical effect to the provision in the Indian Councils Act, which authorises the Governor- General to call his Council together in other parts of India besides Calcutta.  This would give to the Supreme Government a more catholic character than it now possesses, and perhaps in some degree diminish the jealousy of Calcutta influence which obtains so extensively.

I do not see my way towards recommending the entire abandonment of Calcutta.  It is an important place, and has certain traditional claims which it is not quite easy to set aside.  Moreover,