NOTE 22
THE THEORY OF THE “DRAIN.”
The Master of Elibank, then Under-Secretary of State, included in his Indian Budget speech on Aug. 5, 1909, a brief but effective refutation of the “drain” theory:—
“If the House will allow me, I wish to digress for a moment to deal with a charge that is constantly made, and has recently been repeated, to the effect that there is poverty in India which is largely due to the political and commercial drain on the country year by year, the political, it is asserted, amounting to L30,000,000 and the commercial to L40,000,000. These figures have been placed even higher by those who wish to blacken the Indian Administration in order to bolster up a malicious agitation against this country. I think it is incumbent upon the representative of the Indian Government in this House to deal with the statement. I may at once say that it has no foundation in fact. (Hear, hear.) Its origin is to be found, no doubt, in the fact that India makes annually considerable payments in England in return for services rendered, such as the loan of British capital; but there is no justification for describing these payments as a drain, and their amount is only a fraction of the figures which I have just quoted. Let me deal first with the question of amount. As the method by which India makes her payments in England is that she exports more than she imports, all calculations as to the amount of payments must necessarily be based on the returns of Indian trade, which show by how much the Indian exports exceed her imports. If the trade returns are examined for 1904, 1906, and 1906, after