FINANCIAL STATEMENT.

HC Deb 17 July 1862 vol 168 cc427-77

East India Revenue Accounts—considered in Committee:—

(In the Committee.)

SIR CHARLES WOOD

rose and said: Before I proceed to the substance of what I have to address to the Committee, it may be as well that I should explain the nature of the proceeding which I propose for their adoption. On recent occasions, when the financial statements with respect to India have been made, either by the noble Lord opposite or by myself, it has been when powers have been asked from this House to raise money for the service of India. On the last occasion—in July last—fearing that the railroad companies might not be able to raise as much money as would be required for the expenditure on account of railroads for the year, I took the precaution of asking power from the House to raise money for the purpose. I am happy to say that the railroad companies have succeeded in raising more than the sum required, and I have not availed myself of the power intrusted to me by the House. This year the finances of India are in such a state, though not quite so flourishing as at one time was represented, that it is not necessary for me to ask the House to intrust me with any power for raising money. In order, therefore, to lay ground for the statement I am about to make, I have reverted to what was the practice of the House before the last year or two, and, referring the Indian accounts to a Committee of the Whole House, I shall move in the Committee certain formal Resolutions. It may be desirable also that I should caution hon. Gentlemen, that some confusion may arise from our having to deal with the finances of three separate consecutive years. The Chancellor of the Exchequer of this country deals with the last year and the coming year; but, owing to accelerated communication with India, we have now the financial state of India for three years before us at the same time. This year I shall have to refer to the accounts of 1860–1, to what is called the regular estimate of the year 1861–2, made up towards the close of that year, and to the budget estimate made before the beginning of the year as regards 1862–3. The Resolutions, however, which I shall move will have reference simply to the year 1860–1, though it will be my duty to state what probably will be of more pressing interest—the prospect of the Indian finances for 1861–2 and 1862–3. Before doing that, I must place the House in possession of what I believe to be an accurate statement of the accounts for for 1860–1, and of the estimates for those two latter years; and I cannot, therefore, avoid referring to the differences between the Home Government and the Government of India on this subject, which appear in the correspondence on the table of the House. It is painful to me to do so, as I see that they have been represented by some persons as personal differences between Mr. Laing and myself. I can only say, on that point, that no personal feeling of difference exists on my part towards Mr. Laing. I can appeal to many common friends to say whether I have not acted in a most friendly way with Mr. Laing. We have been in constant communication, and during the last year, when he was in this country, the most unrestricted communication took place between him, the members of the Indian Council, and myself; and I was not aware that there was any difference between us on any Indian questions, or, until this matter arose, as to the principle on which the Indian accounts and estimates should be taken. I postponed the present discussion to this evening in order that Mr. Laing might be able to send to me a memorandum in explanation of the points commented upon in the despatch of the 9th of June, expressing my readiness to lay on the table any explanatory statement on his part. I thought that was due to him, though he was only an individual member of the Government of India. Obviously, however, any answer to a despatch addressed to the Government of India ought to proceed from them; and it must be observed, that for the opinions expressed in that memorandum he alone is responsible, and not the Government of India. He refers to the general financial policy of the Indian Government, and to Lord Canning's general policy. I have approved of the former, and to the latter I have given the most unqualified support. There is, however, one point on which I must be permitted to say a word; because, if anything personal is introduced into this discussion, it arises, I think, in the tone of Mr. Laing's memorandum rather than in anything that has proceeded from the India Office. There are statements made in that memorandum which, if true, would place me in the strange position of having said one thing to one man and a different thing to another. Mr. Laing states, that if he had acted on the suggestion or in accordance with the opinion of the Home Government, the 10 per cent duties on manufactured goods would now be in existence. That is a statement which he is not justified in making, and for this reason, that so long ago as April, 1861, I wrote a despatch, stating that in my opinion the duties were too high, "and that it would be consistent with sound policy to reduce them as soon as our financial condition admitted of the reduction." That view was enunciated in a public despatch of a year ago; but I also early in the present year wrote to Lord Elgin and also to Mr. Laing, stating it to be my opinion and wish that the 10 per cent duties should be reduced. I gave them no instructions to reduce them, because I was not aware of the financial position of India at the moment, while I thought it but fair that they should have the credit of making any proposal for reduction which they might think proper. Mr. Laing, therefore, is quite incorrect in saying, that if he had acted in accordance with the views of the Home Government, the 10 per cent duties would still be in existence. I have approved of the reductions, even though they may lead to a deficit, but all these matters have really nothing to do with that which I have deemed it to be my duty to endeavour to correct—namely, the inaccuracy of the estimates and accounts which have been sent home from India, not in small matters only, but in matters of very considerable importance; the most important of them involving a principle which I think has been erroneously adopted by the Government of India, and involving an error approaching to nearly a million in each of three consecutive years. Now, this question of Indian accounts is not one which has arisen this year for the first time. It has been to me, ever since I have been at the head of the Indian Department, a source of the greatest annoyance that I have not been able to depend on the accuracy of the accounts sent home from India. There are two or three members of my Council who are well versed in subjects of this description, and I myself have been unremitting in my endeavour, in conjunction with them, to bring those accounts into a correct shape. The errors in the statements of account now lying before the House exceed, however, any with which it has hitherto been my lot to deal. These accounts are wrong in principle, whereas those previously sent home involved error merely in the mode in which they were stated. I am responsible for the accounts which I lay on the table of this House, and I must therefore see that the accounts produced to Parliament are in such a shape as I can answer for. The hon. Member for Evesham, whom I see opposite, as well as many other hon. Members, takes great interest both in India and in the accuracy of all public accounts, and I have no doubt both he and they would find great fault with me if I were to submit to Parliament statements of a nature which I could not defend. Confidence in the security of Indian Stock, which is held by so many persons in this country, and confidence in the general welfare of India, which is so important to everybody in this country, depends, to a great extent, on the accuracy of the information given with respect to Indian fi- nance. The public generally, both in India and in this country, would have a just cause of complaint if other than correct information were furnished by the Department over which I have the honour to preside. If, for example, as is undoubtedly the case in the statements for the last year or two, items are omitted from the charge which were invariably included before, and items set down as revenue which were never previously so placed; and if these two proceedings are contemporaneous, it is obvious that a statement so framed is productive of a result utterly dissimilar from that shown in former years, without any real change of circumstances, and gives a flourishing view of finance as compared with previous accounts which is not founded on the real facts of the case. That such is the state of things, so far as relates to the Indian accounts with which I have to deal, I can, I think, without any great difficulty, demonstrate; but in order that I may be able to do so, it will, of course, be necessary that those Gentlemen who do me the honour to listen to me, and who take an interest in this subject, should pay close attention to each statement as it is made, because, although the explanation which I have to give is simple enough in principle, yet it may not be quite be easy to render its details perfectly clear. The accounts, then, on the table of the House, and on which my Resolutions depend, are those for 1860–1. The accounts for that year seem to have a sort of fatality attending them. Last year there was a statement made which took us all by surprise, to the effect that the expenditure for 1860–1 had been larger than that for 1859–60. We were assured by the Indian Government in June, 1860, that there was a large reduction, not in prospect, but actually realized, on a comparison of those two years; yet, much to our astonishment, we afterwards learnt, from the statement of Mr. Laing, in the Council of the Governor General, that the expenditure for 1860–1 was higher than that for the previous year. Nor was that surprise diminished when, on referring to the actual accounts, we found, instead of an increase in expenditure to the extent of £213,000, an actual diminution to the extent of £4,400,000. Now, as I told the House last year, Mr. Laing informed me that he had been misled by the estimates published by the Financial Department in India, with reference to the expenditure for 1859–60. I not unnaturally com- mented upon this in a despatch addressed to the Government of India; but I have since heard from Mr. Lushington, the Financial Secretary to the Government of India, that he did not mislead Mr. Laing in any way, and that Mr. Laing must have been perfectly cognizant of the accounts for 1859–60 having been made up at the time he made use of the estimates in his statement. I refer to this point simply in justice to Mr. Lushington, on whom I may have indirectly cast some imputation in the course of the observations which I made last year. Mr. Laing's further explanation, on which I will make no further comment, is in the papers on the table. We have now received the accounts for 1860–1, and I did not anticipate that I should have any more trouble with them. Strange to say, however, we found, when they arrived, that they contained two most singular mistakes, one involving an error to the extent of about £1,000,000, by adding a sum of that amount twice over. But on the other side of the account there was a more serious error, of about the same amount—we found the home charge reduced by about £1,000,000. We were surprised to find this to be the case, as the home charges for 1860–1 had more than once been stated with sufficient accuracy, both here and by Mr. Wilson and Mr. Laing himself in India, at about £5,300,000. We were, therefore, much astonished at finding the sum reduced to £4,300,000, without a word of explanation, except a reference to what was done in another year. It was by following the track thus suggested to us, and not from explanation afforded to us by the Government of India, that we discovered how the reduction had been made. The way in which the reduction was made, was by treating all the items included in the £1,000,000 of entries on the receipt side of the home account as items of revenue, and deducting them from the charges which appeared on the other side. I admit that a small proportion of them ought properly to be so treated; as, for instance, interest on the investment of cash balances. In the years 1862–3 I have allowed not only that deduction, but several other items of a more questionable character. But the main point at issue as to the accounts of 1860–1, which I wish to raise and to discuss separately, when I have dealt with the accounts of 1862–3, in which the same error has been made, is the question whether repayments, which constitute nine-tenths, or even more, of the whole sum deducted, can be considered to be part of the revenue of the year. In the mean time I come to the estimate of 1861–2. That estimate was sent home last year; and omitting, as we were told in the despatch of the Government of India, the loss by exchange, £473,000, and arbitratrarily reducing the home charge by £317,000, making together £790,000, the charge for the year was stated at £41,554,000. From that amount the Government of India deducted £500,000, which they intended to transfer to the local budgets, and the result was a total charge of £41,054,000. Deducting that charge from the income, £41,294,000, there was an estimated surplus of £240,000. On considering that estimate at home, we did not consider that they were justified either in deducting the loss by exchange or in making a reduction upon the Home charge; and we pointed out to them, that if those two sums, together £790,000, were added, the result would show, instead of a surplus, a deficit of £550,000. Inasmuch as the loss by exchange occurs again in 1862–3, I shall defer the argument upon that question until I have gone through the estimate of 1862–3. I only wish the Committee to observe that the same reasoning applies to both years. With respect to the reduction of the home charges, there is no pretence for saying that it was in consequence of any receipt of any sort or kind. Mr. Laing states his reason for making it. It so happened that the estimate of the military charge at home in 1861–2 was, in round numbers, £1,400,000, nearly the same as in the preceding year. The estimate was made up in the Accountant's Department of the India Office. The official gentlemen in that department knew what the charge was, having every means of ascertaining it, which the Government in India had not. Mr. Laing says he naturally concluded that the sum of £1,400,000 must have been assumed at the same amount as that in the previous year. He could not give us credit for knowing what the charge was likely to be, but chose to assume that we had neglected our duty, and taken the charge merely from the amount in the preceding year. Therefore he went to the President of the Military Finance Committee and asked him what reduction ought to have been made, and then he took off one half. This is his own statement. I say he was not justified in making, on such grounds, a reduction upon the estimate sent to India from this country—an estimate, be it remembered, made up by the Department which alone possessed the means of knowing what the charge was likely to be. In what is called the regular estimate—made up long after they had received our despatch on the subject, explaining the reason for what we had done—the same omission is made, with a full knowledge of what we had explained—namely, that the reason why the military charge in 1861–2 was nearly the same as in 1860–1, was that there was an arrear of the War Office charge, not belonging to the year, but having to be paid within it. The addition of that sum to the reduced charge for the year accidentally made the actual amount to be paid about the same as that of the preceding year. Nevertheless, after that intimation, with a full knowledge of the reason why the sum happened to be the same, the sum of £317,000 was still deducted in the regular estimate. It is curious enough that in the budget estimate, in which Mr. Laing had professed to omit the loss by exchange, it had, nevertheless, by mistake been included; but when we come to the regular estimate, in which the Government of India had been instructed by the Secretary of State to insert it, we find that they have omitted it. They were obliged, being disappointed in the transfer of £500,000 to the local budgets, to add that sum to the budget estimate; but they omitted, contrary to the directions of the Secretary of State, who is supreme in that matter, the loss by exchange, and they persisted, also contrary to the instructions of the Secretary of State, accompanied by reasons, in the reduction of the home charge to which I have already alluded. The result was that the charge for 1861–2, as stated in the regular estimate sent from India, is less than it ought to have been by two sums of £473,000 and £317,000, or a total of £790,000.

COLONEL SYKES

Is the right hon. Baronet alluding to the corrected estimate of April last?

SIR CHARLES WOOD

Yes; the estimate sent in the despatch of which the date is the 19th of April. Acting upon these grounds, the Government of India abandoned the licence tax. I wish now for a moment to refer to a debate which took place in this House in February, 1861, when I was supposed to have taken rather too sanguine a view of the finances to India. At that time, no doubt, there was a very desponding view of Indian finance taken in this country, and, more than that, there was likewise a desponding view taken in India. I stated then, that if the reductions were made which I anticipated, and if the estimated produce of the licence tax were realized—namely, about £600,000—I did not despair of the finances of India being brought round in the course of the year. According to the estimates now received, there will, after the abandonment of the licence tax, be a deficit of £595,000. I hope, therefore, that those hon. Gentlemen who doubted my statements will now acknowledge that I did not speak without warrant, because, if the licence tax had not been given up, the finances of India would have been as near as may be in a state of equilibrium at the end of 1861–2. I now come to the estimate for 1862–3. Mr. Laing states, that without any alteration either in income or in charge, the former would be £43,796,000, and the latter £42,364,000, giving a surplus of £1,432,000. In this year also the loss by exchange is omitted, and the home charge is erroneously reduced to the extent of £529,000. Altogether the apparent charge for the year is reduced by £987,000, in consequence of departing from the practice of former years, and from what we believe to be sound principles of account. Deduct from the supposed surplus the amount of these two items, and it will leave a surplus of £440,000. Taxes have been repealed to the extent of £725,000, and therefore a deficit is created, according to my view of finance, to the extent of £285,000. Whether these deductions are justifiable I am now about to discuss. I have gone through the accounts and estimates of the three years. I have shown that in the first year the errors on the two sides balance each other, and therefore the real deficit is about the sum which appears, namely, £4,000,000. In 1861–2 there will, according to the last estimates, be a deficit of £595,000; and in 1862–3 there will be a deficit of £285,000. The question turns, in both cases, substantially on two points, and two points only—namely, whether it is right to omit the loss by exchange from the charges; and, secondly, whether repayments of advances are properly to be treated as income. If they are, and if the loss by exchange be properly omitted, the deficit is not what I suppose it to be. I wish, before I approach these two points, to make clear one other point, which seems to me to be an error, and which occurs more than once in Mr. Laing's memorandum—namely, the assumption that the fact of the cash balances in India having increased is a clear demonstration that there is a surplus revenue. In the first place, I must observe, that as our expenditure in this country on Indian account can only be provided out of Indian revenue, so long as we do not draw money from India there must be an increase of the cash balances in India; but that is no proof of a surplus revenue when you include the whole charge in India and here. More than that, cash balances may be increased from a variety of sources besides revenue. Cash balances may be increased by prize money, by subscriptions to the service funds; loans are paid into cash balances; and the increase of cash balances, under these circumstances, proves nothing as to the surplus of revenue. In point of fact, the truth is, that we have been led to borrow more than we wanted. In the early part of the year 1861 the Government of India represented officially, and Mr. Laing himself backed the statement very strongly, that they were in a state of great distress; that their balances would be "reduced to the minimum point at which it is possible to conduct the Government of India;" that they anticipated that the state of the North Western Provinces would most seriously affect the revenue; that unless they had some assistance they should be obliged to stop the public works. The state of things they represented was so bad that I sold securities here, bought a million of silver, and sent it to India. Then some of the railroad companies, upon whose payments into the Home Treasury we depended for our home expenditure, seemed little likely to be able to raise as much as would provide for that expenditure. Influenced by these various considerations, I borrowed money in this country in June, 1861, stating at the time that it was to make myself sure as to the means of meeting the home expenditure. But it turned out that the representations made to us from India, in February, were erroneous. The cash balances at the end of April were high; the Treasury in India was not pressed upon to remit for our home expenses, as we had borrowed money to defray them; and in these circumstances it was inevitable that the cash balances in India should be increased. The fact is, that the cash balances have not increased now up to the amount of the excess of the money borrowed beyond the deficits which have had to be met by loans since the year 1858. Therefore the assertion that the increase of the cash balances is a clear demonstration of a surplus revenue is a total mistake. It is no proof under any circumstances; but when I show that the excess of loans actually exceeds the increase of cash balances, the presumption that there was a surplus revenue is entirely rebutted. I come now to the first question, that of the loss by exchange. It is rather a complicated matter, and I must beg the attention of hon. Members to what I am about to state. When the contracts with the railroads were made, the rate of exchange for the rupee was about 1s. 10d.; and in the contracts with the railroads it was provided, that the rupee should in all accounts between the railroad companies and Government be taken at that rate. As hon. Gentlemen are aware, the railroad money is paid into the home treasury, and is available for home expenditure. The revenues of India are paid into the Indian treasury, and to the extent necessary are applied to the expenditure on the railways in India. The consequence of this arrangement is, that for every 1s. 10d. we receive into the home treasury we are bound to expend a rupee in India. So long as the exchange remained at 1s. 10d. for the rupee, there was no loss or gain on either side; but when the value of the rupee rose to 2s., then we became bound, for every 1s. 10d. we receive here, to spend the equivalent of a rupee, or 2s., in India; and the difference between the two amounts constitutes what is technically known by the phrase "loss on exchange." When the tables are turned, when the receipts of the railways in India are remitted to this country, in payment of dividends, we shall account to the companies for 1s. 10d. only for every rupee received in India—that is, assuming a capital of a million, when we receive 545,000 rupees, in round numbers, we shall have to pay 500,000 rupees, or £50,000, for guaranteed interest, and retain the remainder (45,000 rupees) as representing 2d. in each rupee. Therefore, it is quite possible that we may recover what we are now paying; it is also perfectly possible that we may never recover a farthing. If the rate of exchange comes down to 1s. 10d., we never can recover one penny of the loss. If the re- ceipts are not sufficient to pay the interest, we never can recover a penny of it. The recovery of this money depends on the double contingency of the maintenance of the rate of exchange at 2s., and the sufficiency of the receipts of the railroads to pay the guaranteed interest. The guaranteed interest is, to a certain extent, in the same condition. We pay it now out of the revenues of India. We may recover great part of it when the railroads make a sufficient return; but in the mean time the interest has been charged on the Indian revenue of the year. When we come to receive our half of the surplus profits—and I hope the day is not far distant when we shall do so—then there will be an extraordinary receipt, as there is now an extraordinary charge, on this account. In like manner the loss by exchange has always been dealt with as an extraordinary charge, and by-and-by we may from a similar source have an extraordinary receipt. Every Government in India, up to last year 1861–2, and the Government at home, has always treated this loss by exchange as a charge on the revenue of India. I wish now to call the attention of the House to the reasons recently given by the Government of India for treating it otherwise. The first reason is given at page 13 of the papers on the table of the House. The Government say— We have omitted this charge, as the interest on advances to railway companies for this year must be an equivalent for any loss by exchange on remittances under existing contracts, and we take it for granted that you will not renew or modify any contracts without expunging this objectionable clause. Now, it will be observed that in that statement the loss by exchange is admitted as a charge on the revenue, but a set-off is pleaded—namely, that we should receive from the railway companies interest on the advances made to them equivalent to the charge of the loss by exchange. If there had been such a receipt, it might have been treated as a set-off; but, unfortunately, the Government of India should have known that no such money could be received, as the only source for the payment of railway interest is the revenue of India. The proposal of the Indian Government is simply this,—that they will set off one payment against another; and the loss by the exchange, which we pay, is to be compensated for to us by the interest which we also pay upon the money bor- rowed in order to make advances to some of the railroad companies. When the railway companies were not able to raise money for themselves, we advanced it to them to prevent their works from standing still. That money we borrowed, and pay 5 per cent interest for it, and this 5 per cent interest that we pay on the money so borrowed is, forsooth, to be set against our loss by the exchange! In his memorandum Mr. Laing has given two reasons for this proceeding, which are to be found at page 3 of that paper. He says he will subject it to two tests. The first is— Suppose the rate of exchange on account had been fixed at 2s. 2d. instead of 1s. 10d. for the rupee, should we have treated the excess as a receipt? Certainly, we should. And the statement I have already made shows that we propose to proceed on this principle, because if the rate of exchange remains at 2s., we shall account for 1s. 10d. only on each rupee that is remitted for the payment of interest, and the difference between the 2s. and the 1s. 10d. will be treated as an extraordinary receipt. The second test is this— How can that be a charge on the revenue of the year which has certainly not been paid in the course of the year; and which, as certainly, is owing to no one at its conclusion? And Mr. Laing adds— I appeal to this latter test with the more confidence, because in no estimate or account from England has this sum ever been entered as a charge to be paid there, or included in any demand for remittances; and it is quite certain that no one claims it in India. No doubt it has never been included in any account transmitted from England, for the simple reason that it is paid in India. Then comes Mr. Laing's statement that "it is not paid in India." Why, it has been paid every year in India, and appears in all the Indian accounts from the beginning. The Government in India has always included it in the Indian accounts. And what is really rather staggering is, that here we have the accounts of 1860–1, transmitted by the Government of India when Mr. Laing was at Calcutta, in which there appears among the charges in India "loss by exchange on railway transactions, £469,759." How, with a document before him in which this is stated as a charge on the Indian revenue, Mr. Laing should now say that it is not paid in India, certainly passes my comprehension. Not only that, but the Government of India, or at any rate one member of it—I mean Sir Bartle Frere—speaking as the organ of the Government of India, in the Governor General's Council in July, 1861, when Mr. Laing was in England, and when they had received our despatch stating that this charge ought to be included—Sir Bartle Frere, in moving the Income Tax Bill, used these words— After mature consideration, however, the Secretary of State did not think it desirable to propose any alteration in the terms of the existing contracts with the old guaranteed railway companies, and it would therefore have been necessary to have added a sum of £495,000 to the estimate of expenditure of the current year. But this will not affect the total of the estimate, for each Government had charged itself with the loss by exchange on railway capital, and the whole sum was included in the £3,096,916 there set down for 'civil and political charges, including contingencies.' For some years it was not stated separately; it was included in the miscellaneous charges. I myself directed that it should be shown separately; and in two, if not three, consecutive years since then, it has been shown separately as a charge on the Indian revenue paid in India—even the very last account for 1860–1, as I have said, so showing it. Then, I take the two tests which Mr. Laing himself takes, and the second—the one to which he appeals with the greatest confidence. He says it never has been paid in India. That it has been so paid I have proved from the very last accounts. Every Government has so treated it. Thinking it right that the same course should be continued, we determined that it should be included, and gave directions in the clearest terms accordingly. In spite of the positive directions of the Secretary of State to the Government of India, they have chosen to exclude that which every Government had included, and which we, the supreme authority in this matter, directed to be included, in order to give a just view of the finances of India. Hon. Gentlemen will at once see, that if that which has invariably been included in the expenditure is to be excluded in a subsequent year, you have a very fallacious account of the expenditure in India. I think, Sir, I need say no more on the subject of the loss by exchange. The next question is the repayment of advances; and on that I will again refer to Mr. Laing's own memorandum, and quote his own words, that there may be no misapprehension about the matter. He says— The Secretary of State says, 'it is contrary to the first principles of account to treat sums so repaid as part of the income of the year.' I must confess my surprise at such a statement from one who has filled the office of Chancellor of the Exchequer in England. Well, I certainly have filled that office, and I repeat again, with the most perfect confidence, and with the conviction that no person in this House who has ever been Chancellor of the Exchequer will contradict my opinion, that the repayment of an advance cannot be regarded as an item of revenue. There are certain advances made from the treasury in India on account of the Imperial Government. I will enter into detail about them presently. They are repaid to the treasury of the Indian Government at home. What they are really is a transfer from the treasury in Calcutta to the treasury in London. They are not treated as items of expenditure when advanced, and of course they cannot be treated as items of revenue when repaid. Mr. Laing quotes against me great authorities—he quotes my right hon. Friend the Chancellor of the Exchequer on my right, another right hon. Friend of mine whom I do not see in the House, and also Mr. Wilson. But the cases are not in the slightest degree similar or parallel. Certain muskets were supplied to the Spanish Government, and the expense of the muskets charged upon the revenue of this country when they were made. The repayment was treated properly as an extraordinary receipt. So, in the Crimean war, stores were provided and charged upon the revenue; and when they were afterwards sold, the produce of them was properly carried to the miscellaneous receipts, according to the ordinary course and practice. The cases of what was done by Mr. Gladstone and Sir George Lewis do not, therefore, bear in the least on the question; but Mr. Laing asks— Or, again, was Mr. Wilson, after five years' experience as Secretary to the Treasury, ignorant of the A B C of accounts when he made a precisely similar deduction in 1860? My answer to that is, that I do not believe Mr. Wilson ever made "a precisely similar deduction." I cannot exactly make out to what Mr. Laing here alludes. I suppose it must be to the same thing as he mentioned at the beginning of his memorandum, where he states that Mr. Wilson with his own hand made an arbitrary reduction in the home charges. All I can say is, that there is not the slightest trace of anything of the kind in the accounts. If done at all, it must have been done in 1859–60, or the next year. Well, we have got the amount of the home charge which Mr. Wilson stated for 1859–60; we have got the amount of the home charge which we sent out to Mr. Wilson. Our charge was stated to include stores, and Mr. Wilson from it very properly deducted the charge for stores, as it was intended it should be done. We could not tell here exactly what the amount was; but the stores are always charged to the Indian account, although paid for here. We sent out, in November, 1859, a certain estimate of £5,700,000, including stores. Mr. Wilson sent home in the appendix to his speech made in February what the amount of the stores was. He deducted that from the total which we sent out, and the remainder is the sum which was properly stated by him as the whole charge, exclusive of stores. But that was not an arbitrary deduction from the home estimate, nor is it treating a repayment as revenue. In the next year he stated as home charge the precise sum which we had sent out. I will now state what these repayments and advances are. Payments were made for troops going to China, or on account of the troops there; advances are made on account of the emigration of Coolies, upon account of pensions paid in India to out-pensioners of Chelsea Hospital, and on account of charges for the late China expedition; and bills of exchange have been cashed in India on account of the Imperial Government. Those are all advances made to the Imperial Government. It was settled that all the charges for the late China expedition should be borne by the Imperial Government, and therefore all expenses incurred in India for that expedition were treated as advances to the Imperial Government, and never appeared in any account of Indian expenditure. We authorized the paymasters of the forces in China to draw upon the Calcutta Treasury to a certain stipulated amount, which was to be repaid here. That was done, but they were simply advances made out of the Indian Treasury in Calcutta, and repaid by the Imperial Treasury in London. I have in my hand half a dozen navy bills drawn, some by the storekeeper at Trincomalee, and some by the paymasters of ships, for cash upon the Treasury in Calcutta, and then made payable to the Secretary of State for India. They are cashed in India, and sent to us. We send them to the Accountant General of the Navy, and they are paid into our Home Treasury. It seems to be the simplest matter possible, and I cannot understand how anybody, even the most ignorant of financial matters, could call those repayments items of revenue. In illustration of my views I will mention a case which may be familiar to all. Most of us have a London banker and a country banker. Last year I had a visit from a friend at my house in Yorkshire. When he was coming to London, he told me he was short of money, and asked me to give him my check upon my Doncaster bankers for £20, which he would repay in London. That was about Christmas. He received the £20 in Doncaster, and early in the following year he repaid the sum to my bankers in London. Would any one say that I ought to treat that £20 received for me by my London bankers as part of my income for the year? I really am ashamed, as an ex-Chancellor of the Exchequer, to have to discuss such a point. It is still more strange that there should have been such a proposition put forward, because I hold in my hand a Report of the Finance Committee which sat in Calcutta, whilst Mr. Laing was there, and which was sent to us in a despatch signed by him. It is a Report in reference to the statement of expenditure sent from this country to India, and it says— The financial transactions with the home authorities connected with railways in India, payments on account of the civil service in India, and remittance transactions with Her Majesty's Government, not being charges against India, but merely remittances or advances, are omitted from the statement. They are all duly adjusted in the accounts prepared in this country, the sums received and paid in England being met by equivalent debits or credits in the general accounts. That is a perfectly accurate statement of the mode of dealing with such transactions, and I confess that it does pass my comprehension how, with such full knowledge of what was the right mode of dealing with them, it can be alleged for a moment, as it is urged with great perseverance in the memorandum, that repayment of advances can or ought to be treated as revenue. Then the argument goes on in the oddest way to say— I cannot understand what is meant by stating that these China advances formed no part of the annual charges for the year in which they were made. They were actually paid, I imagine, in hard rupees out of the cash balances of the Indian Treasury. No doubt, they were paid in hard rupees; but all the disbursements, whether for an- nual expenditure or for advances, were made in hard rupees. I will venture to say that the navy paymaster's bills were paid in hard rupees, but no one can say that this constitutes them an item of charge against the revenue of India. The memorandum then goes on in a way that is not a little remarkable. Mr. Laing refers to a document which appears in these despatches or Statement (A) as conclusive proof of his view— The Statement (A) of home charges in 1862–3 is essentially a revenue statement sent for the purpose of enabling me to make a budget for the year, and not a cash balance statement, showing other receipts and payments that are not revenue, which, in fact, was not sent until a subsequent mail, and did not reach India until after the budget had been necessarily produced in anticipation of the new financial year. I must attribute that statement to forgetfulness, although it is remarkable that Mr. Laing should have forgotten that the Statement (A) was never sent from this country, but was made up in India. There was only one statement sent from this country, and that appears in the printed papers in the hands of Members. It is quite true that Statement (A) is purely a revenue statement; but it was made in India, and contains the mistakes which I have commented upon. The statement sent from England, which appears at page 48 of the papers, is not a mere revenue statement, but is exactly that which Mr. Laing describes it not to be—a statement comprehending revenue and other receipts and disbursements. It speaks for itself, and the despatch enclosing it is upon the table, it is the document from which Statement (A) was made up by omitting a good deal of what we sent out. As I did not send out that Statement (A), and as what I did send out is the direct reverse of what it is alleged to have been, the argument derived from that paper is altogether without the slightest foundation. Mr. Laing goes on to say that I did not admit in the statement of revenue in the accounts for 1861–2 the receipts from the students at Addiscombe College. I must say, that in this memorandum and in the correspondence, there does appear a lamentable confusion of ideas as to estimates and accounts. There are no accounts for 1861–2; but if I refer to the last account upon the table for 1860–61, at page 48, I find that those receipts are deducted from the military expenditure—"Military College at Addiscombe, £16,000." Therefore the statement in the memorandum is quite erroneous; for it is the practice to show in the accounts the receipts from the students. The memorandum goes on to say— One of the grayest charges against me is, that I did not, in the budget of 1861–2, provide by taxes for an estimate of £215,000, made at home, to be spent upon the new India Office. I should be glad to know who made that charge. I have never made it, and I defy any one to find it in the despatches. I agree in the principle laid down in the memorandum, that extraordinary receipts are revenue, and extraordinary charges are expenditure; but, I repeat, without fear of contradiction, that advances are not items to be charged upon expenditure, and that repayments are not to be treated as revenue. I hope that I have now satisfied the Committee upon both points—the loss by exchange and the item of repayments, upon which the question turns of a surplus or a deficit; and that the Council of India and I—for we are all agreed—are right in maintaining that which every preceding Government has maintained. Having then, as I trust, established the correctness of our view of what the two sides of the account ought to contain, I now proceed to state to the House the condition of the Indian finances for the last three years. I am afraid I have already wearied the House by my long explanation; but it was of paramount importance to establish a true basis on which to frame our Indian accounts, so that everybody may know that we deal with them in India just as we should in this country, and that they are perfectly correct and straightforward. The accounts for 1860–1 show a very satisfactory state of improvement. The estimate showed a deficit of £6,500,000; the real deficit was £4,000,000. The increase of revenue over estimate was £3,400,000, and the increase of expenditure over estimate was about £800,000. The income of the year 1860–1 was £42,903,000; the estimated income for 1861–2, without the licence tax, was £42,911,000, and for 1862–3, after the remissions, £42,971,000. The charge for 1860–1 was £46,924,000; the estimated charge for 1861–2 was £43,506,000, and for 1862–3 £43,255,000. These are the corrected figures, and represent what I believe to be the real state of the charges and income in these years. The result of these corrected figures gives, for 1860–1 a deficit of £4,021,000; for 1861–62, £595,000; for 1862–3, of £284,000. Looking to the progress of the revenue, and to the reductions which have been going on, I entertain a hopeful belief that by the end of the year we may find that deficit even less; but that is the calculation at which we arrive at present from the corrected figures. I think it would be satisfactory to the House if I next compare the present state of Indian finance, as we may say that we have now got to something like a permanent state, with the condition of the finances in the year before the mutiny, and we shall then see the progress we have made. In 1856–7—the year ending April 30, 1857—excluding railways, we may say that our income and expenditure were about equal. I hope that will be the case at the end of this year, at any rate in the next. In 1856–7 the income was £33,375,000, and the charge, excluding the railways, £33,300,000, showing a surplus of £75,000. The income has risen since that period, according to the estimates of 1862–3, after remissions, to £43,000,000 in round numbers—an increase of about £9,600,000. Of this, the income tax has produced £1,500,000, and the other taxes which have been increased have produced about £4,000,000—that is to say, £5,500,000 is due either to increased taxes or new taxes. The remainder is due partly to opium, partly to land tax and other taxes, making altogether £9,600,000. The charge in 1856–7 was £33,300,000, and in 1862–63 it will be in round numbers about £41,300,000, showing an increase of £8,000,000. The interest on the debt has increased £2,436,000; the military charges, £1,674,000; and the judicial and police charges, £1,338,000. But for the expenditure on railroads there would be a surplus of about £1,670,000. When we remember that the railroad expenditure will be reproductive, and will contribute to the development of the resources of India, we shall not, I think, look upon this as an unsatisfactory state of things. The charge for railroads, of course, makes a considerable difference. The annual charge of 1856–7, guaranteed interest and loss on exchange, was £673,000; in 1862–3 it was £2,688,000. From this we must, of course, deduct traffic receipts, which, in 1856–7, were £121,000, and in 1862–3, £730,000. The net charge therefore in respect of railroads, in 1856–7, was £551,000, and in 1862–3, £1,958,000. The interest on the debt in 1856–7 was £2,420,000, and in 1862–3 exactly double, or £4,857,000. I now come to what is a most important item—the military charges—which, of course, increased very heavily during the mutiny. In 1856–7 they were £12,781,000; in 1858–9 they were more than double that amount, or £25,449,000. Since that year they have gradually decreased, naturally enough, from a cessation of war charges. They have now got as low as £14,456,000, and I must frankly say that I do not think we shall get them much lower. Some time ago, when we were calculating our future expenditure, we thought if we could get these charges down to £15,000,000, we should do very well; and I think now, if we manage to get them down to £14,000,000, it will be as much as we can do. Here, however, I must again refer for a moment to a passage in Mr. Laing's memorandum, in which he refers to a fear that the Home Government would send out too many recruits to India. I refer to that, because it is a repetition of a charge which has been made in India in the public press there; and which has been sanctioned by a letter of Mr. Laing's, and by a speech which he made. The charge was that in order to relieve the finances of my right hon. Friend here we had unduly charged the finances of India. That is not the case. The Home Government preceded the Government of India in suggestions for the reduction of expenditure, and there are dispatches on the table which show that such was the case. The Government of India, in 1860, asked for forty-five regiments of infantry for the Bengal presidency. After consulting Lord Clyde and other military authorities, we thought thirty-eight sufficient. They asked for thirteen regiments of cavalry; we reduced the number to eight. Of course we did this with great hesitation, because, after all, the Government of India is responsible for the safety and security of India, and it was only after consulting eminent military authorities that we took that responsibility on ourselves. They have since changed their minds, and proposed to send home more regiments. We have acceded to every request they have made, interposing, however, in two cases some delay. They sent home artillery when the number of European artillery were 2,000 below the number which they had reported to be necessary; and they proposed to send home a regiment from Madras, when we thought they had mistaken the opinion of the Madras Government. We desired them to send home batteries of the old artillery only as the new batteries were formed; but we ultimately allowed them to send the old batteries home, if they were confident that no risk was run by leaving the artillery in India for a time below the proper number. As regards the regiment for Madras, they had mistaken the views of the Madras Government; but, nevertheless, they sent a regiment home from Bengal, and we have since agreed to take one more regiment from Madras next year. Then comes the sending out of the troops, and this is a point of great importance, because it has been stated that we sent out too many recruits last year, and that the number of men in India would be 9,000 above what was fixed. That representation was written from India last October. Well, what are the facts? In June the Indian Government had stated that what they wanted for India are 73,000 men. We have since brought the number down to 71,000; but when we sent out the recruits, we did not know that the requirements of the Government of India had come down so low as 73,000. I think I explained once before, that in order to keep up an average number of men in India throughout the year, they must be above the required number when the recruits arrive, because as the recruits arrive only once a year, in the beginning of winter, the men would otherwise in the course of the year fall below the average, owing to deaths, sickness, and invaliding. The casualties, including time-expired men, are reckoned at 10 per cent per annum. In order to keep up 70,000 effective men or thereabouts, we ought, therefore, to have sent out 3,500, but the number we actually did send was 2,800. I take the following statement from a paper sent home by Mr. Laing. On the 1st of September the effective force in India was 74,255; on the 1st of December, when all the recruits but 100 had arrived, it was 74,419; so that the sending out of 2,700 men added only about 200 to the strength of the army. Last autumn happened to be a very fatal time to the European army in India, owing to the prevalence of very severe cholera. I must beg hon. Members to bear in mind, that to hold India safely you must hold it with an adequate European force. An inadequate force is likely to lead to disorder and bloodshed. Therefore, to send out an inadequate number of recruits is not only the worst policy, but it is also the worst economy. My hon. and gallant Friend behind me (Colonel Sykes) is constantly quoting the small expense of the army before the mutiny. In order to show how this was attained, I beg to refer him to a paragraph in one of the dispatches on the table, dated May 2, 1861— The cost of the army is £11,500,000 a year in India, and in England £1,250,000; and this was below the proper cost, as it was only attained by allowing the 'effective' European force to remain dangerously below its established strength. I am not prepared to revert to so dangerous a course. I will now state the deficits (including expenditure on railways) of each year from 1856–7 to the present time. In 1856–7 the deficit was £474,000; in 1857–8 it was £8,390,000; in 1858–9 it was £14,187,000; in 1859–60 it was £10,769,000; in 1860–1 it was £4,021,000; in 1861–2, I estimate it at £595,000; and in 1862–3 at £284,000. These figures show that we are coming to a healthy state; and I hope and trust, that if the revenue thrives as it has done, we may at the end of the year be better off even than I now anticipate The system of open loan has been put an end to, and I trust we shall close that dangerous system of having only to put one's hand into the treasury for money without caring how it came there. I hope by a sound system of finance we shall soon have a permanent surplus, instead of a deficit year by year. With respect to a topic of the greatest possible importance—namely, the public works, and the prospect of the cotton cultivation in India—I stated very fully two or three weeks ago what has been done. I will now merely say the Madras and Sind lines of railroad are now open; the East Indian line will be open at the close of this year or the beginning of next year; and the Great Indian Peninsular, with its cotton branches and its very difficult works through the Ghauts, is making most satisfactory progress. The late Governor of Bombay, Sir George Clerk, who lately returned to England, gives the most promising account of the progress of the works. I mentioned before that the works on the Godavery were delayed principally in consequence of fever and the want of labor. Roads are being constructed for the purpose of bringing down cotton and acting as feeders to the railways, and they too have made satisfactory progress. I asked Sir George Clerk about the supply of cotton that was to be expected from India; and he says, so far as Bombay is concerned the growth was considerably increased this year. The export from Bombay last year was about double that of the year before. Of course, whether the additional growth will make up for the exhaustion of the stocks on hand, which must have been the result of the large quantity which came last year, is what nobody can tell; but Sir George says he believes the price which is now paid will divert a large portion of the cotton from the native spinners to this country. And now a word as to Government interference After the fullest consideration, and taking the opinions of the most experienced and competent men, I have come to the conclusion that Government interference ought not to be given. I have always felt in the strongest way, and I do not, even in this case, see any reason for departing from that opinion, that in all matters of trade Government interference is pretty sure to be prejudicial. I believe in the present case what is wanted is the reasonable expectation on the part of the grower of a fair and permanent remuneration for his labor. That is the result of my inquiries, and I believe there is no difference in this respect between India and other parts of the world. That which takes place elsewhere, and in regard to other produce, will take place in India; in regard to cotton an adequate demand will produce an adequate supply. India produces a great number of other things—sugar, indigo, silk, jute; but an adequate inducement has been given to the ryots for producing them, and cotton also will be produced when a similar inducement is given. I saw the other day Mr. Saunders, who has been employed by Lord Canning to report on the growth of cotton in the North of India, and he said that the universal answer which he received to his inquiries was—"We require nothing from the Government; we only want buyers, and we will supply as much cotton as they require." I have been asked to send persons to obtain information as to the production of cotton. A commissioner was appointed in each Presidency for the purpose of obtaining the fullest possible information. The Cotton Supply Association sent their Secretary, Mr. Haywood, to India, who went into the western districts in company with a Government officer, in order that he might have every facility afforded to him. The Reports of the Commissioners are printed. Mr. Haywood is on his way home. I believe that as much information exists on the subject as is needed, and what we want is not inquiry, but action. The mode of procuring cotton is well known. Transactions are carried on by means of advances made at Bombay, for instance, to agents in the country, and by them again to a series of native agents, each of whom makes a profit; but without some such system as this, I believe you could not reach the requisite number of ryots, who are only to be got at, not by the means of large capitalists, but by a great number of small dealers. Each ryot produces only a small quantity of cotton, If gentlemen in this country are desirous of sending agents to India for the purpose of getting into a more direct communication with the producers, that would be a legitimate mode of proceeding, and to any extent that the Government could fairly aid them in that purpose aid shall be afforded to them. I have been asked to send commissioners and interpreters with them, to facilitate communication with the ryots. My belief is that more can be done by the influence of the local officers, with whom the ryots are acquainted, than by sending persons round with the agents; but still the latter course shall be adopted, if desired. What I wish to be understood is, that the Government is not disposed to turn cotton merchant, but that any aid that can be reasonably given by the Government shall be readily given to those merchants or manufacturers who are disposed to put any agency of their own in motion for procuring a larger quantity or a better quality of cotton. There are other matters to which I now wish to refer. It is not in finance alone that great progress has been made in India. Great reforms and improvements in the administration of India have been made, and I believe that I am warranted in saying, that seldom, if ever, has so much been done in the same period in any country in the world. Last year an Act of Parliament was passed for the improvement of the administration of India. The whole Government of India was recast powers of legislation were restored to the presidencies of Madras and Bombay, which they have not exercised since 1833. A Council has been created in Bengal, to which also legislative powers have been given. All these Councils may deal with most matters within their respective jurisdictions, but there are certain more important questions which are reserved for the Council of the Governor General. To his Council as well as to those in the different Presidencies, Europeans not in office, and native gentlemen, have been admitted. Three distinguished natives took their seats in the Governor General's Council. Five out of the six additional members at Bombay were natives. I am happy to say, that as far as we can judge of the experiment, it has succeeded. Natives of high rank, at much sacrifice to themselves, and casting away prejudices, have taken their place by the side of the Governor General in the Council; and having rended reports of their speeches, I must say that they take a statesmanlike, sensible view of the different questions brought under discussion. I was rather amused by the remark made with respect to them by an English member of Council, to the effect that "we must look after ourselves in order not to be surpassed by the natives." I have heard from an Englishman, than whom no one is better acquainted with India, that in Bengal it is impossible to describe the effect produced on the native mind by the presence in the Council there of three native gentlemen of rank. High Courts of Judicature have also been constituted in the three Presidencies, and I have not been able to place any native in these courts, only because no native is at present technically qualified for office in them; but I believe that natives will, when technically qualified, occupy places as satisfactorily in those courts as in the Councils. I will only shortly refer to the Civil Service, as I have already answered a question on this subject from the right hon. Gentleman opposite this evening. I do not anticipate that there will be room for the admission of any great number of persons in consequence of the recent Act; but the Lieutenant Governor of Bengal complains that, even with the extended field of selection, he cannot find fit persons enough for the administration of the provinces. I am sorry to say that the arrangements as regards the army are not yet completed; and I am aware of the not unnatural dissatisfaction which this circumstance has occasioned. The delay has been mainly occasioned by anxiety to give every consideration to the claims of officers in India. The old Indian regiments of artillery and engineers have already been gazetted as portions of the royal army. With respect to the regiments of infantry and cavalry which were to be formed as an addition to the Queen's army, the officers have not yet been posted. I cannot ac- count for the delay; but we must wait until we receive from the Government and the Commander-in-Chief in India the list of officers selected. I hope, from what I hear, that the cause of delay has been removed, and that before long the additional regiments of the line will be gazetted. The native army has been considerably reduced. The reduction was necessary on political as well as financial considerations. A large native army is a source of danger, and I believe that a much smaller one will be equally effective. It is impossible, however, to deny that the reduction has involved some hardships on the officers and men. I can only say that the greatest consideration has been shown to them. The men have been discharged with gratuities or pensions according to their period of service. Additional retirements have been provided for the officers; many of them have joined the Staff Corps; and though we cannot at present say positively, I am inclined to believe that there are few, if any, for whom there is not present employment; and for all of them their full pay, and promotion to the higher ranks are continued as if their regiments were still in existence. I have been asked once or twice about the Indian navy, but I have not yet had an opportunity of consulting Sir George Clerk, who has recently returned to this country, on the subject. The Government are however, most anxious to consider fairly and liberally the claims of the officers of the navy, whatever may be ultimately decided on. So far as regards the changes which have been made from this country; but in matters more exclusively Indian the progress has been no less. With regard to the treatment of the native princes, a most important change has been made, for which Lord Canning deserves the highest praise. Formerly the native princes were subject to great anxiety, believing it to be the fixed intention of the British Government to get rid of them, and take possession of their territories. Considerable alarm was thereby caused among them; but Lord Canning reversed that policy, and avowed that it was not the intention of the Government to annex their territories. He consequently set the minds of the native princes at ease, and nothing can be more satisfactory than the result of that policy. I have the testimony of Sir George Clerk, than whom no one knows India better, to the effect that this policy of Lord Canning has been the source of the greatest strength to us in India, and that we might now reckon on the support of ten or twelve in lieu of three or four chiefs who were with us before. The next change which Lord Canning introduced has reference to the creation of an intermediate class between the peasantry and the great chiefs. The general effect of our rule has been to destroy such a body of persons, and the peasantry has enjoyed the greatest advantages under our rule; if it were otherwise, they would have taken part against us. It is, however, quite clear, that whatever advantages we may have conferred on the peasantry, it was not a natural state of things that there should be no independent intermediate class connected with land. Lord Canning endeavored to provide a remedy for that state of things, and the experiment which he made in our new territory of Oude has, I am happy to say, so far been most satisfactory. There is a remark made by Lord Canning in connection with this subject which, perhaps, I may be allowed to quote. In addressing the talookdars of Oude, he said— While you, who are now the independent magistracy of your province, have already become, although you are the newest of the Queen's subjects, the foremost of them in the practice of self-government, and in enforcing by your example and authority an intelligent reverence for law and order. It is, indeed, remarkable that the persons intrusted with so much power, have displayed not only great skill, but also the utmost impartiality. They, moreover, have shown their loyalty in various ways. They offered Lord Canning to put down the practice of infanticide; and feeling the great sorrow which oppressed their Sovereign and our own, they determined to forego all demonstrations of joy on one of their great festivals, which is usually celebrated with great rejoicing. Measures, with the objects that I have stated, were passed by Lord Canning. But there was another which he had not time to carry into operation, but about which he was equally anxious. He felt that it was most advisable to take some steps to benefit the general owners of land. Lord Stanley, some time ago, wrote a dispatch, calling the attention of the Indian Government to the sale of waste lands, and the redemption of land revenue. That subject Lord Canning proceeded to take into consideration, and certain Resolutions of the Government of India on these subjects have been published. About the same time Lord Canning sent Colonel Baird Smith to the North Western Provinces, to make inquiries with respect to the best mode of preventing a recurrence of the famine which unfortunately prevailed in that quarter. Colonel Smith, in the performance of that duty, became very much struck with the improved condition of the people since the last famine, which was, in his opinion, to be attributed to the longer leases which had been granted, and the more provident habits which had been produced by the circumstance of a more permanent tenure of land being enjoyed by the occupiers. The consequence was a recommendation by him of a permanent settlement of the land. Lord Canning was much struck with the proposal, and sought for further information on the subject; but he had not time, I regret to say, to mature any measure dealing with it. In conjunction, however, with my Council, I have had it under consideration for some time, and Her Majesty's Government have determined to carry out a measure for the permanent settlement of the land revenue throughout India, as soon as the various districts are pronounced to be in a condition fit for it. Hon. Members must not, however, suppose that we propose, as was done by Lord Cornwallis in Bengal, to sacrifice, to a great extent, the rights of the actual owners of land. The settlements made throughout India for the purposes of the revenue, the holdings of the several occupiers being duly registered, will furnish us with the information necessary to enable us to avoid the evils of his proceeding. What we propose is, that a settlement should be made with each of the present occupiers, and that each should be secured in the possession of the land which he now holds, paying a fixed rent for it for ever. Great political advantage will, I think, be the result of the adoption of such a measure, inasmuch as it will tend to make the people of India attached to our rule, from which alone they can hope for the permanency of such an arrangement—and I need not point out the security afforded by permanent tenure for improvement in the condition of the country, such, I hope, as we have not yet witnessed. I may, perhaps, be allowed, while dealing with this part of the subject, to quote part of a report from Mr. Paterson Saunders on the state of Oude, in which he gives the answer of a most intelligent native on that subject, and the views which he expresses, and which completely corroborate those on which we propose to act— …. "Nearly six months have elapsed since the publication of his Excellency the Viceroy and Governor General in Council's Resolution, and to this date not a single landholder in Oude or the North West Provinces has applied for the redemption of the tax upon his land. What the native landholders do want is a fixity of the public demand, that when the settlements now being made are completed, they should be fixed in permanence. I will here give the evidence of a most intelligent native in Oude, and from the unanimity of evidence I have gathered, I select him as the representative of the whole. What, then, do you think is the real want of the country?—A permanent settlement on the half asset principle, and no other tax upon land. If I got a permanent settlement of my Jaghire, I would retire from the service of the Government, after having served for twenty-six years, without pension, give up my 600 rupees a month, and go and improve my estate.' The want, then, of the landholders is a permanent settlement; and on this subject I will not waste further argument, for even his Honour the Lieutenant Governor of the North West Provinces has surrendered the whole question, when, in the 23rd paragraph of his Minute, dated Camp, Ghatumpore, 27th January, 1862, on my first report, he says that his comments upon it are not made 'with any intention of disputing the expediency of converting the settlements of these Provinces (subject to certain conditions) into a permanent settlement—for it is to that issue that the extension from time to time of the period of settlement has been gradually advancing… … …"If the Supreme Government of India proclaims the principle of permanency of settlement, and directs that all districts where the areas of measurement have been completed, and they are considered to be in a fit state for such permanent settlement, be at once settled, it may well be left to Governors of Provinces and Chief Commissioners to exempt such districts as are manifestly unprepared for such settlement. These last words express most correctly the order we have given. Of course, our plan will come gradually into operation, which will, I think, be all the better, as various modes of improving our proceeding may be developed in the progress of the measures which may be adopted in subsequent settlements. By these measures, for the benefit of the princes, the chiefs, and the people of India, I sincerely trust that we shall have done much to deserve and ensure their attachment to our rule. We have learnt a stern lesson from the recent mutiny in India. It will be necessary to keep up there a considerable military force; but our greatest strength will, I believe, lie in the attachment of the Indian people. I believe, in the words which Lord Canning addressed some time ago to the talookdars of Oude, that, "in spite of bygone animosities, and of the broadest differences of race, religion, and social usages, a generous and trustful rule is the surest way to make a loyal and dutiful people." I cannot conclude, having mentioned the name of Lord Canning, without giving expression to the feeling which we all entertain of deep regret at the loss which the country has sustained in the death of that distinguished statesman. Never was a man more severely tried. He had every prospect of a peaceful rule when he went to India. The outbreak of the mutiny rudely dispelled his pleasant anticipations; but, through the severest storm which India has ever encountered, he with a calm and firm hand held the helm. He was not induced to take any rash step by fear or alarm; but, at the same time, he omitted nothing that was necessary for the maintenance of our power. All his actions were tempered with mercy, and he succeeded in suppressing the rebellion and in acquiring the affections of the people. Nor, when that success was achieved, was his policy less worthy of applause. He brought the finances of India into their present state by reductions carried out with a firm and unsparing hand. He conciliated the affections of all the princes, chiefs, and great landowners in India. His name has been a tower of strength, and his policy will be a tower of strength, continued, as I have no doubt it will be, by the noble Lord who has succeeded him, supported by the Government at home. One of the most remarkable events which have recently taken place in India was an address presented to Lord Canning not long ago by the inhabitants of Benares. Everybody knows that Benares is one of the most bigoted cities in India. Never since the days of Warren Hastings have the inhabitants of Benares approached a Governor General, Lord Canning passed through Benares shortly before he left India, and the inhabitants presented to him an address in which they expressed their estimation of the course he had pursued during the mutiny. It was the best testimony which he could have received of the success of his measures. The inhabitants of Benares said to him— Your Excellency remembered in the time of victory and in the plenitude of restored power, that you were the representative of a Christian Government, and extended a merciful and unhoped-for clemency to those who might have looked-for extermination, while, at the same time, you fully vindicated the majesty of outraged law and upheld the honour and dignity of the Government confided to your care. A more honourable testimony, or one more clearly expressed, could not have been given to his merits, and it was offered by a society as little likely to regard favourably a Christian rule as any to be found within the borders of our Indian empire. A difference of opinion may exist as to some of the measures which have been adopted in India, but it has been a source of the greatest satisfaction to me that every one of them, when mentioned in this House, has met with general approbation. We certainly have not been idle. The government of the country, the course of law the civil and military services have all been placed on a satisfactory footing, while the condition of the princes, the chiefs, the great landowners, and the peasantry of India has been improved. We know by past experience that danger may lurk beneath the most tranquil appearances; but a new era seems to have dawned upon India, and an amount of improvement is going on of which there has been no example in former times. It is our duty to guard against the recurrence of danger; but, as far as we can see at present, no such danger is apparent, and we have every reason to believe as well as hope that peace will be preserved, and that under the blessing of Divine Providence the connection between this country and India will be strengthened, and that the improvement of India will not only tend to the increased happiness of her people, but will be a source of wealth and benefit to the people of these Island.

The right hon. Baronet concluded by moving the following Resolutions:—

1. 1. That the total net Revenues of the Territories and Departments under the immediate control of the Government of India for the year ended the 30th day of April 1861 amounted to £3,758,421 sterling, and the Charges thereof, for the same period, other than Military Charges, amounted to £3,412,724 sterling.
2. 2. That the total net Revenues of the Bengal Presidency for the year ended the 30th day of April 1861 amounted to £12,009,752 sterling, and the Charges thereof, for the same period, other than Military Charges, amounted to £2,441,829 sterling.
3. 3. That the total net Revenues of the North Western Provinces for the year ended the 30th day of April 1861 amounted to £5,056,801 sterling, and the Charges thereof, for the same period, other than Military Charges, amounted to £2,540,310 sterling.
4. 4. That the total net Revenues for the Punjaub for the year ended the 30th day of April 1861 amounted to £2,943,385 sterling, and the Charges 459 thereof, for the same period, other than Military Charges, amounted to £1,330,682 sterling.
5. 5. That the net Revenues of the Territories and Departments under the immediate control of the Government of India, of the Bengal Presidency, of the North Western Provinces, and of the Punjaub together, for the year ended the 30th day of April 1861, amounted to £23,768,359 sterling, and the Charges thereupon, including the Military Charges, amounted to £18,427,377 sterling, leaving a surplus available for the general Charges of India of £5,340,982 sterling.
6. 6. That the total net Revenues of the Madras Presidency (Fort St. George) for the year ended the 30th day of April 1861 amounted to £5,271,915 sterling, and the net Charges thereof, for the same period, amounted to £5,685,818 sterling, showing an excess of Charges over Revenue in the above Presidency of £413,903 sterling.
7. 7. That the total net Revenues of the Bombay Presidency for the year ended the 30th day of April 1861 amounted to £6,435,411 sterling, and the net Charges thereof, for the same period, amounted to £5,635,391 sterling, leaving a surplus available in the above Presidency for the general Charges of India of £800,020 sterling.
8. 8. That the total net Revenues of the several Presidencies for the year ended the 30th day of April 1861 amounted to £35,475,685 sterling, and the Charges thereof amounted to £29,748,586 sterling, leaving a surplus Revenue of £5,727,099 sterling.
9. 9. That the interest on the Registered Debt of India paid in the year ended the 30th day of April 1861 amounted to £3,232,104 sterling, and the Charges defrayed in England on account of the Indian Territory, in the same period, including guaranteed interest on the capital of Railway and other Companies, after deducting net traffic receipts of Railways amounted to £6,516,380 sterling, leaving a deficiency of Indian Income for the year ended as aforesaid to defray the above Interest and Charges of £4,021,385 sterling.

MR. HENRY SEYMOUR

said, he cordially concurred in the eulogium which the right hon. Baronet had passed upon the late Earl Canning. He could not avoid remarking upon the singular and melancholy duty which appeared to fall upon this country, that we should yearly mourn the loss of some great statesman and benefactor of India. Mr. Wilson had died before the benefit of his valuable services had been felt. Mr. Ritchie had died—now Earl Canning was dead; and Mr. Laing had been compelled to return from India by an attack of illness which had nearly proved fatal, and from which he was still suffering. Fortunately he still survived; and, whatever might have been his shortcomings, there remained enough of good done by him during his short residence in India to entitle him to the gratitude of his country. Seven years age the finances of India were stated by Lord Dalhousie to be in a deplorable condition, and he asked that a financier acquainted with the system of keeping the public accounts in India should be sent out. He was told in reply that there were plenty of able financiers and accountants in India, and it was five years before a gentleman well versed in the subject was sent. This was very unfortunate, for the consequence was that the delay had produced great confusion, and had delayed all attempts at improvement. Mr. Wilson had fallen a victim to his exertions, but before he died he laid the foundation of all the improvements which had since been made. At last this department was getting into something like order, although it was far from being complete. The first fault found with Mr. Laing by the right hon. Gentleman had regard to deficits being added instead of subtracted in the year 1861; but it should be remembered that Mr. Laing only arrived in India on the 1st of January of that year; and considering the amount of business he had to transact, some excuse ought to be made for him in having committed that mistake, which led to no result, one error having balanced another. Both Mr. Laing and Mr. Wilson joined in the opinion that there should not be so many estimates. They had an anticipation estimate, a sketch estimate, and a regular estimate; then they came to the accounts of the year, and when they discussed them they were fifteen months behind. There should be only one estimate and one statement of accounts. With reference to the loss by the exchange, the Government of India had sent a memorandum by Mr. Laing in December last. The right hon. Gentleman answered it on the 15th of February; but although he went into all the other items in that memorandum, he never alluded to the loss by exchange; it was not, therefore, unnatural that Mr. Laing should suppose that the right hon. Gentleman was satisfied with the explanation that had been offered. This was not a matter between the right hon. Gentleman and Mr. Laing, but between the right hon. Gentleman and the whole Government of India; who were all of the same opinion with Mr. Laing. Mr. Laing was not, then, open to any severe animadversion with respect to this point either in 1861–2 or in 1862–3, for he had not received any remonstrance on the subject till his financial statement was made in June last. Whether the China advances were right or wrong, he thought the answer of the Indian Government on that head perfectly satisfactory. With respect to the cash balances, he admitted to the right hon. Gentleman that they were not all profit; but when the Indian Government stated that cash balances to the amount of £8,000,000 were sufficient to carry on the Indian Government, and they had cash balances to the amount of £18,000,000, surely the additional £10,000,000 might be considered as available surplus. When Lord Dalhousie had a balance of only £14,000,000, he was authorized by the India Board to apply a certain portion of it to public works in India. Then, how had the Indian Government dealt with the surplus they calculated they possessed? The protective duties had been taken off. The removal of the 5 per cent from piece goods was a very judicious measure; and it was better to trust to the £500,000 being met from the surplus of the cash balances rather than to raise that sum by obnoxious taxes. The remission of £250,000 of the income tax had entirely relieved two-thirds of the persons who were liable to this odious impost. That was a most salutary change. He was gratified to hear the right hon. Gentleman's opinion about the income tax. Almost the first words which the late lamented Lord Canning spoke to Mr. Laing on his arrival was, that he would rather govern India with 40,000 British troops without an income tax than govern it with 100,000 British troops with such a tax. It was therefore satisfactory to find that the right hon. Gentleman had reduced that obnoxious impost. He regretted that the Home Government should have placed the restriction they had done on the expenditure upon education, and also upon roads in India. The chief Superintendent of Works in India had forcibly pointed out the disadvantages of voting mere driblets for the roads. It was almost incredible, after all the experience of the mutiny, that the roads between Calcutta and the North West Provinces should be still so much neglected. Even within a few miles of Calcutta there was a want of bridges and the most ordinary accommodation for traffic. Considering the wonderful fertility of the Delta of Bengal and its enormous population, there was no wonder that the Chief Superintendent of Works should have urged the Government to make a much larger expenditure upon improved means of communication than the niggardly sum which the home Government sanctioned. He hoped the Secretary of State would reconsider the prohibition he had placed upon the Government of India, and allow them to carry out their budget. If ever there was a Government which deserved to have large latitude in this respect, it was the present Government of India, which had reduced the annual expenditure by many millions. Some effort ought to be made to diminish the Indian home expenditure. The manner in which large sums were laid out in building palaces—for such they were—for the Indian Department in England created a feeling of jealousy in India, where severe retrenchment was insisted upon even in regard to the most urgent public works. While the Indian Council at home was but an experiment, they ought not to spend £100,000 or £200,000 in providing a new palace for it, where everybody would be made so exceedingly comfortable, that when once they had got into it, they would not at all like to be turned out again. There were very great complaints as to the mode in which business was transacted in the new India Office—more, indeed, than under the old Court of Directors, and it was not yet certain that the Department would be permanent. He could not see why the India Board should cost the vast sum that was set down for it in the Estimates. He trusted the right hon. Gentleman would turn his attention to the subject before next Session. With respect to Mr. Laing and the Indian Government, they had not had a proper opportunity of seeing the receipt side of Indian home account. Information as to the home charges had been furnished to them, but not as to the home receipts. He did not think it was quite fair for the home Government to withhold all statements of the home expenditure, and therefore there was some palliation for the conduct of the Indian Governments He was glad to find that the statement of that evening was more satisfactory than former statements had been, and that there was no mention of a loan, as was the case last year. The only matter to interfere with complete satisfaction was the little difference that had arisen between the Secretary of State and the Government of India, which had been occasioned by the anxiety of the Indian Government, which was responsible for the well-being of that country, to reduce the expenditure to the lowest point. The new Governor General had agreed with his predecessor upon that point, and there was every ground to hope that next year there would be a sufficient surplus to enable the right hon. Gentleman to sanction a greater expenditure. At present, besides the cash balances, there was a reserve of £5,000,000 expended in the year on public works, only £500,000 of which was military expenditure, and the remainder was reproductive expenditure. He had no doubt that those public works would be eventually profitable, and even now they had benefited the community of India, and had increased the revenue of India by the money which they had caused to be circulated among the population. The only point upon which he differed from the right hon. Gentleman was that he appeared to be rather too diffident in encouraging the investment of British capital in India. There were few parts of the world where railways had been carried out without the assistance of the State, and he should be glad to see the right hon. Gentleman the Secretary of State for India give greater encouragement than he had hitherto done to British enterprise in India in connection with Government aid. For example, he thought that irrigation companies should have received greater encouragement, as no works were more likely to produce permanent benefit in India than works of irrigation. He was also of opinion that greater encouragement should be given to the sale of waste land in India. He trusted the right hon. Gentleman would reconsider his determination upon these matters.

MR. SMOLLETT

said, that he agreed in many things that had been said by the right hon. Gentleman the Secretary for India; but having been many years in that country, he was desirous of offering a few remarks upon the management of the finances of India in this country. In the first place, he wished to make two admissions. He admitted that great progress had been made towards affecting an equilibrium between income and expenditure in India. The great reduction in the army, to which that state of things was mainly traceable, was due chiefly to the efforts of a Commission that had been appointed in India to carry out reductions. He also admitted that there had been a great advance in the material prosperity of India and its inhabitants, which had begun in 1850, and had continued until the present time. The price of cereals had more than doubled; and as India yielded a vast amount of raw produce, and as almost every class in the country were more or less dependent upon agriculture, the increase of prices had greatly increased the general prosperity. Hence the great ad- vance in the revenue generally, and in the land revenue particularly, on which one half of the Indian revenue depended. But he must say he thought the management of Indian finance was most faulty, as was proved by the simple fact, that while many of the taxes were temporary, the expenditure for the present year was greater by £10,000,000 than it was five years ago. Indian finance ought to be and might be clear and intelligible, but it was never dealt with in that House in a manner calculated to make the subject popular. When Mr. Wilson went to Calcutta, the income was between £38,000,000 and £39,000,000, while the expenditure was £48,000,000, leaving a deficit of about £10,000,000. That deficit arose from the extravagant expenditure in the army, the Commissariat, the Staff Corps, and the civil servants in the Public Works Department. The Governor General ought to have put an end to that extravagance, and to have produced an equilibrium between expenditure and revenue; which might easily have been achieved without taxing the manufacturers of Lancashire and Yorkshire, and without even the aid of a "great arithmetician" from the Treasury Bench, like Mr. Laing, whose only qualification seemed to be that he knew nothing about Indian affairs. No part of the reductions recently made, he contended, belonged to Mr. Laing—they would all have been carried out if neither Mr. Wilson nor Mr. Laing had gone out to India at all. They had been made entirely in the expenses of the public departments, and nobody could make those reductions except the Governor General, aided by public servants of long Indian experience. Clear as Indian finance really was, every attempt was made to mystify it whenever the subject was discussed in that House. Last year a loan was announced for India, and the right hon. Gentleman, in answer to a question from the hon. Member for London which appeared to have been pre-arranged, made what was called a "prosperity speech," saying that the finances of India were quite buoyant, and that the money was only wanted for the railways. It turned out afterwards that the expenditure exceeded the income by about £4,000,000, which was made up by money wholly raised in this country—for not a shilling of it, he believed, was raised in India. This same system of mystification was followed in the months of July and August, when the right hon. Gentleman came forward to ask to borrow £8,000,000, at the very time when Mr. Laing was telling the people of Calcutta that there would be a balance of from £200,000 to £300,000 surplus revenue. The loan was asked for on the ground that the railway companies in India wanted the money to carry on their works there. He did not believe that to be a true representation of the matter, and he must enter his protest strongly against the public money being mixed up with the money of private adventurers, and it was quite time that that system of juggling should be put an end to. There was no reason why the accounts of the railway companies should not be kept separate from the public accounts; and if in 1861 it was found that the railway companies were unable to carry out their arrangements, the fact ought to have been made known to the House, and the arrangements previously made with the companies should have been cancelled. But instead of taking such a course, the Secretary for India borrowed £4,000,000 for the railway companies in question, and never communicated to the House who the particular company was, the terms of their agreement, or what security they had given for those advances. He protested against the system of mixing up the private affairs of individuals with the money of the Government. That system had been carried on too long, and it was from these collusions and mystifications that all the difficulties had arisen with respect to Indian finance. The Government had been patronizing companies of every kind for India—flotilla companies, irrigation companies, navigation companies, many of which would never have been floated on the London Stock Exchange but for the mischievous system of guarantees. The hon. Gentleman then described the origin and progress of a company which he said was started in 1858, having emanated from the brain of Colonel Cotton; it had received encouragement from the noble Lord the Member for King's Lynn (Lord Stanley), had raised £50,000, in payments of £1 per share, and The Times newspaper showed that the shares upon the pound which had been paid were between £2 and £3 premium, all owing to the mischievous patronage of the India Office. The hon. Member also commented on the conduct of Sir Charles Trevelyan in 1859 in attempting to write up the Godavery navigation scheme. Such a system ought to be immediately discontinued. The House ought, for the future, to exercise a proper control over Indian finance. There was scarcely any person in the House capable of properly dealing with the subject. One of the first things that ought to be done was to repeal that portion of the Act of Parliament which prevented the Members of the Indian Council from sitting in the House, so that these men might be able in future to bring their information to bear on Indian subjects. He would also suggest the propriety of passing a Resolution that hereafter no loans whatever should be raised for Indian purposes on the London Stock Exchange either directly or indirectly, through guaranteed companies. He also proposed, that considering we had taken Indian affairs out of the hands of the East India Company and transferred them to the management of a Secretary of State, instead of bringing forward a budget at a late period of the Session, a sketch should be given at the commencement of each Session stating the amount of the Estimates for the year, and that Votes should be taken on the principal items of expenditure. He could not see any reason why the number of European troops should not be voted in that manner. His next proposal was that a stop should be put to any further guarantees to private companies by the Secretary of State for India on his own authority. He made this proposal to save the virtue of Chancellors of the Exchequer from libertines from Manchester and the Stock Exchange. Next Session he should move that no further guarantee or extension of existing guarantees be made by the Secretary of State without a preliminary vote of the House, on the responsibility of the Secretary. Unless these amendments were introduced into the existing system, the sooner the annual farce of an Indian budget was put an end to the better, and the responsibility of governing India thrown on the Secretary of State.

MR. GREGSON

said, he did not agree with the hon. Member for Poole (Mr. H. Seymour) that the home expenditure of the Indian Government was exorbitant. As to the hon. Gentleman's charge, that a palace was being built for the India Office, he replied, that it was essential that ample accommodation should be afforded for all the officers of the Department. With regard to telegraphic communication with India, he believed that the sooner it was completed the better, and in respect to the absence of the Mem- bers of the Indian Council from that House, he expressed his regret that that arrangement, against which he divided the House at the time, had been come to. He was of opinion that the Indian accounts should be brought down to a later period than April. The charge for exchange was a matter in dispute, but as it had been allowed on former occasions, he did not see why it should be excluded from the Estimates now. As to the repayments of advances, if the money originally formed part of the revenue account, the repayments should go back to revenue, and in like manner they should go back to the cash balances, if the advances were taken, as it appeared that they were, from them. He was gratified the income had so much increased, though the expenditure seemed to have increased in the same proportion. He was very glad that the system of open loans in India had been put an end to; and he trusted that the public works would continue to progress as satisfactorily as they were now stated to be progressing.

MR. VANSITTART

said, it was unnecessary that he should say a single word in defence of the Financial Secretary of the Indian Government (Mr. Lushington) after the manner in which he had been exonerated from all blame by the Secretary for India. He should, therefore, pass at once to the points more immediately involved in the question under discussion. Without presuming to offer any opinion as to the necessity of the right hon. Baronet (Sir C. Wood) addressing Mr. Laing in the very extraordinary language contained in that painful correspondence embodied in a Return dated the 23rd of June last, or whether Mr. Laing was justified in retorting upon the right hon. Gentleman in an equally extraordinary tone, he would merely observe that there was no doubt Mr. Laing had experienced considerable difficulty in unravelling the tangled skein of Indian finance. Feeling this, and learning on his arrival in this country that the right hon. Baronet's despatch of the 9th of June, in which very serious charges were brought against him, had been made public, it could hardly form a matter of surprise that Mr. Laing penned the following rather warm rejoinder:— When I look at the marvellous results of that last year, in which all the fruits of Lord Canning's policy seemed to blossom forth at once, I confess that a despatch which, before his remains are cold in the grave, holds him up to the public of England as a weak ruler, led by an ignorant or unscrupulous Chancellor of the Exchequer into financial blunders which have created a deficit, takes me greatly by surprise. He must confess, however, that on reading Mr. Laing's financial statement, as reported in the Hurkaru newspaper by authority, he was not disposed to join in that enthusiastic chorus of applause with which it was received by the excited Indian press, nor to be deceived into the belief that he had succeeded in obtaining a bonâ fide surplus of £903,814, as stated by him in his speech of the 16th of April last, and which he had disposed of in such a hurried and summary manner. He was also surprised that Mr. Laing thought it necessary to make that statement before the expiration of the financial year; for it necessarily became a mere sketch estimate, made up of returns, &c., consisting of ten months of reality and two months of conjecture; and, strange to say, the mail which succeeded that which brought it home announced a failure in the opium trade, regarding which Mr. Laing admitted in his speech that unless China was able to spend £8,000,000 on Indian opium this year, the revenue must diminish. If, therefore, Mr. Laing had been less precipitate in making his financial statement, or had paid a little attention to the actual figures of the account giving the real expenditure, we should not probably have heard a single word about a surplus this year. The real fact was, Mr. Laing rushed out to Calcutta during the pleasant months of the year, and in his anxiety to return home, instead of waiting for the returns and disbursement from the different departments, was intent only upon making a prosperity speech, trusting to the Indian press to carry him safely through against any criticism which might be passed upon it by the Home Secretary and his Council, whose duty it was to revise it, and acquaint the public with the real state of the case. Assuming for the moment that Mr. Laing had a bonâ fide surplus of £903,814, he was at a loss to reconcile the manner in which he had disposed of it with the spirited reply he gave to a deputation from the Chamber of Commerce and the British Land Association a few months ago—namely— He (Mr. Laing) thought the first duty of a Chancellor of the Exchequer was to resist the desire to gain popularity by remitting taxes unless he was assured of a solid surplus. In the face of this declaration he was surprised to find among the taxes he selected to remit stood the paper duty, which most providentially was not of the same importance to the Indian revenue as it was to the English. He next flung away a large sum of money for the purposes of education, and partially reduced the income tax and the customs duties on manufactured goods. The consequence was, as was generally the case with all half-and-half measures, neither of these two latter interests were satisfied. This especially applied to the income tax; for although Mr. Laing had promised it should cease altogether in three years, yet the Indian community could not so easily forget that our present Chancellor of the Exchequer, during those seven long years he sat on the Opposition benches of that House, vehemently denounced the iniquity of this odious and oppressive war tax, and took his present Colleague, the right hon. Baronet the Member for Radnor (Sir George Lewis), sharply to task for not reducing it; whereas, the moment he had succeeded in displacing him, he not only forgot his promise and professions, but doubled and trebled it, though two millions a year fell in most opportunely at the time by the expiration of certain Long Annuities. Mr. Laing complained with justice of the heavy home charges, which amounted to no less than £9,000,000, or one-fourth of the whole Indian expenditure. He thought the cause might be partly traced to the extravagant manner in which the loans were raised after the mutiny, against which he had repeatedly protested. These loans, which had increased the Indian debt from £50,000,000 to £100,000,000, were offered to the public under an Act of Parliament below par, bearing interest at 5 per cent for ten years, payable at the Bank of England, without any provision having been made to pay them off at the expiration of the ten years, as was the practice with railway and other commercial companies. That being the case, there was no doubt that these loans had the advantage of the security of an Imperial guarantee, which made the arrangement not only needlessly extravagant, but very injurious to the interests of the British fundholder. From a Return dated the 14th of May last, from the India Office, he found that the interest of this stock had increased from £341,975 for 1860–1 to £671,890 for 1861–2. When we reflected upon the conciliatory measures which had been passed during the administration of the much-lamented Earl Can- ning—namely, the restoration of the Oude talookdars, the recognition of the law of adoption, the redemption of the land tax, the sale of waste lands, the extension of the permanent settlement, and the total abolition of the licence and trade taxes—he must say he thought, if further taxation was necessary, that the time had arrived to call upon the opulent Mahagim, the Calcutta Baboo, and other money extortioners, into whose hands the landed property was so rapidly falling, to contribute something towards the public revenue, in order to be appropriated towards paying off the £50,000,000 of additional debt to which he had just referred. For his own part, he could think of no fairer tax than a succession duty, somewhat similar to what prevailed in England, and better known in India as "Nuzeranna." To this day no tax was more popular and resorted to by the native princes who are independent of our rule than this "Nuzeranna" or "Salamee," for they argued it did not hit them but posterity. By cheerfully submitting to the imposition of this tax, our "Upper Ten Thousand" in India would not only have a graceful opportunity afforded them of showing their sense of gratitude to the British Government for stepping forward so promptly at the most critical period of their country's history to restore order and peace, but of expressing their conviction that few Governments, even under far more favourable circumstances, had attempted so much for their good, and carried so many of their attempts to a successful and beneficial issue.

MR. CRAWFORD

said, that the charge of the hon. Member for Dumbartonshire (Mr. Smollett) against the Secretary of State for India that he had been juggling the House, was a mere ad captandum argument, quite unworthy of any answer. In reply to the charge that the Secretary for India had been spending the balances belonging to the Indian railway companies, he observed that so long as the greater portion of the money provided for the construction of railways in India proceeded from this country, so long would it be necessary to spend here a certain portion of the receipts. The railway companies were constituted on the basis of a guarantee from the Indian Government. Without such guarantee it would have been impossible to obtain money in this country for the construction of Indian railways. He was in a position to state that the hon. Gentleman's observations regarding the Indian railways were entirely unfounded. None of the companies had failed in carrying out the arrangements which they had made with the Indian Government. Leaving that subject, he wished to say a few words on the loss by exchange. Some years ago, when the railway companies were first formed, the rate of exchange was fixed at 1s. 10d. for the rupee. He objected to that at that time, because he did not think it was based upon a sound principle, and because he was apprehensive that it would lead to inconvenience About 98 per cent of the capital required for railways in India was raised in this country, but the expenditure here did not amount to one-half of the whole; the remainder had to be sent to India for disbursement in that country. For every 1s. 10d., which the railway companies paid in to the credit of the Secretary of State at the Bank of England, the Government had to disburse one rupee in India. The amount that was annually disbursed in India by the railway companies might be taken as equivalent to £6,000,000, which, at the rate of 1s. 10d. per rupee, was represented by 65,000,000 rupees. In the accounts at Calcutta, however, the payments were entered at the conventional rate of 2s. per rupee, the whole thus amounting to 60,000,000 rupees. He maintained, then, that the sum to be included in the budget should be 65,000,000, and not 60,000,000. The additional 5,000,000 rupees, representing the loss by exchange, should be debited as a sum to be received at some future time—a sort of deferred receipt. He agreed with the Secretary of State that in course of time the deficiency arising from the loss by exchange might be recovered. He had listened with great attention to the statement of his right hon. Friend, and he was bound to observe, that so far as he was able to pronounce an opinion on the facts stated, he did look on the account given of the affairs of India as satisfactory in the extreme. With regard to the question of cotton, he entirely concurred with his right hon. Friend that it would have been the greatest invasion of all the principles of sound political economy for the Government to have interfered and guaranteed a fixed price for cotton at the port of shipment. As a general rule, the people of India would be found the best agents for developing the resources of that country. Upon the whole, it was impossible for any one connected with the trade of India not to feel that the present extent of that trade was but a drop in the ocean compared with what it would be when the railroads in India were completed. The increase in the cotton, coffee, and tea trade would astonish the world. There was only one further remark he had to make. He wished that justice had been done to the merits of two gentlemen to whom, he must say, we were particularly indebted in connection with the reductions in military expenditure—he meant Colonel Jamieson and Colonel Balfour. They had rendered most important services, and he thought they were entitled to public acknowledgment.

MR. KINNAIRD

said, he had listened with great interest to the statement of the right hon. Gentleman the Secretary for India, and, without entering into the controversy about Mr. Laing, he must say that the right hon. Gentleman had borne out the statement he had made, and had satisfactorily answered the questions which had been put into their hands that morning. He did not know that he should have risen but for the speech of the hon. Member for Dumbartonshire (Mr. Smollett). That hon. Gentleman had made an attack upon Sir Charles Trevelyan which was scarcely worthy of him. He had ridiculed the visit which Sir Charles had paid to the Godavery, and said that he had come out with one of his claptrap statements. That was not language to be held respecting a public servant who had performed such eminent services as Sir Charles Trevelyan had done. He had himself seen a letter from an eyewitness, dated March last, with respect to the works now going on upon the Godavery, so that he could give the hon. Gentleman some information on the point. The letter stated that the whole delta was watered, the people paying to Government two and a half rupees an acre for irrigation, and the water-tax alone yielding a revenue of from five to six lacs of rupees; that every Native seemed well to do, the villages appearing to be full of comfort; that in most of them a patch of ground was set apart for the growth of cotton, the people cultivating just enough for their own consumption. [A laugh.] An hon. Gentleman opposite seemed to be much amused. Perhaps he regarded the dearth of cotton in Lancashire as a fit subject for laughter, ["No."] The improvement of the Godavery, instead of being a work to be sneered at, would tend not only to the future benefit of India, but of this country also, especially in regard to the supply of the raw material of our staple manufacture. He had listened with extreme regret to the attack that had been made upon the Madras Irrigation Company. The noble Lord the Member for King's Lynn (Lord Stanley) had minutely examined the project of that Company, and they were encouraged by his sanction to undertake these great works. He trusted that his right hon. Friend the Secretary of State would not be deterred by the observations of the hon. Member for Dumbartonshire from aiding the development of the resources of India, where necessary, by a Government guarantee, and that he would use his best endeavours to encourage British capital to flow into that country.

COLONEL DICKSON

said, he did not know whether the hon. Gentleman who had just down was a member of an irrigation company himself; but he must protest against being supposed to regard the cotton famine in Lancashire with levity because he had smiled at hearing that certain persons in India grew enough cotton for their own consumption. He must say that he thought the hon. Member for Dumbartonshire had not been treated fairly in that debate, his remarks having been greatly misinterpreted. A debt of gratitude was due to that hon. Gentleman, who, speaking from his own knowledge of the subject, had exposed a scheme for introudcing capital into India which could not prove remunerative.

MR. BUXTON

said, that this was not the first occasion on which the hon. Member for Dumbartonshire (Mr. Smollett) had gone out of his way to express his contempt for a man who was not there to defend himself, and whose administration, during the year and a half that he was at Madras, had been spoken of on all sides in terms of the warmest admiration. It had been universally allowed that Sir Charles Trevelyan—whatever mistakes he might have made in respect to the publication of a certain despatch—had done a marvellous amount of work for the benefit of India, and that his recall, whether necessary or not, had been a misfortune, not to himself alone, but to the Natives of that country. With regard to the loss by the exchanges, he regarded what had been so termed as an investment by the Government in railways. It ought to appear under the head of Public Works; for it represented, in fact, a portion of the pub- lic works undertaken by the Government in India.

COLONEL SYKES

said, that the right hon. Gentleman the Secretary of State had found fault with the Governor General, with his Council, and with his Chancellor of the Exchequer; but at the same time had been obliged to admit that Lord Canning and his Council had—by their recent legislative measures giving permanency to rights to land, by the admission of the just claims of the native nobility and gentry, and by the modification of the income tax, consolidated for many years to come British influence in India. With respect to the two points especially in dispute, the loss by exchange and taking credit for monies forthcoming from China, he thought Mr. Laing's own published statements were the best argument in favour of his view. The hon. Member then read the passage. With regard to the loss by exchange it was, according to Mr. Laing, a mere question of account, and was a theoretical and not a practical loss. With regard to the advances made in China account, the Secretary of State stated that the advances were never charged in the accounts of India; but such a sum as £1,700,000 must have been taken into account, or the cash balances represented £1,700,000 more than their real amount, a blunder not likely to be made. Mr. Laing did not mean that the amount brought in this year in repayment from China was revenue, but miscellaneous receipts. But the whole question was a mere matter of account, and did not deserve the discussion it had undergone; and even if the Government had been wrong in anything, after Mr. Laing's acknowledged public services there might have been more forbearance. He wished to say one word as to increased taxation from the income tax in India. The people of that country looked with horror upon new taxes, and especially upon an income tax, which brought an inspector into their houses and among their women, and unnecessarily gave rise to hostile feelings against us. He could not see the necessity for the enormous European force now maintained in India, exceeding 74,000 men, nor for the distrust of Native troops, when he remembered that it was the loyalty and discipline of the Native armies of Bombay and Madras which mainly prevented our being driven to the coast. The neck of the rebellion was broken by 45,000 European troops in 1857, and Delhi was taken before any reinforcements had arrived from Europe; but now we had no enemy, nor the prospect of an enemy to contend with. Lord Canning had said that he would rather maintain India with 40,000 Europeans and no new taxes, than with new taxes and 100,000 Europeans. The maintenance of this large force in India prevented the repeal of the 5 per cent import duty and of the income tax. He agreed with the right hon. Gentleman the Secretary of State, that we must maintain our power by an adequate military force; but if we desired its permanency, it must be more through the good will of the people than by the aid of the bayonet; but he doubted whether that good will could be conciliated if we maintained an income tax. Moreover, the fathers and mothers of England, and England itself, had a right to complain of the unnecessary waste of the youthful blood and sinew of the country by exposure to the great mortality in India.

MR. MARSH

said, he thought the worst possible tax in India was a tax upon cotton goods, which made the consumer in that country pay not only the tax upon imported goods which the Government received, but also a corresponding increased price upon native manufactures, from which the Government derived no benefit. He suggested that a small tax should be raised on the gold and silver ornaments worn by the men in India, which would, in fact, amount to a sort of poll tax.

MR. PULLER

said, he could not but regret that a gentleman who had so highly distinguished himself in India as Mr. Laing should, on returning to this country in broken health, be met by a despatch like that of the Secretary of State; great allowance must be made for his feelings under such circumstances. But, at the same time, as the home Government had taken such a view of the Indian budget, it could not but insist upon its views if it desired to retain its authority over the Government of India. One point had been altogether lost sight of in the discussion, and that was that the Indian budget presented to the House was but a partial budget. It was merely an estimate of the revenue and expenditure out of that revenue. It did not in any way show the cash balances. In such a state of things it might naturally become a matter of doubt as to which account certain items could be carried to. It would be unjust to Mr. Laing to say that there had been anything like deception on his part, for the Indian Government was perfectly aware of the difference between him and the Secretary of State; but having received such clear instructions from home, it was the duty of the Indian Government to have made their accounts in the way prescribed to them. The right hon. Gentleman had pointed out that the £500,000 of repayments for the China war and advances to the Imperial Government did not in any way belong to revenue, but he had omitted to say what he intended to do with it. He suggested it should be applied to the improvement of the local communications, in the same manner as the £380,000 of which the right hon. Gentleman had spoken had been devoted to the making of roads. Such an expenditure would not only be of permanent advantage to India, but would facilitate our obtaining those supplies of cotton which were so much needed by this country at the present time.

SIR CHARLES WOOD

said, he must express his gratitude for the kind manner in which the Committee had received his statement, and the credit which they seemed disposed to give to the Government for the course which they had taken in endeavouring to improve the condition of India. With regard to the interest on the Indian railways, it was treated as extraordinary expenditure now; and if it ever was repaid, the receipts would be treated as extraordinary receipts. In the same way the loss of exchange was an annual charge; and when the receipts came in, it would be treated as a portion of the annual receipts. As to the charges for China, they appeared under the head of supplies to London. They were, in point of fact, sums disbursed by the Indian Treasury in Calcutta, which were paid to the Indian Treasury in London. It was just as if a million of money was sent from Calcutta to London. The Indian Government advanced it for the service of the Imperial Government in India, and the Imperial Government repaid it here. It was nothing but a transfer of a million from the Treasury at Calcutta to the Treasury in London. With regard to the cash balances, they might be high, but this circumstance did not prove the existence of a surplus of income over charge, as they might be swelled from other sources. He hoped that there might be a surplus; but that would not prove, more than the amount of the cash balances proved, that any item was pro- perly inserted or omitted in the accounts. It would only prove that the estimates of income and expenditure formed in India were wrong. But he wanted to establish a system of accounts which would show what the income and expenditure were, and how the finances of India really stood. He had already explained the matter fully, and no one had contravened the position which be had laid down in his statement to the Committee. He had a most painful duty imposed upon him. He had no intention to say anything which could personally annoy Mr. Laing; but as one of the minutes he had mentioned in the correspondence was signed by Mr. Laing, he could not avoid referring to that gentleman's name. Mr. Laing had exerted himself in the service of this country and of India, and he was most ready to bear witness to the importance of those services. Upon a point of principle he was obliged to challenge a doctrine laid down by Mr. Laing, and he was very sorry if he had unintentionally said anything to give offence to him or his friends. With regard to the health of the troops, what he said was that at the time the recruits arrived in India last year there was an excessive mortality, owing to the prevalence of cholera at that period.

Resolutions agreed to.

House resumed.

Resolutions to be reported To-morrow.