THE ANNUAL FINANCIAL STATEMENT.

HC Deb 14 August 1882 vol 273 cc1701-79

Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."

THE MARQUESS OF HARTINGTON

I do not know, Sir, whether it is neces- sary that I should commence the Statement I have to make by the usual expression of regret at the period of the Session at which I am now making it being so advanced; but I do regret extremely that year after year it should be necessary to make this Statement at a time when it is impossible to have any considerable part of the House present, however much they may desire to attend. At the same time, I must be permitted to express some doubt whether, at whatever time the Statement might be made, it would secure a general or crowded attendance of the House. I hope that there are here to-day a very considerable number of Members who take an interest in the discussion of Indian financial subjects, although it is hardly possible that a Statement so long and so dry as that which it is my duty to make should command any general attention or interest. I think it will be desirable, before I begin the Statement I have to make, to offer some explanation upon two points which have caused me considerable perplexity, and which may be described as financial puzzles, but which it is essential the House should understand, as they exercise considerable effect upon the Accounts and the Estimates we have now before us, and, if unexplained, would lead to misapprehension.

The first of these subjects is the mode in which the Imperial contribution in aid of the cost of the Afghan War has been brought to account in the two years 1880–1 and 1881–2. The House may remember that last year I explained the plan which had been adopted in bringing this contribution to account. It was done with the object of securing, as far as possible, that the War Expenditure which fell in 1881–2 should be balanced or eliminated by an equivalent amount of War Contribution, so that, in the years subsequent to 1880–1, the year in which the war ended, the Accounts and Estimates of the Government of India should be as little as possible disturbed by abnormal expenditure arising out of the war. With this view it was determined, as I said last year, at the time the Estimates were prepared, to credit the Revenues of 1881–2 with a portion of this contribution amounting to £3,000,000. Then the balance of £2,000,000 out of the £5,000,000 given in aid of the War Charges remained for the previous year 1880–1. When the Accounts of 1880–1 were about to be closed, it was necessary to come to a definite decision as to the amount of the War Contribution to be credited to that year, and it was then found that the War Charges which would fall in 1881–2 would probably not exceed £2,305,000. That sum only was, therefore, credited to 1881–2, leaving an increased sum of £2,695,000 to be credited to the previous year 1880–1. That change from what I said last year has, therefore, been made in the distribution of the contribution. I ought, however, to add that the present Estimate for the year 1881–2 gives for War Charges a sum of £1,610,500; Frontier Railways are put at £235,200 in 1881–2, besides £223,000 for their completion in 1882–3, making a total of £2,068,700, so that about £236,000 more than was required was reserved; and by the postponement of part of this outlay to the present year, the Estimates of 1881–2 benefited by £259,000 more than was intended.

The next point on which I desire to offer some explanation is with regard to the Provincial surpluses and deficits, by which the Estimates of the last two years have been very largely affected. Last year I endeavoured to explain what was the effect of the introduction of these headings upon the Revenue and Expenditure of the year, and, at the same time, I expressed a doubt as to whether—though they ought to be shown in the Accounts somewhere—they ought to form part of the Accounts of Revenue and Expenditure. On that subject a correspondence has taken place with the Government of India, and I am convinced that it would give a false idea of the position of that Government as regards its surplus or deficit if these items were altogether omitted. It has, however, been decided to remove the item of Provincial deficits from the Revenue side of the Account, where it used formerly to appear, so that entries will no longer appear which do not actually form an addition to the income, but only a transfer of balances. The course now adopted is to show the net result of the deficits and surpluses of the Provincial Governments on the Expenditure side of the Account. Thus, the total Expenditure of the year, by both the Supreme and the Provincial Governments, being first given, an addition or subtraction is made of the amounts by which the Provincial Governments have either fallen short of or exceeded their income, which amount has accordingly to be paid by the Government of India to, or received by it from, the Provincial balances. I will ask the House for a few moments to follow me in a review of the effect which these items have had during the last three years. In 1880–1 there was a total Expenditure of £76,306,000; but in that year some of the Provincial Governments had saved to the amount of £336,000, while others had exceeded to the extent of £38,000, the difference being £298,000, which the Government of India had to pay to the Provincial balances, so that the total Expenditure of the Supreme Government was £76,604,000. In 1881–2 the Budget Estimates of the Provincial Governments showed that some of them expected to draw £821,000 from their balances, while on the balances of others there was an increase of £114,000. While, therefore, the total estimated Expenditure, Imperial and Provincial, was £70,012,000, the Supreme Government had only to find £69,305,000, the remainder being obtained from the Provincial balances. But the flourishing state of the Revenue for that year enabled the Supreme Government to repay to the Provincial Governments the contributions which had been demanded from them during the time of the Afghan War, amounting to £670,000. The quinquennial adjustments of the contracts with the Provincial Governments fell in that year, and the same prosperous condition of the Revenue enabled the Government to make grants in anticipation of the Provincial re-adjustments, amounting to £360,000. They also made a special grant to Bombay, on account of certain refunds of Land Revenue, amounting to £251,000. Those sums amounted to £1,281,000, which were in the nature of presents made to the Provincial Governments. But, in addition, the Provincial Governments, instead of exceeding their income, spent less by £41,000, so that the Provincial balances increased by £1,322,000, instead of being, as was anticipated, reduced by £707,000. The surplus on the Regular Estimate of 1881–2 was made to appear worse by the sum of those two amounts—or £2,029,000—than it would have been but for the existence of this system of Provincial finance. These sums are simply transferred from the balances of the Supreme to those of the Provincial Governments, where they are available for purposes of Provincial improvement, and where, as will be seen, it is intended that they shall be largely utilized in that way in the present year. Coming to 1882–3, the total estimated Expenditure—the sum of the 36 items enumerated on page 61 of the Budget Statement—will be found to amount to £68,164,000; but a large portion of this is within the control of the Provincial Governments, who, being in funds from the operations which I have been describing, estimate to draw on their balances in the present year to the extent of £1,990,000. The amount, therefore, which the Government of India will have to provide is not £68,164,000, but that sum less£l,990,000, or£66,174,000. I have laid on the Table a Statement. which contains most of the figures which it has been usual to give in the Financial Statement for the purpose of comparing the results of the three years under review; and it will therefore be unnecessary for me to enter into many details respecting them.

The Expenditure of 1880–1 was reduced below the Estimate by £287,000, and, the Revenue being increased by very nearly £2,000,000, the anticipated deficit of £6,220,000 was reduced to an actual deficit of £4,044,000. In 1881–2 the Regular Estimate, as compared with the Budget Estimate, showed that the Revenue, omitting the English War Contribution, was increased by £3,455,000 over the Estimate which I gave last year, one-third of which was derived from opium, another third from Productive Works, and the remainder from excise, interest, extra army receipts, &c. The Expenditure of 1881–2, as compared with the Budget Estimate, shows, apart from the Provincial adjustments, very little change, the reduction being only £75,000. The ordinary Army Charge was about £ 500,000 more than was anticipated, which was mainly due to expenses indirectly connected with the military operations in Afghanistan, while the direct charges for those operations and the frontier railways was about £1,000,000 less. Comparing the Expenditure shown by the Regular Estimates for 1881–2 with the Accounts for 1880–1, and deducting the War Contribution as well as the War Charges, it appears that the Revenue was increased by £750,000, and that the Expenditure was increased by £6,472,000,whichlwillpresentlyexplain.

I come now to the Budget Estimates for the present year, 1882–3. The Re- venue Estimates have been, as stated by Major Baring, framed with very great care and moderation. Allowance has been made for a decrease in the Land Revenue of £283,000, owing to the remissions which have been ordered in Bombay, and to the very moderate estimate which has been taken for the North-West Provinces and for Madras, where arrears were collected in 1881–2. Notwithstanding the flourishing condition of the Excise, a reduction has been made in the estimate from that source in every Province except Bengal, giving a net reduction of £80,000. The net Revenue from the Railways has been taken at a diminution of £466,000; that is an estimate which is considered an extremely, almost an absurdly, low one; and I think that, as far as the results of the present year have yet been ascertained, it is shown to be very greatly under-estimated. A very moderate estimate has been taken of the increased consumption of Salt in consequence of the reduction of duty, to which I shall revert by-and-by. As to the Opium Revenue, it has been estimated in the present year £588,000 below the regular estimate of the net receipts in the preceding year; at the same time, I have to state that it has been estimated in the present Budget at £750,000 more than in that of 1881–2, when it was taken at £6,500,000, a low estimate which I endeavoured to justify this time last year. Major Baring has entered at very great length in his financial statement into a discussion of the Opium Question. It will be unnecessary for me on this occasion to follow him into any discussion on the moral or political aspects of the question. All that we are concerned with at present is its financial aspect, and how far the Estimate which has been taken for the present year is justified by the condition of the Revenue. Major Baring on this point shows that, although, no doubt, elements exist which give to the Opium Revenue a precarious character in future, although competition both from foreign opium and also from the Chinese growth. may ultimately affect it, yet the great fluctuations that in former years occurred in the receipts and in the price of opium were chiefly owing to the varying amount of the quantity offered for sale; and he has shown that, since the policy was adopted of establishing a reserve and offering the same number of chests for sale annually, the number being announced a year previously, the revenue from this source has been comparatively steady, and, on the whole, an increasing one. It is quite true that the reserve of opium has been in recent years very greatly reduced, and in the absence of a large crop it would be necessary next year or in future years to give notice of reducing the number of chests to be offered for sale; but the reserve is sufficient for the sale of the number of chests announced and estimated for the present year; and, indeed, under the existing arrangements, it is absolutely necessary that the number of chests which have been announced the year before should be offered for sale in the present year. As, then, the usual quantity will be offered for sale this year, there is no reason to fear that the Estimate for the present year, £7,250,000, which is £500,000 below the Regular Estimate for 1881–2, will not be realized, and, indeed, it is not by any means an excessive one. I now come to the Expenditure of the present year. The Estimate shows a reduction of £3,475,000. But then I am obliged to acknowledge that almost the whole of this estimated reduction is due to what I have already had so often to refer to—the item of Provincial adjustments. This accounts for £3,312,000 of that sum. The statement, which has been circulated, shows what are the increases and the decreases under the different heads, and I think I need not now detain the House on the matter. But probably this is the most convenient opportunity on which I can examine a statement which the hon. Member for Mid Lincolnshire (Mr. E. Stanhope) made on the 31st of July in the present year. The hon. Member is reported to have said that since 1880 the Expenditure has been raised £3,500,000. I cannot, of course, tell what were the exact figures on which the hon. Member based that statement; but I presume that his calculation was somewhat as follows:—I may probably take him to mean that, deducting from last year, 1880–1, the charge for War Expenditure and the Frontier Railways, and deducting also the charge for the present year for Famine Insurance, and adding the sums to be drawn from the Provincial balances, the excess of Expenditure in the present year over that for the year 1880–1 would amount to £3,500,000. Taken that way, I believe the statement is substantially correct. It has to be explained how far this is due to the real increase of Expenditure. The year 1880–1 obtained exceptional advantages from the conversion of the India Stock, which accounts for an increase of £186,000. A sum of £768,000 is due to Reproductive Public Works, the development of which, while bringing increased Revenue, necessitates increased charges for working expenses. To that has to be added, under the head of Interest, a sum of £248,000, arising from the reduction of the rate charged against those works, from 4½ to 4 per cent. Under the head of Subsidized Railways is a charge of £50,000 for the Bengal Central Railway, repayable from the profits of the line, which enterprize was not initiated in 1880–1; and there was also an additional loss by exchange of £32,000. These sums, which ought to be eliminated from the comparison, make together an aggregate of £1,284,000. The additional charge for 1882–3 for ordinary State railway construction— that is, railways which it is not considered right to include under the head of Reproductive Public Works, and which are, therefore, constructed out of Revenue, is £515,000. The amount for ordinary irrigation and navigation works is £265,000; for other works, buildings, roads, &c, £1,058,000. Public Works, therefore, account for £1,838,000. That leaves only £374,000 to be explained. But, on the other hand, there is a saving of £595,000, which, it is estimated, will be effected under the head of the Army, so that under other heads there is a total increased Expenditure of £969,000. That arises upon several heads, among them being the charges for the collection of the Revenue, and for administration. The Land Revenue Department takes £184,000, which is due to the improved position of the Uncovenanted Service, and also to the assumption by the Government of the charge for village officers; £143,000 more is required for Law and Justice; and the cost of the collection of the Salt Revenue has increased about £275,000, which is due to the institution of the depot system, an increase of Expenditure that is expected to lead to an increased development of the Revenue. Roughly speaking, one-half of this increase is due to the construction of Public Works, one-third is due to the extension of the railway system, and the remainder is due to the Government assuming administrative charges formerly borne by the people. It is an increase which I am not concerned to explain away or to apologize for. It is in part due to causes over which the Government can exercise no control. It is in part due to the development of Public Works already constructed, and which, as business increases, must, of course, cost more in working expenses; but the Expenditure is more than balanced by the increased Revenue they bring in. It is in part due to the activity of Provincial Governments and local bodies in the construction out of funds at their disposal of a minor class of Public Works, such as roads, bridges, drainage works, sanitary improvements, and minor local improvements of all kinds. These are works for the construction of which it would not be justifiable to borrow, as they produce no direct return; but they are undoubtedly quite as necessary for the progress and development of the country as—if they are even not more necessary than—the more showy and pretentious works which are known by the name of Productive Works. It is on this class of Public Works, which do not bring any immediate and direct return, that the progress of the country, especially in the parts that are least advanced, mainly depends, and as to these I should be sorry to check the activity of the Provincial and the public bodies. Part of the increase is due to the improvement of the revenue-producing branches of Expenditure, such as the institution of depôts for salt and advances for the cultivation of opium. Part of the increase, though nominally expenditure, is due to the assumption by the Government of payments hitherto made by the cesspayers in parts of the country occupied by the poorest class of cultivators. These increases are, in every intsance, the result of improvements which, I admit, could not be made under the pressure of war or famine, or when the disturbance of the rate of exchange placed the Government in difficulty, and compelled it to enforce a disagreeable retrenchment. The late Government was necessarily driven to postpone improvements of this character, and I think they were right in doing it rather than resort to increase of taxation for the purpose. At the same time, I do not think we are liable to any reproach when, under no such pressure, with an increasing Revenue, we endeavour to resume the course of improvement which had been necessarily checked, and also, to some extent, to make up for time which has been lost.

I am able to announce some reduction—I regret it is not larger—in one branch of Expenditure, that on the Army. In the financial discussion at Calcutta, General Wilson made a comparison with the year 1877–8—the last in which there was no disturbance by extraordinary War Charges; and he stated that a reduction had been effected of £259,000. I have not the materials to explain exactly where the reduction has been effected, especially as, according to the statement of General Wilson, it is accompanied by an improvement in the position, pay, promotion, and non-effective pay of officers and soldiers in both the British and Native Armies. At all events, I think the broad fact will show that the Military Administration has been conducted with due regard to economical considerations. Certain reductions in the Establishment have been sanctioned recently, for which it has not been possible to take full credit in the Estimate for the present year. The reductions in the British Army which have been sanctioned are—four batteries of Horse Artillery, two of Field Artillery, and five garrison batteries of Artillery. At the same time, two reduced garrison batteries have been converted into mountain batteries. There is a reduction of 11 and an increase of two, making a net reduction of nine batteries of Artillery. Two remaining garrison batteries are also increased in strength. The financial results, prospective and practical, represent a reduction of between £70,000 and £80,000 a-year. In the Native Army the reductions which have been recommended and sanctioned are —in Cavalry, three Bengal regiments and one Bombay regiment; in Infantry, six Bengal, eight Madras, and four Bombay regiments. These are reductions of cadres, and concurrently with them there has been an increase in the numerical strength of the remaining regiments to 550 of all ranks in each Cavalry regiment, and 832 in each regiment of Native Infantry. The practical result is that there is the same number of rank and file in the new Establishment as in the old. The ultimate financial saving is estimated to amount to £100,000 or£120,000 a-year. In making I this reduction, the Government of India have desired to offer to the non-commissioned officers and men of the reduced regiments such liberal terms as shall save them from inconvenience and suffering. They have reason to suppose that the terms offered have been adequate, because a considerable number have accepted their discharge, and have not re-enlisted in other regiments. The vacant places in the increased Establishment will be filled up from the same races as those from which the regiments have been previously recruited. In the opinion of the Government, these changes will not only lead to economy, but will also add to the efficiency of the Army, because the regiments which have been reduced have been those recruited from the least warlike races of India, and their places will be filled up by recruits from the most warlike races. At the same time, the Government have considered it their duty to increase the efficiency of the Native Forces by adding one English officer to each regiment. They have also been able to make a considerable improvement in the position of the non-commissioned officers of the Native regiments. The ultimate net saving will be £80,000 in the Artillery, and £100,000 in the Native regiments. These reductions have been adopted on the recommendation of the Government of India, to whom they were recommended by the Army Commission; but I am bound to say that the Government of India proposed to us considerably larger reductions in the British garrison, and, again, the Army Commission proposed considerably larger reductions than have been supported by the Government of India. The Army Commission recommended no reduction of numerical strength, except in the Artillery, where they thought the number excessive; but they recommended a large reduction of cadres in every arm, though accompanied by a corresponding increase of the strength of the remaining cadres. They contended that these measures, while resulting in considerable economy from the reduction of the most costly military element—that of the officers and non-commissioned officers —would produce more efficient fighting units. The Government of India, however, were not prepared to accept those recommendations in their entirety, in any branch of the Service; but they recommended the reduction of one regiment of British Cavalry, and four bat- talions of Infantry, the numbers being made good by increasing the strength of other regiments. Much doubt was, however, felt by my advisers in Council of the policy of these reductions. I admit that I should have been disposed to support a great part of these recommendations, but for the remonstrances with which they were met by the military authorities in this country. There is no question, in my opinion, more difficult to determine exactly, than that of the fair and just relations of India and the United Kingdom in regard to military expenditure. India pays for every man in her garrison, and for every man required from home to maintain the efficiency of that garrison; but the military liabilities of the United Kingdom towards India are not to be measured by the exact force of the garrison, or by the number of men necessary to maintain its efficiency. Great Britain would be bound, in case of emergency, to provide whatever military force might be required for service in India; and it is quite impossible to define the exact effect of that obligation. There is no doubt that the Military Establishment of the United Kingdom is, to a certain extent, regulated by the consideration that is always present in the minds of the military authorities, that India may have to make a call on the military strength of this country, and to demand troops in excess of her normal garrison. I am not, therefore, disposed to put forward on behalf of the Government of India any absolute claim to regulate their Military Establishment precisely as it may suit them at any given moment. The military authorities of this country are of opinion that the changes advocated by the Government of India would diminish the military strength of the British Forces in India, and they also contend that the proposed reduction would diminish the combined military strength of the Empire maintained by India and the United Kingdom. As regards the first point, the military efficiency of the Force in India, I should be disposed to give the greatest weight to military opinion in India; and, if I could think it purely an Indian military question, to assent to the whole of the pro-| posed reduction. But, with respect to that aspect of the question which regards the combined strength of the whole Empire, I cannot deny that the authorities in this country have the greater weight; and I have, therefore, decided to waive the claim of the Indian Government for further reductions, though with a protest that their arguments should receive further consideration; and I am not without a hope that some such economy may be effected with no diminution of the military strength of the Empire. [Mr. ONSLOW: When will the Papers be presented?] I do not know that there is very much Correspondence which can be given, I but I will deal with that question presently. While I am on this point, I have also to state that the Government of India have made proposals connected with the organization of the Army, founded partly on the recommendations of the Army Commission, proposals which, I think, are even of greater importance than those relating to the reduction of the Forces, for they go to the root of the whole organization of the Indian Army. The House is aware that the supreme control over the whole of the Army in India, British and Native, rests with the Commander-in-Chief in India and the Indian Government; but the Madras and Bombay Armies, though in subordination to the Commander-in-Chief, are directly commanded by the local Commanders in-Chief. The Government of India proposes the abolition of the offices of Commander-in-Chief of Bombay and Madras; and, instead of the three Armies now known as the Bengal, the Bombay, and the Madras Armies, they propose that the whole Force should consist of four Army Corps, the Bengal Army being divided into two Corps, and the Madras and Bombay Armies constituting one Corps each. Each of these Army Corps would be under the command of a lieutenant-general, who would be under the direct command of the Commander-in-Chief in India, and the Military Departments would be administered under the direct control of the Government of India, at Calcutta or Simla. They also think it would be possible, by a redistribution of the divisional and district commands, to effect a considerable reduction in the number of commands, and in the cost of Staffs. They further express their opinion that it would be possible to intrust to the lieutenant-generals commanding these Corps larger powers than are now possessed by them. I must acknowledge that great difference of opinion exists as to these proposals; in fact, I may go fur- ther, and state that there is an absolute divergence of opinion on this point between the Government of India and the Council of India in this country. The Government of India recommend these changes on the ground not only of economy, but also of efficiency. They say that at present the real power and responsibility rests with the Government of India and. the Commander-in-Chief, but that the power is weakened and the responsibility diminished by the interposition of the local Commanders-in-Chief and the local Governments. They contend that the principle of segregation could be more efficiently observed by the redistribution they propose, and by more carefully keeping apart the different Native races of which the Native Army is constituted. And they argue that in every Military Department greater efficiency and economy will result from placing the Departments under the control, not of the local Governments, but of the Government of India. On the other hand, it is contended, and is the almost unanimous opinion of the Council of India, that the Indian Army is too large, and India itself too vast, to be administered advantageously in this manner. It is contended that Madras and Bombay are real and efficient centres of Military Administration, which have been found useful in the past, and may at any time be useful in the future. The Council say that there has been great advantage in not having all the Military Departments centred under one control, and that Madras and Bombay may still furnish efficient means of military organization. They deny that any economy will result from the substitution of four lieutenant-generals and their Staffs for the existing three Commanders-in-Chief and three Military Departments, and, above all, they contend that the principle of territorial segregation recommended by the Army Commission would be more than counterbalanced by the dangerous tendency to unification and the loss of esprit de corps. It was urged, moreover, that no Government of India, no Commander-in-Chief, and no Military Department, whether at Calcutta or Simla, could possibly have an intimate knowledge of the wishes, the wants, and the desires of the local Armies, and that, in the absence of such necessary knowledge, the most dangerous errors might be committed. I have not attempted to argue the question, but only to give a statement of the different views on this vital subject of organization which are held by different persons. The House will not be surprised to hear that the Government hesitated before giving effect to the recommendations of the Government of India. I do not know that it is necessary that I should put forward the importance of the question as an excuse for delay. No other course was open, for it would not have been possible for the Government to come to any final decision on the question. In order fully to carry out the views of the Government of India, the sanction of Parliament, by way of legislation, would have been necessary, and Parliament would not be disposed either to sanction or to reject a scheme of such great importance to our rule in India as that which I have indicated without full consideration and deliberation. It is quite clear, I think, that Parliament would not have been able to devote, either in the past or the present Session, adequate time to the consideration of a question of such vital importance. Whenever these proposals are brought before Parliament for adoption or rejection, I think the decision ought to be a final one. And, therefore, I do not think it necessary that I should excuse the Government to the House for not having, up to the present time, arrived at a final decision. I trust, however, that, before another year has elapsed, it may be possible for the Government, with the help of the best advice we can obtain, and giving due weight to the views entertained by the Council of India, to arrive at a decision on the subject, and to lay our conclusions before Parliament. The final responsibility, however, rests with the Government. The views of the Government of India are valuable, and no Secretary of State would be justified in disregarding them. But, nevertheless, a Secretary of State for India may at times take the responsibility of overruling those opinions. I may also point out, without in the slightest degree under-estimating the value of the opinions to which I have referred, and which are held by the majority of the Members of the Council of India, that it is natural that the Council should from its composition be opposed to very large and sweeping changes. The Council of India does not represent the prevailing opinion of Indian Administrators; it re- presents opinions which prevailed five or 10 years ago, or even longer. The Council of India will always be of a conservative character, and in questions involving very important changes it will very rarely be prepared to go the length which the actual Government of India are prepared to go. I have been asked whether the Papers on the subject can be laid before Parliament. I have already said that, as soon as there was a probability of Parliament being able to discuss any tangible proposals, I hoped it would be placed in possession of all the information necessary. The Report, or the greater part of the Report, will be laid upon the Table; but I cannot undertake to say that the whole of the Report will be published, a great deal of the evidence having been given under circumstances which would make its publication impossible. As I have said, the greater part of the Report will be laid before Parliament; but I am not at all convinced that it would be desirable that the Papers should be produced before the Government forms a final conclusion on the matter, and the time approaches when Parliament will be called upon to consider that conclusion.

There are one or two subjects connected with the Budget Estimates to which I must ask the attention of the House for a short time. I have already referred to improvements intended to be made next year in the position of the subordinate Civil Servants. The Government of India have had before them proposals connected with the subject of the Civil Service. It has been found that there exist in different Provinces of India very wide differences in the duties attached to similar appointments, and also with respect to the pay, promotion, and prospects of the officers. Great inconveniences also have been found to arise from the system of acting appointments and acting allowances, which has sprung from the necessity for frequent furloughs for considerable periods. It has become an extremely complicated question; the pay and position of a Covenanted Civil Servant depend rarely on his substantive appointment, but far more on the acting appointment which he may hold or have a claim to hold. Such a system causes great confusion and much unnecessary shifting and dislocation. The details of the scheme have yet to be considered in connection with the Local Governments; but I may men- tion very briefly that the principle of our policy in this matter is to have the number of the superior appointments, whether in administrative departments or executive offices, which must necessarily be held by covenanted civilians, fixed absolutely for periods of five years, assigning to those appointments suitable rates of pay, and grading them so as to give to every Civil Servant after a suitable probation, and after the time necessary for acquiring a knowledge of his duties, the certainty of arriving at a position of responsible duty with suitable pay. No member of the Civil Service ought to be retained in a subordinate position longer than is necessary to acquire a knowledge of his duty; and any increase of the subordinate establishment within the five-year period should be made from the Native Service. Belying, as the Government of India proposes to do, on the Native subordinate Civil Service more exclusively than it has hitherto done, it is necessary that it should be efficient, and, in order that it may be efficient, it is necessary that it be adequately paid.

Another point of considerable importance as affecting the financial arrangements of the year was the quinquennial settlement of the contracts with the Provincial Governments. These have now been based on the principle that, instead of the Local Governments receiving a fixed sum of money to make good any excess of Provincialized expenditure over Provincialized receipts, a certain portion of the Imperial Revenue of each Province shall be devoted to that object. A few heads are reserved as Imperial, others are divided between Imperial and Provincial, and the rest are made Provincial. The balance of revenue and charge thus made Provincial, being against the Local Governments, will be rectified for each Province by a fixed percentage on its Land Revenue, which otherwise is reserved as Imperial, and in the case of British Burma by a percentage also of the export duty on rice and the revenue from salt. The advantage of this system is that the Provincial Governments will have a direct interest, not only in the Provincialized Revenue, but also in the most important head of Imperial Revenue raised within their own Provinces. The general result of these arrangements is that in about three-fifths of the Revenue, amounting to £42,000,000, and in about one-fourth of the Expenditure, amounting to £19,000,000, the Provincial Governments will, to a greater or less extent, have an interest in, and responsibility for, their administration. As regards the financial effect of the new contracts, it is obvious that the Government of India could not possibly forego all claim on the increments of revenue which arise from the growing wealth of the country; and, when the contracts which have just expired were made, power was reserved to revise the arrangements subsequently. The new contracts are, however, framed in a liberal spirit, so as to make no revision at the expense of the Provincial Revenues, except in cases where such a course would not embarrass Provincial finance or check the growth of the material prosperity of the Province. It was found, on a careful examination of the circumstances in each case, that the Supreme Government might, on the whole, reduce its grants by £470,000 a-year. Of this sum, however, it has given back £78,000 for the improvement of the position of the subordinate Civil Service, and for general purposes in the Central Provinces, &c.; £20,000 to Madras for public works; £326,000 to the North-West Provinces and Oudh, on account of the payment of additional Revenue officers and village accountants, and the remission of a cess levied for the remuneration of such persons; and £72,000 to Bengal, British Burma, and the North-West Provinces, for various minor reasons. Thus the net result is a loss to the Supreme Government of £26,000 for each of the five ensuing years; but the whole amount of the last - mentioned £72,000 a-year has been paid at once from the balances in a lump sum of £360,000, so that the Revenue of the Supreme Government in the coming years will actually benefit to the extent of £46,000 a-year annually.

The condition of the cultivators of land in the North-West Provinces and Oudh has been already mentioned in Parliament. The Government of India have arrived at the conclusion, after a careful examination of the social condition of the people, that in no part of India does there exist greater poverty than in the North-West Provinces; and it has been determined, as I have just stated, to remit certain payments borne in the main by cultivators of the soil in that part of the country. According to the estimate, the remission will amount to £316,000.

The following, then, was the financial position of the Government of India. Taking into consideration all the circumstances to which I have referred—the new arrangements with the Provincial Governments, and the increased expenditure which they entail—the estimated surplus, if no remission of taxation had taken place, would have been £3,171,000. The question which the Government of India had to consider was to what purposes ought the surplus to be applied. Some people might have recommended that it should be applied to the reduction of debt, and others that it should be applied to increase the expenditure upon productive Public Works. In the opinion of the Government, both those objects were good ones; but neither of them has been neglected. Provision is already being made for the reduction of debt by the inclusion in the annual Estimates of £1,500,000, the average sum considered necessary by the Famine Commission, of which half is devoted to the repayment of debt, and half to the construction of protective works, which, it is hoped, will make the contraction of debt on account of famine relief less necessary. In the same way care has already been taken for the extension of Public Works. The expenditure upon such works is not limited to the £2,500,000 which they had annually borrowed. In the year 1880–1, for example, the expenditure from borrowed money was £614,000 on Irrigation Works; £2,554,000 on State Railways; £70,000 on the Madras Harbour; and £418,000 on the East Indian Railway; £435,000 was spent from Guaranteed Railway Capital; while out of Revenue was spent £2,294,000 on the Frontier Railways; £77,000 on other railways; £290,000 on irrigation works; and £1,427,000 on buildings and roads. Thus, the total outlay on the construction of public works of all kinds was upwards of £8,000,000, which is quite as much as can with prudence be laid out in one year. The Government of India think that it would not be wise, in a time of exceptional prosperity, to pledge themselves to a course of additional expenditure upon public works. There was something more necessary than either of the two objects that I have named. The main object of the Government of India was to place the fiscal system of that country upon a sounder and more secure foundation. The precarious character of the Opium Revenue, the sudden fluctuations of exchange, the liability to recurring famines, and the inelasticity of many of the sources of revenue, are factors in connection with Indian finance which cannot be ignored. Nor is it of any use simply to admit them with an expression of regret; the difficulties and risks must be fairly faced. Again, it would not be desirable to seek to meet them simply by a reduction of expenditure, and so, by unwise parsimony, to forbid the hope of future development. The true policy is to husband those sources of revenue which are assured, and to develop those which have the elements of extension. If it be true, for instance, that the Opium Revenue cannot be relied on for a long series of years, it yet shows no diminution or insecurity in the immediate present, and the best use to which it can be put is to develop those sources which may in time replace it. The Government of India have, therefore, sought for something in the nature of a financial reserve, something which should, however distantly, resemble the great reserves which we possess in the Income Tax and the Excise Duties. It is certain that in India no such reserve is to be found in the Income Tax, or in any form of direct taxation, though I do not despair of its being possible to incorporate some form of direct taxation as a permanent source of revenue. There is much of the wealth of India, such as that which is acquired in trade and industrial occupations, and that derived from settled landed property, which escapes taxation, or, at all events, does not pay a fair proportion of taxes to the State; and too large a proportion of the State burdens is borne by the poorest classes and the most struggling cultivators of the soil. It is, I think, just that the wealthy classes of India should contribute something more than they do now. The objections to an Income Tax, on account of its inequality, its inquisitorial character, the fraud and oppression exercised in its collection, are in India at least as great as elsewhere, if not greater. Above all, there has in India been the extreme uncertainty of the demand. To quote from Major Baring's statement— In the last 22 years no less than 23 Acts of the Legislature hare been passed, in which successive Governments have either rung the changes on the various expedients for imposing direct taxes, or have, for the time being, adopted a policy opposed to any direct taxation whatsoever. These frequent changes have rendered it difficult for the taxpayers to ascertain the true amount due from them, and have facilitated arbitrary and illegal exactions on the part of the tax-gatherers. The Government of India thus came to the conclusion that a system of direct taxation cannot form the requisite financial reserve, and they therefore wisely decided not to deal with it on the present occasion. It is, however, admitted that the Licence Tax cannot be left as it is, and that it must either be given up or be remodelled in such a manner as to form a permanent and certain part of the taxation of the country,

The direction in which the Government next turned for their reserve was the Salt Tax. It appeared to me, as it probably has to everyone, on first making acquaintance with the facts of Indian finance, that this tax is open to every possible objection to which a tax can be liable. It is a tax upon a necessary of life, and it is a tax which, for the protection of the Revenue, makes it necessary for the law to declare it to be a penal offence for a man to collect or store a little salt earth for the purpose of seasoning his scanty food. But, on the other hand, it has some great advantages. It is the only means of reaching the mass of the population. Its incidence is light—a few annas per head annually; and it seems to possess some important qualities of a financial reserve, seeing that in time of pressure a considerable addition to the Revenue might be obtained by simply increasing the rate of duty. To render it, however, useful for such a purpose, it is necessary that in ordinary times it should be reduced to the lowest rate practicable. Great improvements have been made in regard to it in recent years. An approach to an equalization of the incidence of this tax was made by the late Government, involving an increase in some Provinces, but a larger decrease to a larger number of people in others. The Government of India, with the view of reducing the price of this necessary article of life to the poorest classes, of extending the consumption of an excisable article, and of strengthening the financial position and equalizing the incidence of the Salt Tax, has decided to take advantage of the prosperous condition, and especially of the present high receipts from opium, and has made a reduction in the duty on salt of 30 per cent in Bengal, and of 20 per cent in the remaining parts of India. It is singular that this is the part of the Budget which has provoked most criticism. There is a school of financiers in India which has very curious views of political economy, holding that low duties do not stimulate consumption, and that indirect taxes are not felt by the people. I trust that the result of this very considerable reduction of the Salt Tax will prove more conclusively than any argument the unsoundness of their theory. It is, of course, too early to judge what will be the result. The consumption of salt is influenced by so many considerations, by the quantity of stock in hand, and by so many other circumstances which it would be idle to ignore, that it is not possible to form an opinion as to what will be the permanent result of this measure. But as far as it has gone the result of four months of the present year has been certainly satisfactory. The consumption of the four months from March to June of this year, compared with the consumption of the four corresponding months of last year, shows an increase of nearly 10 per cent, while it is more than 13½ per cent above the average consumption of the past three years. Whether that increase will be permanently maintained it is too early to foretell; but there seems reason to hope that the estimate of a net loss of £1,400,000 owing to the reduction will not be realized.

I now come to another great step taken by the Government of India—namely, the reform of the Customs Duties, the importance of which has been somewhat obscured by the controversy as to a single branch—those on cotton goods. It is said that it has been adopted owing to the demand from England, and as a concession to powerful Home interests. But this is to put it on a false issue; it might, no doubt, be sufficient to point to the anomalies and disturbance of trade which have resulted from the partial remissions in the case of the Cotton Duties, and which have been fully expounded by Major Baring. But I think it is desirable to look at this question from a broad point of view. The fact is, that there is no country in the world where it is less desirable to raise Revenue by duties on foreign trade than in India. This is proved, in the first place, by Indian trade being very small relatively to its population. It is eminently desirable, in the interests of India, that its trade should be increased. In the second place, the variety of the productions and of the industrial capacity of the workers gives to any tariff a protective character. Thirdly, the mass of the people, being poor, consume no luxuries of foreign importation, and, the wealthier persons being numerically so small a class, it is not worth while to maintain indirect taxes falling only on them. Whatever opinion may be held as to the relative disadvantages of direct and indirect taxation generally, it is clear that regard must be had to the conditions of the country in which it is to be imposed. In such questions there are certain rules of political, economy which are also rules of common sense. Taxes which take more from the taxpayer than the Exchequer receives are bad; taxes which yield little in proportion to the cost of collection, and the inconvenience and injury of the community, are bad. Judged by either of these standards, the Import Duties are condemned. A few years ago the Tariff Duty was placed at 10 per cent, a rate which Mr. Cobden used to say was the lowest it was worth while to impose; but the trade of India was not strong enough to bear so high a rate, and it was successively reduced to 7½ and 5 per cent. The remission proved to be wise, as no appreciable loss of Revenue ensued. But, when these reductions had been made, and when machinery and various articles had been from time to time exempted, the duties on cotton, salt, and spirits were the only ones remaining which, from a fiscal point of view, it was worth while to retain. The Salt Duty and the Spirit Duty, which are counteracted by Excise Duties, will remain; but the Cotton Duty, which is the only other article from which any considerable Revenue is derived, is distinctly of a protective character. It was impossible to deny that this duty was protective in principle, though every kind of ingenious argument was brought forward to prove that it was not so in practice—an unfortunate line of reasoning for the supporters of the duties, because it proved fatal to their existence. The general arguments upon this subject are well set out in the Marquess of Salisbury's despatch of May 31, 1876, and, so far as I am aware, have never been controverted. The despatch showed that the whole of the duties were at the time protective, and that they were tending to become more protective still. It was contended by the advocates of the Cotton Duties that there was no Indian trade with which the British manufacturer really competed. It was said that the Indian manufacturer was not capable of competing with the British. The figures relating to the exportation of Indian-made cotton goods from Indian ports to foreign and other Indian ports show that since 1874 those exports have greatly increased, from £1,260,000 in 1874–5 to £3,564,000 in 1880–1. The number of mills and the number of persons employed have also risen enormously. It is thus clear that a large Indian industry is growing up under the injurious influence of the Protective Tariff. An article of necessary consumption by the people of India is being raised in price by the effect of the Protective Tariff, and the Revenue upon which the Government calculated is gradually slipping away. Under these circumstances, there is only one argument which could justify even the temporary retention of these duties, and that is the argument of financial exigency. But that argument had disappeared; the duties were bad in principle, while their existing condition led to confusion and dislocation of trade; they were condemned by Parliament; their retention caused a conflict between great interests in India and at home; they were an unsound and rotten part of the Indian fiscal system; and it was inevitable that they should go on this, the first clear and evident opportunity. They have been swept away, and with them have gone the minor duties which it was no longer worth while to collect. The result is, that India has become a great free port, and an experiment in Free Trade will now be carried out in India on, perhaps, the largest and grandest scale upon which it has ever been tried. I regret that I should have been compelled to say anything against the arguments of my friends, and doubtless there may still be a question as to the time and mode selected for striking the blow; but I think, now that the question has been finally settled, it is right that I should say a few words in justice to the Lancashire manufacturers, and to the late Government. The manufacturers were, I consider, perfectly justified in the part they have taken in opposing these duties. Exposed as they are to the various effects of competition in their own country, they have a right to demand from the Govern- ment under which they live that, so far as it is in their power, they should not he harassed by the application of principles which have been pronounced inexpedient in their own case. It seems to me that they had a right to claim that, as soon as the financial exigency would permit, they should enjoy for their trade in India the advantage of that free competition to which they are exposed in their own country. I have no hesitation in saying that the policy and the action of the Government of India with regard to the duty is sound and wise, and that it has been adopted, not in deference to any political pressure or exigency, but deliberately in the interests of the people of India. Before I part with this subject I wish to make an appeal to my right hon. friend the Prime Minister and Chancellor of the Exchequer. I have had very frequent and urgent requests made to me from India for the abolition of the duty on silver plate in this country. I think that it would be a graceful concession on the part of this country to surrender a duty on which they feel in India a very considerable interest, and which is of no great amount. I find, however, from the statements of my right hon. Friend, that there is some difficulty in dealing with the subject at the present moment.

Before I conclude, I should state to the House the result of the working of the railway and irrigation works. During the year 1881, 726 miles of new railway were opened for traffic, the total number of miles now finished, or in course of construction, being 11,900, and the extent open for traffic 9,875 miles. The total amount of capital expended on railways stood at the end of 1881 at £134,200,000, and the net Revenue during 1881 was £6,953,000. The gross receipts were £13,726,000, and the working expenses, £6,773,000. The net receipts yielded a return of £5 3s. per cent, and in 1880, £4 15s. per cent; the East Indian and guaranteed lines together yielded £6 5s. per cent, and the State lines £2 3s. per cent. A large trade in the exportation of wheat to this country has been started, and will be still larger when the railways are more fully developed.

The net addition to the Debt in 1880–1 was £5,661,000, including a loan in India of 313 lakhs for Protective Works, and the raising of £3,500,000 of 3½ per cent Stock in England. In 1881–2, when India bonds to the amount of £4,500,000 were repaid, the net addition to the Debt was only £927,000, notwith- standing the raising of a loan of 3 crores of rupees for Protective Works in India. In 1882–3, the Budget Estimate shows a net discharge of debt to the extent of £1,188,000, chiefly through the application of the Famine Insurance money to the repayment of securities bearing interest at 5 or 4 per cent. This, however, involves an estimated reduction of the cash balances from £17,251,000 on the 1st of April, 1882, to £12,995,000 on the 31st of March, 1883, after allowing for an expenditure of £3,250,000 on Public Works. The Government of India carefully reserve the question whether any loan will be raised during the year to replenish the balances; but they hope that funds may be obtained by means of the Post Office Savings' Banks, and by the issue of Stock-notes—the details of which are explained in a paper appended to Major Baring's statement—sufficient to render any loan unnecessary.

It is hardly necessary for me to say that the Estimates were framed several months ago, before the Indian Government had any expectation of incurring the expenditure for the expedition to Egypt. Up to the present time I have not been able to receive anything but telegraphic information on the subject of this expenditure; but a fortnight ago I received a rough estimate which has occasioned me very great surprise. The estimate which the Indian Government has given for the expedition, including the cost of transport and maintenance in Egypt for three months, is £1,880,000, a sum greatly in excess of the amount I anticipated the other day. Whatever decision the House may arrive at respecting the incidence of this charge, it cannot be without its effect on the Ways and Means during the present year. It appears that the Revenue for the first four months of this year was greater than was estimated, while the Expenditure was somewhat less; so that, even with the addition of the expenses incurred by the expedition to Egypt, it is not likely that the Government of India will be compelled to depart very widely from their original proposals, or that they will have to make any exceptional arrangements. This is a subject upon which it is necessary always to speak with reserve. The Indian Government wisely refuse at all times to pledge themselves either to borrow or not to borrow for the purpose of Public Works. Therefore, I must not be expected to commit myself upon this matter, All I wish to impress upon the House is that, notwithstanding the heavy charge they may be called upon to pay during the present year, I see no reason to suppose that the financial arrangements of the Indian Government will be seriously affected thereby. The actual Revenue in excess of the estimated Revenue may be such as to enable them, without much inconvenience, to meet this charge.

I have now, in spite of all my efforts, spoken at much too great length. I have had some critical points to dwell upon. I am aware that, notwithstanding the length of my remarks, there are many important subjects of which I have been able only to give a very imperfect summary. The two past years have been, on the part of the Government of India, years of very great activity in the investigation and examination of some of the most important problems of Indian finance. I am afraid that the Home Government, occupied as it has been with nearer and more pressing, but certainly not more important questions, has been scarcely able to keep pace with the activity of the Indian Government. But nevertheless in these two years much has been done in India, and reforms, financial and social, have been initiated. Above all, I think that the statement which I have made shows that the Indian Government have availed themselves of the favourable seasons, and, having avoided, most fortunately, until the present year, both foreign war and domestic trouble, have made use of the advantages which they have enjoyed to apply to Indian finance those sound and scientific principles which have done so much for other countries, and have done much to relieve the future of Indian finance and the administration both at home and in India of those anxieties and those disquietudes which have so often heavily oppressed our rule in India.

MR. E. STANHOPE

said, that he had originally intended to remark upon the period of the Session at which the Indian Budget had been brought forward, and he should have done so, were it not for the fact that the Statement of the noble Marquess had almost disarmed his criticism. He was heartily glad, at any rate, that the noble Marquess had not used the argument which the Prime Minister had used on the subject. He did not base the fact that the Budget was taken so late in the Session on account of the obstruction to Public Busi- ness. The fact was that it had grown to be the invariable practice, though: broken through by the late Government, to take the Indian Budget at the last period of the Session. The noble Marquess had said that it was not much use to take it earlier, as it was not a subject of very general interest; but he (Mr. E. Stanhope) should like to see the experiment tried. He did not, in fact, think the House would be doing its duty to India unless, by some arrangement of the Public Business, an earlier period of the Session were chosen for the discussion on the Budget for that country. He had listened to the very interesting Statement of the noble Marquess, which had gone over a great number of topics, some of which were of too wide a range for him (Mr. E. Stanhope) to deal with then. But there were two subjects which deserved ample discussion, and which at some future time he hoped would be adequately dealt with. One was the policy of the present Government with regard to railways, which deserved full and complete discussion; the other was the Opium Question, and the latter was so extensive that he would reserve his remarks for a future occasion. But all those who were interested in the question of the Indian finances could not fail to have observed with great satisfaction the result of the financial measures which were adopted by the Government of India some four or five years ago, and which had resulted in the present magnificent surplus. Major Baring, the present Finance Minister, had admitted this so fully that he (Mr. E. Stanhope) would quote his words. He said— So far as the flourishing condition of the finances which I have given above results from financial administration, the credit is due, not to the present Government, but to its Predecessors. That was, to Lord Lytton and Sir John Strachey. But he (Mr. E. Stanhope) could heartily agree with the noble Marquess as to the use made of that surplus by Major Baring. It had been used with courage and sound judgment; and, although the estimated surplus was smaller than he could wish, and smaller than persons of more experience than himself advised, yet he could not but admit that a courageous forecast of the future was justifiable in present circumstances. He must be allowed to congratulate Major Baring upon having been able to repeal the Cotton Duties and import duties generally. It was to the interest of India to get rid of what was likely to be in the future a source of friction between, this country and India. "With respect to the Salt Duties, he would read one passage from the admirable work recently published of Sir John Strachey and his brother, General Strachey, which was a perfect mine of information on this and other subjects. The writers said— No time could be more favourable than the present for taking another step in this direction (of giving the people throughout India an unlimited supply of salt at the cheapest possible cost) by a large and general reduction of the Salt Duties. The condition of the finances is so prosperous that a temporary loss of Revenue could well be afforded; but this would rapidly diminish, and the Salt Revenue would before long be in a far more satisfactory condition than any which had hitherto existed. That was the course which Major Baring had adopted. The first point was, the desirability of reducing the cost of a prime necessary of life; and the second, that the general financial condition of India would be strengthened by that course. The noble Marquess had dwelt upon that point, and he (Mr. E. Stanhope) hoped that the temporary decrease of Revenue might be met without resort to those objectionable means which had hitherto been found necessary in India. Major Baring had also anticipated that the consumption would be increased. He said— It is almost certain that the consumption will be increased by so large a reduction as 30 per cent in Bengal and 20 per cent elsewhere. He was glad to hear from the noble Marquess that the expectation was likely to be realized. There was another point to which he desired to draw the attention of the House. That was the estimate of opium. It was a source of great satisfaction to him that the Opium Revenue had been estimated upon the true ground, for the only sound method was to estimate it at the amount which was really likely to be received. To fix it at an arbitrary sum, as had been done last year, was most objectionable, and especially because of the temptation it offered to fix, so as to make the Estimate high or low, according to the financial necessities of the time. But the most prominent feature of the present Budget which he desired to bring before the House was the continued increase in the ordinary Expenditure of India. Three years ago he thought everybody had made up their mind upon this subject. Three years ago the Government of India, Her Majesty's Government, the House of Commons, and the public unanimously agreed that there ought to be a large reduction of Expenditure. The only real criticism upon the proposal was that made by the present Prime Minister, who pronounced the proposed reduction to be inadequate. But that reduction of Expenditure was proposed and accepted, not because of the heavy expense to which India was subjected in consequence of the Afghan War, but because, on all grounds, it was essential to the permanent welfare of our position in India. And, accordingly, the Government of India took steps to carry it out; and the results appeared in the Budget of 1880–1. But since that time—in tact, ever since the Marquess of Ripon had been Viceroy—a reaction had taken place, and the ordinary Expenditure of India had largely increased. The extent of that increase was probably hardly known to the House. But the noble Marquess frankly told them that, subject to certain deductions, his estimate of an increase of £3,500,000 was not exaggerated. The noble Marquess had, in fact, admitted the whole of the case he (Mr. E. Stanhope) had put forward; but still, in order to make his position on this matter beyond doubt, he hoped that he might be permitted to place it before them still more clearly, but with as few figures as he could. He took for the purpose the Return of Net Expenditure in India (known as Parliamentary Paper 214 of this Session). Now, in order to make a fair comparison of the ordinary Expenditure of India in different years, it was necessary to exclude one item, which was entirely beyond the control of the Government— namely, loss by exchange, and other items which occurred exceptionally, such as the charges for frontier railways and for war. And he also deducted certain mere adjusting entries, known as the Provincial and Local Surpluses and Deficits. In 1880–1, the first of the three years under review, the net Expenditure was £49,617,688. Deducting from that amount the items of loss by exchange, frontier railways, and war expenditure, amounting in all to £18,081,306, he arrived at a net ordinary Expenditure for the year of £36,536,382. In 1881–2 the net Expenditure was £42,860,483. He deducted in the same way for frontier railways and loss by exchange; but he had, on the other hand, to mate an allowance for the excess of receipts from the English Exchequer over and above the expenditure for the Afghan War. He arrived in this way at a net ordinary Expenditure of £40,292,700, or £3,250,000 more than in the previous year. In 1882–3 the net Expenditure was estimated at £43,796,000. Deducting, in the same way as before, £2,998,000 for frontier railways and loss by exchange, he found a true net ordinary Expenditure of £40,798,000, or £500,000 more than last year, and no less than £4,250,000 in excess of 1880–1. But he ought also to allow for the amount now placed to the credit of famine insurance, or £1,500,000 a-year during the past two years, so that the actual increase in the first year was £2,250,000, and in the second £2,750,000. That was an enormous increase, even if it were admitted that the standard of 1880, attained by a great effort, was a difficult one to maintain. But even if the comparison were to be made with previous years, a very large increase would still be shown. How had it been caused? If any hon. Member would take the trouble to examine this Return, he would find that an increase had taken place on many of the items of expenditure, but that it had chiefly arisen under the bead of Public Works. The very large increase which had taken place under this head could best be estimated by the figures in a Return for which he recently moved, and from which it would be seen that the total net charge on the Revenue of the year for Public Works was£6,305,000, as against £3,408,000 in 1880–1, or an increase of not much under £3,000,000 sterling. For if he took the single items of what were called Public Works Ordinary, it would be found that the cost of these works was taken for the present yearat£6,368,000, as against £4,353,000 in 1880–l, or as against £4,600,000, which was the average expenditure upon these works during the five years immediately preceding 1879. Upon these figures no one could doubt that an enormous increase of expenditure had recently taken place under this head; and he confessed that his own apprehensions on the subject were enormously in- creased by a step upon which the noble Marquess had recently decided. He had sanctioned the re-establishment of the office of Public Works Minister in India, which was abolished, after full consideration, in 1879; and principally upon the special ground that to make the construction of Public Works a subordinate Department under the Minister of Finance would be to establish a more complete system of control over an expenditure which there was every temptation to extend in India, and which it required very careful supervision to hold in check. He hoped the House would not suppose that he was undervaluing the importance of Public Works in India. We certainly did not spare our money for promoting them. The noble Marquess had told them that day that they spent last year out of capital no less than £8,000,000 sterling on Public Works, and that did not exhaust the subject, because very considerable works were being undertaken also, as they were all glad to know, by private capitalists. Certainly, the results of most of their past expenditure, not only in its direct financial returns, but in the indirect benefit which it had conferred upon the country, were highly encouraging. But his fear was that, in pursuit of these great and noble objects, they would again begin to force this expenditure on India more rapidly than India was able to bear it, and that they were losing sight of the necessity of economy as regarded that expenditure, a necessity of which, personally, he was as much convinced as he was in 1879. Looking to the certain recurrence of famines, and to the many great and difficult problems which they would have to face in India, the importance of making provision for a rainy—or, as he was afraid they must put it, a dry day—was no less pressing than it ever was. But it might be said—"Surely this provision for times of adversity was the special object of the so-called 'famine insurance surplus.'" No doubt it was; but he was sorry that, upon a very careful examination, he could not say that that object was being attained. The House would remember that the original idea was based upon the assumption that famine entailed upon India an expenditure of about £15,000,000 every 10 years. If, then, they provided an annual surplus of £1,500,000, they would be put into the position of meeting all their famine expenditure without permanent addition to the Debt. Well, accordingly, they had provided an annual surplus of £1,500,000, and how was it disposed of? When, happily, there was no famine which required expenditure, we gave one-half of the surplus to "Protective" public works—that was, works specially constructed to protect particular districts against famine, or to afford means of relief in the event of its occurrence. And if only the works were carefully selected, everybody must approve that appropriation. The remainder, or £750,000 a-year, was to be devoted to the reduction of Debt. But what Debt? The original intention always was, that that amount should be applied, whenever reasonably possible, to the reduction of the Gold Debt in England. The effect of that would be as follows:— When a serious famine occurred, and they had to borrow on a large scale, it inevitably followed that they had partly to borrow in England. But if, in the meantime, they had been gradually remitting from India, year by year, for reduction of Debt, the ultimate result was that the permanent amount of the Debt in England was not increased. That policy was sanctioned by the noble Marquess the present Secretary of State for India, and it was accepted in principle by the Government of India; but, in practice, it was not being carried out, and he (Mr. E: Stanhope) was sorry to see that, in October last, the noble Marquess sanctioned the application of the famine insurance moneys during this year to the reduction of Debt in India, although the smaller amount of bills to be offered for competition would seem to have afforded an opportunity for endeavouring to carry out the policy of reducing the Gold Debt. The noble Marquess had told them that day, and it appeared also in the Papers laid on the Table, that, in October last, he sanctioned the application of half of the famine relief surplus towards the reduction of the Debt in India, although a smaller amount of bills were going to be sold during the present year, and it would appear justifiable if greater efforts were made to obtain remittances towards the reduction of that Debt. In effect, what the Government of India was doing was this. With one hand, they were paying off debts; and with the other, borrowing money for Public Works to a much greater extent. The result was that, in effect, the famine relief surplus was devoted to Public Works. When the noble Marquess told them the amount required for the service of the war in Egypt, and the amount of the cash balances, he must be a very sanguine man, he (Mr. E. Stanhope) thought, who did not believe it would be necessary to borrow during the current year. His position was this. If it were not easy to send money from India for the purpose of reducing the Gold Debt in England, it became all the more necessary to practise economy in the Public Expenditure of India. He had dealt with the question of Public Works, but there were a number of other questions which quite as much as that one deserved attention. For instance, there was the military expenditure, and he had observed with great satisfaction the reduction that had taken place under that head; and although, perhaps, the reduction was rather more apparent than real, still, so far as it went, it was satisfactory. He had pressed the noble Marquess, during the present Session, to produce to them the Report of the Simla Army Commission. His reason for that was, that he believed that the only possible means of effecting economy in expenditure in India was by enlisting on their side the support of the public opinion of this country. Certain points, indeed, had been mentioned by the noble Marquess, which appeared to show that much good would have been done if the Report of that Commission had been published. The noble Marquess had referred to one subject which interested him (Mr. E. Stanhope) very much—that was the proposal to abolish the local Commanders-in-Chief, and to substitute for them lieutenant generals in command of Army Corps. The noble Marquess had told them that there was the utmost possible divergence of opinion on that question, and that he was not in a position to state precisely his conclusions. But both sides were before the noble Marquess. What were the views presented to him? In the first place, there was the view of the Simla Army Commission, and he would remind the House that that Commission had one of the ablest civilians in the Service—Sir Ashley Eden—as President, and one of the best soldiers—Sir Frederick Roberts—as two of its members, On the other side, they had the opinions of the Council of the noble Marquess; and as regarded the latter, he (Mr. E. Stanhope) had no desire to say anything of a disparaging nature. During past years the Government of India had derived most valuable and important services from them; but, still, at the same time, as practical interpreters of what India's military requirements were, he could not but think that the Commission was a greater authority and weight than the Council in this country. Between those two authorities, however, he should not venture to decide. All he could say was that, at the time of the Afghan War, it was proved to him conclusively that the system as it stood was unsatisfactory. He believed there was great truth in the remark made by a distinguished general at that time, when they were employing troops both from the Bengal Army and from Bombay, that the result was that they were not operating against Afghanistan with one array, but that they were in exactly the same position as if they were employing two allied armies. There could be no doubt that such a system as that caused very great inconvenience, and was eminently unsatisfactory. The noble Marquess said that it was quite impossible to alter that without submitting legislation to that House. Well, in that case, he (Mr. E. Stanhope) hoped the noble Marquess would submit a Bill to Parliament, which would have the effect of insuring a practical discussion on the matter, and might be referred to a strong Committee if necessary. Before passing from the subject of expenditure, he wished to say that he feared that those who were in favour of rigid economy in the Indian finances must, for the present, be contented with entering a simple protest, when they considered the circumstances with which they had to deal. There were two or three points on which he wished to ask the noble Marquess a question. The first was on a subject on which the noble Marquess had not touched that night—namely, with regard to the experiment that had been tried since last year in selling the Council's bills, of announcing a minimum price beforehand. At first this appeared to work satisfactorily; but since then there were indications which led many to doubt its success; and he would therefore like to ask the noble Marquess to state, so far as he could properly do so, the results of that experiment. The next question was as to local self-government. A mysterious Order had been issued by the Marquess of Ripon on this subject; and, as there were a number of people who regarded the proposal with considerable anxiety, going, as it did, far beyond the recent proposals of Sir Ashley Eden in Bengal, which were in themselves bold enough. At first sight it certainly appeared to be rash and hasty, and he had read it with great surprise. He would only now express the hope that it had been carefully considered, and would not, in any case, be put into practical operation without great caution. With regard to the cost of the war in Egypt, the noble Marquess had given them, he said, an outside estimate. He (Mr. E. Stanhope) accepted it, however, because he remembered that the estimate as to the sending of troops to Malta was singularly accurate. The noble Marquess had stated that the expenditure under the former head would be no less than £1,800,000; but he would remind him that the cost of bringing the Indian troops to Malta did not exceed £800,000. The noble Marquess had stated in regard to this sum that he believed, having regard to the revenue received since the Budget Estimate, there would be no great difficulty in providing for it. He hoped that statement of the noble Marquess would turn out to be true. In conclusion, he would say that he had detained the House at greater length than he intended. Upon the whole, however, he was sure that the House had derived the same impression as he had himself from the noble Marquess's statement—that it was a satisfactory and an encouraging statement; but he hoped that the Government would not give way too much to that view of the case. He would venture to repeat what he had once said before—that there was excessive danger of rushing into extremes, and he must warn them against taking at one time an optimist, and at another a pessimist view of the affairs of India. At one time they were in a condition of unreasoning apprehension; at another they were apt to fall into apathy and neglect. Indian finance always required close and careful attention, on the part of both the House and the country, if it was ever to be placed upon a sound and satisfactory footing.

MR. CROPPER

said, it was to be deeply regretted that the noble Marquess the Secretary of State for India (the Marquess of Hartington), in his very able and exhaustive Statement on the affairs of India, had spoken so very briefly on one large source of Indian revenue—namely, that derived from opium, which was very uncertain and so very likely to change, that he (Mr. Cropper) should very much have liked for the noble Marquess to have given them his own views as to the future. He (Mr. Cropper) alluded to the Opium Duty. He would like to know what provision was contemplated to meet the loss which would be entailed in the event of that traffic being abolished; and what tax or scheme would be substituted should that contingency occur? How would he raise the £7,000,000 now derived from opium, in case it should be taken from him. Several suggestions had recently been made which tended to show that the Opium Revenue of India was by no means so assured as it used to be. Many persons in this country felt not only that the opium traffic was a crime against China, but that it was a grave danger to India that it should be one of the great staples of the revenue of our greatest Dependency. If China should hereafter resist the introduction of opium from our Dominions, the people of England would refuse to sanction another war to force the pernicious drug upon the Chinese, and then call on the Indian Government to make arrangements for dispensing with that source of revenue. Opium smoking and opium eating were a curse to the countries where they were practised; and it should be the part of a wise statesman to provide in time for such a contingency as he had indicated. Last June, the Bombay merchants had memorialized the Government for a reduction of the duties on Malwa opium, and a reduction of 50 rupees per chest had been made. Now, he should desire to increase the consumption of an article like salt by a reduction of the duty; but he was very sorry indeed to see the consumption of opium in China stimulated by a reduction of duty. He felt that a step in the wrong direction had been taken in the change that had been introduced during the last two months, and he hoped that would be the last concession that would be made to the merchants of Bombay. He believed a deputation had lately gone from China to the Viceroy of India with a view to negotiate for the ultimate extinction of the opium traffic by a fixed yearly reduction, and he was anxious to know if this was correct, and how such a proposal had been received? If our Government meant to enourage the use of opium in other countries by lowering the duties, it was taking a further step in the wrong direction, which would cause it to be more closely watched, and more strongly suspected.

Mr. ARTHUR ARNOLD

said, he felt that the development of a policy of Free Trade in India would confer such vast benefits upon the people of our great Dependency that no justification was needed for the course which the noble Marquess (the Marquess of Hartington) was pursuing in that matter. The hon. Member for North Durham (Sir George Elliot) had alluded to Major Baring's work in Egypt, and had lately spoken of that gentleman as the most successful financier who had ever been engaged in the affairs of that country. The noble Marquess had made a statement as to military reforms in India which could not but produce very important results. It seemed pretty certain that the noble Marquess's inclination was to a large military reform in India, such as would produce the most important results, and lead to a very considerable reduction of expenditure. Another important question was the escape of Europeans from the incidence of taxation. He could not help thinking that the Government should be careful lest they produced in the Native mind in India a feeling of irritation that they had a hardship to bear, in the spectacle of a large number of European traders escaping all direct taxation. He could not but think that every one of the 228,000 who paid licence duty must feel the hardship of having to pay a tax to which Europeans were not subject. He hoped the noble Marquess would yet be able to inform them that something had been done by the Department of Agriculture. It had been maintained over and over again that to interfere with Native implements or Native methods of agriculture would be disastrous; but there was one sentence in the Blue Book just published, which had an important bearing on the moral and ma- terial progress of India, and which ought to be proclaimed on the housetops—that was, the announcement of the result of experiments in deep ploughing, which showed that by that means 50 per cent more could be produced than from the same land tilled with Native implements. That statement showed that by properly working the land they might raise the miserable average annual income of the people of India, which at present amounted to 54s. per head, while that of France and Great Britain amounted respectively to £23 and £33 per head. If that possibility could be realized, it would do more than anything else to lighten the Budget of India; and in India the State was the only landlord who could command the requisite knowledge and capital to work this mine of wealth, which would supply food for very many millions of people. The Government, he held, should not be discouraged from the duty of directing their attention to the improvement of Indian agriculture by the fact that there was no appreciable desire on the part of the people of India for better agricultural knowledge and instruction in scientific principles, because such a desire had never been observed on the part of an uninstructed people. It was satisfactory that property had passed so safely through the India Post Office that the Government had saved nineteen-twentieths of the amount of insurance. He was glad to hear that the Government continued their efforts as regarded the extension and development of local self-government in India; and, as a Liberal, he was proud that the first proposal in that direction had been brought forward by the Duke of Argyll. He looked upon those efforts as being full of promise for the future. He thought a step in the direction of Free Trade might have been taken by the remission of the duty on rice. It was only within the last few years that rice had been used in brewing in this country; but the export from India was checked by the duty of 12 per cent, which, besides operating in the direction of restricting the traffic, made a bountiful harvest a disadvantage to the rice growers rather than a benefit. The Salt Duty, too, fell heavily on the very poor, to whom its remission would be a great boon. The extraordinary increase in the export of corn from India, to which the noble Marquess had alluded, was a very remarkable fact; but while that export had increased by leaps and bounds, the cotton imports, being harassed by duties and imposts, had not only been stagnant, but had actually declined. It seemed reasonable, then, to expect that the entire remission of the cotton duties would lead to a large increase in the import of cotton goods into India, and would also tend to increase the amount of food exported to this country. The opium trade had been mentioned in the course of the debate; and he (Mr. Arnold) regretted as much as the hon. Member for Kendal (Mr. Cropper) the vast consumption of opium, spirits, and tobacco; but he was not so sanguine as to believe that the abandonment of the opium monopoly would diminish the evils of the opium traffic. In fact, Major Baring was, no doubt, right in his assertion that the suppression of the growth of opium would be made more difficult if the monopoly were abolished. He was no friend to opium, but he had seen persons habitually take opium with their tea just as Frenchmen take brandy with their coffee; and be had been in factories where it was manufactured, and, so far as he could observe, without any bad consequences. While drunkenness and delirium tremens were noticed by the very careful medical supervision of India, no medical statistics recorded any baleful effect of opium on the public health; and yet opium, he believed, was largely consumed by the population of many parts of the country. While he detested the opium traffic, he must say that he heard with astonishment that hon. Members, who objected entirely to what they called the interference with India in regard to the Expedition to Egypt, were ready in a moment, without consulting the people of India, at once to deal with a source of revenue amounting to £5,000,000 sterling. He thought there was some inconsistency in that position, which needed further explanation. He did not think it would be possible to prevent the cultivation of opium in India; and, in regard to the general question, he could only repeat that all their efforts should be directed to raise the moral and material welfare of the people, and they would do much to attain that object by raising the income per head of the population.

MR. O'DONNELL

said, he felt bound once more to protest most emphatically against the deliberate and wilful postponement by the Government of the discussion on the Indian Budget till the last days of the Session, to a time when it was difficult for the Government to secure the attendance of a quorum, nor did he think the speech of the noble Marquess opposite (the Marquess of Hartington) adequate to the occasion. The Statement of the noble Marquess was like other Budget Statements; and, indeed, since the hon. Member for Cavan (Mr. Biggar) held the House spellbound some years ago, by the recital of Indian Blue Books, he (Mr. O'Donnell) had heard no more faithful repetition of all that had for years past appeared in print with respect to India than the speech of the noble Marquess; and he could not help thinking that it might very well have been condensed into 40 or 50 lines of statistics. Financial Statements, until the time of the Prime Minister, were expected to be unentertaining; but that right hon. Gentleman had wholly changed their character, and he (Mr. O'Donnell) only wished that the noble Marquess had endeavoured to imitate him. If the noble Marquess had devoted the great bulk of his speech to the state of India under British rule, he might have added to the information of the House with regard to the social, moral, and political condition of the Indian people. He rejoiced, however, to hear that the duty upon salt was to be reduced. That was truly a matter for congratulation, for it had long been impossible to persuade the Government of the desirability of the change, and that it would not act prejudicially upon the Revenue. Moreover, such a proceeding was not likely to injure the finances of the country, and it was needless to say that all such taxation was cruel and unnecessary. He had no wish to discuss the question of the taxation of cotton and opium; but he did expect that sooner or later some hon. Member from Lancashire would favour the House with his views about cotton. He wished to impress upon the noble Marquess the expediency of the removal of the application of the Contagious Diseases Act from India. If anything was calculated to disgust the Natives with British rule, it was the carrying out of those abominable Acts, which were intended to protect the vice of a Christian soldiery. The noble Marquess, in the course of his speech, dealt with the reorganization of the Army. For his own part, he (Mr. O'Donnell) was inclined to look at the Indian Army, not from the point of view of figures, but of the comfort and health of the Native soldier. He would recommend Her Majesty's Government to improve the sanitary condition of those gallant troops, who had proved themselves so often faithful to their salt. A constant cause of much of the unhealthiness of the Army was the abominable condition of the Native lines, which were constructed without regard to health, and the floors of which were soddened with the elements of disease. As a result of the recent reorganization of the Native Indian Army, a large number of regiments were broken up, and it was supposed that the officers and men would be distributed among other regiments. But, of 10,000 men, 7,000, and of 16 officers, 13 had refused to continue any longer in the Service of the Empress of India. He contended that it would be wise to induce Natives to enter our Service and remain in it. Turning to the condition of the late Gaekwar of Baroda's family, he insisted that we ought to show something like liberality to a Royal Family whom we had deprived of their ancestral rights for political purposes. He would also suggest that steps should be taken by the Government to stop the import of cheap and dangerous petroleum into India, many homes having been destroyed by its use. In connection with that point, he must say that he would like an explanation of the extraordinary Petroleum Bill, which had been introduced at the instance of the Secretary of State for India, in order to legalize that importation. Another instance of the disregard shown to the feelings of the people of India was exemplified by the Bill which had been introduced into the Bombay Legislative Council, prohibiting the collection for sale of a fruit in general use for food, which it was held was liable to be used for the purpose of illicit distillation. That Bill had been passed despite the most strenuous protest of the Natives. He maintained that the condition of India, so far from being improved, had grown more wretched under the administration of British officials, and a great cause of complaint was the action of the supreme authorities in the Madras Presidency. Instead of remaining at their posts to hear the grievances of the peasantry, they spent the greater part of their time, 10 months out of 12, in the Neilgherries, where they were practically beyond the reach of the poor people. With regard to the proposed remission of taxes to the amount of £315,000 in the North-West Provinces in Oudh, he argued that the remission would have no practical effect as regarded the poorer classes of the population, because, as a matter of fact, it only affected taxation which was never paid by the very poor. Sixty per cent of the population in that part of India were always in debt; in some districts 69 per cent owed three years' arrears, and 25 per cent of the agricultural population of Oudh were always on the verge of starvation. Next Session he should move that Oudh be restored to the Native Administration, from which it had been taken unfairly and on false pretences. In support of his contention that parts of India had been misgoverned by this country he would instance Jhansi. There our administration had existed for 25 years, and yet now a Bill had been introduced in order to check the ruin to which we had exposed the Native landholders. The subjects to which he had referred might usefully appear in the Annual Statement of the Secretary of State. What was the use of repeating year after year what appeared in the Blue Books, and which, in many instances, had been sent over by the Calcutta Correspondent of The Times, months before the noble Marquess made his Annual Statement? If the noble Marquess would in future make his Statement a real Budget, and allow this country to understand what these figures meant, that would be the commencement of a real era of reform in India. As to the Coolies imported into Assam, it appeared that the mortality among them was as great as among the prisoners in the gaols of Bengal. The Natives of Assam, knowing the sort of work that was imposed in the plantations in Assam, did not volunteer in sufficient numbers, and labourers were imported from primitive districts of India. The term for which they were engaged under the old system was three years; and, even under that system, the mortality was equal to a sentence of death to one in three. And now that the term had been enlarged to five years, they might expect a fearful result. Was it not a fact that some of the greatest officials in India invested large portions of their savings in Assam plantations, and that those plantations were regarded as the only sure investment for yielding 10 per cent? He had often complained of the administration of Behar, the population of which was always on the verge of famine. There were fair Land Laws in Behar, as there were in other parts of India; but those laws were not properly carried out. As an instance of the way in which matters were managed in India, he would state that the ryots on a large indigo estate went to the magistrate of Behar to complain of oppression on the part of the indigo planter; but they found that the magistrate had accepted the hospitality of the indigo planter. Complaint was made of the conduct of the Maharajah of Futtehpoor; but he gave a magnificent ball, which cost 60,000 rupees, to which he invited all the authorities, and they whitewashed him. After that, what ryot would dare to complain of rack-renting by the Maharajah? He further wished to complain, in the most emphatic terms, of the neglect of duty of the Indian officials in permitting Indian coolies to be entrapped into engagements with the French planters in the Island of Réunion. Year after year our Indian fellow-subjects were permitted to be taken to éeunion to a condition of absolute slavery. The terms upon which they went were ostensibly fair and honest; but the condition of the coolies in the Island was miserable in the extreme. All their religious and social observances were outraged at will by the insolent planters; they were reduced to absolute slavery, and seldom succeeded in leaving the Island alive. He would ask why that traffic was allowed to go on? The reason was, that corrupt European influence had come between justice and British authority. Then there was the question of the ryots on the indigo plantations in Behar. The indigo ryots were now in a wretched state; but there was reason to fear that, in consequence of the discovery of artificial indigo, they would become still more wretched. It was noticeable that all the officials at Behar were closely connected by marriage with the indigo interest, and there was reason to fear that this system would not work favourably in protecting the interests of the indigo ryots. A subject which he wished to make one of special inquiry was the practice that prevailed among English officials of accepting small presents from the Natives, and, in. many cases, of accepting the loan of carriages and elephants for hunting expeditions and other purposes. On a future occasion he should give the names of the English officials who had resorted to that system of sponging. Then, with regard to the subject of the Indian gaols, he protested against the statement made by the Secretary of State for India that the administration of Sir Ashley Eden, the Lieutenant Governor of Bengal, led to an improvement in the management of those gaols. The real fact was that his appointment marked the commencement of increased mortality and flogging. The Supreme Government of India themselves admitted that the period from 1868 to 1876 was a period of low mortality in gaols; but with Sir Ashley Eden's accession in 1876 or 1877 began an era of increased mortality. The explanation of it was that he took no steps to punish or replace the subordinate gaol officials; and he considered that the late Secretary of State for India (Viscount Cranbrook) was equally culpable with Sir Ashley Eden. The hon. Member for Kirkcaldy (Sir George Campbell) had replaced many of these subordinates by men of energy, and had succeeded in reducing the mortality to about 40 per cent. In conclusion, he would again protest against these discussions on Indian grievances being put off to the end of the Session. He thought that the Government ought to set apart some more convenient period for their discussion. He would assure the Government that, unless before next year he received more satisfactory assurances from his numerous correspondents in India upon the subjects he had mentioned, he should take the earliest opportunity of bringing them under the notice of the House.

MR. LYON PLAYFAIR

said, that the hon. Member for Kendal (Mr. Cropper) had spoken of the bad effects of the Opium Tax on the health of the Chinese, who consumed that drug. But he (Mr. Lyon Playfair) would venture to assert, as a physiologist, that the Salt Tax did more harm to the health of the people of India than the opium supplied to the Chinese did to the Chinese. Salt, which formed one-half of the inorganic ingredients of blood, was absolutely essential to the health, not only of man, but of all animals. When highly taxed, the consumption of salt was limited, and fell below the requirements of health; and when it fell below a certain minimum, it stunted the growth, not only of human beings, but also arrested the development of the leading manufactures. Formerly, the people of Madras used to consume from 16 lbs. to 18 lbs. of salt per head of the population. Now they were reduced to 12 lbs. But the people of Bengal were in a worse state, for they only consumed 9.1 lbs. That was about the minimum required for existence. He was grateful to the noble Marquess the Secretary of State for India, and to the Government of India, for reducing substantially the Salt Tax to the extent of 30 per cent in Bengal, and 20 per cent in Madras and Bombay. That reduction was substantial; but it must not be forgotten that 20 per cent reduction was only one-half of the increase of 40 per cent upon the impost which had been put upon the inhabitants of Madras and Bombay in 1878. The substantial reduction of 30 per cent upon Bengal would undoubtedly stimulate to increased consumption, and quickly make up any loss which the Revenue might temporarily experience. If it produced no more effect than to raise the average consumption of the Natives of Bengal from 9 lbs. to 12 lbs., the low average of Madras, that increase, at 2 rupees per maund, on 140,000,000 of inhabitants, would equal an increased Revenue of £4,000,000 sterling. Salt was the basis of the chemicals used in bleaching cotton, in making glass, pottery, soap, the salting of provisions, and many other industries; so that cheaper salt meant increasing manufactures. No tax would be more elastic if it were moderate in amount; but at present it was enormous—something like 140s. per ton. The proposed reduction in the tax, substantial though it was, must go much further in future years, if elasticity was to be shown in the revenue to be derived from this impost. A Salt Tax was in any case a bad one; but he would admit that it was difficult to find one more easily imposed and collected. Still, it was a poll tax, paid by everyone equally, and without any differentiation as to the ability of the taxpayer. He gave credit to the Government for using their surplus in the reduction of the tax; and he would confidently predict that their estimated loss of £1,400,000 next year would not reach half that amount.

LORD GEORGE HAMILTON

said, he thought the Statement of the noble Marquess the Secretary of State for India was, in one sense, very remarkable. It was satisfactory to learn that in the last three years the ordinary Revenue had exceeded the ordinary Expenditure by £11,850,000, according to Major Baring's figures, although the noble Marquess candidly admitted that the later information received from India showed that the surpluses of the last two years had been under-estimated. Only three or four years ago, when he (Lord George Hamilton) or his hon. Friend the Member for Mid Lincolnshire (Mr. E. Stanhope) made any statement on Indian finance, it was customary for their critics to make deplorable prophecies, and to assert that we had reached the extreme limit of taxation in India, that the expenditure was rapidly increasing, and that the bankruptcy of India was a mere question of time. The present satisfactory condition of affairs arose from the judicious financial and administrative reforms initiated five years ago by Sir John Strachey, whose great services had been, to a certain extent, effaced three years ago in consequence of the unfortunate blunder he made in connection with the Afghan War. Now, however, an accurate estimate could be formed of the immense value of his financial reforms, and he thought it only fair that full credit should be given to Sir John Strachey for what he had done, and to Major Baring for the vigour with which he had pushed forward the reforms in question. One of the difficulties Sir John Strachey had to contend with when he initiated his reforms was that the Party in that House which had been associated with Free Trade and fiscal reforms gave very little encouragement to his proposals. The noble Marquess had spoken with enthusiasm to-night of the scientific principles on which financial reforms were effected in India. But in 1878 the right hon. Gentleman the present Postmaster General (Mr. Fawcett) made a number of hostile Motions against Sir John Strachey's proposals. The great bulk of the Liberal Party divided against those proposals, and among them was the noble Marquess; but he (Lord George Hamilton) would admit, however, that the noble Marquess had now done ample justice to Sir John Strachey. The right hon. Gentleman the Chairman of Ways and Means (Mr. Playfair) had expressed his satisfaction at the reduction of the Salt Duties, What occurred in 1878 was this —on 45,000,000 of people there was an increase of 11 annas, on 70,000,000 a decrease of 7 annas, and on another 70,000,000 a decrease of 4 annas. The only object Sir John Strachey had in thus temporarily levelling up a certain portion of the duties was to obtain a temporary income to enable him to tide over the difficulty in which he was placed by a rapid fall in the value of silver and a succession of harvest failures in the South of India. A distinct pledge was then given by the Government that as soon as they could they would reduce the Salt Duty, and the reduction which had been made was considerably more than the right hon. Gentleman the Chairman of Ways and Means seemed to imagine. The most satisfactory part of the noble Marquess's comprehensive Statement was that which showed that the loss of Revenue arising from the reduction of the Salt Duty would soon be compensated for by an increased consumption of that article. In fact, a largely increased consumption had already taken place, and there was no reason why the Indian Government should not reduce those duties until they stood on a much lower level. There was great danger in those sudden changes in the Revenue and Expenditure of India, because the moment the Revenue considerably exceeded the Expenditure, a series of new projects was brought forward and sanctioned which would otherwise never have been sanctioned. Thus, as the noble Marquess had said, there was an increased expenditure of £1,800,000 with reference to works for which it would not have been justifiable to borrow money. Thus, while the Local Government were carrying on those great works, which amounted to £1,800,000 in one year, the Indian Government was suddenly involved in a war which would cost £1,800,000. He hoped the noble Marquess would carefully look into that class of expenditure. The right hon. Gentleman the Postmaster General had insisted that no class of work required more careful investigation than that which did not pay interest on the money borrowed. The general statement of the noble Marquess was so satisfactory that there was little he (Lord George Hamilton) could criticize; but he could not understand why the noble Marquess had said that the Opium Revenue could not be relied on for long. [The Marquess of HARTINGTON: Its present amount.] He supposed the noble Marquess was referring to some arrangement to be made with the Chinese Government. He had nothing to say against that. He had feared there was some intention of abolishing the Opium Revenue altogether. The noble Marquess had judiciously avoided certain moral questions in connection with that revenue. If the statements of the Anti-Opium Association were admitted, it would be necessary to do away with the revenue. But he had always disputed their statements. He would refer to the authority of the late Mr. Cooper, who had been a British Consul, was well acquainted with the Chinese language, and had a greater knowledge of the interior of China than anyone else. Mr. Cooper said that, although Indian, opium was largely consumed on the coast, it was not so inland, and that, just as in proportion as Indian opium was not consumed, the Native poppy was grown and used in its place, and that was much more injurious than the opium from India. It was absurd that India should be asked to give up a revenue which was doing incalculable benefit to 250,000,000 of people, when it was doubtful if one ounce of opium less would be consumed if that revenue were removed. He should like to say a word on a matter which he had been anxious for some years to bring before the House—namely, the method which had been adopted by the Prime Minister, as Chancellor of the Exchequer, in paying from Imperial Revenues part of the expenses of the Afghan War. He (Lord George Hamilton) thought that the effect of such a method as had been adopted would be to mix up English and Indian finance in an inextricable muddle, unless some definite arrangement were come to. The method adopted was to give to India a sum of £5,000,000, by remitting India a loan amounting to £2,000,000 due from India to Eng- land, and to pay the remainder—the sum of £3,000,000—in six equal amounts spread over six financial years. The last amount would be payable in 1886, and if it were as the Prime Minister had stated that a Resolution passed by that House was not binding on a subsequent House, it would be competent for a future House of Commons to repudiate the debt. In that ease, who was to pay the amount which would still be owing to India by England? He did not know whether the right hon. Gentleman was aware that it had been necessary to raise an additional sum by taxation in the United Kingdom every year in order to pay the contribution of £500,000 to India. He would suggest that the realized surplus, if any, at the end of the financial year should not be voted for the reduction of the Debt, but for the payment to India of the amount which was due under that head until the whole was liquidated. As regarded the military question, to which the noble Marquess had referred, he admitted that the arguments on either side were rather nicely balanced. He should like to see the Commander-in-Chief of Madras or Bombay in the same position as the Commander-in-Chief in Ireland. At the same time, he admitted that there were strong arguments against the abolition of separate armies for the Presidencies. He thought the noble Marquess was to be congratulated on his Statement; and he hoped that, during his tenure of Office, he would exercise such foresight and judgment as to mitigate the suffering which would be felt in future years of distress and scarcity.

SIR GEORGE CAMPBELL

said, he must confess he was one of those who had not taken a very sanguine view of Indian finances. It had always been said that if something or other had not happened they should have had a surplus; but that something or other had always happened. It was acknowledged up to 1880–1 that there was a small deficit; but they were all led to believe that in the year 1881–2 there would be a surplus, whilst the fact was that, excluding the grant to India of £5,000,000, there was a deficit. As to that grant to India of £5,000,000 in respect of the Afghan War, it was a fictitious grant; because India had not got the money, and it was yet possible that she might never obtain it. It, therefore, seemed to be the fact that in the year 1881–2 they had no real surplus at all. The statement of the noble Marquess brought out a surplus that would have existed if there had been no Afghan War; but, unfortunately, there had been an Afghan War, and there had been a real disbursement in respect of that war. As a matter of fact, there was not a surplus for the year 1881, but a deficit. Coming to the year 1882–3, they hoped they should get a surplus; but, unfortunately, again, there was the Egyptian Expedition, which came to disarrange their anticipations; and he must say he might have been knocked down with a feather when he heard the noble Marquess's statement that the small contingent of 5,000 men that was coming from India to Egypt was expected to cost, in something like three months, about £1,800,000. It seemed to beat anything Lord Napier of Magdala could have done, though that noble Lord had carried on Expeditions on a pretty expensive scale. He could not conceive how that sum was arrived at; but, unfortunately, that was the cause that entirely nullified all their expectations, and they, no doubt, would have to be told next year that they should have had a surplus if they had not had an Egyptian War. He was inclined to think that the Indian Accounts had been so refined and made so scientific that no one could understand them. There were payments on loans which clearly were not payments on account of Revenue; there were fictitious accounts and Provincial adjustments which he defied mortal man to understand. Certainly, even after hearing the elaborate Statement that had been made, no Member of the House except the noble Marquess could understand the question of the Provincial adjustments with regard to the actual amount of Indian Revenue and Expenditure. They were so complicated that it was impossible to analyze them within a reasonable space of time. But he had looked into these Accounts with some knowledge of the subject; and, setting increase against decrease, and putting aside the Revenue from Public Works, as to which he believed there had been an increase, and the traffic in opium, he believed, with those exceptions, there had not been any real increase of Revenue. As to the latter, he had found that, taking the increase of re- ceipts and the decrease of expenditure, there had been a real increase of £2,500,000. He would not go into the moral question with respect to opium; but, from the accounts received by the last mail, it appeared that the Indian Government viewed with alarm, and most reasonably, the prospects with regard to the Opium Revenue. Though the estimate of the noble Marquess was not sanguine, it was, he (Sir George Campbell) was afraid, still too sanguine. In Lord Mayo's time it was thought right to establish what was called a reserve, in order to equalize the sale of opium; and, in his (Sir George Campbell's) time, that was fixed at 60,000 chests; but within the last few years, since that time, he found that the season's stock had been reduced from 48,000 chests to 15,000 chests, so that in this matter they had been living upon their capital; and this last Resolution of the Government of India showed that they could not maintain even that. Under these circumstances, it would be necessary to reduce the amount sold in Bengal in future, which was an alarming state of things as regarded the financial prospects of India. Altogether, political questions apart, he thought the noble Lord was right in thinking he should be chary in building too much upon the opium traffic, and that he would have been more right if he had gone a little farther than he had gone in his action with regard to the Opium Revenue; and if, from political causes, it was not swept away, from financial causes it was not at all unlikely it might be considerably diminished. There was one item which showed a tendency to increase during the past two years, and that was the item of excisable and spirituous liquors. That was an increase on which he looked with very great misgivings. He believed that the cause was a change in the system in Bengal, and that it had been a reversion from the strict and more modern system to older and looser systems. He was very much inclined to believe that there was considerable ground for the complaint that such a change had been allowed to prevail over the restraint on the consumption of spirituous liquors, which ought to be the main object of a system of that kind; and he was sure that the noble Marquess would take care not to encourage the increase referred to. He believed there had been a great increase in the system of railways, and they had reason to congratulate themselves that the great system of railways inaugurated by Lord Dalhousie had been a distinct and wonderful success. There was no country in the world in which railways paid such a uniformly good average percentage on the capital expended. The question of Public Works was a large one; but he would not enter into it at length. He must, however, say that it seemed to him to be a great misfortune that we were subject to such oscillations of policy. A mistake was at one time made in the belief that nothing would make India prosperous but an almost unlimited expenditure on Public Works, and he was glad that that mistake had been corrected. No one was more opposed to the extreme profuseness in regard to Public Works that was at one time allowed to prevail; but, at the same time, he thought that the reaction had been carried out too suddenly and too far. The consequence of the stoppage of Public Works was to render necessary an enormous increase of pensions and compensations. For instance, the excess of expenditure over the Estimate for compensations and pensions in the Accounts of 1880–1 was£169,000, owing to the cost of pensions and gratuities in consequence of the reductions made in the Public Works Department. They compensated and pensioned largely men who were in the prime of life, and then they soon found that they must employ them again. In regard to the railways, they should in the same way be careful to pursue a steady policy. As to that, it had been thought right to make more railways, and the Government chafed under the restrictive Resolution imposed on them by the hon. Gentleman opposite (Mr. E. Stanhope). The Southern Mahratta Railway was made under a quasi-guarantee outside the limits fixed by the Resolution. The result of the whole was that, when they came to the year 1882–3, they had arrived at a small surplus of £250,000. They only arrived at that surplus by that extraordinary £1,000,000 of Provincial adjustments which no person on earth could understand. He relied on the Financial Department of the Government of India, although it was a puzzle to himself how they arrived at a very gratifying reduction of taxation. Assuming that they were able to make those reductions, he heartily joined in the congratulations expressed on both sides of the House to the noble Marquess that he had been able to abolish the Customs Duties, and to reduce the Salt Duty, which he (Sir George Campbell) had always considered a monstrous tax—which was literally a poll tax upon the people of India, amounting to something like an Income Tax of 3 or 4 per cent upon the working men of India. As regards the abolition of the Customs Duties, he would not dispute that it was not a just and economically right measure; but let them not be hypocritical about it. It was not because of the people of India, but because of the pressure put on the Government by the manufacturers of Lancashire, that those duties were abolished; and he was afraid if the matter had been merely one of the benefits that was to be conferred on the people of India by taking that step, it never would have been taken. He would remind hon. Members that though they had abolished all the import duties in which this country was interested, they had not abolished the export duties, for they levied a heavy tax on the export of rice from India, and the people of India were still hampered by export duties, as much as we should be by export duties on cotton manufactures. As regarded the Civil Expenditure of India, it was a growing item, which had a tendency to increase, and which must increase with civilization; and he had very considerable doubt whether the ideas of the hon. Gentleman opposite were correct, the Government of India, being hard pressed for money to carry on the Afghan War, had found it necessary to starve the Departments in order to carry on that war. The Government of India, having returned to a normal state of things, the hon. Gentleman said what a terrible thing that the Expenditure was again going to be increased. [Mr. E. STANHOPE said, he used the same language in 1879.] As regarded the Army, he was not very sanguine that the expenditure could be materially reduced. The Army might be reduced here and there; but, on the other hand, he believed the noble Marquess would find that our Indian Army, especially when there was a call for men to Egypt, was not too largely, but dangerously small. There might be a cutting down of expenditure by the abolition of the Commanders-in-Chief, and their Staff at Madras and Bombay; but the rank and file of the Indian Army were not over, but under-paid. He condemned as absolutely fatal the amalgamation of the Native Army; but expenditure might be saved by remodelling it on the basis of the Punjab Frontier Force. One thing which struck him very much was the enormous increase of the Non-Effeetive Charges for the Army —the most unsatisfactory kind of military expenditure—a charge which was rapidly growing; and he would point out that, in the view of the great expenditure of India, the costs incidental to the large Public Works, and the charges necessary for the provision of the General Debt, there was great want of a Sinking Fund. Taking all these things into consideration, he would impress upon the Government the great need there was for the exercise of prudence in regard to their Indian finance.

MR. R. N. FOWLER

said, the right hon. Gentleman the Member for the University of Edinburgh (Mr. Lyon Play fair) had spoken very forcibly on the question of the Salt Duty; and he (Mr. R. N. Fowler) thought the House would heartily concur with the right hon. Gentleman in all he had said upon the subject. He was glad to find that the noble Marquess (the Marquess of Hartington) had been able to announce a reduction of the duty on salt; and he hoped that, on future occasions, he might have the privilege of announcing still further reductions. But he wished more particularly to call attention to the question which had been alluded to by the hon. Member for Kendal (Mr. Cropper) and other hon. Gentlemen—namely, the question of the opium trade. There could be no doubt that there was, throughout the country, a strong feeling that it was a great disgrace to Great Britain that we should continue to derive an important part of the Revenue of India from that pernicious traffic. [Mr. O'SHEA: Oh!] The hon. Member for Clare (Mr. O'Shea) said "Oh;" but he (Mr. R. N. Fowler) would ask the hon. Gentleman if he ever heard of an instance in which a medical man prescribed the smoking of opium? He (Mr. R. N. Fowler) knew that opium was constantly prescribed in other forms; but he never heard of any case in which the smoking of opium was prescribed. It certainly seemed to him that that was a subject which deserved the earnest attention of the Government and of the House, and he earnestly hoped that the time would soon come when the noble Marquess would be able to tell them that he had decided upon taking steps to put a stop to the traffic. There was one question which he would like to put, and which the noble Marquess would, perhaps, be good enough to answer when he replied upon the debate generally. They had been informed that an alteration had been made in the transit duties on opium; but he could not find, in the Accounts before them, what that alteration was, and the noble Marquess had not alluded to it in the really very able speech which he had delivered to the House. He hoped the noble Marquess, when he rose to wind up the debate, would tell them the precise steps he had taken, and what had been done in regard to the reduction of the duty on Malwa opium. He (Mr. R. N. Fowler) quite concurred with the hon. Member for Kendal in the remarks he had made as to the impropriety of raising that very large amount of duty from opium. It was generally felt that the opium traffic was a disgrace to the country. There was only one other point with which he would trouble the House. There had already been a debate on the question of placing the expense of the troops about to be sent from India to Egypt upon the Indian Revenue. He was one of those who felt very strongly on the subject, and he had recorded his opinion by his vote against the propriety of placing any part of the charge upon the Indian Revenue. The people of India were a poor and a highly-taxed people, and it was a crying shame that they should be taxed for any Imperial purpose. He trusted that the question would receive the future consideration of the House; and he hoped when the time came, when it would have to be fairly discussed, the House would lift up its voice in a strong protest against any part of the expenditure for military operations in Egypt being levied upon India. The noble Marquess had told the House that night that the sum demanded for this purpose would be greater than had been anticipated. He thought that was only an additional reason for listening to the advice of those hon. Members on both sides of the House who objected to placing the charge upon the people of India. At that late hour he would not further detain the House; but he had wished particularly to express the views he entertained upon these two points—the opium traffic, and the impropriety of charging upon India any of the expenses connected with the Expedition to Egypt.

GENERAL SIR GEORGE BALFOUR

Mr. Speaker, I am desirous of explaining that, in expressing dissent during the speech of the hon. Gentleman the Member for Mid Lincolnshire (Mr. E. Stanhope), I was not actuated by any feeling of discourtesy. I am confident that, from the high personal esteem and regard in which he knows I hold him, my unintentional interruption will be overlooked. This involuntary loud objection was simply caused by the hon. Member's unexpected advocacy of another extensive scheme of Indian Army re-organization. I frankly say that after the hon. Member's wide experience, as Under Secretary of State for India, of the disastrous consequences from the vast changes in the Indian Army system in 1861, I did not expect anyone, having that knowledge, would desire to enter upon a second attempt. I naturally feel Strongly on all such proposals. I was directed by the Viceroy of India, from my official position, as head of the Military Finance Department, to join the Indian Military Commission of 1861. It was appointed by the Viceroy to aid Government in carrying out the Army changes which Sir Charles Wood, the then Secretary of State for India, with the sanction of the Government of that day, had ordered. With the experience I then acquired, and with the knowledge since obtained of the financial and military evils resulting from changes, unwisely ordered, and hastily carried out, I look with the greatest distrust on new schemes. The old system of the Indian Army, which had been advocated by the ablest men, who created our vast Empire, was destroyed in 1861, on grounds neither sufficient, nor properly sifted, to justify the ordered changes. There were defects, no doubt, in the Indian military system; but these were remedial. They were, however, not noticed in the despatches from the Secretary of State. But hardly a year passed after that re-organization without some attempt to patch up the created defects, and vast sums have been annually spent to try and make the 1861 system work well. After only 20 years we are again urged to accept further changes, on the recommendation of a Commission which three years ago sat in India. I maintain that the proposals of that Commission are not entitled to confidence, partly because the inquiry was not carried on with that continuous regularity and order which are expected from the presence of all the Commissioners.

I may also point out that but little official confidence appears to be placed on the proposals of that Commission. We now learn, for the first time, that not only does the Government in India dissent from recommendations, but the Council of the Secretary of State for India are wholly opposed. And, as regards the opinion of the Secretary of State, that has yet to be made up. Above all, the Papers connected with this new re-organization are still withheld from Parliament. In this respect in great contrast, for the worse, with the course followed in regard to the reorganization of 1861. The whole of the documents of that time were promptly published. The secrecy now practised can only be viewed as a planned mystery to cover something in the proceedings of the Commission necessary to be concealed from the scrutiny of many persons fully as qualified as were the Members of the Commission who advised these changes.

We have, however, this evening heard from the noble Marquess (the Marquess of Hartington) of some results of the new re-organization. We have been informed of an actual diminution of 11 batteries of horse, field, and garrison Artillery. These have been withdrawn from India after forming two mountain train batteries and adding men to each of the remaining garrison batteries. There from is expected a diminution of annual charge of £80,000. This, indeed, is a very small item for such an important diminution in this powerful Army. At no previous time, during the past 60 years, has the Artillery of India been on so small a scale as at present.

We also learn from the Secretary of State for India that 18 battalions of Native Infantry, and four regiments of Native Cavalry, have been broken up; of these 18 Infantry battalions, eight are struck off from the unfortunate Madras Army, making up, with former reductions in that Division, no fewer than 20 of the 52 Madras battalions since the re-organization of 1861. Thus the branch of the Service of India—that of Madras—which stood loyal to a man during the Mutiny of the Bengal Army, has been the greatest sufferer, having had two-fifths of the battalions disbanded.

We are also told that liberal pensions, gratuities, and rewards have been offered, and inducements held out to the men of all these disbanded corps. But, if the reports in the newspapers can be relied on, it would appear as if the inducements to the men to remain in the Service had failed throughout all India. This, of itself, is a great political warning. No one who has had experience in India can fail to look on this fact otherwise than one of grievous import. From my personal acquaintance with the Madras Sepoys, I look on the extent to which the men of the disbanded corps have taken their discharge to be an augury of great danger.

I confess I am not astonished at such evidence of dislike to the Service; and I have no doubt my experience is applicable to all India. The Madras battalions now disbanded were, in my time, good serviceable corps. I have served with several of them. With one in particular—the 34th battalion of Light Infantry—I had personal experience in the field. I saw that battalion, weak in numbers, face one of the most formidable bands, 3,000 strong, ever collected in the Deccan. The band was composed of Arabs, and men from Central Asia. The former, wiry and brave men, the latter, stalwart and tall, with brown hair and faces, and light eyes. The band was bravely commanded and led by two experienced Native Chiefs, who both fell in the action. For right well did the gallant 34th Madras battalion bear itself on that day. If it had been a battalion of the Bengal Army, loud would have been the praises and liberal the rewards bestowed on the men and officers. But Madras had then, as now, no friends. The whole military administration of India is practically vested in Bengal officers. The old jealous feeling still exists of the kind created by the services of Clive, a Madras officer sent to Bengal from Madras, whereby the Madras Army is still, as always, kept in the background. Even the most obvious occasions on which Madras corps might have gained a name by being employed in the field have been denied that Army. The plea often urged of distrust of its bravery was not justified. The 34th battalion proved how well and willing the Madras Sepoy was to meet brave, warlike races such as I have mentioned; for, after the fight was over, I had the duty, as the Staff officer of the force, to examine the many prisoners. They were such fresh men from Central Asia that none could speak Hindostanee.

Then, as regards the Council which advises the Secretary of State. I appeal to the noble Marquess, as to the numerous Bengal civil and military officers on that Council, and how very few are the Madras and Bombay officers. Madras has certainly strong reason of urging partiality, by pointing to the neglect by the Government of India of the civil and military interests of that part of the Empire.

We have also been informed by the noble Marquess that the financial saving expected from disbanding 22 corps of Indian Cavalry and Infantry is only £120,000. In contrast with the great military and political evils from such vast changes, I unhesitatingly say that this is truly a miserable saving. I should be ashamed, even now, with the years heavy on me, if I could not easily effect a much larger saving in the Indian Army Expenditure of £16,000,000. Then, again, we are told that the object-of disbanding these 22 corps is to increase the numerical strength of the remaining Native corps. Now, this question, as to the suitable numbers to form a Native corps, was fully considered in 1861 by Lord Canning and his Council, aided by his Military Advisers. With all the full experience derived from the great events that had resulted from the Mutiny of the Bengal Army, it was then considered that 600 Sepoys was a proper strength for a battalion. Now, one of 800 Sepoys is thought to have some virtue in it, unknown to the former statesmen, who certainly then had as full knowledge of the Indian military requirements as any of those of the present day, whose opinions are now taken as guides for making great changes.

Before great reductions in Artillery, Native Infantry, and Cavalry, are ordered, I urge far more careful consideration. If the measures be ordered on purely military grounds, then full weight should be given to the opinions of the best military experts. If for economical reasons, then the various modes of effecting such a small economy as that of £200,000, now expected to be obtained, should be discussed. Besides feeling confident in being easily able to save £200,000 out of £16,000,000, the present Military Budget of India, without the diminution of a gun or a private, I could have put forward other economical proposals for consideration. For instance, to form Artillery batteries, as in former years in India, into eight guns instead of six guns as at present, and thus have largely diminished the cadres of batteries, but kept up all the guns. Also to have largely added to the numerical strength of the garrison batteries, thus maintaining the existing number of gunners with only half the number of batteries. Then to have formed the Native Infantry battalions into six companies, each, of 100 men, instead of the eight companies of 75 men as at present. In this way, the full number of guns, gunners, and battalion cadres would have been kept up. Instead of cutting off only 144 companies of Native Infantry by disbanding 18 battalions, there would have been about 260 companies of Infantry struck off, without touching the number of cadres of battalions.

These changes could not have led to such violent and serious alterations as have been brought about by the mode followed. And I am certain that economies more than equal to those effected, and greater military efficiency, would thereby have been secured. I, however, greatly doubt the stated economical result from the reductions as ordered. For after deducting the pensions, gratuities, and rewards to the men of the disbanded corps, swelled up for the long series of years, which men of middle age will live, the estimated saving of £120,000 from disbanding 22 Native corps will be seriously diminished, if not entirely absorbed.

There is, however, another planned economy, which the noble Marquess the Secretary of State for India informs us has been resisted by the autho- rities of the War Office. It is one which has often been proposed and opposed. It is to diminish the number of cadres of European Infantry and Cavalry without decreasing the privates. This resistance to diminution of cadres might have been expected. In 1861, when the Indian finances were embarrassed, the Government earnestly desired a large reduction in the number of these cadres. Whereas, whilst a large decrease of privates in Cavalry and Infantry regiments was ordered by the Horse Guards, with the diminution of only one officer, the cadres were persistently maintained, with, necessarily, all the costly establishments and Staff allowances, which are so wisely attached to European corps in India.

As far as I could make out from the noble Marquess's Statement, the cadres of five European Infantry and three of Cavalry; in all, eight cadres, recently advised by the Indian Government to be withdrawn, would leave India with 45 Infantry and six Cavalry regiments; in all, 51. It was also proposed, in 1868 and 1869, that out of the then 63 cadres—namely, 52 Infantry and 11 Cavalry, 12 should be diminished; but only four Cavalry and Infantry, two of each, were withdrawn in 1870. The plea urged against the diminution of the other eight cadres was, that their cost would become a charge on the Imperial Exchequer. My own view is that the existing eight available cadres would, at present, be a useful addition to our Home Establishment. The present grounds of objection have not been fully stated by the noble Marquess; but if the plea of extra cost to the Imperial Government be again urged, I submit that it would be real economy to bring away from India the eight cadres, and pay their much smaller Home cost out of Indian Revenues. These cadres could be usefully employed, on behalf of, and form a Reserve for, India.

The strength of the 45 Infantry battalions and six Cavalry regiments then left in India should be increased on the plan followed in 1870. The 52 battalions of Infantry in India in 1870 were decreased by two; but the 1,500 privates in the two withdrawn corps were distributed amongst the 50 battalions retained. The Cavalry corps, 11 in number, also diminished in 1870 by two, had the number of troopers in- creased in each of the other nine cadres left in India.

Some useful changes in the remaining 51 corps of Cavalry and Infantry might now be made. I advocate all ranks being made effective in the ranks for which employed. For instance, there are, at present, bandsmen, pioneers, lance corporals, librarians, instructors, workmen, teachers, clerks, extra drummers, borne as privates, fully 80 in number, now withdrawn from the grade of duty privates. These should be made real effectives, and all returned separately in ranks suitable for the duties on which actually employed. The 39,000 privates of Infantry now nominally kept up in the 50 Infantry battalions cannot leave more than about 35,000 duty privates after deducting the 4,000 men withdrawn for these various purposes. This number should be made good by each of the 45 battalions having an extra establishment of 40 lance corporals, 12 pioneers, 20 bandsmen, and eight for the other duties. The total number so replaced would be about 3,600 in the 45 battalions. Each Infantry company should be also raised to 100 duty privates instead of, as at present, 97½ on the average; the battalion then being 800, instead of the nominal strength of 780, thereby making up 36,000 duty privates in the 45 battalions. The total number would be, with the employed men, above the present number of 39,000 privates. The six Cavalry cadres retained should also be increased to 480 duty privates, instead of at the present nominal 384. Then, with the present employed men— about 80 in each Corps—made effectives, the Cavalry would be as strong in privates as the nine cadres are at present. By these modifications, the Indian Establishments and the Staff, of eight cadres, would be decreased, and a considerable saving thereby effected.

But it is disheartening to urge economies in the Military Service of India, when extravagance and wasteful outlays in that Military Expenditure are incurred by rushing into useless and dangerous expeditions, such as were the late operations in Afghanistan. I have, on several occasions, given expression to an opinion that these operations have cost India to the full extent of £30,000,000 extra, instead of the often-repeated official statements of £18,000,000, £20,000,000, and now, I believe, £23,000,000. I am now prepared to prove, by figures taken from the Accounts, that my calculation of nearly £31,000,000 extra is nearer the correct charge. I have in my hand a statement of the Military Charge of India for a long series of years, also covering the seven years following 1875–6. These charges began to increase in the year 1876–7, and so continued for seven years in excess of the charges for former years. In that first year, the total amount was £15,792,112; whereas the Military Charge in 1875–6 was £15,308,460. For the seven years ending with the year 1882–3, the total charges, including therein the Frontier Railways, is £138,022,614; according to my statement, as follows:— 1876–7,15,792,112l; 1877–8, 16,639,761l; 1878–9,17,092,488l; 1879–80,23,047,212l; 1880–1,30,237,048l; 1881–2, 18,862,993l; 1882–3, 16,351,000l; total, seven years, 138,022,614l. If we deduct seven years Ordinary Charges, at the rate, in 1875–6, of 15,308,460l, the total would be 107,159,220l, leaving a net excess of charge for the Afghan operations of 30,863,394l. I may point out that the figures used for five of the seven years are taken from the audited Accounts, and two are estimated. The great variations between estimated and actual expenditure may reasonably be urged as a caution in accepting the estimated sums for the two years as the minimum charge.

I admit that additions were made in the military system, during this period, somewhat increasing the cost of the Army. I have tried, but failed, to make out the exact sum by which these changes raised the military cost. I am, however, confident that, after allowing for a few economies, the actual net increase has been but a very small fraction of this extra charge. If one-seventh of the extra £1,000,000 above£30,000,000 be, as I believe it to be, the extreme average annual increased charge, then I have justified my assertion as to the £30,000,000 being the extra cost for the War beyond our Frontiers.

I do not now venture to enlarge on the possible economies in Indian Military Expenditure. It is a question of great complexity, because it involves considerations of such a varied character that few minds can grasp them. The most experienced authorities have been at sea as to how to base calculations of the suitable strengths of European and Native troops for the garrison of India. I remember well the vast European Army which a Committee of the foremost men at home considered necessary after the Mutiny for our security in India. I also well remember the large Army which the Commander-in-Chief, Lord Strathnairn, considered requisite. Then, again, the calm-minded statesman, Lord Canning, proposed, in May, 1860, a vast European force, but which, within eight months, he greatly diminished on the broad and avowed ground that no one could have foreseen the marked quieting down of the excitement from the Mutiny, which, in that very short period, had taken place. Holding these views, I am content to accept the strength in privates, which may at the moment form the Indian garrison; and, on that grade, base all calculations of cost, so that the largest economies may flow from that formation and distribution of all ranks into corps which experienced experts may decide on. The only fixed data on which Government can act is financial. After long consideration Lord Canning decided on the amount for the Army, which the finances of India could bear, with this instruction—that the largest Army that could be provided out of that sum was to be maintained. That condition was complied with in 1861, and an Army was then formed, in numerical strengths and in corps, larger than now maintained; but its charge was less than at present. I believe that considerable economies could be effected in the present Expenditure; but it involves considerable friction with the War Office and Horse Guards, and close and powerful check in India, and in the Home Office of India.

There is, however, one unnoticed opening for economies. I bring before the House the excessive Civil Charges as affording a great opening for effecting a diminution of Indian Expenditure. Whilst everyone is calling out to cut down military outlay, to enable Government to find funds to carry out those improvements which India needs, not only is reduction in the purely Civil Charges studiously left unspoken, but, on the contrary, augmentations are advocated. We have, even this evening, heard from the noble Marquess of augmentations to the pay of subordinate Civil Servants, and evidently more increases in that direction may be expected. But we never hear any advocacy of changes in the Civil Administration by which outlays may be cut down by improved organization, and so provide funds for improvements. No; the existing civil organizations are left untouched, without those independent inquiries being instituted as applied to the Military Service.

There are military officers fully as fit to preside over a Commission on the civil organization, and to wisely advise extensive alterations, as Sir Ashley Eden was supposed capable in respect of presiding over an inquiry into the military system. I do state that Sir Ashley Eden was less qualified than many other civilians to advise on military changes; his services, mainly in Bengal, having thrown him far less than other civilians amongst the Army. But with such an adviser in the Home Council of India, we have less reason than ever to expect economies in the purely Civil Charges. These, on the contrary, have been largely augmented during the last 14 years, and in a far higher ratio than have the Military Charges increased.

I hold in my hand a statement of the payments during 14 years, for realizing, as it is termed, the Revenue of the country, and for the purely Civil Departments under the Civil Services. In 1867–8 these two branches amounted to £18,943,974. In 1880–1 the like charges were £21,853,953, an increase of nearly £3,000,000. The items as follows are all taken from audited ac counts:—

Years.	Payments in Realization of Revenue.	Civil Charges in India.	Total Civil charges.
	£	£	£
1867–68	8,682,083	10,261,891	18,943,974
1868–69	8,800,803	10,307,185	19,107,988
1869–70	9,069,162	10,737,920	19,847,082
1870–71	8,973,892	10,238,781	19,212,673
1871–72	8,333,824	10,497,931	18,831,755
1876–77	9,808,436	10,495,519	20,303,955
1877–78	9,738,640	10,337,478	20,076,118
1878–79	9,606,319	11,337,672	20,943,991
1879–80	10,057,976	11,468,900	21,526,876
1880–81	10,358,735	11,495,218	21,853,953

During these 14 years, all other kinds of Civil expenditure in India, exclusive of the outlay on Public Works, but including Interest, Famine Relief, and Loss by Exchange, have largely increased. In 1867–8 the total charge in India for all these Civil purposes amounted to £22,640,749. By the last audited Accounts for 1880–1 this charge had swelled up to £29,088,147, nearly £7,000,000 increase. For some years of this period these charges have been higher owing to the extraordinary Loss by Exchange, and for Famine. Even after allowing for the additional loss by exchange, which has been the main item of increase in the Civil Charges since 1867–8, the often-asserted claim of the Government of India for credit in effecting a diminution of the Civil Charges is contradicted by the figures mentioned.

I now ask the attention of the House to the remarkable mode of exhibiting the capital set apart for Productive Public Works. The Accounts of 1867–8 show, for the first time, an extraordinary outlay for these works in the form of Irrigation, State Railways, and Miscellaneous Improvements. Up to 1879–80 the invested irrigation capital amounted to £11,851,193 spent in England and India; but the profits being very small, then, in 1878–9, for the first time, the Accounts divided the receipts from Land Revenue into "Ordinary," and into "Portions of Irrigation Land Revenue," and credited this last amount as derived from all the capital expended since 1867–8 in these special Irrigation Works. The amount of the Irrigation Revenue for the first year, 1878–9, was £126,934, exclusive of Madras. In the year following Madras was added on, and supplied £483,859; the total for all India being £602,398. In 1880–1, whilst the Irrigation Revenue for all India was £797,319, Madras supplied £552,160. This large sum, at 25 years' capitalized value, represents an investment in Madras Irrigation Works of about £14,000,000. That amount is in excess of the capital invested since 1867–8 in all the extraordinary works of irrigation. But, by including the Madras favourable results, the losses in other parts of India are covered. I cannot, from my inquiries, make out that there has been invested in Madras Extraordinary Works since 1867–8 a twentieth part of this sum. I, however, admit that the Accounts of 1879–80 exhibit an invested Productive Capital in Madras Extraordinary Irrigation Works of £774,027. Large as this sum appears to be, yet the portion of Madras Land Revenue credited to this investment actually represents an annual profit of 70 per cent. In 1880–1 the Accounts show a great jump in the amount of Productive Irrigation capital. The sum put down for Madras alone is there stated at £1,772,744. This increase of nearly £1,000,000 is by assigning to the previously exhibited Productive Capital all the Ordinary outlay spent only on the specially profitable Madras Irrigation Works prior to 1867–8, also by transferring Unprofitable Productive Irrigation Works commenced since that year to Ordinary Works. Such a mode of making an extension to the Productive Capital is opposed to all right accounting. The Accounts of 1880–1 show the invested capital on Productive Irrigation Works of all India at £16,049,774; whereas by the Accounts of the previous year, 1879–80, this capital is only £10,643,307. It is in the one year following suddenly increased by £5,406,467, of which £4,792,017 is the ordinary expenditure on Profitable Works made prior to 1867–8, of which Madras supplies nearly one-fifth. Not only are the past Accounts of these Extraordinary Works vitiated by this addition to the special fund commenced in 1867–8, but the mode of exhibiting the Interest on Debt is there from greatly modified. This is the more objectionable, because one claim made for good financial management in India is the diminution of the interest for what is called "Debt proper." But this is mainly effected by merely altering the figures in the Accounts, by debiting interest on the increased Productive Capital.

In 1875–6 the charge for all Debt in India and England is entered in the Accounts at £5,563,968. In 1882–3, the estimated charge is only £3,917,000. This remarkable apparent decrease is caused by separating the interest for "Debt proper" and interest on the yearly capital claimed to be invested in Productive Works. In the year 1876–7, the first year's ordinary interest after this division is in the Accounts £4,907,236, and the interest on the invested Productive Capital at £895,933. In 1879–80, the interest for ordinary Debt was £4,590,482, and on the invested capital £1,616,511. In the following Debt year, 1880–1, the ordinary interest is reduced to £3,669,195, and interest on capital increased to £2,381,745. So that in one year, whilst the ordinary interest is decreased by £921,287, the interest on the invested capital is increased by £765,234. These differences are still further increased in 1882–3, so as to make the interest on Productive Capital amount to more than it has ever been. This is the natural result from adding on the funds spent before 1867–8 for Ordinary Works.

I now mention to the House an example of the unfair mode of distributing this capital for Productive Public Works amongst the several Provinces of India. The expending of public money is well known to have an important useful bearing on the revenues of the districts in which spent. A largely-increased military expenditure in any locality is known to have a great effect on the revenue. This beneficial action is equally caused by an increased outlay for Public Works. Now, prior to 1867–8, the whole of the outlay on all Public Works was exhibited as "Ordinary" in the accounts of the several Provinces. In that year, and subsequently, this outlay was divided into "Ordinary," "Extraordinary," and latterly called "Productive." The Government of India, then, for the first time, distributed this extraordinary fund at its pleasure amongst the 10 Provinces of the Empire. In the 14 years, from 1867–8 to 1880–1, the fund so distributed in India for Irrigation Works and State Railways amounted to £31,772,859, of which Madras and Bombay received £3,901,373, and the rest of India £27,871,486. The ratios to all India of the population and areas of these two divisions may be stated to be more than one-fourth for Madras and Bombay, and less than three-fourths for the rest of India. The respective divisions ought, therefore, to have had assigned £9,000,000 to the one and £24,000,000 to the other division. Again, basing the proper division of this fund on the revenues and surplus income of the two divisions, after deducting expenditure, the fund ought to have been still more fairly apportioned. In 14 years, from 1867–8 to 1880–1, the total revenue of Madras and Bombay amounted to £258,085,276, against £508,735,683 for the rest of India. The expenditure has been respectively £209,029,078, against £414,107,810; leaving the surpluses of revenue over outlay for the two divisions £49,056,198 for Madras and Bombay, against £94,627,873 for the rest of India-On the ratios of these figures the fund for Productive Public Works ought to have provided Madras and Bombay with a share equal to fully £15,000,000, or four times more than the amount actually assigned. An examination of the division of the fund for even the Ordinary Public Works will also show that the sum now allowed to be expended by Madras and Bombay is far less than in 1867–8, the year in which capital for Productive Public Works was first formed. Such partial assignments as now stated is most unfair to the semi-independent Governments of Madras and Bombay, being calculated to retard the improvement of these districts, and to unfairly benefit the other eight districts under the more direct rule of the Viceroy.

One important part of this night's discussion has turned on the Opium Revenue, about which many opinions have been expressed, all mainly as to the risky character of the revenue. And, in now venturing to offer my views to the House, I urge that my experience as Consul in China entitles me to form, and, I hope, to express, an opinion. No doubt it is nearly 40 years since I was there employed; but the Indian Opium Revenue appears to be more secure at the present time than formerly.

At that period, opium was excluded from our Tariff, though openly sold outside our trading ports from vessels anchored in the waters of China. Now it is saleable within the limits of the trading ports. Formerly, no Opium. Revenue was taken by the Chinese Government. That Revenue is now openly and legally levied. It was fixed on the distinct proposal of China, and, if recent Reports can be relied on, a higher rate of Revenue is now to be levied. In 1843, a definite proposal was voluntarily made by the Chinese Plenipotentiaries to legalize the opium trade, but rejected by Sir Henry Pottinger. And, in belief of its being my duty, under Treaty, to prevent British vessels from entering ports with contraband articles, such as opium, on board, I seized three vessels that had so violated these Treaty obligations. But when I offered the local Chinese authorities the opium so seized, I was distinctly told that they would not act. I can, therefore, justly say that, within ray experience, the Chinese Government was not then, and, in my belief, is not now, zealous in opposing the opium trade. I admit that a Party in China has always there existed opposed to opium consumption; but whilst most active in crying out against imported opium, that Party was, and is, silent as respects the Native opium so extensively grown in different parts of the country.

Then, as respects the Opium Revenue, my hon. Friend the Member for Orkney (Mr. Laing) has freely avowed his opinion as to that revenue being more regular than any other Branch, and his experience entitles that view to confidence, the more so as the accounts of that revenue fully bear out the opinion. I find that for 14 years the net revenue from opium has been well maintained, having increased nearly £ 1,500,000 since 1867–8, as my statement shows.

The net Opium Revenue, after deducting all charges, is as follows: —In 1867–8, £7,049,415; 1868–9, £6,733,215; 1869–70, £6,132,387; 1870–1, £6,031,034; 1871–2, £7,657,187; 1872–3, £6,872,415; 1873–4, £6,323,395; 1874–5, £6,214,782; 1875–6, £6,252,026; 1876–7, £6,280,781; 1877–8, £6,521,337; 1878–9, £7,699,032; 1879–80, £8,249,808; and for 1880–1, £8,451,185.

The variations in the annual amounts are not owing to changes in the taste of the Chinese, but to the many fluctuations in Calcutta in the mode of disposing and storing the opium to suit the financial wants of the time.

One more, and the last, question I wish to submit for the consideration of the House is the Salt Tax. Long before I had a seat in Parliament I advocated the policy of freeing salt from taxation; and since I have been in the House I have urged, both inside and outside, free trade in salt throughout India. But, on this occasion, I shall confine myself to the question of the unjust bearing of the Salt Tax on Madras and Bombay. In 1868–9, out of a gross revenue of £5,588,240 from salt from all India, Bombay and Madras were called on to yield only £1,722,846. In 1880–1, that yield had actually been increased to £3,064,541 out of a gross revenue of £7,155,988.

I hold in my hand a Statement of the Indian Salt Revenue for 14 years as follows: —

GROSS SALT REVENUE.
Years.	The rest of India.	From Madras and Bombay.	From all India.
	£	£	£
1868–69	3,865,400	1,722,840	5,588,240
1869–70	4,124,564	1,764,143	5,888,707
1870–71	4,112,088	1,994,192	6,106,280
1871–72	4,001,465	1,965,130	5,966,595
1872–73	4,195,598	1,970,032	6,165,630
1873–74	4,120,705	2,029,957	6,150,662
1874–75	4,098,610	2,128,691	6,227,301
1875–76	4,010,185	2,234,230	6,244,415
1876–77	4,082,264	2,222,394	6,304,658
1877–78	4,189,622	2,270,460	6,460,082
1878–79	4,019,839	2,921,281	6,941,120
1879–80	4,240,043	3,026,370	7,266,413
1880–81	4,051,447	3,064,541	7,115,988
1881–82	4,289,497	2,923,503	7,213,000

The figures show that whilst the actual increase has been in total revenue from 1868–9, only £1,527,748. Madras and Bombay have furnished £1,341,701, and the rest of India only £186,047. This large increase has been brought about by unequal, if not unjust, additions to the tax on the salt of Madras and Bombay. In the ratio of population, the yield of Salt Revenue in these two divisions ought not to exceed £2,000,000, against £5,000,000 from the rest of India. In the earlier years of this century, Madras salt was practically free till 1805, and mainly so in Bombay till 1837. In these years a maund, or 82lbs. of Madras salt, was first taxed at 9 annas and 4 pie, and Bombay salt 8 annas. These rates gradually swelled up to 40 annas in Madras and Bombay, and recently lowered to 32 annas. The former large consumption in Madras has fallen off by reason of these large augmentations. I can only add a few words in warm support of the views of the right hon. Gentleman the Chairman of Committees (Mr. Lyon Playfair). I believe with him that vast beneficial results to the people, cattle, and traffic, would follow from the abolition of all duties on salt. The great cheapness arising from this freedom would insure a largely increased supply of salt for the people and cattle; at least 20lbs. per head might be the annual consumption, making about 60,000,000 maunds of salt consumed in all India, instead of one-half of that quantity as at present. Such an extension could not fail to improve the health of the people, and greatly benefit the cattle for agri- culture. Free salt -would also cause a wonderful extent of increased traffic. The salt sources of India are conveniently placed in centres from which traffic would easily spread throughout all India. I cannot too strongly urge on the noble Marquess the policy of free salt. No statesman has ever had so grand an opportunity as free salt offers of effecting so great a benefit to 250,000,000 of people. I can only express an earnest wish, that the noble Marquess will avail himself of the opportunity by declaring salt free, and make the fame of our Empire extend throughout all Asia.

There are several other subjects I should like to mention; but I have too long occupied the attention of the House, and must therefore now close with my respectful thanks for having listened so long.

SIR WALTER B. BARTTELOT

said, it appeared, from a statement made by the noble Marquess (the Marquess of Hartington), in the course of his speech delivered that evening, that the Government of India had estimated the cost of the 6,000 or 7,000 men who were to form the Indian Contingent of the Army in Egypt at £1,800,000, which sum included transport and maintenance of the troops for three months. In other words, each man landed at Suez from India was to cost a bout £300 a man if only 6,000 were sent, or £30,000 for 100 men; whereas the 23,000 who were to be sent from this country were estimated to cost for the same period £2,300,000. Now, under those circumstances, he thought it right that the noble Marquess should have an opportunity of telegraphing to India to ascertain whether that statement was correct; because, if it were so, it would materially alter the opinion of many hon. Members of the House with regard to the cost of the Indian Contingent being made a charge upon the Revenues of India. The disproportion between the cost of the men to be sent to Egypt from India and the cost of those to be sent from this country was so great, that it was hardly possible to conceive the calculation of the Indian Government to be correct. The House would recollect that when, in 1878, 8,000 men were brought from India and landed at Malta, the charge was only £750,000, and that was considered by hon. Gentlemen opposite to be excessive; moreover, they said that so great a charge ought not to be placed on the Revenues of India. When the House re-assembled on the 24th of October next, the noble Marquess would have to state something more with regard to this matter; and hon. Members ought to have before them, when the time arrived, the actual cost of the Expedition from India. He was quite certain that the noble Marquess would not say that the whole of any such sum as had been named should be charged upon the Indian Revenues, seeing that India had nothing to do with the commencement of this war. With the permission of the House, he would read an extract from the despatch of Sir Edward Malet, the concluding words of which were remarkable. Sir Edward Malet said— The garrison of Alexandria has been strengthened, and now amounts to about 10,000 men. This has been done upon the advice of Dervish Pasha, whose view is that the town and garrison can at any time be reduced to submission, and that, consequently, it is right to concentrate the resistance at this point so as to save the country by one decisive blow. That was written immediately after the massacre of Christians at Alexandria, and one month before the bombardment; and, if there ever was a warning in this world, it was a warning to Her Majesty's Government that, if they had courage to place troops in Cyprus, ready to land, if necessary, at Alexandria, the Army of Arabi would have laid down their arms. If we had had the courage of our opinions, and had understood our duty at that particular moment, there would have been no necessity to send Indian troops into Egypt at all. That consideration alone ought to make them very careful of the apportionment of the charge for the Indian troops; and he would again venture to call the attention of the noble Marquess to the excessive amount which had been named in connection with them, because he believed that the taxpayers of this country, much as they regretted the amount they would be called upon to pay, would rather bear a considerable portion of the cost themselves than that the whole should be placed upon the Revenues of India.

MR. R. T. REID

said, there was one subject which had not been noticed in the course of this discussion—namely, the employment of Natives in the Civil Service of India. He was satisfied, from conversations had by him with gen- tlemen familiar with the subject, as well as from the documents in connection with it that had been placed in his hands, that the cost of the Government of India would be greatly diminished if a large number of Natives were employed in the Civil Service. These men had more sympathy with, and knowledge of, the people than Europeans, and their employment would tend, as much as anything he could think of, to popularize the Government, and would provide an opening for educated and aspiring Natives, who, under the present arrangements, were very inadequately provided for. In view of the enormous and increasing expenditure of the Indian Government and the easy means of diminishing it by the method which he advocated, he trusted the subject of the employment of Natives in the Civil Service of India would receive the favourable consideration of the noble Marquess.

THE MARQUESS OF HARTINGTON

said, that he would reserve his observations on the matters of detail which had been discussed until they got into Committee; but at that time, with the leave of the House, he would reply to the general questions of policy which had been raised. The chief question raised by the noble Lord the Member for Middlesex (Lord George Hamilton) and the hon. Member for Mid Lincolnshire (Mr. E. Stanhope) was with reference to the increased expenditure on Public Works. Both hon. Members seemed greatly alarmed at what they considered the tendency to an increased expenditure in that direction. He (the Marquess of Hartington) had already explained that no change had been made in the limit imposed by the Secretary of State, under the direction of Parliament, on the amount which might be borrowed for direct outlay on Public Works. With the exception of certain temporary assistance, which had been given to private Companies for limited purposes and which would be repaid, no extension whatever had been permitted to arise of the liabilities of the Government of India for the extension of Public Works. The increased Expenditure upon Public Works had taken place out of the Revenue of the year, mainly under the direction of the Local Governments out of the surpluses which they had accumulated in past years. It was an essential part of the system which had been adopted that the Provincial Governments should have greater control and interest in the Expenditure. That system was initiated by Lord Mayo, and had been followed by successive Governments, including that of Lord Lytton. It was an essential part of that policy that the Local Governments should be permitted to exercise some discretion in the expenditure of the funds. If, when they accumulated a balance, it was taken by the Central Government for the payment of debt, it would tend to prevent that policy being in any way carried out. If the Local Governments considered that in no way could they more thoroughly promote the prosperity of the district over which they ruled than by a wise expenditure on Public Works, it would be unwise to impose any stringent limits on that policy. He did not share with the noble Lord opposite (Lord George Hamilton) the fear as to an undue expenditure on Public Works. So long as the Supreme Government and the Local Governments confined themselves to the Revenue of the year, he did not think they could be said to be going into extravagance. With regard to the appointment of Mr. Hope, he was a man of experience in financial matters, and would be likely to restrict rather than encourage expense. The House was aware of the machinery that existed for the supervision of the construction of public works by public Companies in this country. They had officers of the Board of Trade and machinery of various kinds to watch over the management of enterprizes of that description; but in India no machinery of the kind existed; these enterprizes were under the control only of the Council. There was, at the present moment, increased activity in that direction, and the Government had numerous applications for assistance. It was extremely desirable, therefore, that these proposals should be dealt with by some skilled person. He did not question the ability of the Members of the Council who had to deal with these enterprizes. But the Government had come to the conclusion that they should be dealt with upon some definite line of policy, and that it was worth while to appoint some person of the Civil Service who had the requisite ability and financial knowledge to enable him to deal effectively with the proposals that were coming in upon them. He could assure the hon. Member for Mid Lincolnshire (Mr. E. Stanhope) that there was no intention on the part of the Government to make that a starting point for an increase of extravagance. The hon. Member had asked him a question on a subject of the greatest importance with reference to the Resolution of the Government of India on the question of Local Self-Government. That Resolution indicated, no doubt, a policy which the Government of India desired to pursue; but it did not indicate any settled intention on their part as to the extent that the Provincial and Local Governments should proceed in this matter. It merely laid down certain principles on which the Indian Government thought their policy ought to proceed. But the circumstances under which the development of Local Self-Government in India must proceed would necessarily differ widely in different parts of India. In the more advanced parts it might be possible to grant a larger share of Local Self-Government than could take place in the wilder portions of the country. No considerable change in this direction could take place without legislation, and there could be no legislation without the consent of the Indian and of the Home Government. The views of the Secretary of State in Council had not yet been communicated to the Government of India, as they were not yet in possession of all the Correspondence which had passed with the Local Governments. The subject had not been lost sight of, and he could not refrain from giving a general approval to the principle laid down by the Resolution published by the Government of India. Some persons of great Indian experience thought it indicated too rapid a rate of progression in the present state of India; but it only indicated the general lines on which it desired the Local Governments to proceed, and it did not sanction any particular measures in this direction. He did not think he need enter into any further details. The hon. and gallant Member who spoke just now (Sir Walter B. Barttelot) travelled rather far when he discussed the question of the garrison of Alexandria. The hon. and gallant Member suggested that he (the Marquess of Hartington) should telegraph to India for further information as to the War Expenditure. He had already telegraphed for information to the Government of India; but it was impossible that complete information on a subject of this kind could be transmitted by telegraph. If further information were required on the various points mentioned in the course of this discussion, he would supply it after they had gone into Committee.

MR. WARTON

said, he wished to make just one observation to express his regret that the precedent of last year had been followed this year in the matter of bringing on the Indian Budget. He hoped it would not establish a fixed habit of the House to take the Indian Budget on the last Monday of the Session. The course they had adopted showed that the Government had not a proper sense of the relative value of certain kinds of Business. He hoped they would do better another year than waste the Session in attacks on the House of Lords.

Question, "That Mr. Speaker do now leave the Chair," put, and agreed to.

MATTER considered in Committee.

(In the Committee.)

Motion made, and Question proposed, That it appears by the Accounts laid he-fore this House, that the Ordinary Revenue of India for the year ending the 31st day of March 1881, was £63,178,192; the Revenue from Productive Public Works, including the Net Traffic Receipts from Guaranteed Companies, was £9,381,786, making the total Revenue of India for that year £72,569,978; that the Ordinary Expenditure in India and in England, including Charges for the Collection of the Revenue, for Ordinary Public Works, and for Interest on Debt, exclusive of that for Productive Public Works, was £67,344,896; the Expenditure on Productive Public Works (Working Expenses and Interest), including the payments to Guaranteed Companies for Interest and Surplus Profits, was £9,259,437, making a total Charge for that year of £76,604,333; that there was an excess of Expenditure over Income in that year of £2,044,355; that the Capital Expenditure on Productive Public Works in the same year was £3,238,070; and that there was also an outlay on the East Indian Railway of £418,435.

MR. R. N. FOWLER

said, the noble Marquess the Secretary of State for India was good enough to say that he would answer any question that any hon. Member might think it desirable to put in Committee. He (Mr. R. N. Fowler) should like to know what provision had been made for the reduction of the duty on Malwa opium?

THE MARQUESS OF HARTINGTON

No provision has been made for the reduction of the duty.

MR. R. N. FOWLER

What is the alteration?

THE MARQUESS OF HARTINGTON

I am not certain what the reduction is —50 rupees a-chest, I think.

Question put, and agreed to.

Resolution to be reported To-morrow.