§ Order of the day for the Second Reading read.
§ THE EARL OF DERBYMy Lords, in moving the second reading of the East India Loan Bill I presume your Lordships would hardly wish me to go again over the ground which I traversed a few days ago, in laying before you a revised estimate of the Indian finances, and in stating the increased amount of the deficiency for which it was then calculated that we should have to provide in the course of the ensuing year. I then mentioned the amount to which that deficiency would, in all probability, extend, and what were the means on which the Government of India relied for reducing the estimated deficiency of £ll,500,000 for the year, so that they might require a further assistance from Her Majesty's Government only to the extent of somewhere about £4,000,000. It will also, no doubt, he easily understood by your Lordships that although upon the present occasion I am asking your assent to the second reading of this Bill, I am, in point of fact, only asking what may be considered a giant on account, because, as I have already stated, it will be necessary at a future period to ask for a further sum of 1475 about £5,000,000, to make up the whole of the amount which will be required. It was thought better, looking to the approaching dissolution of Parliament, that no time should be lost in passing this Bill, and your Lordships, the other day, kindly showed your willingness to suspend the Standing Orders, so that the fact of its having become law should be conveyed to India by the mail which is to leave this country on Monday next. On this occasion therefore I do not wish to make any lengthened statement; and I shall now proceed to give the best answers in my power to a series of questions which were put to me the other evening by several noble Lords. The noble Lord opposite (Lord Monteagle) asked me what were the intentions of the Government as to the proposal of a vote of thanks to the Governor General, the Commander-in-Chief, and the other officers, civil and military, to whose exertions we are indebted, under Divine Providence, for what I hope I may venture to call the suppression of the late great revolt, and the restoration of a state of what may be regarded, at all events, as a state of comparative peace in India. I have to state upon that point that it is my intention on Monday next to call the attention of your Lordships to that subject, and to move a Vote of Thanks in the terms usual upon such occasions. A noble Duke on the cross benches (the Duke of Marlborough) asked whether it was our intention to recommend to Her Majesty that there should be a public religious manifestation to testify the gratitude of the country to Almighty God for the blessings vouchsafed to our arms: and in answer to that question I have to state that Her Majesty will be advised to issue Her commands to his Grace the Primate to prepare a form of thanksgiving to be read in all the churches and chapels of the kingdom on such day as Her Majesty may think fit to appoint. I come now to a question which was put by a noble Earl below me (the Earl of Ellenborough) who said that he felt some difficulty in comprehending the statement which had been made with regard to the system of deposit for Indian railways to be made in this country, and the general expenditure on that account. My noble Friend is no doubt correct in stating that that is a subject of rather a complicated character; but it is in reality a question of account much more than of revenue; and I hope I shall be able to make the matter clear to my noble Friend and to your Lordships. 1476 Your Lordships are already aware that a very large sum has been raised in this country for the construction of railways in India. It is anticipated that the amount paid up here in the course of the next year on Indian railway calls will not he less than £6,800,000, or in round numbers £7,000,000. Now, the course which it has been found desirable for the general convenience to adopt upon that subject is this. The amounts paid on the railway calls are not transmitted to India, there to be employed by the companies on the various works to be completed, but they are in the first instance paid into the Indian Treasury in this country. It is estimated that about 96 per cent of the whole amount embarked in the construction of those railways is held in this country; so that out of every £1,000,000 paid up, £960,000 are paid in this country, and out of these £960,000 there will be required for services performed here about £400,000, and the remaining £560,000 will be expended in India. I am putting out of view at the present moment all considerations of the interest guaranteed to the shareholders; and I am speaking solely of the application of the money that is actually raised. Now, with regard to the £400,000 out of every £960,000 payable in this country, of course it was a matter of convenience that it should never be transmitted to India, but that it should be paid into the Home Treasury, and be there disbursed in proportion to the calls made upon the companies. With regard to the remaining£560,000 the course of proceeding is as follows. Your Lordships are aware that the Government have entered into a guarantee to make up all the interest that may fall short of 5 per cent on the capital expended; and further, that whenever those railways shall return a profit of more than the guaranteed 5 per cent, the surplus is to be divided, one-half between the shareholders, and the other half is to go to the Government in repayment of its guarantee. As yet, the Returns upon the sums that have been expended in those undertakings have fallen far short of the guaranteed interest; and it has been arranged with respect to all work done in India, to the extent of £560,000 out of every £1,000,000 that the capital should not be transmitted from this country, but should be made a charge on the finances of India, while the companies draw to such an amount on the finances of that country as they require for the execution of their works, the Government in the 1477 meantime taking in to their hands all the receipts of the Indian railways, and paying over, or rather accounting to the various shareholders, for the dividend of 5 per cent on the capital. This being the case, there is a running account kept, which is settled month by month between the Indian Government in India and the Indian Government at home. Of course, the sum expended in India is set against the sum deposited in this country, and out of the amount which remains in this country the various calls on the Indian Government for the home establishment are met. The result is, that there is no transmission of bullion to India on account of railway shares, and neither are there any remittances from India on account of services performed here. The amount which has been hitherto deposited in this country is so large, that it has been quite sufficient to pay all the expenses of the home Government. The estimate of the sum which will probably be received on this account by the home Government during the year 1859–60 is £6,844,000; on the 7th of April, the balance in hand was £4,366,000; so that there will be £11,210,000 to be applicable to the service of the railway companies in both countries. The portion of that sum, including interest, which will be payable in this country is £5,285,000; and, deducting that sum from the £11,210,000, there will remain a balance of £5,925,000, or, in round numbers, of £6,000,000, available for the home expenditure of the Indian Government. I now come to a different but equally important subject. A question was put to me upon a subject of considerable importance, by the noble Earl opposite (Earl Grey). The noble Earl wishes to know what are the steps which have been taken, or which are in the course of being taken, for the purpose of reducing the great military expenditure of India. I need hardly say, my Lords, that I should indeed take a gloomy view of Indian finances, if we were to regard the expenditure of India during the last few years as one of a normal character. But your Lordships are aware, that the state of things which has arisen during the war is exceptional, and ought not to form the basis of a judgment for the future. I am, however, quite prepared to admit, that of all the modes that can be adopted for restoring the balance between Indian revenue and Indian expenditure, the one in my mind which is most absolutely necessary to 1478 adopt, is a reduction of the military expenditure. The force of all arms at present in India amounts to about 112,000 Europeans and 310,000 Natives, including the police. Your Lordships, will, perhaps, be surprised to hear, that at this moment the number of Native troops in India, including the police, exceed by 50,000 the number which was at the disposal of the Government at the commencement of the mutiny. The number was then, I believe, 260,000 and it is now 310,000. I am sure that the views of the Governor General upon this subject entirely coincide with those which we entertain; but we have sent out to him the most urgent representations to effect as large a reduction as he possibly can in the Native troops and the newly-raised levies. That process has already commenced. But it must, of course, be somewhat gradual in its operation. The main reductions which have hitherto taken place, have been effected by the discontinuance of large field establishments against the enemy, by diminishing the number of extraordinary commands and the staff appointments. There may also be a considerable reduction of the troops of the line sent to India from this country. At the present moment there are, I believe, in India, not less than eighty-five of Her Majesty's regiments. In the course of the present year, the Governor General has intimated his intention to send back to this country ten of those regiments that have been longest in India and have suffered most severely during the service. But I must call your Lordships' attention to this fact, that the operation of sending back regiments to this country is an operation not of a single character; it must be considered in a double aspect—first, as bearing upon the expenditure of India; and next, as bearing upon the War Department in this country—unless the sending of them back is conducted upon some regular and well-understood system. Because, as soon as these regiments return home from India they cease to be a charge upon the revenues of India, and they become a charge upon the home service. The consequence is, as your Lordships will understand, that if a large amount of troops were to return to this country without previous notice to, and previous concert with the War Department, it would derange all the calculations submitted to Parliament, and would cause a large increase in our military establishments. But, my Lords, it is of essential importance that some understanding should 1479 be come to, and that at no distant period, with regard to the permanent peace establishment of India; and also as regards its composition. On some of these points there are considerable differences of opinion among the Members of the Commission appointed to inquire into that question, all of whom, as your Lordships are aware, are of great experience and authority on Indian questions. The evidence given before the Commission has not yet been printed, nor has the Report been laid before your Lordships. There is one point, however, on which the Commission appears to be unanimous, but on which, I am sorry to say, it is absolutely impossible, in consistency with a due regard to the revenues of India, that we should follow their recommendations. Because, my Lords, it is the opinion of that Commission—and probably a very sound and judicious recommendation, considered in itself—that at all times the proportion of the European troops of all arms present in India should be as one to two, or in some districts as one to three, of the Native troops. But that Estimate was accompanied with this further recommendation, that the number of British troops of all arms to be permanently maintained in India should be 80,000 men. Now, to maintain 80,000 British troops in India, and the corresponding number of Native troops—say 160,000 or 200,000 men—would require an annual expenditure which I estimate would fall little short of £15,000,000; and as your Lordships are aware that the net revenue of India does not exceed £26,000,000 sterling, it must he evident to your Lordships that these revenues could not afford such an expenditure on her army alone, which, it must be remembered, is calculated for a period of profound peace. It is clear, therefore, that some reduction must be made in that Estimate, because the Indian revenues will not bear the expenditure. I come now to another important question, as to the character of the European troops that ought to be employed in the country; and on this point I find there are also considerable differences of opinion. It is the opinion of those officers who are best acquainted with what used to be called the Queen's Service—all the different corps are in the Queen's Service now—that the European force for the service of India should be taken from the regular forces of Her Majesty, and that the line and other corps should serve by turns in India—consequently that the military force of India 1480 should be supplied by successive draughts from this country. On the other hand, it is the opinion of those officers who are connected with the Indian service, and have had most experience in India, that it will be necessary to maintain not a large but a considerable body of European troops, raised particularly for the Indian service, and commanded by officers acquainted with the country. I must say the arguments they have brought forward in favour of local European forces, commanded by officers brought up in the service and acquainted with the manners and habits of the people, and with the mode of living in India, are of great weight. And there is this further advantage connected with the formation of such a corps, that it would be attended with a considerable saving of expense, which has been estimated at a reduction of 10 per cent upon the expenditure consequent on the employment of regiments of the line. But against that is to be set the consideration that a local force constantly remaining in the country is subjected to a great deterioration in point of discipline and in point of effectiveness, unless special care is taken to prevent it. If that can be overcome there is great advantage in their employment, because your Lordships will see that a local force levied exclusively for service in India will not require that system of reliefs which forms so heavy an item of expenditure in the employment of regiments of the line—a system which requires us to keep up regiments, that would otherwise not be wanted, to do the duty of those regiments that are unavailable to the service while on their voyage out and their voyage home. I do not presume on this subject to express any strong opinion; but I have certainly formed an opinion that a certain local force is, in point of fact, exceedingly desirable for India, would be a considerable saving of expenditure, and, moreover, would be exceedingly useful in forming a species of link between the Native armies and those troops sent over from this country with no previous knowledge of the country, and no previous knowledge of the habits and discipline of the army. I think, however, if I may venture to pronounce an opinion, that if a local force is to be maintained, it must be maintained subject to the existing engagements with the present officers, and subject to the authority to which a local corps in India is now subject. If there is to be a local corps, there ought, I think, to be every facility for the purpose of assimilating the drill, the discipline, and 1481 everything pertaining to the internal management of that corps, as between the local corps and the line. I think, moreover—though this is necessarily a point of great difficulty—that facilities ought to be given, not only for the return home of regiments from India, but also for exchanges between officers of the line and officers of the local European service, in order, as far as possible, to keep up an esprit de corps between them, and to prevent the formation of an injurious rivalry, but at the same time not to repress an honourable competition and emulation between them. However, I only mention these subjects because they must ere long engage the serious attention both of the Government and of Parliament. They are questions upon which there have been very great differences of opinion between high authorities. It has been a question between them whether there should be a local corps at all, and, if there should be, what proportion it should bear to the European force. My opinion undoubtedly is that that proportion should be defined and fixed, and that this country should be guaranteed against an intolerable evil—namely, that of the Indian Government calling, in an extraordinary emergency, upon this country for 30,000 men this year, for 20,000 another year, and for this 25,000 another year, thereby altogether deranging and disorganizing the whole system of reliefs in the British army. Upon the question, as to what proportion the local corps should bear to the European force, there arises considerable difficulty, and I think there will be considerable difficulty in settling points of detail, upon which it will be absolutely necessary that we should have the opinion and advice of the Governor General and of officers of Indian experience. But that is not the point which presses at the present moment. It is in the military expenditure of India that we hope to be able to effect the greatest amount of reduction; and in order to arrive at an opinion of what that expenditure may be reduced to, it would be necessary to come, at the earliest possible period, to a distinct understanding both with regard to the numbers of the military forces and their respective proportions to each other, as an ordinary peace establishment in India, apart from any extraordinary emergency, such as lately happened, and such as, I trust, may not happen again. I think I have given as 1482 far as I could an answer to the noble Earl opposite with regard to the stops that have been taken for the reduction of this expenditure when I stated that first there will be a reduction in the extraordinary commands, next that there will be a reduction in the staff; thirdly, that there will be a reduction of the British force in India, and a return of a considerable portion of that force to this country; and, fourthly, that there will shortly be, as I hope, largo reductions in the overgrown Native army by which the finances of India are now so heavily burdened. I am not able to state to the noble Earl how far these reductions have been carried into effect. All I can say is that the attention of the Governor General is anxiously devoted to this subject. He is making every effort in his power to effect reductions; but at the same time I think that reductions, more especially as regards the European force, ought to be made with considerable caution, and not with too great haste. Although I hope that peace is now permanently established, yet I think it is very desirable that we should for some time maintain a considerable and imposing European force to keep the peace, and to assert the predominant authority of this country in India. My Lords, I am not aware of any other points upon which any question was put to me the other day. If there are any I hope I may be able to answer them; but, as your Lordships are aware, I am not very familiar with these subjects of Indian detail. I shall be very happy to give such information as is in my power, and now, without further occupying your Lordships' time, I beg to move the second reading of this Bill.
§ Moved, that the Bill be now read 2a.
THE DUKE OF ARGYLLMy Lords, it is impossible to have listened to the statement of the noble Earl at the head of the Government—that which he made some days ago, together with the farther explanations he has given us to-night—without deriving from it a very serious impression as to the condition of Indian finance. I know that those who sit on this, the "shady" side of the House, are accused of a proneness to take a darker view of all public affairs than that which is presented to us from the Ministerial bench. Yet, serious as the condition of Indian finance undoubtedly is, I feel under no temptation to exaggerate the difficulty, or to take, on the whole, other than a hopeful view of the possibility of overcoming that difficulty 1483 with success. That hope is founded mainly on one fact, which cannot he too much pressed on the attention of the House—of the country—namely, that the present great deficit in the finances of India is due, wholly and alone, to the vast military expenditure consequent on the recent mutiny. No part of it has arisen from any failure in the revenue, or from any sudden increase in the expenses of Government. Temporary embarrassment may have been increased by steps taken by the Indian Exchequer, which, whether justly or not, have been severely censured. But, whatever may have been the evil of those measures, it probably admits of easy remedy; and, indeed, by the last account, it seems already to have been in process of removal. But it cannot be denied that the ultimate source of nil the difficulties which beset the Indian Government lies in the vast military expenditure which the suppression of the mutiny has entailed upon the country. I believe it is to a reduction of that expenditure that we can alone look for a possible remedy, and that all other suggestions for meeting the difficulty do but serve to withdraw our attention from the only resource which is available for the purpose. And, first, I cannot help expressing great doubt of the wisdom of the language which is now frequently held as to the connection which ought to subsist, or rather which is said already to subsist, between the Indian and the Imperial Exchequer. I know that the authority of the late Sir Robert Peel has been claimed for this doctrine; but, as it appears to me, without sufficient justification. We must recollect the circumstances under which Sir Robert Peel was speaking in 1842. It had been the settled tradition of the whole Liberal party, and had become, in fact, a popular conviction, that an income-tax was exclusively a war tax; that it was a weapon which no Government was entitled to use, except under that pressure which war alone can exert on the resources of the State. Sir Robert Peel was about to propose an income-tax in a time of peace, at least in Europe, and for no object more immediate or urgent than certain changes in our system of taxation. Naturally Sir Robert Peel, having such a task before him, pressed into his service every possible argument which could be used on the occasion, and, in exposing the existing condition of the finances, took into view every possible contingency which might throw upon them additional burdens. 1484 His reference to the East was at the time considered as rather a wide departure from the arguments which were ordinarily considered as having a legitimate bearing on Imperial taxation. But considering the condition of the affairs in the East at that time, when the consequences of the Affghan war were not yet fully known, and considering farther the undoubted truth that any serious calamity in India would undoubtedly throw heavy burdens, directly or indirectly, on the Government at home, I am not prepared to dispute the relevancy of Sir Robert Peel's language in 1842. But the doctrine now held is something far more definite. It is said that there is already a virtual responsibility on the part of the Imperial Exchequer for the Indian debt, and the sooner that responsibility receives legal acknowledgment the better, so as to secure for India the pecuniary advantage arising from the superior credit attaching to an Imperial guarantee. Two questions are obviously involved in the recommendation which this language conveys. First, there is the question of fact, how far it is true that there is any virtual responsibility on the part of the Imperial Exchequer for the Indian debt; and, secondly, there is a question of policy, how far, supposing no such responsibility to exist at present, it would be wise now to assume it for the first time in a recognized legal form. As regards the first of these questions, I can hardly conceive it to be seriously held that the existing Indian bondholders have any claim whatever on the Imperial revenue. They have lent their money on the security of the Indian revenue, and on that security alone. They knew when they trusted that security that it was less good than the security of the British Treasury; and, in consideration of its inferiority, they have stipulated for a higher rate of interest. It is surely impossible to assert that if the security on which they lent should actually fail, those persons would have any moral claim whatever on a wholly different security to which in fact they did not, and in law they could not, look when they entered into the transaction. Nor, practically—if, indeed, the question can be considered as in any degree practical at all—do I believe that the claim would be admitted in the only case in which it could ever be advanced. Let us suppose the case—an extreme case, no doubt, but none the worse on that account for test- 1485 ing a principle. Lot us suppose the case—that the late mutiny had been successful, that we had been driven from India, my noble Friend (Lord Monteagle) who has given his support to this doctrine, is an old Chancellor of the Exchequer. He must recollect the feelings and opinions which are connected with the tenure of that office, and I think I need hardly ask him whether he would in such a case come down with much hope of success to the House of Commons, and ask them to add eighty or ninety millions to the national debt of England: a sum of which, it would be necessary for him to explain, some two-fifths were held by natives of India, no longer subjects of the Crown, and all of which had been lent on the security of revenues now lost to our dominion. Does my noble Friend think that this appeal, made under such circumstances, could be made with much likelihood of success. The same argument applies to a deficit which applies to a total loss of India. I very much doubt whether the House of Commons could ever be induced to pay such deficit out of the revenues of this country. It might, indeed, lead to measures being taken for the redress of such a state of things involving great national outlay. But in this sense I do not mean to say, nor can anyone doubt, that the difficulties of India will react most seriously on the Imperial Government. As regards the question of policy, whether it would be wise or otherwise now, for the first time, to extend to the Indian debt an Imperial guarantee, I can only say that it will be time enough to discuss it when such a measure is seriously proposed. Meanwhile it may be sufficient to observe, that the pecuniary advantage to be gained by the operation would probably be much smaller than appears to be frequently supposed. It has been calculated at from £800,000 to one million. I think it very doubtful bow far this amount of difference would be actually realized; but, supposing that it were actually gained, it is unfortunately but a small part of the deficit with which we have now to deal. It has been said that this sum spent as a Sinking Fund would pay off the whole debt in a moderate term of years. But the doctrine of Sinking Funds, not founded on an actual surplus of revenue, has long been abandoned; and whenever the time shall come when the Imperial guarantee shall afford to India such a surplus, we may consider the expediency of the course proposed. It 1486 is beyond doubt that whatever might be the pecuniary advantage, there are some political objections, especially in the effect which such an abatement of responsibility would have on the carefulness and foresight of the local Government. At present, however, it is needless to dwell on any other argument than this—that, as a means of escape from our present difficulties, the policy of our Imperial guarantee has no practical importance.
I pass, then, to another recommendation which I see frequently made, and which not less than the last, I think, tends to direct our attention from the only real remedy—I mean what is commonly called a "development of the resources" of India by public works. I confess I look upon the language with great suspicion, not from any doubt as to the extent of the resources of India, but from a very great doubt how far they can be made available for our present purpose. The resources of India are, indeed, immense, and looking forward to what is, I am afraid, a yet distant future, we may with confidence anticipate a time when the millions of Hindustan will produce and enjoy an amount of wealth compared with which their present condition is poverty indeed. But it would be a fatal mistake to suppose that this is a prospect which can justify present extravagance, or one which will be otherwise than blighted by yearly additions to the debt. The development of national resources is one of "the long results of time." It can best—I ought rather to say it can only—be promoted by good Government and light taxation, and both these are incompatible with an extravagant military expenditure. My Lords, I cannot help thinking that very loose and dangerous notions are abroad on this subject. It seems to be imagined that by a forced application of capital in public works, a fund of unlimited amount may be realized, which will go far to remove all difficulties from the Indian Exchequer. I believe this to be an entire mistake. There are two kinds of public works—those which are undertaken by private capital, under Government guarantee, and those which are directly undertaken by the Government itself with its own funds, and with a view to immediate return. As regards the first of these two kinds of public works, I do not think that the Indian Government can be charged with any indifference to their importance. On the contrary, the Secretary of State and his Council have been blamed for carrying 1487 too far the system of Government guarantees. I think that system has been legitimately applied in the case of railways, because works of that magnitude would probably not have been undertaken by British capital on any other condition. But I have great doubt how far it would be wise to extend that system farther. The inevitable effect would soon be that all independent investments of capital would be rendered impossible. No such investments, starting under terms of such comparative disadvantage, would be undertaken in India. I need hardly say that this would he a most injurious result. But, even supposing that it were possible or advisable to extend the system of guarantees, such public works can have no direct effect on the Indian revenue. They may possibly entail an immediate loss, but they cannot possibly afford any immediate gain, because any surplus return over and above the guaranteed amount goes into the pocket of the private capitalists, whilst any deficiency below that amount must be met out of the public funds. Then, as regards the second class of public works, those undertaken directly by the Government, it is beyond doubt that when judiciously selected, they may be and have been in the highest degree remunerative. You may secure good interest on your capital, nay, sometimes such interest as will in a few years restore your capital again. But it is idle to expect that besides this rent, public works can ever yield such a source of income as to redress any part of the enormous adverse balance which is now weighing down Indian finance. Public works will never enable you to bear up against the effect of yearly accumulating debt. And now, my Lords, I come to another resource much spoken of in some quarters, and one which partially, at least, is now being actually adopted by the Indian Government; I mean new taxes. I have always had more belief than many others appeared to have in the possibility of raising new taxes in India, but I deprecate these being spent in meeting, or rather in endeavouring partially to meet extravagant expenditure. You have other more important purposes to which you should apply any increased resources of the kind. Our revenue system in India requires revision, and for the purposes of such revision additional resources are invariably required. I should like to see any new taxes which can be raised in India applied as Sir Robert Peel 1488 applied the income-tax hero, in the alleviation of other burdens which press more severely upon the great body of the people. There is a strange discrepancy in the language which is held by different persons in this country in reference to Indian taxation. By some it is affirmed that the Indian people are very lightly taxed, more lightly than ourselves, or than any other European state. By others they are spoken of as ground down under the oppressiveness of our rule, and the weight of the burdens we impose upon them. Cannot we arrive at the truth between these two opposite assertions? I believe we can. It if true that some classes in India are very lightly taxed; nay, it may even be said that they escape taxation altogether. But I believe it to be equally true that the burden of our financial system is severe and presses most heavy on the great bulk of the population. I have seen with surprise an argument maintained, that in considering this question, the land revenue of India must be kept out of view, because that revenue is of the nature of rent, and not of tax. As regards the conclusion aimed at, it is perfectly immaterial whether it is called a rent or a tax. As regards the ability or inability of the people to support other burdens, it comes to much the same thing whether they are overtaxed or over-rented. Rent in a country which is mainly agricultural, is the principal fund which goes to the accumulation of wealth and the support of reproductive industry. Where the whole of that fund is appropriated by the State and expended, all but a fraction, on great armies and the machinery of Government, it is to a great extent withdrawn from those channels in which it would have found more profitable employment. Whatever it may be called, I believe the land revenue of India—everywhere except in the lower provinces of Bengal, where it is light, and where the poverty of the people depends on other causes—to be so heavy in amount as to be a serious burden on the people, and to interfere with their advancement in prosperity and wealth. It has long been the desire and aim of the Government to lighten its burden. I was looking to-day at a despatch sent out some three or four years ago, by the Court of Directors to the Government of Madras, urging on that Government a reduction of the land tax in the provinces subject to its rule. I find it stated in that despatch that at present the proportion of the total or gross produce of 1489 the soil absorbed by the land tax was as respects the best or irrigated lands, no less than one-half or 50 per cent, and as regarded other land, fully as much as 35 per cent. Even in the north western provinces, which are considered in this respect a model, the proportion absorbed by the Government is as much as 35 per cent of the net produce. Now, I think it impossible to deny that where so large a proportion of the produce of the soil is absorbed by the necessities of Government, a most severe burden is laid upon the people, and a most serious deduction made from the fund, out of which alone we can hope to see in India an increase in the wealth and comfort of its people. And here, my Lords, I must demur to the mode of estimating the burden or weight of taxation borne by the people of India, which was lately adopted by the Secretary of State for India in his speech in another place. It was said that the average taxation per head in India was only 14s., whereas in this country it was £28. Now, I apprehend that if you wish to estimate the comparative amount of pressure exerted upon the people of two countries by their respective systems of taxation, you must compare the amount of tax—not with the number of the population, but with the total earnings of the people, the total value of their industry and wealth. If, for example, it be true, that whilst in India the average total earnings of the people is only 28s. or 30s. a year, and the taxation is 14s.; and if, on the other hand, the average earnings or incomes of the people here is £150 or £200, whilst the taxation is £28, it is clear that the burden, or pressure borne is in a reverse proportion to that indicated in the figures of the noble Lord. Before passing from the subject of the Indian land revenue, I cannot help expressing serious doubts of the wisdom of the measure which has been recommended to the Government of India by the Government at home—I refer to the redemption of the land tax. This measure is confessedly applicable only to the provinces of Bengal where the permanent settlement prevails. But this is exactly the portion of India, where the land tax is at least burdensome to the people, and where, with least injury, it may be retained in its present amount as a permanent source of revenue to the State. The reasons assigned in favour of the measure are that the purchase money can be applied to the extinction of a corresponding amount of debt; whilst the effect of rent-free tenures will 1490 be to increase the loyalty of the people to the Government, since, if that Government were replaced by any other, it is hardly probable that such tenures would be respected. As regards the first consideration, I am afraid that, as is generally the case with private individuals, sums received in forestalment of the income of future years, and which ought to be treated as capital, will practically be treated as income—but at the end of the operation, which must necessarily be slow, yielding its returns in driblets—we shall find the debt not diminished by a single rupee, and a large population, not the least wealthy in India, contributing nothing to the necessities of the State. The inevitable result will be that though relieved from that particular impost, other imposts will be substituted in its stead; and thus the argument derived from the supposed political effects of the measure will fall to the ground. I am, therefore, disposed to think that whilst there is every reason to lower the land tax where it is excessive, and to spend the resources of new taxation in that most useful reform, it is unadvisable to sacrifice the land tax where it is moderate in amount, and may therefore without injury be retained.
Reduction in the civil expenditure is another resource which I see must be dwelt upon at the present moment. It is, indeed, impossible to look over the salaries attached to various offices in India without seeing that some reduction might be effected. But, I am convinced that on the whole this cannot be regarded as a resource from which you can gain anything on the total expenditure of the Government. What you save in one direction, and probably far more, you will have to lay out in another. There is a Committee of the other House now sitting on colonization in India; and your Lordships will find, if you examine the evidence taken before it, that the one constant cry is "more European superintendence;" and as regards subordinate employments such large and larger salaries as may secure, at least, a higher class of Native. In every branch of the public service, the revenue, police, judicial—the same demand is repeated—the same necessity is felt. We may depend upon it that on the whole the expenses of civil Government will rather increase than diminish, and the hope of deriving from economy on this head, any assistance whatever towards meeting the existing deficit must be put entirely aside. We come, then, to the point from which we started, that a reduc- 1491 tion of the present enormous military expenditure is the one only resource which remains. But for this expenditure there is no ground for despondency. In the year which ended about the commencement of the mutiny, our income equalled our expenditure. There was a nominal deficit on the accounts of £179,000; but whilst there was, so far as I can see, no extraordinary item in the receipts, there was one very extraordinary item in the expenditure, viz., one half of the cost of the late Persian expedition which amounted to £205,000. Deducting this, there was in truth an actual surplus—and this, too, allowing for an expenditure on Public Works of £1,800,000. Yet, in that year, upwards of eleven millions was the military expenditure of the State; and if we cannot now hold India, after the disarmament of its people, the destruction of their forts, and the moral effect of our late triumph, for a sum even less than this—then our prospects are serious indeed. Since the beginning of the mutiny, a large increase of charge has arisen from the debt which has been incurred. That increased debt amounts already to about £27,000,000, and I fear we may count on another year's deficit, which will raise the amount to £37,000,000, with a permanent increase of charge for interest approaching to £2,000,000. I need hardly say that this renders it the more absolutely necessary to proceed without a moment's unnecessary delay in bringing the military expenditure within reasonable limits. Our present deficit is not to be wondered at when, by the statement of the Secretary of State for War, more than half the whole British army is quartered on the revenues of India, whilst the number of Native troops is actually larger than before the insurrection. In this state of things, I confess I heard, with some alarm, the language held by the noble Earl at the head of the Government to-night, which tallies with the language of General Peel in "another place," to the effect that the withdrawal of troops from India is to be considered not exclusively with reference to the condition and prospects of that country, but also with reference to the convenience of the Government at home. Lord Clyde, at the beginning of the year, when his operations in Oude had just been brought to a conclusion, appears to have intimated to the War Office that he could spare a certain number of regiments, and the noble Earl says that if more than this anticipated 1492 number should come home, it would put the Government to the inconvenience of a supplementary estimate for the year. It would thus appear that if later in the year Lord Clyde should find the country so quiet, the disarmament so complete, and altogether the prospects so secure, as to justify him in sparing a large number of troops, India would not be allowed to have the benefit of that reduction until the end of the year, thus throwing on the overburdened resources of that country, for perhaps a considerable time, a larger force than is required for its defence. Now, though I do not pretend to be a judge of the exact amount of inconvenience which a government might suffer from the necessity for a supplementary Estimate, there is one thing of which I am confident, and that is that such inconvenience, whatever it may be, is not to be compared with the evil of delaying for a single day to reduce, as far as the necessities of that country enable you to do so, the enormous military expenditure which is throwing its finances into present confusion, and threatens to leave them in a condition of permanent embarrassment. Connected with this subject, I must notice a report which has prevailed that the Government intend to send out to India twelve batteries of the Royal Artillery, contrary to the opinion of the Council at Home; and it has been added, contrary to the opinion of the Indian Minister. The last occasion on which I had the honour of addressing this House on the affairs of India, it was before that change in the form of Government which has since received the sanction of Parliament. I hear it already said, among the various expressions of dissatisfaction to which the present alarm gives rise, that that change has proved a failure, and that there must be a more complete reversal of the former system. I do not use this language, nor indeed do I hold this opinion. I think that to a great extent it is founded on a mistake as to the reasons which induced the late Government to propose, and the present Government to adopt the change referred to. That change was not made—I speak with confidence, at least as regards the late Government—because we believed that the Government of the East India Company had been a total failure, or that their policy had been such as to require complete reversal, but mainly because we thought that the change, whilst tending to promote improvement and reform, was required for giving additional 1493 strength to the Government of India. We thought that by bringing the Minister for India face to face with his Council, there would be, at least where both were agreed, such an identity of feeling and of interest as would produce a strong executive; and where they were not agreed, due provision was made for a record of the policy which was rejected as well as of that which was actually pursued. Too much stress, I think, was laid upon what was called the "independence" of the Council, because you meant only independence of position, and never intended them to possess any independence of authority. But I shall indeed think that the change has proved a failure, if it be true that the Minister for India, agreeing with his Council, shall be unable to enforce in the Cabinet and in Parliament the policy which they deem best for the interests of India. We have at least a right to know how far the military expenditure involved in the measures of Her Majesty's Government is, or is not, considered by them to be really required. We have a right to know how far notions of Imperial policy, which may be merely considerations of convenience to an existing Cabinet, are interfering with that Indian policy which is recommended by those specially responsible for Indian Administration. Might I venture to repeat that no considerations of ministerial convenience at home ought to be allowed to interfere with the one essential operation which can alone be effectual in restoring the credit of Indian finance. The language which is now held as to the ultimate responsibility of the Imperial Exchequer, and the conviction that, whether that language be literally true or not, it is perfectly true that embarrassment in India will result, and that soon, in serious embarrassment at home—is raising a just feeling of alarm in the public mind—partaking, as all popular alarm does, of the nature of irritation. You cannot go into the streets without hearing men say, "India is not worth keeping on such terms." This, no doubt, is merely the expression of impatience. We cannot abandon India—it is morally, it may almost be said to be physically, impossible. It would be difficult to say how much blood and treasure England would not be willing to expend rather than lose her empire in the East. We are all proud of that dominion, and justly proud of it. It is the great existing proof of the yet undecayed and undimi- 1494 nished energies of our Imperial race. But behind and above this there is a better and a higher feeling of the deep obligations under which we lie to the people of India. There is a conviction, and a just conviction, that if the present condition of its financial affairs is to continue, those obligations cannot be discharged. It is not merely that the present state of things interferes with this or that particular expenditure which would be more permanently useful—it is not merely that it leads us to grudge, for example, the comparatively trifling sums spent in the education of the people, and in affording them opportunities of improvement of which it has been clearly proved that they are most eager to avail themselves—it is not merely that in every direction it is interfering with every scheme of a just and wise benevolence; but it is that by those sure laws of political economy which regulate the wealth, and with the wealth, the happiness of nations, the cause of national progress is incompatible with an embarrassed Government and the innumerable evils which are inseparable from it.
§ THE EARL OF ELLENBOROUGHMy Lords, I entirely agree with the noble Duke in deprecating the extension of any guarantee by England to loans raised in India for the service of that country—I do not think the time has yet arrived even for considering that general question. I deprecate it not so much on behalf of England as on behalf of India. I do not think that a general guarantee would lead to extravagance on the part of the officers employed in India; but it would give rise to a constant interference by Parliament with the Government of India, and to a reduction of establishments and of salaries which I am convinced would be utterly fatal to the good government of that country, and ultimately to its connection with England. On that ground I deprecate it as a general principle. But, my Lords, there is one point which I wish to bring under the consideration of the House, and of Her Majesty's Government, and which I think is well worthy their attention—namely, whether it might not be advisable for a particular purpose, and in an exceptional case, to extend that guarantee? Your Lordships are aware that the revenues of India are burdened with a permanent charge of £630,000 a year, payable to the proprietors of East India Stock. When the Bill was passed for the Government of India in 1833, a sum of £2,000,000 was set apart, 1495 which was to accumulate; and it was expected that, at the end of forty years, that accumulation would produce a sure of £12,000,000,—or an amount equal to the whole of the capital stock of the East India Company,—and enable the Government then to pay off the holders of that stock. The calculations then made seem to have been based on very erroneous data, or at least they have not been verified by experience; for instead of there being any probability of this sum being realized in 1873 for the purpose of paying off this £12,000,000 of stock, it appears, from the figures furnished the other day, that, supposing the average price of the funds to remain for the future as it has stood for the past, the amount required would not be realized before the year 1887. I would suggest, therefore, whether it would not be expedient for the Government of this country to guarantee the payment upon the East India Stock to the amount of £630,000 annually, having, of course a claim to that extent upon the revenues of India. A measure of this kind would at once set free the whole of the sum now accumulated under the head of the guarantee fund, namely, about £4,700,000, and would thereby immediately relieve the revenue of India from the necessity of having any loan this year, or relieve us from the necessity of raising any additional loan to that now under the consideration of this House. If at any future period it should be thought advisable on the part of the Government to pay off this stock, the operation could be effected with advantage to the public. In all probability, the interest upon the amount required to be raised to effect it would not exceed £350,000 a year, which, as compared with the present amount of £630,000 which the Government would continue to receive from the revenues of India, would yield a gain of £280,000 per annum. I agree also with the noble Duke in entertaining very great apprehension at the extension of the system of giving guarantees of interest at 5 per cent to public works in India. When I was for a short time in office last year, I was told that the sum already guaranteed in this manner amounted to £28,000,000. With a good deal of reluctance, and after much consideration, I consented to an additional guarantee to the extent of £2,000,000 to afford facilities for the making of a railroad of the greatest possible importance in connection with the communication be- 1496 tween Madras and the Island of Ceylon. But I certainly made up my mind I would not, under hardly any circumstances, go beyond that last guarantee. The sums now guaranteed amount to more than £40,000,000. The interest of these sums will be £2,000,000, and with that interest the revenues of India are charged. Your Lordships have had more opportunities than I have of investigating the position of the various railways established in England. You know, as I do, that, with one or two exceptions, they have not paid 5 per cent out of their earnings; and I think it contrary to all reason to suppose that, in the peculiar circumstances of India, her railways, however cheaply constructed, can produce any dividend at all approaching to that rate. Now, looking at all the facts of the case, and taking even a more favourable view of the prospects of railway property in India than I am disposed to think warranted, it appears to me that there is likely to be an ultimate deficit of at least half a million a-year upon those railways, which will have to be made up from the revenues of India. But that is not the whole of the loss. I apprehend that when money is expended upon railways, two or three years at least must elapse before they yield a return: whereas the guaranteed interest is payable at once; and consequently for the whole of that period the Indian exchequer will have to pay the shareholders 5 per cent. If then you consider that there are £40,000,000 to be expended, and assume that these years will expire before a profit upon the outlay is obtained, the loss to the finances of India will not be less than £6,000,000 previously to any of these lines being brought into working order. These, then, are matters really requiring the serious attention of the House. My noble Friend at the head of the Government had the goodness to-night to answer a question which I had previously put to him, and he has given a perfectly clear explanation of the manner of conducting the accounts between the Government of India and the several railway companies. But he did not appear to perceive the disadvantage of that arrangement. It may be gathered from one of the letters from India, and it was only when I saw it stated there that I became acquainted with the working of the system. I was always under the impression that all, or nearly all, the money was received in this country, and all the money paid in this country, the various companies transmitting what they required 1497 in the ordinary way, by means of commercial bills. My Lords, not a fortnight elapsed after we had intelligence of the commencement of this mutiny before I earnestly desired the Government to insist upon there being no more remittances forced from India to England. This request was assented to, and we have been believing till now that there have been no such remittances. But, from what my noble Friend has stated, it appears that in the next year there will practically be a remittance of £5,000,000 from that country: that is to say, India will be charged with payments on account of these railways, from which she receives nothing, to a sum equal to the whole amount which you are attempting to raise in this country for this year by means of a loan. All the financial difficulties of India now arise from the forced payment of the advances made by the railway companies. I see it is stated that £4,280,000 will be paid to that account before the 30th of April; the sum next year will be £5,000,000; making together £9,280,000 which is practically to be remitted to England. This money remains in the coffers of the Council of India, who use it for any of their own purposes. It is as much money remitted as if it came in the shape of bullion from India, or of hypothecated goods, or in commercial bills. This is entirely contrary to the promise given when the mutiny began, and now that daylight has broken in upon the practice, I trust it will be discontinued. If an account were called for of the remittances from India, in addition to the amount sent by bullion, Government bills, and the hypothecation of goods, the money sent for railways must be included, and would form a very serious item. I trust that the Government will put an end to this system, which causes a loss of 1¼ per cent on all the money that is raised for this purpose, and which, beyond this, causes extreme embarrassment by compelling the Indian Government to go into the market for money, when otherwise it would not have been necessary. On another point adverted to by the noble Duke, I also agree with him; namely, that the proportion of the Queen's troops serving in India, and in England ought to be governed by the exigencies of the service from time to time, and by nothing else. My Lords, I never like to see a course taken by the Government which is as ruinous in public as in private life, that of deciding great questions by little views. This Bill was 1498 brought into the House of Commons before we knew of the financial embarrassments in India that have since transpired. Circumstances may have rendered it difficult to calculate the extent of financial embarrassment in India until the present time; but I regret that this is not a Bill for enabling the Government to borrow a larger sum than is proposed. Time is of importance in finance as well as in war, and occasions and necessities of borrowing may occur, of which we should be able to avail ourselves at once. I therefore regret that the power of borrowing is not given to a greater extent, But this financial embarrassment does not come upon me by surprise. I took occasion eleven months ago to express in this House my apprehensions that, great as were the dangers of a protracted war in India, there were other dangers looming in the distance, of financial difficulties, arising out of that war, which dangers were the subject of greater apprehensions than the war itself. These apprehensions do not appear to have been entertained by the Government of India; and, I must say, I think that my noble Friend, the Secretary of State for India, deals extremely gently with this branch of Government Administration in India when he complains very slightly of something like want of foresight in those intrusted with financial affairs in India. My Lords, there is but one person intrusted with the superintending management of financial as well as other affairs, and that is the Governor General. The Governor General alone is responsible; because, by the Act of Parliament, if his Council differ from him in a matter of such importance, he has the power of overruling them. If he leaves the Presidency and goes up the country, he always takes with him the second financial officer of the Government, and he ought to be in weekly and even daily communication with his Chancellor of the Exchequer. His predecessors have been so, and if they had not been so the most serious dangers might have arisen. What I apprehend is this, that Lord Canning left all these affairs, as he thought, safely in the hands of the President of the Council, for it was only when he arrived at Calcutta on the 26th of January, that he appears to have perceived the extent of the difficulty. I deeply regret that the financial embarrassment was not sooner perceived by the Governor General, because I know the necessity that exists for his individually superintending the financial as well as 1499 every other department of the Indian Government. Let us place this question of finance on the true ground. We may take the year 1856–7 as our point of departure, because this year has been correctly stated as a year in which expenditure very nearly balanced the income. I believe the deficit in that year did not exceed £180,000. I moved for a return, which shows these results. Since that year, the interest added to the debt here is £457,664; the interest added in India is £527,257; the interest upon £12,000,000 which will have been raised here at 4¼ per cent, is £510,000; and the interest on £5,000,000, raised in India is £275,000. Thus, since the commencement of the mutiny, two years ago, the additional expenditure incurred by India, on account of the increased debt, is £1,769,921; to which there is to be added the £180,000 deficit in 1856–7, making altogether an expenditure exceeding revenue of little less than £2,000,000. My Lords, if this were all, I should not be under any great apprehensions, because I recollect perfectly well that when I came into office, thirty years ago—In September, 1828—the Government of India of that day were under great apprehensions relative to the finances; the Court of Directors were then looking forward to the prospect of the termination of their charter, and they were anxious to reduce their expenditure. When I was at the Board of Control, I had the inestimable advantage of the assistance of the late Duke of Wellington; and I am bound to say that the Court of Directors co-operated with me most zealously, most honestly, and most usefully in the reduction of the expenditure. In the two years and a quarter during which I held office, we either made absolute reductions that were completed, or brought into operation reductions which were not quite completed when we left office, or had determined upon further reductions which were almost immediately to be carried out, amounting to £1,864,000 per annum. And it must be remembered that this reduction was made with a much lower total of revenue and expenditure than now exists. Looking back, therefore, to what has been done, I should not be under any apprehensions if this were the only difficulty, But, my Lords, we must not forget that there is an enormous expenditure attending upon the winding up of a great war, and that it will be years before these arrears can be discharged. It must also be considered that whatever our disposition may be, it will 1500 be impossible for us at once to reduce to the level of the army of 1856–7, the vast force we now have in India. It will be necessary that we should hold a strong European garrison in India fur four or five years, until no one can indulge the hope of overthrowing our empire. My Lords, I can imagine no policy so injurious, so unwise, and so discreditable as that of at once relaxing our hold when with infinite difficulty we have subdued our enemies. Still, in order to equalize the revenue and expenditure, the Governor-General will be bound to consider the reduction of the army. I was not aware that the Native force amounted to so large a number as was stated by my noble Friend (the Earl of Derby); and I think he is not quite correct in mixing the military police with the troops in his statement. My noble Friend must remember that when a police of a military character is established the police of a civil character is removed. From the very day the military police was established by Mr. Montgomery the civil police was reduced. The number of that civil police many years ago, including those employed in the revenue department, amounted to as many as the whole Indian army; and no doubt since that time there has rather been an increase than a decrease. But when my noble Friend mentions 320,000 as the present number of the Indian army and the police, I should strike off 100,000 police as standing in the place of the civil force, but being of a more efficient character. I was the first who established the military police in India. When I left India it was done away with by the court of Directors; and what you are doing now is to re-establish that system. I know it may be urged now, as it was in my time, that although I reduced a much greater number of the civil force than I raised of the military police, the expense was greater. I gave the soldiers better pay, but the increase of expenditure was very small, while the country was much better served. Then, with regard to the European troops: we had at the beginning of this mutiny a European force of 38,000 effective men in India, and I cannot imagine a state of things during the next four or five years which would render it safe for us to leave India without a European force of at least double the amount we had there in 1856–7. There is very great expense attached to the employment of European troops in India; the cost of one European regiment equals 1501 that of three Native regiments. To reduce the expense of the Indian army to the scale on which it existed in 1856–7, it would be necessary to dismiss 114,000 men of the Native troops. I believe that may be done, but the reduction must not be carried into effect rashly, or at once. If the Government suddenly dismisses 114,000 men, or pays off any great proportion of them, every man will become a Pindaree. You will have to meet the difficulties for four or five years before the period will arrive when it will be safe to reduce this force. It is very advisable to provide for a portion of the increased expenditure by an increase of taxation; but we must remember, that though the Indian will submit to an old tax, he has very strong objections to a new one. At the close of a war it is absolutely necessary that the Government should not run the slightest risk of exciting the feelings of the people on the subject of taxation. But the objections to a new and direct tax do not apply to raising a larger revenue from the Customs duties. I trust also, there will be no difficulty in imposing the stamp duties on the three Presidency towns, which the Government, by a recent Act, is enabled to do. Hitherto, the wealthy inhabitants of the Presidency towns have had an exemption from the tax paid by the rest of the empire. I have heard a tax on tobacco suggested. I hope such a tax will not be imposed. I think it not advisable to impose any other tax which would have the effect of a poll-tax. But the inhabitants of Madras and Bombay, who are so much better off—I never could understand why—do not pay so high a tax on salt as the people of the other parts of India, and I think the Government may, with reason and justice, raise the salt-tax in those Presidencies to an equality with the amount paid in the other provinces. I think the Government might also fairly impose a tax on persons engaged in trade. At present that class, throughout India, is almost entirely exempted from taxation. How such a tax can be imposed without exciting discontent and be easily collected, I am not prepared to say; but means should be found of compelling these classes, who are the wealthiest in the country, to contribute to the revenue. If I had remained in India I had intended to propose to the Native Princes, an arrangement with regard to the payment of the customs duties, on the principle of the Zollverein of Germany; its object was to render the whole of India, from the ocean to the Himalayas, entirely 1502 free for the transport of goods by all persons. By facilitating the internal intercourse of 150,000,000 of people, I hoped I was laying the foundation of a degree of prosperity which India had never yet seen, and which ought to accompany the rule of an enlightened nation. It is said that "parsimony is a great revenue," but good government is a greater; and I am certain that a government established in India in conformity with the wishes of the people, and that alone, will enable you to reduce your military force to such an extent as to keep the expenditure within the revenue. I have here a letter from a very intelligent Native gentleman, now employed in a situation of great trust under the Government of India, who says, "No laws will ever succeed, whatever force they may bring to back them, if they will not suit the views, wishes, and customs of those who come under their operation. This is my full belief, confirmed by long and personal experience of my country and my countrymen; but I find the European public is as blind after the mutiny as it was before." He says, also, that "no single proof has yet been given that the Government will act in accordance with the spirit of the Proclamation." I would place before you as an example of the effect of good Government, the territory of Scinde. At the most critical period of the revolt there were in Scinde only 500 Europeans. There was a mutiny at each of the three principal stations; those mutinies were put down, but not one native of Scinde has been executed, and no mutineer has suffered without a regular trial. That is good government—the government established by Sir Charles, Napier, and continued by his two able successors. They have made that country the most loyal from one end of India to the other. They have governed that part of India without being compelled to come to this country for assistance. Where there is an unbroken succession of able Governors, all possessing the same principles of wise policy, much is effected for the people; but when the succession is, as is too often the case, broken in upon by the introduction of an incompetent man, the labours of the able are rendered vain. But, my Lords, whatever you may do for the general benefit of the people, be assured that the one thing above all others which it is absolutely necessary to do, in the first instance, is to give them the most absolute security with respect to their religion. Their apprehension upon 1503 that subject was the immediate cause of the war we have had in India. Nothing can exceed the fairness and justice of the policy expressed in Her Majesty's Proclamation, and if the Government will determine to carry that Proclamation into effect in all its spirit, and will compel those who serve under it to act in accordance with its principles, you may be assured that at no distant period you will be enabled to look with satisfaction and joy to the state of India, and not with a feeling of sorrow, of shame, and of remorse.
§ THE EARL OF ALBEMARLEsaid, he wished to call their Lordships' attention to one or two points connected with the revenue of India, previous to the outbreak. Their Lordships would remember that the customs levied by us in India were not levied merely upon our own 130,000,000 of subjects, but also upon 70,000,000 other people, inasmuch as we had the whole of the seaboard. What, then, was the amount of the customs obtained from these 200,000,000 of people in the year preceding the rebellion? The paltry sum of £770,000. It had been stated that the Government intended to put a tax upon tobacco in India; but he was glad to find that so obnoxious a lax had been abandoned. The stamp duties, which it was proposed to increase, yielded for so great a country as India an inconsiderable sum, and the revenue from salt had actually declined, notwithstanding the great increase in the population. For the last fifty years there had been no increase in the revenue from land, or from any article of consumption upon which a tax was imposed and to which the Native subjects of India were contributories. His noble Friend the noble Duke who spoke early in this debate, (the Duke of Argyll) would have to admit, upon further examination, that he (the Earl of Albemarle) had not, as the noble Duke imagined, over-estimated the grinding taxation to which the Natives of India had been subjected under our dominion. He would mention one fact which, he thought, demonstrated the extreme misery of the Indian population under the present system of taxation. The Secretary for India had stated, in "another place," that our revenues had increased with our territorial possessions. In one sense, that was true; for, in cases where the Government had seized the revenues of native Powers, the general revenue had, as a necessary consequence, increased—but with these exceptions, for the last fifty years there had 1504 been no increase in the land revenues, or upon any article of Indian consumption to which the Native subjects were contributors. In the Presidency of Madras there had been an actual decrease. About fifty years ago the land revenue in the Presidency of Madras amounted to £3,500,000 the population being 16,000,000. The population was now 23,000,000, and if the land-tax had increased in the same proportion it would now be £5,000,000, whereas it had remained stationary. What, then, must be the wretchedness of that population of 23,000,000, which had to subsist upon the same produce of the soil as fed the 16,000,000 of fifty years ago? Expectations had been held out that there would be an increase in the laud revenue of India; but how could the Government expect any increase of revenue from a people who were already taxed at the rate of 18s. in the pound? One of the present Council of India had given evidence before two Parliamentary Committees, and had made a statement to the effect that when the rent of land was taken the parties paying that rent were not taxed at all. What would that House of landlords which he was addressing think if 18s. out of every pound of rent received by them were taken from them by Government collectors? Would they think, if that deduction were made from their incomes, they were not at all taxed? Mr. M'Culloch, in his well-known work, described rent as a compensation for the expense of farm buildings, drains, roads, etc., but that rent, properly speaking, could only be considered in the light of compensation for the latter. Rent might be a fair subject of taxation; but how, he asked, could they separate the rent due to the landlord from the interest on the capital laid out in the improvements of the land? Rent had always existed in Hindostan, where there had been land in cultivation hundreds of years, but not in Pegu or Arracan and other parts of the country. When, therefore, the Government laid a heavy tax in Pegu and Arracan on such products as rice, they imposed a capitation tax of the most odious description. With regard to customs' duties, they could only be productive when masses were in such a prosperous condition as to be contributors. In England they raised large amounts, but he was most distrustful of the customs' duty which it was proposed to levy upon the greatly taxed people of India. Instead of paltering with an excise and stamp tax which had proved unpro- 1505 ductive, and instead of the very questionable succession duty, he suggested that an export duty should he levied upon the staple commodities of India—upon the rice of Pegu and Arracan for example, upon indigo, oil seeds, and other Native products. This advantage would arise from an export duty—that it would be paid by the wealthy foreigner instead of by the rack-rented and hard-pressed people of India. It was remarkable that the only elastic tax in India was one as to which no merit could be claimed by the Government inasmuch as all they did was to impose a duty upon it before it went into another country. The duty on opium yielded a revenue of £3,500,000, one-fifth of the whole net revenue of India, and it was rather a serious consideration to reflect that this one tax had been the means of preventing the Indian exchequer from becoming bankrupt, leaving us the alternative, either of giving up the country or of coming to the Imperial Exchequer. Here he would throw out for the consideration of the Government the propriety of abandoning the existing monopoly with regard to opium. At the present moment the Chinese were themselves cultivating this article to a very great extent. Opium was grown in the remote provinces of China, but it was of very inferior quality; at all events, the Chinese liked our opium better than their own. Now, if the monopoly were abolished, we should be able to enter into a fair competition with the producers in China, which under the present system was out of the question. It was unnecessary for him to dwell on the immorality of the opium trade, for he had spoken on this subject a few evenings ago; and by the late treaty, too, the trade had become perfectly legal. Passing from this subject, then, be would express his regret that the Government had announced their intention not to deal with any of those vicious systems of land revenue which he believed to be the main cause of all our embarrassments. He had heard it assigned with surprise as a reason for taking that course that the Natives of India were so wedded to their present system of land tenure that it would not be expedient to interfere with it. He must, however, remind their Lordships that neither the zemindaree system, which now prevailed in Bengal, nor the ryotwarree, which obtained in Madras, nor the village system, which existed in the North-Western Provinces was fifty years old; these several systems were, in fact, 1506 English in their origin, and he could not therefore see why they should not be meddled with. For his own part, he felt confident that the principle on which we at present acted in India, of allowing the State to be regarded as the chief landlord, and granting no leases in perpetuity operated as a virtual exclusion of the European from that country, and thus deprived it of an advantage in which, in his opinion, was to be found the best, if not the only means of regenerating its people, and making them prosperous and contented.
THE EARL OF DONOUGHMORE,said that as regarded the observations which had fallen from his noble Friend (the Earl of Ellenborough) in reference to remittances alleged to be made to India to this country in connection with railways, said, that it was a mistake to suppose that the money in question was paid by the Indian Government out of Indian resources. The whole thing was, after all, a mere matter of account. Out of every million sterling which was subscribed for the construction of railways in India about £440,000 was spent for the necessary works performed in this country, the remaining £560,000 being applied, in the first place, to the payment of the interest guaranteed to the shareholders; any sum which happened to be left being devoted to the purpose of defraying the capital expenses of the Government of India. Now, if that sum of £560,000 which remained after the payment of the necessary expenses were remitted to India, an equal amount should be remitted thence to this country for the purpose of defraying the expenses of the Home Government, &c.; so that, in point of fact, the £560,000 which were retained in this country merely replaced the remittances which would otherwise have to be made from India for the expenses of the Home Government—an arrangement which he could not help regarding as extremely judicious.
§ LORD MONTEAGLEsaid, the House had a right to complain of the complicated and unintelligible manner in which the Indian accounts were presented to them. The question involved in this Bill was one of great magnitude. He could give the authority of Lord Hardinge for saying that the real danger of India was not so much in the people we had to govern as in the finances of India. It was a mistake to suppose that the difficulties of Indian finance had originated with the mutiny. That they had been greatly enhanced by 1507 the mutiny he admitted; but that they had been occasioned by it he utterly denied. For a long period antecedent to that event the revenue had fallen short of the expenditure. In the twenty-two preceding years there had been £20,000,000 of deficiency and only £5,000,000 of supply, leaving a net deficiency of £15,000,000; so that the remark of the Chancellor of the Exchequer that the state of Indian finance was a "state of chronic deficiency" was perfectly just. To that chronic deficiency it was most difficult to apply a remedy. He did not see much prospect under existing-circumstances of greatly reducing the expenditure in India, and the noble Earl had not held out the prospect of obtaining any large increase of revenue from additional taxation. It appeared, however, that there was some hope of obtaining assistance through the medium of the support of English credit; and he might remind the House that in 1810 and 1812 the wants of India were recited in the preambles of certain Acts as a justification for the advances which in those years were made to India. He believed that the revenues of India were fully adequate to meet the interest on the debt; but what in the meantime, without assistance from England, was to become of our army, and what of our civil service in India? At the present moment the civil servants were only receiving subsistence money, or "board wages" as it might be termed, and that short payment was to be continued for a period of three months. Would they allow the army to remain unpaid? But if the Indian resources should be insufficient to pay for the Indian service, there was no choice but for this country to provide the funds or to abandon India. He wished to know when the Report of the Commission upon the Indian army would be laid upon the table.
§ THE EARL OF DERBYsaid, the Report had been received; but the Government did not wish to lay it upon the table un-accompanied by the evidence, nor before the Government had had time to decide the course they would adopt in consequence.
§ Motion agreed to.
§ Bill read 2a accordingly.
§ Committee negatived.
§ Standing orders Nos. 37 and 38 considered (according to Order), and dispensed with; and Bill read 3a and passed.
§ House adjourned at half-past Eight o'clock, till To-morrow, half-past Ten o'clock.