THIRD READING.

HC Deb 04 April 1859 vol 153 cc1346-80

Order for Third Reading read.

LORD STANLEY

I feel, Sir, that on any subject of less importance than this I should owe some apology to the House for attempting to invite their attention to a matter of this nature after those more immediately interesting and exciting discussions in which we have just been engaged; and I am bound, in the first instance, to admit that the brief explanation which it will now be my duty to offer to the House with regard to the present condition of Indian finance will be of a less satisfactory character than that which I submitted to their notice nearly two months ago; but of this I can assure the House, that as upon that occasion I did, so upon the present occasion I shall, keep back and conceal no fact or expression of opinion bearing upon the subject of which I have to treat which comes within my knowledge or belief. Indian questions will always be treated by this House on their own merits; and I feel that at all times; but more especially in times of some public difficulty and embarrassment, it is the duty of the servants of the State to communicate with this House in the frankest and most unreserved manner. I do hot intend to deny that it will be necessary for the Government, on behalf off the Ad ministration of India, to make a demand of this House for larger borrowing powers in the course of the present year than two months ago; it was considered would be necessary; and, of Course, I am prepared to meet that question Which will naturally be asked—How comes it that this difference has arisen; has it been an error, has it been Wing to miscalculation; is it due to an excess of expenditure over what was anticipated, or is it due to any equally unexpected deficiencies in the revenue? I think that I shall be able to show that the increased demand for the Government of India is not due to any one of those causes, and that the difficulty which now presses upon the finances of India is purely of an accidental and temporary character. It may be remembered that in February last I stated distinctly to the House, when asking for power to borrow on behalf of the Indian Government to the amount of £7,000,000, that I had not before me any estimate of the expenses of the Government of India for the year 1859–60, that I had nothing before me but the comparatively small estimate for the home expenses, and that, therefore, my information was necessarily imperfect. If it be asked why, under those circumstances, did we come forward with a specific demand, and why did we venture to name the sum which we required without having received an estimate from India, my reply is, that we had no option in the matter, and that some part at least of the funds to be raised by the Bill were, and are, urgently required for the necessities of the Indian Administration. The estimate has not usually been sent home at so early a period of the year as the present, and even now it is not in my hands. I have nothing except two or three despatches, which have been laid before Parliament, which give the calculation which the local Government in India have formed upon the financial data before them; but I have not the means of checking that calculation by comparing it with the data on which it is founded. It is clear, therefore, that in asking six weeks ago for a specific sum to meet the wants of the Indian Government, I could only act upon calculations which were in a great measure conjectural. The theory on which we proceeded was this—that in the main, India must be left to defray the expenses of its own Government on the spot, and that it ought to be enough, if besides providing for the Home Administration, we had a margin to enable us to meet any sudden exigencies that might arise. Looking, then, at the question with the knowledge we then possessed, I think we were justified in the course we pursued. It will be remembered that in the year 1857–58 and in 1858–59, at the time when the mutiny was still unsuppressed—when an enormous destruction of public and private property had taken place in India—when great expenses for the raising of new levies were necessarily being incurred—at the time when the political confidence of the natives in the stability of the Government was necessarily disturbed—at that time and up to the present year India has been able to meet the expenses which took place there, with the exception of stores sent out from this country, and with the one further exception that in 1857, after the disturbances broke out, £1,000,000 was remitted in bullion from this country. I do not think, therefore, it was unreasonable to suppose that the same amount of assistance which had sufficed at the time of the utmost peril in 1857, and at the time of great military expenditure in 1858, would still be found sufficient in 1859, when political confidence is restored, when the stability of our Government is assured, and when our military expenses are beginning to be decreased. There is no doubt that at present—I will not say the credit of the Indian Government is impaired, but for the time the borrowing power of the Indian Government is considerably diminished. The general rule is, when a Government finds itself unable to borrow to the extent it desires, that that state of things can only arise from one of three causes. It may arise from the actual want of capital in the country itself; it may arise from the want of confidence in the stability of the Government; or it may arise from the community holding back their capital from the belief that by waiting, they make a better investment. I apprehend that any one who is acquainted with the state of India will not allege that the borrowing power of the Government is affected by the first of those causes; for we know that capital is not usually found wanting in India for the promotion of private undertakings by those who offer reasonable terms, and it is the practice of the Natives to hoard largely, as is proved by the extent is which bullion is imported. Nor can we suppose that the difficulty is due to the want of confidence in a political sense at a time when our military ascendancy has been more completely confirmed than at any former period. But if neither of these reasons operate, we are thrown back upon the third cause—namely, that of the capitalists in India holding back, in the hope of procuring some better investment for their money than it is now in their power to obtain. It is enough, in order to verify what I say, to take a general view of the question, and to look at the terms offered within the last three years. In August, 1856, a 4½ per cent loan was opened; in January, 1857, a 5 per cent loan was opened, and since the mutiny began that 5 per cent loan was open to be subscribed for half in cash and half in 4 per cent paper; and now it appears that this resource is beginning to fail, and a new loan has been opened at 5½, one-half of it being in 5 per cents. Now, looking at these transactions, this at least is clear, that the Native capitalist may fairly believe that the wants of the Government are increasing, and that the rate of interest which they are prepared to offer is likely to increase in a similar proportion, and that if he invests his capital in the loan now opened he may possibly lose his chance of a better bargain hereafter. Not only does his chance decrease, but it necessarily and inevitably happens that when a higher rate of interest has to be offered there is some consequent depreciation of existing stock. We all know that the only inducement—or the principal inducement I should say—which Government securities offer to the population of India is the character of safety and permanence which they possess; because, as far as the rate of interest is concerned, it is well known that a higher rate can generally be obtained from private investments. When, therefore, it has been found that the effect of the transactions which have successively taken place has been to depreciate the value and actually for a time to diminish the capital invested in Government securities, that circumstance has operated to deter persons from investing in them. The only remedy for such a state of things is to take two steps, both of which the Government have now taken—namely, to fix a limit to the amount which they are prepared to ask for, and to the rate of interest they are prepared to offer, giving also such assurance as they can that this rate of interest will not be exceeded. But the only condition on which a pledge of that kind can be made good is that some other source should be looked to supply a deficiency, and that the Government here should take upon itself to supply whatever may be wanting after the fixed limit which the Government in India pledges itself not to exceed shall have been reached. That is the explanation of the difficulty in which the Government of India now finds itself. It is not a question of a larger expenditure than was anticipated, or of a smaller revenue than was expected; it is simply a question of having to burrow a larger sum in England than was intended, because less can be borrowed in India. Let us see what, according to the despatches which have been laid before Parliament, are the present requirements of the Government in India. According to the estimate—if estimate it can be called which is drawn from information at present so imperfect—the calculation of the Government in India is, that they want, in round numbers, £11,500,000. Perhaps it may be necessary to explain that the sum which they require involves merely a deficiency of ways and means to that extent, and not a corresponding deficit in revenue. But this sum of £11,500,000 includes payments made on account of railways in progress to the amount of £4.500,000. It includes, also, a proposed increase of the cash balance from a little less than £9.000,000 to £12,000,000. With regard to those railways in progress, the House is aware of the practice that the sums so laid out in India shall be reimbursed into the Home Treasury. With respect to the increase in the cash balance, that amount has to be spread over the local treasuries in India, 400 and more in number, and it represents the sum which is supposed to be necessary for carrying on the local administration, but does not represent a corresponding increase of expense. Deducting those two items, therefore, that deficit of £11,500,000 is reduced to a deficiency of £4,000,000, and that, I am informed, is still further to be diminished by a charge for stores having been included, which is to be met in this country. The amount of that charge for stores is about £1,300,000. That will reduce the deficit to a sum of rather more than £2,700,000 in India, to which should be added that part of the home expenses which is charged on the revenue of India, namely, £5,200,000. I am speaking under some difficulty; but I apprehend, after the minutest examination of the papers, before me, that the actual deficiency for the year 1859–60, including all charges except those for compensation and prize money, and excluding, too, from the other side of the account, the amount which may be expected to be derived from new taxes, is not much above £9,000,000. It was £9,000,000 in 1857–58, but in 1858–59, with respect to which the deficiency has turned out to be larger than was at first estimated, it is found to amount to £13,000,000 instead of £12,500,000. Regarding the question of Ways and Means, this House has to consider in what way the require- merits of the Indian Government for the sum of £11,500,000 are to be met. It is proposed to borrow £5,000,000 in India—the new taxes are estimated to produce £1,000,000. It was originally proposed to raise the cash balances from something less than £9,000,000 to £12,000,000; but inasmuch as the amount in time of war, and when military operations were going on, was only £10,000,000, it is thought that it will be quite sufficient to raise it to £11,000,000 instead of £12,000,000. Deducting, then, the £5,000,000 loan, £1,000,000 new taxes, and £1,000,000 saved by raising the cash balances only to that extent, the sum to be made good is only £4,500,000. Viscount Canning puts it at only £4,000,000, but whether he or we are right it will be safer to take the higher calculation. We shall have also to meet the demands made on us for prize money and compensations. By the Bill before the House it was proposed to raise £7,000,000. That sum would have left us a margin of £1,300,000, but the railway receipts have since that time increased so as to bring that margin up to £2,300,000, so that after sending out £1,000,000 of bullion there would still be a margin left on this loan of £1,300,000. It is improbable that the claims for compensation and prize money should amount to so large a sum as £2,000,000; but, assuming them to come so high, that would leave £6,500,000 to be supplied. I need not say that the payments on account of railways in progress in India are necessarily a very uncertain item (I am told that they are likely to exceed £4,000,000 this year); and there are many elements of uncertainty in other respects which may vitiate our calculations. The opium revenue is precarious, and it is impossible to speak with certainty as to the precise amount by which the military expenditure will be reduced. As accurate an examination as I have been able to give to these papers, in the absence of any precise and detailed estimate, seems to justify the course which we are about to take. I do not intend to ask the House to recommit the Bill, nor to substitute a larger amount for that already agreed to. To take at once the full sum required for the year and thus to give an assurance that no more will be required, might have a favourable effect on the market; but I hope that effect will be equally produced by the announcement which I have to make that the sum named elsewhere—£5,000,000 —as being that which we should probably still have to raise is the highest amount that will be required. I am inclined to hope that £3,000,000 will be sufficient to meet our wants; but the House will see how many points there are upon which it is impossible to speak, except on conjecture, and I should only be misleading the House if I were to attempt to name at the present moment the precise increase in the sum which has to be provided. One advantage of this course will be that the House will have an opportunity of reconsidering and rediscussing this question, which requires the closest attention, at a period and under circumstances more favourable to a minute examination. There is also the advantage that when it is seen in India that Parliament have passed a Bill of this kind, and is ready to conic forward when necessary to meet the emergent demands of the Indian Government, confidence will be restored to the Indian capitalists, and possibly the necessity of further assistance may, to some extent, be superseded. Though far from thinking that the financial condition of India is satisfactory, yet, if we are to judge from appearances merely, we might think it in a much less satisfactory condition than it really is. The estimated gross revenue for the coining year is larger than in any year; hitherto, the requisition for an increase in the cash balances and the expenditure on railways do not imply any falling off in the revenue, but merely a deficiency in the Ways and Means. On a previous occasion I expressed an opinion that the forfeiture of the estates or pensions of the insurgents might come in to meet the demands for compensations, but it must be remembered that these last will probably take the form of a money payment once and for all, while the advantages of the forfeited lands will only be slowly realized. We have impressed upon the Government of India the necessity of making as large a reduction in that immense Native army which is now kept up as is consistent with the safety of the country. Ten regiments of British troops are coming home at present, and I do not doubt that a further reduction may be made to a considerable extent after the hot weather. All the information that I possess as to the now taxes is contained in the papers laid before Parliament. The subject was being considered by the Government in this country, and we were prepared to recommend an increase in the Customs' duties, which I think on the whole is the wisest course, and on which the Indian Government was disposed to place most reliance; but this financial emergency has come rather suddenly on the Government of India, and they have determined in their exigency to take the matter into their own hands. The only two taxes which will be imposed at present are the Customs' Duties and the Stamp Tax. With regard to the duty on tobacco, to which some allusion has been made, I am glad to say it is not proposed to impose it at once, without consideration and discussion. I do not know that in the present state of affairs there is any further explanation I can offer. I can assure the House that every paper and every document except, of course, private letters—every official document in my possession—has been and will be laid before the House; and with these observations I beg to move that the Bill be now read a third time.

MR. VERNON SMITH

remarked that he understood the noble Lord to state that it was not his intention to re-commit the Bill for the purpose of proposing an additional loan, nor to propose an additional loan in the present Parliament. (Lord Stanley assented.) The statement of the noble Lord differed greatly from the statement made in "another place" by the Prime Minister, and the latter statement might require consideration as well as the statement of the noble Lord. He would not enter into the causes which had led to a deficiency of subscriptions by the Natives, nor controvert the noble Lord's explanation that, seeing the difficulties we were in, the Natives were waiting to know if they could obtain better terms. But, at the same time, he thought that the revenue and accounts of India were in a most unsatisfactory state. He did not find fault with anything which had been done recently, but there appeared to him to be a want of financial counsel in the Council of India, such as might fairly he expected to set right this question. With regard to the deficiency of information, it was stated in the papers presented to the House of Lords, that accounts were sent home in January, and, if so, those accounts should have been presented to Parliament. He believed he was correct in saying that before the month of May the regular accounts ought to be laid on the table of the House. He understood the noble Lord to say that not only the sketch estimate, but the ordi- nary accounts had not yet reached England, and that raised an additional difficulty in the way of the discussion of the question, because the accounts could not be presented to Parliament during the dissolution, and a still wider interval of time than usual must elapse before the public would be acquainted with them. The Secretary of State, writing to the Governor General and Council desiring them to do one thing and their writing home requesting him to do another, led to a complimentary and dilatory correspondence, by which the public interests were neglected and nothing done. He would suggest to the noble Lord that during his absence from Parliamentary attendance by reason of the dissolution he would have some leisure, and might devote it to the preparation of a report on the taxation and revenue of India. If a Committee of the House were appointed upon the subject which, had the Session continued, would have been proposed, they might have obtained some information. But, at all events, the noble Lord might institute a committee of his own council. It was improbable from their connections that Gentlemen in India were the best persons to carry out either reduction of expenditure or increase of taxation. What was the object of establishing a Council in England? The noble Lord said the business was continued exactly as it was conducted under the Court of Directors. If so, the whole principle of the India Bill had broken down, because the object of that Bill, as he understood it, was to take away the initiative from the Court of Directors and give it to the Secretary of State. With his power, the Secretary of State ought to say to those gentlemen, "You are meeting in Council every day and you are meeting in Committees. There are among you gentlemen of experience in India. I have also retained in my Council gentlemen of commercial knowledge merely on account of that knowledge, and I charge you to go through tax after tax, and reduction after reduction, and state to me what is the possibility of altering the position of Indian finance and raising the balance of receipts over expenditure." It might be that such a Committee would show it to be possible, and it might be they would show it to be impossible; but, at any rate, some light would be thrown upon a subject which was now more obscure than before the combination for the purpose of increased responsibility of the two authorities. He was sure the noble Lord was anxious to do justice to India, and he could do nothing better than call for a report from such a Committee and present it to Parliament. The Council could not be so overcharged with labour as not to have the time to consider the subject, and if they could not give an opinion upon different points which might be referred to them, such as the reduction of their own number to begin with, the abolition of the office of legal adviser, or the substitution of an accountant, the imposition of an income tax, and the reduction of the salaries of the civil servants, they were not worth their salt. He should have been perfectly willing to agree to an increase in the amount of the loan, as he by no means wished the Government to be put to any inconvenience, and there was no doubt that by loan the necessary funds must be raised, but, as that course would not be pursued, he should not further trespass on the attention of the House.

MR. W. VANSITTART

said, that at the conclusion of the interesting discussion on the dissolution, not expecting the debate on the India Loan Bill to come on, he went away, and penned an address to his constituents, which would be found on the walls of Windsor the next morning. Having performed that duty he accidentally sauntered down St. James's Street, and on reaching his club found from the telegraphic messages that this Bill was under discussion, and therefore hastened down to take part in the proceedings. He found from letters and accounts that he had received from India that it would be necessary to raise £5,000,000 in addition to the £7,000,000 it was now proposed to raise. However, some Gentlemen might be opposed to the system of an Imperial guarantee that subject must come under consideration before long. From what he had heard from India it was at present impossible to borrow there even at 5½ per cent. A loan at 5½ per cent had been opened at Calcutta, but it had failed, and Viscount Canning could not get money on those terms. England, in conjunction with France, had not long since raised a loan of £5,000,000 for the Ottoman empire. Now, what was the Ottoman empire to England compared with India? He thought that India had a fair claim on England at a moment when she had just emerged from so foul a rebellion. He was satisfied that India wanted £12,000,000 at the present moment. The Earl of Derby said so in the other House, and if the noble Lord (Lord Stanley) had done wisely he would have gone boldly into the English market, asked for £12,000,000 at 3½ per cent and then lent it to India, without pledging himself one way or the other on the question of an Imperial guarantee for Indian loans. By such a course the noble Lord would have saved India a sum of £240,000 per annum, and need not have compromised either himself or the House with regard to the Imperial guarantee. There was, however, another great question connected with Indian finance, and he was glad to see the hon. Member for Birmingham (Mr. Bright) in his place, as this was a subject in which that hon. Gentleman took a deep interest. If England refused to acknowledge all responsibility for the public debt of India, it stood to reason that she had no right to dictate to India how she should raise her revenue, and what customs, excise, and import duties she should impose. If that was the case what became of the agitation about the repeal of the opium duty and the salt tax? Until there was an Imperial guarantee, England must not interfere in the raising of money for India. Then as to reduction of expenditure. Indian finance was in rather a shaky state, but he was satisfied that things would right themselves in a few years, if peace were preserved. What he should like the noble Lord to do would be to turn his attention to improve the whole police of India upon the plan introduced by his old Haileybury friend Mr. Robert Montgomery. A great reduction of the Native army would thus be practicable. He knew the Natives in India, and he felt satisfied we could never hold India without a European force. The severity of the revenue laws in some points ought to be relaxed, and the costly and useless Legislative Council ought to be remodelled. That Council was established by the right hon. Gentleman (Sir Charles Wood), and a most awful failure it had been. The noble Lord ought also to expedite the construction of railways and encourage the settlement of Europeans in India. He would recommend the noble Lord to sell the premises in Leadenhall Street. There were five or six acres of land there, which, with the building, would bring in, he was told, £350,000. The next step should be to reduce the Council of India from fifteen members to nine. He would not interfere with the present dear old creatures, but he would not fill up their places as vacancies occurred. He understood that the whole business of the Council was at present transferred to three committees of five each, and if each committee consisted of three members it would be quite enough. Then he would at once amalgamate the Supreme Court and the Sudder Dewannee and Nizamut Adawlut Court. There was a Committee now sitting on India of which he was a member, but they were all at sixes and sevens, and it would be some time yet before they reported to the House. He believed that if the reforms he had indicated were carried out the Natives of India fully appreciating our good intentions, would acknowledge that a wiser, more powerful, and beneficial Government they could not possibly have.

MR. CRAWFORD

said, it had been his intention, on the Motion of which notice had been given by the hon. and learned Member for Devonport, to have offered some remarks on Indian finance, and he thought the present a legitimate opportunity of doing so. The noble Lord bad stated three grounds on which the supply of money on loan was withheld, and particularly that it was not a want of confidence in Indian finance that prevented the Natives from contributing to raise the loan now asked for, but an impression that the longer they kept off the better terms they would obtain. He (Mr. Crawford) did not think so, but he believed it proceeded from an entire mistrust in the financial policy of the Government originating in the measures taken by the right hon. Gentleman the Member for Halifax, in 1853. He would remind the House of the peculiar nature of the Indian debt. The practice of the Indian Government had always been to maintain what was called an open loan—the officers in charge of the different treasuries receiving from the public such sums as were offered to the Government on loan, at rates of interest uniform at the time, but varying with the state of the market. When the revenue was in excess of expenditure, then money was received by the Government to pay off debt, at a high rate of interest; but when the revenue was deficient, it was necessary to make it up by loans, and the rate of interest was in accordance with the existing state of things. The result of this practice during the last few years had been this. When the new charter was conferred on the 1st of May, 1854, the amount of the public registered debt of India was £30,195,000, and on the 1st of May, 1856, it amounted to £44,028,000. The increase was caused in this way. A sum of £53,940,000 of new debt had been contracted, from which a deduction of £12,000,000 of the old debt was made, and £28,000,000 of the old debt was transferred to the new debt at a lower rate of interest. The interest upon the former sum was £1,541,000, or at the rate of about 5⅛ per cent; that upon the latter was £1,777,000, or at the rate of 4 per cent. While, therefore, the debt had increased about £13,800,000, the charge for it had increased only about £230,000. This might seem to be matter for congratulation, but he believed that the reduction of the interest in, the year 1854 to 4 per cent had occasioned great discontent among the Natives of India—a discontent which had weighed on them ever since, and had been greatly aggravated by the course which had been adopted by the Government since the month of November last. The right hon. Gentleman the Member for Halifax on the 8th August, 1854, stated that on his accession to office he had sent out directions to the Governor General to proceed at once to reduce the whole of the 5 per cents to 4 per cent. The right hon. Gentleman also stated that in 1849–50 there was a surplus revenue of £520,000, and that in 1851–52 it was £626,000, but he also said, that in the year to which he was referring there was a deficiency of £1,500,000, and yet he was bold enough to order a reduction on the interest of the debt from 5 per cent to 4 per cent; though at the same time he went on to say that there was no prospect of any material reduction of the deficiency. He (Mr. Crawford) said, therefore, that there was no justification of the reduction of the rate of interest from 5 to 4 per cent. The public, however, necessarily submitted to the great loss occasioned by it. Soon after a notice of a loan was issued called the "Public Works Loan." People it first supposed that the object was really the promotion of public works, but they soon found out that the real object was to supply a deficiency of two years amounting to £1,500,000, and a similar sum to pay off in cash the dissentients to the reduction of the rate of interest on the debt. What he wanted the public to know was this, that in the mind of India there had been created a feeling of great distrust in the financial policy and measures of the Government of India, and that distrust still existed. He now came to the proceedings of last year. In November last the public was informed that the holders of India debt could have it registered in India, and receive the interest in this country; in January notice was given that the permission to subscribe partly in the paper of existing loans would be withdrawn on the 20th of April, and at the same time Treasury bills, similar to Exchequer bills in this country, were offered to the public at an interest equivalent to 5¾ per cent. So that at a time when it ought to have been the policy of the Government to uphold the value of their securities in the market, they adopted measures which had a precisely opposite effect. The only redeeming feature in the matter was the intimation that the Government of India was wisely appealing to the population of India, He regretted that that step had not been taken earlier, and that in the proclamation in which it was made public a higher tone had not been taken. He would himself have stated exactly the circumstances in which the Government was placed, and would then have called upon the Natives to come forward to its assistance. There was another matter connected with 'the management of these affairs to which he wished to advert—he meant the singularly inopportune moments which the Government of India took for arranging its loans. The finance arrangements of India proceeded from the Supreme Government at Calcutta; and they showed great ignorance of circumstances connected with the other side of India. There was a very large number of Natives possessed of money in the market on the western side of India, and yet the finance arrangements were made without reference to the circumstances connected with the western side. The two great commodities in which the funds of the mercantile community of western India were engaged, were opium and cotton. It required three or four millions to set the opium crop in motion in Malwa, in the month of October, and it required no less a sum for the purposes of the cotton crop, and to bring it down to Bombay early in the year, as it must be shipped before June. If so large a sum was required for these purposes, it was evident that any demand on the part of the Government which disturbed these arrangements, must necessarily act on the markets in Bombay, and if loans were called for, the commercial rate of interest was ne- cessarily raised. That was the case now. The rate of discount in Bombay was now 14 per cent, and all this arose from the Government at Calcutta concluding its financial arrangements without reference to the state of affairs on the other side of India. The right hon. Gentleman the Member for Northampton (Mr. Vernon Smith) had alluded to the propriety of some person skilled in finance being appointed to an official position in India. He (Mr. Crawford) understood that a suggestion of that kind was made to the Court of Directors two years ago, but was rejected by them. He regretted it, for he believed that an appointment of that kind of some person of large financial experience would he most useful. If it was necessary to have a Governor General at £25,000 a year to represent the policy and the dignity of the Government, a Commander in Chief at £17,000 a. year to represent the army of England, and a gentleman at £10,000 a year as the representative of the legal profession in the Legislative Council, it was equally necessary to send out some person to take charge of financial matters. The right hon. Gentleman the Member for Northampton had made a suggestion that a financier should be substituted for a lawyer in the Legislative Council, and he (Mr. Crawford) concurred in that suggestion. With regard to railways, the noble Lord had called attention to this subject, which was of considerable consequence at this moment. The noble Lord seemed to expect that the wants of India as regarded the Government in this country would be met for the present year by a payment of £4,000,000 on account of railways. It might be some satisfaction to the noble Lord if he (Mr. Crawford) stated that tomorrow he would have the pleasure of sending him a cheque for £1,000,000 on that account, and in the course of a few days he would have to send him another, not, perhaps, for so large an amount, but still for a considerable sum. The noble Lord would thus have about half the sum which he expected from the railway companies. He had before him an official statement of the condition of Indian railways up to January, 1859, which was read before the Society of Arts by Mr. Watson. According to his statement, the whole length of railways sanctioned in India was 4,847 miles, of which 559 were now open for traffic, and by the end of 1861 no loss than 3,000 miles more were expected to be opened. The whole amount of capital which the Government of India had guaranteed was £40,000,000, of which £19,000,000 was paid up and £21,000,000 was still required by the different railway companies for the construction of their lines. The two principal lines were the East Indian Railway and the Great Indian Peninsula Railway. The former company had a capital of £10,000,000, and the latter a capital of £8,000,000. Of the whole £10,000,000 of the capital of the former, only 2¾ per cent had been raised on the shares in India, while 97¼ per cent was raised in this country, although the shares were open to subscription in India as well as here. The proportions were somewhat different in the case of the Great Indian Peninsula Company, for 93 per cent had been received here, and 7 per cent in India; while in the case of the Madras Company the whole paid-up capital had been received in this country. It might he said that of the entire £19,000,000 of paid up capital, 96 or 97 per cent had been received in England, and the remaining 4 or 3 per cent in India. But there was still £21,000,000 to be raised, and, assuming that it would he received in the same proportions, no less a sum than £20,000,000 must be looked for in England, and only £1,000,000 in Indian. The expenditure of the East Indian and the Great India Peninsula Companies had been in the proportion of 55 per cent in England, and about 45 per cent in India, and, applying those figures to the remaining £21,000,000, about £8,000,000 or £9,000,000 would have to be spent in India, and the other £12,000,000 in England. The Secretary of State might feel assured that he would obtain from the railway companies a sufficient sum to enable him to meet his charges. The money market of England professed to be able to supply the money required to pay for this expenditure, but not to supply what was required for loans for the Government of India. He had read with great interest and attention the despatch of 19th January, which had been laid on the table, and he had listened with equal attention to the noble Lord on that evening, and he was bound to say that he could not regard the affairs of India with the despondency with which they were generally viewed, but he was bold enough to look at them in a financial point of view with great confidence. The revenue had not diminished even during the troublous times of the rebellion, and it had now rather increased. The whole question therefore resolved itself into one of expenditure, and seeing how largely military expenditure entered into the question, it lay with that House to prevent great burdens being imposed on our Indian finances. There was a feeling of uneasiness in the public mind at hearing that attempts were being made in high quarters to charge Indian revenue with the maintenance of a- great military force. It had been stated that twelve batteries of artillery were about to be sent out; and it was at a time when the war was over, and all the arms of the people in the revolted provinces seized, that this large force was being sent out at a great expense to be saddled on the revenue of India. Plausible reasons however might be adduced for this course, and such had been offered, but he was afraid that the principal object was to increase the influence and patronage of the Horse Guards. He hoped, at all events, that the attempt to increase the European army unnecessarily at the expense of India might not succeed. When it was considered how greatly the exports and imports of India had been increased in the last few years, the condition of the country must be commercially good, and therefore he did not look with any despondency at the future of its finance, believing as he did that the only question was one of expenditure. With regard to an imperial guarantee, he was not prepared at present to give his concurrence to such a proceeding. He could not conceive how this country could become responsible for the debt of India without greater control being exercised over Indian expenditure by vote and estimate in that House; and he hoped the time was not come when that House would interfere so minutely with the affairs of India. There was an item in the despatch of 19th January, of which, perhaps, the noble Lord would give an explanation. Under the head of charges for each Presidency there were items under the head of "profit and loss" which amounted in the whole to £150,000. He did not understand how such an item of charge arose. There was one other subject to which he wished to call the attention of the House. The right hon. Gentleman below him (Sir Charles Wood) in 1854 stated that instructions bad been sent out to the different Presidencies desiring the accounts to be framed upon a now model, and that he hoped in the next year to lay on the table of the House accounts of the trade and navigation of India. Those accounts had not yet been presented, and he thought he might do the public some service by pressing on the noble Lord the expediency of having them regularly laid on the table of the House. He repeated that he looked with great confidence to the future of India. The noble Lord had seen by his statement how much the public in this country must be relied on for means to complete the railways in India; but he must assure the noble Lord that if the practice of the Indian Council to sanction every scheme that comes before them, however desirable it may be in itself, was to continue, they would, to use a homely expression, soon kill the goose that laid the golden eggs. At the present moment the guarantee of the Indian Council was barely sufficient to maintain the stock of the railway companies above par, and as long as that was the case, it would be difficult for the noble Lord to attract towards India the amount of money necessary for large public works.

SIR CHARLES WOOD

said, that thinking as he did that there was no more serious question for the consideration of the House and Government than the present state of Indian finance, he was glad to have the present opportunity of stating his views on the matter, because, in his opinion, no time should be lost in taking measures more efficient than had yet been adopted for equalizing the revenue and expenditure of that country. Before he went into that question, however, he must be permitted to refer to what fell from the hon. Member for London with respect to the measure for which he (Sir Charles Wood) was to a certain extent responsible—the reduction of the interest of the 5 per cent Indian loan to 4 per cent. He had not the least objection to take the whole of the responsibility which ought to be on his shoulders in that respect; but considerable difference would be made in the consideration of that question by a reference to the dates at which the orders in respect to the matter were given, and when the subsequent transaction occurred the hon. Member for London had omitted the dates. In looking through the Parliamentary paper, showing the variety of loans raised in India, it would be found that the processes were not quite so simultaneous as the hon. Member seemed to suppose, but that there was a considerable interval between the first and last transactions alluded to. He became President of the Board of Control about January, 1853, and it so happened that the Indian Government, seeing that they had a surplus of £500,000 for three successive years, did in January, 1853, take on themselves the responsibility of commencing the operation of reducing the 5 per cent loan to a 4 per cent loan. It was quite true that, very soon after his accession to office, he sent directions to India entirely approving of what they had done, and urging them to continue the same operation. This reduction was to be carried out in the early part of 1853, and in September, 1853, the 4 per cent. loan was closed, and in October, 1853, a 3½ per cent loan was opened, to which a certain sum of money was subscribed, showing that at that time the prevalent rate of interest in India was under 4 per cent. He could not quite understand on what principle that operation was impeached. Was it to be said that it was not desirable, if they could, to reduce the rate of interest payable on the public debt? At the time this operation was commenced there had been a surplus averaging half a million for three successive years, and there was then no prospect of an increase of charge or a diminution of revenue. The Indian Government, therefore, with the entire approbation of the Home Government, undertook an operation which in this country had always been regarded as a most desirable and advantageous course. It was effected in the spring and summer of 1853, and the decrease of charge consequent upon this reduction of interest amounted to half a million per annum. The state of Indian finance had been a source of anxiety to every Government for the last twenty years; and a saving of this amount in the expenditure of India was a measure surely undeserving of the censure cast upon it in that House. Such a saving had not been made for many a long year before, and he should be glad to see a similar reduction effected in future. It was true that in March, 1855, a change of circumstances occurred in the money market at home and in India, occasioned by the war; and the Indian Government then finding it necessary to raise a loan, were compelled to increase the rate of interest to 5 per cent. That fact, however, did not furnish the slightest ground for impugning an act of the Government two years before, which was perfectly legitimate at the time; and he could see no reason, looking at the large sum which had been raised in India up to January last, for supposing that the credit of the Indian Government had been affected by what was done in 1853. He would not refer to what had just been said with regard to the Indian railways, except to observe that in point of fact that subject had not much to do with Indian finance. Taking all that had been stated on this point to be true, it only amounted to this, that if the sums to be received in this country from the various companies went for the payment of the home charges, the necessity of remittances from India would be obviated. An equal sum would have to be applied from Indian revenue to railroad purposes in India instead of being applied to public purposes, and their payment in England would make no difference in the expenditure and income, the relative balance between which would remain unaffected.

The Member for London talked of paying in a million to the Home Treasury; but of this sum one quarter at least would be required to pay the July dividend to the shareholders in this country. He now came to what was the real question of Indian finance. He did not differ from the hon. Member for Windsor as to the reductions which he thought desirable. He had before expressed his concurrence in the opinions now expressed by the hon. Gentleman, but after all they only applied to a reduction of some ten or twenty thousand pounds, and if they were to accomplish any effectual reduction of expenditure in India, they must deal not with tens or hundreds of thousands, but with millions. He had been told not many weeks ago that he had taken far too gloomy a view of the financial prospects of India, but a despatch from the Indian Government, which had been recently published, presented an infinitely worse picture than anything he had ventured to sketch, He had not said one word on this matter that he did not believe to be true, or which could not be demonstrated from the figures before them at the time; but nothing that he had said came near the facts which were disclosed in these despatches. In a recent debate, several Gentlemen had ex- pressed unbounded confidence in the future increase of Indian revenue. He did not quarrel with those who had anticipated a great development of the resources of India, and a consequent further increase of its revenue. All this, however, was mere matter of conjecture, and afforded no certain data on which any calculations could be based. But when hon. Gentlemen, professedly founding themselves upon the experience of the past, had contradicted the noble Lord's statement, and his own also as to the inelastic nature of the Indian land revenue, he begged entirely to differ from them. On hearing the statement, he had at first mistrusted his own judgment in deference to the high authority of the hon. Gentleman who said so. On subsequent examination, however, he found that his previous opinion was perfectly borne out by the facts. In the year 1850–1, the land revenue amounted to about £17,058,000, while in 1856–7 it was £18,658,000. The increase between these two periods was £1,600,000. But the same accounts showed that this result was mainly due to the addition of the land revenue of the provinces annexed since 1851, the item for which was £1,500,000. Taking, therefore, the most favourable view of the case, the augmentation of the land revenue derivable from other sources than the annexation of new territory was only £100,000 between the years 1850–1 and 1856–7. They could not, then, expect any large increase of revenue under this head for many years to come. But, passing now to the statement which they had heard from the Secretary for India, he thought the noble Lord had under-rated—and, perhaps, naturally so—the real gravity of the position of Indian finance. There was another respect in which he had been greatly disappointed by the noble Lord's explanations. He could not understand how it was possible for the noble Lord to make the statement he did, not six weeks ago, on the state of the finances of India, and not even allude to this startling deficit of £11,500,000 which they now heard of for the first time. He could not suppose for a moment that the noble Lord had wilfully concealed that which he knew to be the case; but he must say, that wherever the fault lay, whether with the Government in India or with the Government at home, it was utterly impossible that this serious deficiency should have escaped their notice until it was discovered all at once. It was absurd to suppose, that the probability of a deficit in India should not have been known before the despatch from India of January last. How came it that when the noble Lord asked them for a loan of seven millions there should have been beyond that amount as stated in this despatch, an expenditure of eleven-and-a-half millions in excess of the revenue? Could anybody believe that either the Home Government or the authorities in India could have been so long unaware that it was probable there could be this heavy deficit in the finances of India, to which the noble Lord in his recent exposition never alluded? Having thought it unlikely that there should be no deficit, he had himself put a question a few days ago to the noble Lord. Not a single syllable, however, did the noble Lord say on that occasion on this subject; and it was now incumbent on him to explain why this important fact had been wholly excluded from his previous statement. He would shortly refer to the deficits of recent years. In the years 1857–8, the deficit was £9,304,000. In 1858–9,£12,600,000. The noble Lord had stated the deficit of last year at rather a larger amount than he gave for it on a former occasion; namely, at £13,000,000. For the year 1859–60, the Home expenditure had to be provided for by the loan of £,7000,000, which was the subject of the Bill now before the House; and we had recently learnt with astonishment, that beyond this deficit of £7,000,000, there was a further excess of £11,500,000 in the expenditure in India to be provided for. The noble Lord had said, that some of this excess arose from railway expenditure, but on the other hand it did not include the sum due for prize-money, which was said to be £4,000,000, or the sum due for compensations, and therefore he thought we might be well content to take the statement of Indian finances as the Indian Government gave it. The whole expenditure for 1859 was estimated after the proposed reductions at £53,435,000, and the whole income, including the estimated increase at £45,692,500. (This was taking the rupee at 2s.) The deficiency was therefore £7,742,500. To this sum was to be added £3,135,000 in order to increase the balance up to the amount which the Indian Government thought it right to have in their treasuries, and £562,500 to pay oft some Tanjore debt, which ought not perhaps to be included in the current expenditure. No doubt means must be provided for these demands, but there was a deficiency on the current expenditure alone of £7,742,000 beyond the £7,000,000 that had been already borrowed. How was this deficit to be met? It appeared to him that in its financial operations the Indian Government had been very unsuccessful. It began by announcing in January the closing in May of the arrangement for converting the 4 per cent paper, with an equal amount of cash, into 5 per cent paper, accompanied by an issue of Teasury bills, bearing interest at 5¾ per cent. This did not answer. On the 10th of February it reduced the amount for which Treasury bills could be issued to £20. The consequence of these measures was a complete panic. The 5 per cents fell from 93 to 85, and were unsaleable at 15 per cent discount. On the 22nd of February they announced the opening of a 5½ per cent loan in May, and having failed to obtain money on Treasury bills at 5¾ per cent, they then issued similar bills at 4¾. Having failed to raise money by bills at 5¾of per cent, how they expected to get any on similar bills at 4¾ passed his comprehension. In regard to the revenue they anticipated a probable diminution of that from opium, and no material increase of the existing custom duties. What steps, then, were taken to meet the deficiency. They proposed to raise £1,000,000, by additional customs and stamp duties, they hoped to get£5,000,000 by the 5½ per cent loan, and for all the remainder of the £11,500,000, they threw themselves upon this country. Such was the financial state of India for the year 1859–60. During the present year military operations would be to a certain extent going on, and it was not to be expected but that it would be necessary to raise money by loan to pay the expenses of them, But he must look forward to the period when it was to be hoped that the war would have altogether ceased, and we must see what were the financial prospects held out for 1860? Taking the revenue at what it was estimated to be for 1859–60, and the expenditure at the sum to which it was proposed to reduce it, the account would stand thus:—Expenditure, £53,435,000; income, £46,692,500, leaving a deficit of £6,500,000, exclusive of home charges. The home charges for the last year of peace were £3,500,000, and taking them only at £3,000,000, there would be a deficit in the year 1860–61, of nine millions and a-half to be dealt with after the proposed increase of taxation on the one hand, and the proposed reduction of expenditure in the year 1859–60 had been made. This was the prospect fur a year, as we hoped, of profound peace. What were the prospects of meeting it? He wished to urge the question at this period, because the noble Lord must begin at once to take effectual measures for reducing the expenditure, not by tens or hundreds of thousands, but by millions. At the same time it would be necessary to increase the revenue. In their despatch, the Indian Government reckoned the extra expenses of the military department at about £8,500,000, £2,000,000 of which they proposed to strike out in the course of the present year, which would still leave an extra expenditure under this head of £6,500,000. How was that expenditure to be brought down? It was not by such reductions as were talked of in this country, or by such reductions as had hitherto been proposed in India, that the difficulty could be met. Unless an infinitely greater reduction than now seemed contemplated was effected, there seemed no possibility of bringing the expenditure within the revenue of India. It was nonsense to talk of small economies, of lopping off a Member of the Legislature in India and two councillors at home, or of saving one or two hundred thousand pounds by means of guarantees. All this was quite right, so far as it went, but it was a mere fleabite; and unless the question was dealt with in a, much more comprehensive and statesmanlike manner than the Home Government or the Government in India had yet treated it, a serious crisis was imminent. It was incumbent on the House to press upon the Indian Government the necessity of effecting largo reductions. He concurred in the opinion which had been expressed that a Committee of this House was not the proper mode of taking the subject into consideration, He did not say that the necessary measures could betaken in India; but the Indian Council at home was composed of men bettor acquainted with India than the whole of the House of Commons put together, and if they could not suggest means both of reducing the expenditure and of increasing the revenue, he utterly despaired of the House of Commons being able to do so. The House might know what taxes to impose on the people of England, but they could have no acquaintance with the feelings, the prejudices, and the interests of the people of India, all of which must be considered in dealing with this subject. Some action must, at all events, be taken on the question without loss of time. Mere general orders sent out for a reduction of expenditure would not produce much effect: the Home Government must be prepared to point out and to insist on certain definite reductions. The Indian Government might find a difficulty in revising the salaries of the servants, and of reducing the establishment, military or civil, under their control; this was a duty incumbent on the Council at home. The question was one of the most serious ever brought before the House, and he trusted that it would give rise to speedy and to vigorous action on the part of the Government. He would not now go into the question of guaranteed loans, though he entertained a strong opinion that it would be a great mistake if India were encouraged to look to this country for resources to meet increased expenditure; but he did hope that the Government would look the existing deficit manfully in the face and deal with it by much more effective measures in the way of reduction than by the mere general advice and general exhortation which were contained in these despatches.

MR. T. BARING

said, that such a discussion was calculated to make the House regret the exclusion of the members of the Council, who would have brought to boar upon it a practical knowledge and a local experience which might have corrected some of the statements which had been made, and would certainly have carried more weight than the speeches of mere amateurs in Indian finance. His right hon. Friend (Sir Charles Wood) had thought it necessary to defend his measure for the reduction of the interest, and had said that it was not only successful, but justifiable and expedient. Now, the measure might have been temporarily successful, but it was permanently unfortunate. It did not seem clear what permanent surplus of revenue there was in the treasury when his right hon. Friend attempted it; nor was he aware that there was such a diminution in the general rate of interest throughout India as would warrant such a reduction. His right hon. Friend only followed at that time the prevalent mania for the reduction of the rate of interest, and although his measure succeeded for a time it had had the effect of creating great distrust in reference to the management of the finances of India, and had thus exercised a prejudicial effect on the future conduct of those finances. To maintain confidence in matters of finance it was not only necessary that the Government should be able to meet all its engagements, but that its creditors should feel convinced that it would not avail itself of any temporary events to disturb existing settlements by forced operations, to their prejudice. Now that was what the reduction of the rate of interest did in India. The subsequent financial operations which his right hon. Friend criticised might or might not be judicious. At this distance it was rather unjust to criticise operations undertaken to meet a special exigency. As far as they could judge, the measures taken in Calcutta, constantly changing as they did, were not very wise. For success in finance two things were necessary—simplicity of system and consistency of purpose; the sys- tem must be thoroughly intelligible, and here must then be consistency of purpose in carrying it into effect. This did not seem to have been the case at Calcutta; but it should be recollected that we in England had contributed very much to the distrust which prevailed throughout India. He was not going to raise the question whether this country should not have come directly to the aid of India last year; but he was strongly of opinion that had it done so, credit would have been restored throughout India, and the Natives would have been ready to lend their money freely when they saw we were not distrustful of the resources of India. The view taken on this subject by the right hon. Gentleman last year was, he could not help thinking petty, unwise, and uneconomic. Probably with the support which the House had given to that view, the present Government were obliged to follow in the old track, and could not help adopting the same plan; but by so doing they had prevented the Natives from investing their money in Government securities, and had prevented the restoration of confidence in India. The hon. Member (Mr. Crawford) saw a remedy in the proposal that individuals should be sent from this country to put to rights the finances of India. Now, he had no confidence in the attempts of strangers to regulate the finances of another country; he should not think much of any advice given by Frenchmen and Americans as to the taxes which should be imposed on the people of this country. He should have great distrust of the report even of a Commission composed of Chancellors of the Exchequer who might be sent out to India to pronounce an opinion as to what was the system of finance which ought to be carried into effect in that country. If such an opinion were pronounced without due consideration, it would deserve to be regarded as a rash one, while, if it were the result of mature inquiry, it could not be arrived at for years after the application of a remedy for existing embarrassments in India was required. Surely, therefore, the best plan to adopt was, to leave it to the Governor General to appoint a Commission on the spot, which would be composed of men conversant with the subject which they were appointed to investigate, and not to send persons out from this country who could know nothing of it except from hearsay. But, be that as it might, it was to economy only that we ought, in his opinion, to look with a view to righting the finances of India. He, like the right hon. Baronet, should have no distrust of Indian finance if that country were but well and economically governed. The deficit which had arisen in past years in India had been occasioned by wars carried on not for the benefit of that country, but for objects of Imperial advantage. He might also observe that the small deficit which had occurred previous to the breaking out of the mutiny had arisen from the anxiety which had been evinced to contribute to the prosecution of public works. When therefore great deficiencies were occasioned by wars which, if we were wise, we should avoid, it became more than ever expedient that the expenditure for public works should be regulated in accordance with the means at the disposal of the Government. He, for one, regarded with some anxiety the disposition to guarantee these public works. It was all very well to a certain extent to contend that industry ought to be promoted and improvements carried into execution, but there was a limit even in those cases; and if some positive limit were not imposed there would be such a constant pressure on the Indian Government for further guarantees that it would be impossible to look on the continuance of a system without grave anxiety and fear as to the future. Economy could only be worked out by making India to pay only for what she wanted, and not by forcing upon her a large expenditure for the purpose of adding to our own national establishments, and our military resources. He made that remark because he had heard with apprehension a statement which was made during the discussion on the Army Estimates, and which led him to suppose that there was some intention of throwing upon India in some measure the expenses of maintaining the military establishment of England. Now, the revenue of India could only be gradually and moderately increased, and he could not help thinking that some saving might be effected in the cost of its collection. But we could not, he believed, levy taxes upon the inhabitants of that country without consulting Native prejudices and feelings, and it was in that case difficult, he thought, to say how these burdens could be laid upon them with either wisdom or success. It was after all, then, to retrenchment of expenditure—and that must be effected in connection with the army—that we must look for the adjustment of Indian finance. The system of double government no longer existed to act as a buffer to stop the pressure which from time to time was put upon the Government at home. It now fell upon a Cabinet Minister, who could not always resist it. There was, therefore, great danger that he would yield to that pressure, and throw that expenditure on India which, if borne at all, ought to be borne by England. The only course now open to the House was, in his opinion, to adopt the measure of the noble Lord the Secretary for India, and if for the future economy were practised in the management of the finances of that country he should entertain no fears with regard to the result. He must at the same time observe that he could not help feeling that an opportunity had been lost last year of transferring for a time to India the benefit of the national credit—an opportunity which if it had been seized upon might have been productive of great benefit to that country, while England would have lost nothing by the proceeding.

SIR GEORGE LEWIS

said, the hon. Gentleman who had just spoken, and whose opinions on financial subjects were entitled to the utmost attention, had expressed it to be his belief that a portion of the existing financial embarrassments of India had been occasioned by the adoption of the course which had been recommended by Her Majesty's late Government with respect to the loan which had last year been contracted for the service of that country. Now, he (Sir George Lewis) was, he must confess, totally unable to understand the force of that argument. Anybody would suppose, from the reasoning of the hon. Gentleman, that Her Majesty's late Government had recommended some novel and unprecedented scheme for the adoption of Parliament. So far, however, from that being the case, they had simply pursued the invariable course of practice on such subjects. There never had been a time when the Exchequer of England had come to the assistance of the Exchequer of India. On the contrary, an attempt had at one time been made to exact from India a tribute to the English Exchequer. The expenses of Indian wars, moreover, had at all times been defrayed by the Indian Treasury from money raised in India, and whenever it had been found necessary to raise money for the service of the Indian Government in England, it had been raised by means of Indian bonds, under the authority of an Act of Parliament. The course, therefore, which Her Majesty's late Government had recommended the House of Commons to adopt, was one which up to that time had been uniformly pursued. But, if there had then been any difficulty in obtaining the proposed loan; if it had been obtainable only at a high rate of interest, there would have been some reason for contending that the credit of the Indian Government had been injuriously affected. The fact of the matter, however was, that the bonds, being 4 per cent bonds, had been issued nearly at par; so that it was perfectly clear that the loan was obtained on terms not very far from being as advantageous as those on which even the Imperial Government could borrow. Indeed, he apprehended that if the French or Russian, or any other of the continental Governments, whose credit stood highest were to issue 4 per cent debenture bonds, those bonds would not stand as high as 98 per cent. It therefore appeared to him that the hon. Gentleman who had just spoken, so far from proving his case, had failed in showing that any connection existed between the high rate of interest in Calcutta and the issue of Indian debentures last year in this country. So far as the notion that there was any insurmountable difficulty in the way of granting assistance to the Indian Treasury from the Imperial Exchequer was concerned, he could only say that the obstacle was purely imaginary, provided only that it was shown to be expedient that such aid should be rendered. What he objected to, was the principle of confounding the two Exchequers; of granting a loan, in other words, for public works or similar projects for the benefit of India at the expense of the English Exchequer. But, if it could be shown that the late mutiny had imposed upon the Indian Government an expense that might fairly be considered to have been incurred rather for the promotion of the interests of this country than of India, and if it were proved that no additional taxation could reasonably be imposed to defray the current expenses of the Indian administration, then undoubtedly a case might be made out for assistance from the English Exchequer. Let such a case be made out, and there would be no difficulty in treating it in accordance with recognized financial rules; but it was, he should contend, an entire mis- apprehension of the present embarrassment to suppose that it was in any way connected with the loan which had been contracted fur the service of India last year. The existing pressure on Indian finance was the result of the late mutiny, and the real difficulty which now beset it was that of bringing the expenditure of India within its revenue. For his own part, he should not hesitate to express his conviction that it was imperative upon the noble Lord the Secretary for India and his Council, to cause the Government of India to understand that it was incumbent on them, by some means or other, so to shape their administration as to secure that the ordinary revenue would meet the expenditure. Unless the present state of things could be remedied the possession of India by this country would cease to be possible. That House, as the representative of the people of England, could not con- template a state of things in which they should be called upon to vote £4,000,000, £5,000,000, or £6,000,000 annually as a subsidy for the maintenance of that which was called a valuable dependency of the British Crown. He had no doubt that if it could be shown that an extraordinary assistance was required to meet an extraordinary emergency, that House would always be ready to take a reasonable view of the matter, and to do what such an emergency might require. But he must repeat his conviction that it was the duty of that House to enforce upon the Executive Government, in whatever hands it might be, the necessity of its teaching the Indian Government that means must positively be found within no very distant time to bring the ordinary expenditure of India within the amount of its ordinary revenue. It might be desirable that the House should have some more distinct statement than they had hitherto received with respect to the prospects of diminishing the numbers of the European forces in India. He thought there was some misunderstanding in a former debate with regard to the precise numbers of the troops which it was contemplated to keep in India during this year. He did not himself understand precisely the force of some of the remarks which the hon. Member for Huntingdon (Mr. Thomas Baring) made as to the danger of an English Minister imposing an unnecessary amount of troops upon India, and the pressure to which the Secretary for India would be subjected from the Horse Guards upon that subject. He could not see how the military department of this country could have any interest in imposing upon India a greater military force than the authorities had asked for, or than was necessary for the maintenance of our power in that country. He could hardly conceive, what- ever might be the patronage to accrue from it, that there would be any disposition on the part of the War Department to maintain such a force, or to force it upon the Indian Government contrary to that Government's inclinations, merely for the sake of increasing the army in India. His own experience assured him that the War Department had great difficulty in recruiting the large number of men necessary to supply the troops in India. He should therefore think that the Horse Guards would be glad to receive information that it would be in the power of the Indian Government to spare some regiments to send to this country. However that might be, it was not desirable, looking at the present state of Continental Europe, and the balance of power in Europe, to maintain a body of men equal to 90,000 of our army in India. It was of great importance that, so soon as the state of India would permit, a considerable portion of that body should be returned to ordinary service. He hoped that the hon. Gentleman the Under-Secretary for India, who was about to address the House, would state, so far as he was able, the reduction which the Government expected to be in a position to make this year in the number of European troops serving in India.

MR. H. J. BAILLIE

said, he did not in the least complain of his right hon. Friend the Member for Halifax, (Sir C. Wood), for having drawn what he believed to be a faithful and what was, no doubt, a very good picture, of the present state of the finances of India. Nor did he complain of the exposition made by his right hon. Friend upon a former occasion. Unfavourable as were the remarks made by his right hon. Friend upon that former occasion, he (Mr. H. Baillie) very much agreed in them. But when his right hon. Friend stated that his noble Friend (Lord Stanley) ought, when he brought forward his Loan Bill, to have foreseen that the deficit in the Indian revenue would require a much larger loan than £7,000,000, he seemed to have forgotten that it was only from information recently received that the noble Lord had learnt that £7,000,000 would be inadequate. It must be perfectly obvious to every one that there was only one mode by which a reduction could be made in the Indian expenditure—namely, by a very large reduction of the European army in India. The right hon. Gentleman who had just spoken had asked him what reduction the Government intended to make in that army; but that would depend upon the views of the Commander-in-Chief in India as to the force that would be necessary. However, of one thing we might be quite certain—that unless we could reduce our European army in India to a force of somewhere about 50,000 men it would be impossible for the revenue of India to meet the expenditure required by a larger force. He firmly believed that if India were governed in the spirit of Her Majesty's proclamation, if there were no interference with the religious feelings of the people, it was possible that in the course of time we might maintain India by a European force of 50,000 men, backed up by a well-organized Native army, for we must always depend in a great measure on a Native army, as it was by far less expensive than a European army. If India could not be thus maintained we had much better give up that country. The course pursued by the Government would be to desire the Governor General to ascertain what reduction might be safely made, and to effect such reduction at once.

COLONEL SYKES

said, our prospects of Indian finance were, no doubt, at present exceedingly gloomy, and our prospect of improving the Indian revenue was not satisfactory. But to increase that revenue by increasing the land taxes would be to subvert the system we had pursued in India during the last thirty years, which was a system of constant reduction. That mode, therefore, of increasing the revenue was entirely out of the question. It had been said that there was a prospect of the Indian Government losing from £3,000,000 to £5,000,000 per annum of the opium tax in consequence of China cultivating opium for her own population; but inasmuch as about one-fourth of that population had to live upon the waters, as they had no land to cultivate, it was extremely improbable that any part of the soil of China would be devoted to the growth of a luxury. We were in much more danger of losing the opium revenue by the efforts of a body of most amiable philanthropists on this side of the water, He, however, did not think that the good sense of this country would permit those efforts, however well meant, to injure the interests of India. It had been said that the deficiency in the Indian revenue might possibly be remedied by an increased taxation on exports, but all political economists knew that precisely as they imposed taxes upon exports they placed a cheek on the productive power of a country. There was, he thought, very little hope of much increase either from an export tax or an import tax, and the latter would not only be highly unpopular, but would fall from the articles enumerated, beer, wines, tea, &c. chiefly upon Europeans. It was said that an additional revenue might be obtained from the Excise duty upon spirituous liquors and drugs, but that would yield, comparatively speaking, only a trifling amount. Works of irrigation might no doubt in a few years prove productive, but nothing could be expected from that source for some time to come. What, then, was to be done? They wished to diminish expenditure, but it seemed to him that they were continually throwing obstacles in their own way. For instance, while they desired to limit expenditure, the Estimates showed that they were about to send twelve batteries to India, consisting of seventy-two guns, with all their materiel and stores, and requiring 3,000 men, probably, to work them, when there was not a fortress to reduce or an army to meet in the field. Those 3,000 men would have to go into cantonments, for there were no proper barracks to receive them, and they would swelter away their lives in disease. Another obstacle which they placed in their own way was that bugbear about responsibility for the money advanced to India. There could be no doubt that that money was advanced for Imperial purposes, to enable us to maintain our hold upon India. Was it not, therefore, more just, more reasonable and honest, that the country for whose advantage the money was raised should be responsible for it in case of an emergency which was not likely to arise, but which might come. He held in his hand a letter from Sir James Outram, received by the last mail, in which Sir James said,— You will see that they have taken to issuing Treasury Bills, but it is doubtful whether that step will produce any great return. The Natives have got it into their heads that the Queen is not, bound to recognize the Government securities of the late Company, and unless a national loan for India is opened in England our Indian paper will be still further depreciated. That measure will disabuse them of the suspicion that the Indian and the home Governments are not identical, and would at once raise the value of our Indian 5 and 4 per cents. What were our prospects for the future? It was quite impossible that the Indian finances could ever right themselves while there was in that country an European array of 106,000 or 108,000 men. Two of the best authorities on Indian subjects had laid it down in official reports, but at present only in private circulation, that 40,000 British troops would be sufficient for the maintenance of our power in India, for India never before was so prostrate as now. That was the usual amount of the European forces in that country before the mutiny. The only way, therefore, was to reduce matters to their normal condition before the mutiny, and meanwhile to let India go into the money market for loans upon the same footing as the Imperial Government, and then it would be found that Indian resources would be still equal to their engagements as they were before the present state of things arose.

SIR HENRY WILLOUGHBY

observed one thing was quite clear, that unless we could limit the military expenditure of India the insolvency of Indian finance was inevitable. At the present moment we had 93,000 British troops in India, the entire expense of which, as well as of their depots in this country, was placed upon the Indian revenue. He thought that having so large a force of British troops in that country, it was scarcely fair that the Indian finance should bear the entire cost of those depots. The military expenditure of India was not less than £20,000,000 sterling, an amount very nearly double the whole expenditure of the British army. How was it possible that such a state of things could last? The best course for this empire to pursue would be to take on itself a fair proportion of the military expenditure, so far as it-might be regarded as an expeditionary force sent out for a particular object. It was all very well to say that England was not bound to provide for the Indian debt, but its Government had authorized the loans, and the expenditure of the money, and, therefore, if Indian finance could not meet the liability, imperial finance should do so. He should be glad to hear from the noble Lord (Lord Stanley) that the idea of sending out twelve batteries of artillery had been given up. There were 7,000 British artillery troops in India already. In conclusion he could not but express his regret that the House had but very limited information upon this question of Indian finance. It was very much in the dark upon the subject; and most of its views of the matter could only be taken as speculative and uncertain.

LORD STANLEY

said, it could hardly be necessary for him to reply to the remarks which had been made, as most of the hon. Members who made them had left the House. The various questions of taxation had been, and were still being, carefully considered in Council here. No doubt their deliberations had been to some extent interrupted and superseded by the independent action taken in the exigency that had arisen by the Governor General in India; but the Government were far from wishing to throw the whole responsibility on the Indian Government. The suggested substitution of a financial for the legislative Members of Council would receive due consideration whenever a vacancy occurred.

Bill read 3^a and passed.

House adjourned at Twelve o'clock.