EAST INDIA REVENUE ACCOUNTS.

HC Deb 19 July 1866 vol 184 cc1079-137

Considered in Committee.

(In the Committee.)

VISCOUNT CRANBOURNE

Sir, it is my misfortune, in moving the Resolution and introducing the financial statement of the East India Revenue, to follow a predecessor who probably, of all those who have ever governed the affairs of India, has had more experience than any other Minister. And, therefore, not only in respect to the great abilities of that noble Lord, but also in respect to the experience which he had a right to claim, I stand at a great disadvantage, and I think if the practice of moving the East India budgets continues for any considerable length of time, while Lord Halifax is placed on record as having moved the Indian budget with the largest amount of experience, I am afraid that I shall be placed on record as having moved it with the least. Under these circumstances, I wish by anticipation that I may be permitted to qualify any opinions, which, in the course of the remarks, I have to make. I shall express such opinions as seem to me to be justified; but I hope that the House will not think that I attribute to them more weight than they deserve. I make them, not in the least degree concealing my inexperience in the office, but for the purpose of raising discussion upon these important questions, and of eliciting the opinions of those hon. Members who will be far better worth listening to than I am. Sir, it is in the knowledge of the House that it is the practice of Indian finance to deal with three years at a time, whilst in English finance we deal with only two years. In dealing with Indian finance, in consequence of the difficulty of communication and the length of time which elapses after the accounts are made up by the Indian Government before they come into our hands, for convenience sake it is the custom to take three years. The first year is the year of fact, in regard to which we are certain of the figures. The next year is the year of mixed estimate and fact, there being eight months of fact and four months of estimate; and the third year is the year of pure estimate. With regard to the first of those years with which I have to deal, I hope you will excuse me if I am short. The last year, 1864–5, which was brought to a close fifteen months ago, will have but limited interest for the House of Commons, and I shall therefore content myself with giving a mere summary of the financial results. The gross revenue for that year was £45,653,000. The gross expenditure £45,846,000, showing a deficit of £193,000. Sir Charles Trevelyan, in moving the budget which came to these results, estimated a surplus of £823,000. By adding to that the deficit of £193,000, it appears that he was about £1,000,000 wrong in his calculations. That error of calculation was due to a loss of £800,000 on the opium tax, and to a further loss on military expenditure, caused partly by the expedition to Bhootan, and partly by the increased cost of the necessaries of life, which was experienced in all parts of India. With these remarks I will pass by the financial year of 1864–5. I will now come to the year—a more important one—which closed on the 30th of April last—the year 1865–6. The gross revenue of that year was £47,041,000; the gross expenditure was £47,021,000; showing the small surplus of £20,000. On this occasion the Finance Minister was nearly as much wrong as he was on the previous one; only on this occasion he was wrong in the right direction. Instead of calculating on £1,000,000 more than he got, he calculated on £675,000 less than he got; and, again, the variation was due to one great variable element of Indian finance, the yield upon the opium crop. The opium crop recovered unexpectedly, and the result was that which I have stated. Now, I shall trouble the House with the details of that expenditure and revenue, and I do so the more that I find on looking back that Lord Halifax has not for many years entered into the details of expenditure and receipts of the Indian budget; and although I am quite conscious of the reluctance with which the House listens to details so little affecting their own constituents, still as it has imposed on the Indian Minister the task of making the statement, I think it my duty to make it tolerably complete. Now, in the years 1865–6 the land and forest revenue was £20,480,000 against £20,439,000 of the previous year, which gives a gain of £41,000. With respect to land and forest revenue there is little to say. The House is aware that the authorities in India have lately been prosecuting a new settlement of land revenue, the object of which is in many parts of the country to give to it a more permanent character, and to a certain extent to cut off from the Government all the gain that would accrue from the increased value of the land. The forest revenue is a matter of comparatively recent institution. It began, like many other good things, with the administration of Lord Dalhousie. Great things are expected from it. It is hoped that it will furnish not only fuel for the railways, but also a great article for export in the commerce of India. But at present its financial result is not hopeful. It yields £414,000 and costs about £250,000 to collect, so that the net result is not at present very attractive. The next item of revenue is the Excise, which yielded in 1865–6 £2,271,000, as against £2,224,000, showing a gain of £47,000. It struck me certainly with surprise, on first looking at these figures—as I think it will strike any one who is not accustomed to hear statements of Indian finance—that the duty on spirits, of which the Excise mainly consists, should yield so small a revenue. The duty on spirits is 6s. a gallon. Now, a duty of 6s. a gallon on 130,000,000 of people is enough to make the mouth of an English Chancellor of the Exchequer water. If we could raise from the Hindoos a spirit duty at the rate at which we raise it from Englishmen that amount of duty would yield about £26,000,000 a year. But in India it only brings in £2,200,000. [Colonel SYKES: Hear, hear!] The hon. and gallant Member for Aberdeen has expressed the opinion that the smaller the amount is the better. [Colonel SYKES: Hear, hear!] But I think it is fair to say something in favour of the Indian Government. There is no Government in the world that is so pelted with moral admonitions as the Indian Government. Everybody regards it as the model of all that is atrocious, avaricious, and grasping. It may be so; but, at all events, in this matter of Excise it is only right to do it justice. We know that there are some European countries in which the people are encouraged to drink for the sake of getting a revenue. No charge of that kind can be brought against us. I do not, however, think that we take much trouble to discourage drinking. I believe that we are well satisfied that Englishmen should drink up to the tune of £10,000,000 a year in the Excise, or £14,000,000 a year including Customs. The Indian Government are, I think, entitled to look down upon the English Government from a pinnacle of moral elevation, because the Indian Government is content with that miserable contribution from its subjects in order to discourage the habit of drinking. The Indian Government actually does what I believe no other Government does—it so frames its Excise laws that its subjects may to the largest possible extent be discouraged from drinking. I confess I was surprised when I learned this, and I venture to record it as an instance of virtue rarely known in Governments. However, virtue is to a certain extent its own reward, and we have got £47,000 more under this head this year than we did last year. The next item to which I will allude is the income tax. The income tax is perhaps another case in which we may claim a certain amount of moral excellence for the Indian Government. We must recollect that when the income tax was first introduced into India it was stated to be for a period of five years only. This intelligence was received in England with a shout of derision. We said we knew what that meant. We had been accustomed to hear our own income tax imposed for a certain number of years only, but we have found it existing up to the present period. But it has actually turned out that the income tax which was imposed in India in 1860 for five years has only lasted five years. The income tax in India has ceased to exist. At the same time, I am bound to confess that this other exhibition of moral elevation may be explained by the fact that the income tax has proved a complete failure in India. Mr. Wilson, I think, went over to India just when the right hon. Gentleman opposite had induced us to bow our necks to an income tax of 10d. in the pound, and Mr. Wilson induced the Council of India to impose a tax of about 10d. in the pound in that country, and he appeared at first to be very confident of thus being enabled to relieve the finances of India. But his successor next year—and I know no higher authority existing in reference to India than Mr. Laing—said his first duty was to announce that the income tax had failed. Although the tax was 10d. in the pound, and though levied upon 130,000,000 of people, it never produced more than £2,000,000. And, accordingly, Mr. Laing reduced it in the course of three years. I am bound to add further circumstances showing its extreme stringency, it being imposed on incomes of from £50 to £20 a year at the rate of 2 per cent. Mr. Laing felt it his duty in the course of two years to abolish it on the lower income, and Sir Charles Trevelyan reduced it on the higher incomes from 4 to 3 per cent, and finally in 1865 the tax was allowed to lapse. It is worth while to give attention to the causes of that failure. I believe that the two most yielding schedules in our own income tax are Schedules A and B. Both of these schedules are crippled in India. The income under Schedule A is derived in this country chiefly from rents, but in India the land is the property of the Government, and the result is that that which is the subject of taxation in England is withdrawn from taxation in India. With regard to Schedule D there is another not so satisfactory a reason. I have already pointed out the superior moral elevation of the Indian Government; but I am compelled to admit that the same standard of moral elevation cannot be claimed for the Indian population. We are accustomed to look at Schedule D as showing the moral elevation of our own population. But everything of this kind is comparative, and we may refer to other nations to see how much lower their notions are in the scale of financial morality than our own. I find that in the North-Western provinces of India of those who have sent in returns of their own incomes only 6 per cent were taxed upon their own returns. In other words, ninety-four out of every 100 were suspected of having told lies. The Government acted upon that suspicion, and on inquiry into the reality of their incomes they surcharged them at the rate of 300 per cent. It is obvious that in the face of those difficulties the income tax could not have succeeded in India. It is impossible to raise the tax but by self-assessment; and we know that if self-assessment fails it is impossible to raise it by inquisitorial proceedings. But still it must be noted that there is a serious blank in the financial system of India. There is no machinery for raising contributions from personal property, and only a very limited machinery for raising it out of that large amount of income which comes under the head of Schedule D—that is, from persons carrying on trades and professions. The consequence is that the revenue of India is at present mainly raised either from land or from the contributions of the poorer classes of the community in the shape of the salt tax. From the salt tax of last year we have experienced a considerable loss. In 1864–5 it was £5,523,000; in 1865–6 it was £5,396,000, being a loss of £127,000. This was due to two causes. It was partly due to the fact that a good deal of salt formerly was procured in the manufacture of saltpetre. But saltpetre being now greatly manufactured in Europe, the Indian saltpetre has lost its market. The consequence has been that less of it has been made. Another cause, perhaps, was, that in consequence of the spread of railways the Bengal Government retired from the manufacture of salt — and now salt is admitted from other countries on payment of a Customs duty. The Customs showed a gain of £88,000, the figures being £2,296,000 in 1864–5, as against £2,384,000 in 1865–6. The opium yielded in 1864–5, £7,361,000, and in 1865–6, £8,638,000, showing an increase of £1,270,000. Public works in 1864–5 produced £588,000, and in 1865–6 £1,016,000, the excess, I believe, being partly owing to the sale of lands in Bombay. It is my duty now to turn to the expenditure of that year. The first item which will strike any one on examining the expenditure of the two years is the enormous amount which is required for the collection of the revenue. It is true that that collection includes what we may call the purchase money of our possessions in India—that is to say, the allowances and assignments under treaties and engagements—£2,000,000 is withdrawn from the whole amount for these purposes; but the whole amount of expenditure for collection of a revenue of £47,000,000 is no less than £8,774,000, which is a diminution of £204,000 on the cost of collection of the revenue of 1864–5, which was £8,978,000. But after deducting such exceptional items as allowances under treaty engagements, I find that the cost is still extraordinarily heavy. The cost, for instance, of collecting the tax upon land and forests is no less than 12 per cent. I have no doubt that a large economy will be ultimately effected in this respect. The army stands nearly at the point at which it was fixed last year—namely, at £13,494,000 in 1864–5, and £13,568,000, in the present year. During the last five years the cost had never exceeded £14,000,000, and had never been under £12,000,000, and as there has been a singular variety of circumstances during that period affecting its cost, we may infer that the average expenditure for the Indian army may be taken at £13,000,000. There are other items of expenditure which the House will hear with pleasure. The expenditure on public works in 1864–5 was £5,131,000, and in 1865–6 £5,352,000, and, if we include stores from England; £5,487,000. For law and justice there is an increase from £2,264,000 to £2,439,000. In police an increase from £2,361,000 to £2,398,000. There is still one more item I will mention, because it is an item to which all those who have taken an interest in the government of India attach the greatest importance. Some years ago there was scarcely anything given towards education, but since 1854 the sum given for that purpose has been constantly rising, and during the past year it has risen from £531,000 to £660,000. Now, that is the statement of figures for the year that has just passed, I will now give the estimate for the year to come. For this year, 1866–7, we are in a less favourable position than we were in last year, when there was a surplus of £20,000. This year we shall have, perhaps, a deficit of £72,800. The items of the expenditure I will briefly state to the House. There is an increase in the revenue from land of £188,000. An increase in the Excise of £220,000; in the Customs, £29,000; in salt, £137,000. But then, on the other hand, there is a decrease in opium of £138,000; in stamps, of £24,000; and in public works, of £37,000; and the consequence is, that we have the satisfaction of knowing that there is the moderate deficit of only £72,800. I wish, however, to draw the attention of the Committee, and those who take an interest in Indian finance and Indian affairs, to the fact that the balance for 1866–7 has been obtained by basing the sales of opium on an amount to which it has scarcely ever reached in any previous year. Last year there was the extraordinary yield of £8,600,000, and this year it is estimated at £8,500,000, Mr. Massey feeling confident, and no doubt he is justified in doing so, that the sales of opium will reach that amount. But we know by previous estimates, that the yield of this uncertain drug has proved fallacious, and if we look to what opium has done in recent years, we shall have reasonable grounds for concluding that the deficit of £72,000 may be increased to a much larger figure. £8,500,000 was a very exceptional yield for this article, which has only once exceeded that sum from 1856 to 1867. If opium should behave during the current year as it behaved two years ago, the deficit will be £1,200,000; if it should behave as it behaved three years ago, the deficit will be £1,740,000. I do not say this in the least degree for the purpose of questioning the discretion of Mr. Massey, or the late Government in approving of what he did in refusing to raise the revenue of India by means of additional taxation; but to draw attention to the necessity of caution in dealing with this head of Indian finance. It is evident that the perfection of our Indian budget, and the attainment of a good balance sheet, depends on our rightly estimating the yield of opium. Some years ago the revenue derivable from opium was considered to be precarious, but since then certain high authorities have stated that it is as certain as the beer and spirit taxes raised in England. Mr. Laing and Sir Charles Trevelyan have so expressed themselves; but I cannot help thinking that these authorities omit, in the arguments they use in support of that opinion, the real danger of the opium trade, and overlook the real argument they have to deal with. They say that the opium revenue depends on popular taste, which is as stable as those in England for gin and beer, and upon which English Chancellors of the Exchequer have not the slightest fear of their anticipations being realized. It is true popular tastes do not speedily disappear, and if that was the whole of the argument I should be disposed to concur in opinion with the distinguished authorities I have named. So far as popular taste goes, probably the Chinese will continue to be as passionately fond of opium as the English will continue to be passionately fond of gin; but the point of danger is not that. If the opium were consumed in our own dominions the case would be exactly parallel, but the danger here is that we are dependent upon another locality. It would be a matter of indifference to an English Chancellor of the Exchequer where the beer and gin came from, provided it was consumed in this country. But it is not so with regard to opium; because if by any accident or change of circumstances the Chinese might be able to get their opium elsewhere, the Indian revenue from opium would be utterly ruined. I think the authorities I have mentioned, and the Indian Government generally, rely too confidently and too exclusively on a source of revenue which is not on a footing with similar English resources of revenue dependent on popular taste, and I look with some anxiety on the statement that the Indian budget depends on the yield of opium not falling far short of the highest rate it has ever yet attained. Another source of danger is, that opium being a monopoly it is subjected to those speculative operations which in the vernacular are known by the name of "a rig," large amounts being bought up for the purpose of influencing prices; and not only is this done by individual speculators, but something of the same kind is done by the Indian Government itself. Mr. Massey states that, as an unusually large quantity was for sale during the present year, the Indian Government resolved to limit the amount for next year; and the result was that the price rose from 850 rupees per chest to 1,487 rupees per chest. It has been inferred that in the ensuing year the price will be about 1,300 rupees per chest. It must, therefore, be obvious that a revenue which is capable of being manipulated in this way—prices raised by holding back the supply—is always liable to accidental derangement from private speculation. I have made these observations in the hope of drawing attention to the state of our Indian revenue as regards its future prospect in connection with the opium trade. At present, it is upon this opium trade that the success of an Indian Chancellor of the Exchequer depends. If there is a good yield, he has a surplus; if there is a bad yield, he has a deficit. It has been said that this is merely a temporary state of things, and that, in course of time, the rising prosperity of other items of revenue will lift Indian finance above this dependence upon opium. I think it was Mr. Laing who in one of his budgets expressed the greatest confidence in the future of Indian finance. I do not say he was not justified on the facts before him in forming that opinion. Undoubtedly that Gentleman deserves great credit for having relieved Indian finance from its desperate condition. From the buoyancy Indian finance seemed to exhibit under his hand he was justified in drawing those favourable auguries, but they have not, as a matter of fact, been justified by the event. In 1861–2 Mr. Laing reduced the deficit to £50,000; in the next year there was a surplus, and in the following year there was a small surplus of £17,000, and there is now a deficit of £72,000, and, from some cause or another, we have not reached that satisfactory state of Indian finance which he foresaw. I will lay before the Committee the percentage of increase in some of the main articles of Indian revenue, to show that we cannot rely too confidently on the buoyancy of our Indian revenue, and that this absolute reliance on the opium tax is at least a measure of doubtful principle. The land tax in India had increased in the five years before Mr. Laing went to India at the rate of 10 per cent, which was an enormous increase, but for the five years since he left it had only been at the rate 2 8-10 per cent. Again, the Customs in his time appeared to show an enormous elasticity, but that elasticity ceases to appear if the comparison is extended over a long series of years. I will take a period from 1858–9 to 1865–6, because in 1859 the Customs were enormously raised, but very much diminished afterwards. Up to 1858 there was a 5 per cent ad valorem duty, but the following year it was raised to 20 per cent, and after- wards diminished to 7½ per cent. And what I want is for the Committee to compare the state of the Customs revenue when it was 5 per cent and what is its yield now at 7½ per cent. In 1858–9 the yield was £1,987,000, and in 1865–6 it was £2,384,000; but there was an alteration in certain minor articles, from which was gained £100,000, and the result was £2,284,000 as against £1,987,000; or, in other words, the rate of duty had increased during seven years from 5 to 7½ per cent, whilst the gross return had only increased £300,000; the duty had increased 50 per cent, but the revenue only 14 per cent. These are not very encouraging figures, and I lay them before the Committee to show that they cannot rely, as in England, on the elasticity of the Indian Customs revenue. Turning to the Indian Excise revenue, we naturally come to the tax on salt. The consumption of wine, spirits, and tea generally increases with the wealth of the population, but I take it that few people consume more salt when they grow rich than they did before, and consequently we must not look upon salt as an article likely to produce any indefinite increase of revenue. The Committee will, no doubt, be inclined to think that I am making an opposition speech to Mr. Massey's budget rather than as Secretary of State for India, but I can assure you that I am not doing so, but putting the worst part of it first, as the fairest way, in my opinion, of dealing with it, and I invite the Committee to discuss the subject, because I want them to make up their minds whether the opium tax ought to be one of the main supports on which Indian finance should rest. There is, however, a very bright side to the question. We have, it is true, a very large expenditure, which we are scarcely able to meet with our income, but then that expenditure contains charges which are not, strictly speaking, within the proper limits of expenditure, because in the current year we have spent £6,394,000 on public works in India. No man who wished to make permanent improvements on his land would do it at the expense of one-seventh of his income, but would borrow the money and charge the estate. Now India does not do that, but spends what is required for public works out of her current revenue, and consequently it is only fair to credit that revenue with the portion so expended, and in that case we shall have not a miserable surplus but a very large one, which has been invested in the best pos- sible manner for the future interest of the population. Probably £1,000,000 or £1,500,000 expended annually in repairs properly belongs to the revenue of the year. The remainder would properly be carried to capital. That is a consoling circumstance, because it is a large amount so expended. Mr. Laing has laid down that there should be large cash balances as part of the reserve. In his time the cash balances amounted to £17,000,000, and he has laid down that no Government ought to have less than £14,000,000. Now, I am sorry that I cannot claim such a balance, because Mr. Massey states that at the close of the next financial year he will not have more than £10,000,000 cash balance, which is not more than is absolutely necessary to meet the working expenses of the Government. Another source of congratulation is the enormous success of railway extension in India, and nothing is more gratifying than the reports that our Indian railways are re-paying their expenditure with extraordinary rapidity. I find that the great Indian Peninsular Railway, although not completed, is paying 7 per cent on its capital, besides setting aside 50 per cent with which to meet working expenses. The East Indian, which is not finished, but which has been so far constructed on a much more expensive principle than the former, having cost at the rate of £22,000 per mile, is already paying very nearly 5 per cent. Of course the Committee will bear in mind that these railways are not open to the full extent contemplated, and that they have at present to rely very much upon goods traffic, but when these great trunk lines are completed, it was reasonable to expect large returns both for passengers and goods traffic. These appear to me to be sources of great consolation, which ought to outweigh even a heavy deficit, and which certainly ought to tell against any uncertainty in the opium revenue which may cause us apprehension. There is in India an enormous amount of wealth which only awaits the opening of her communications, the increase of produce, the employment of industry. When you have done all that can be done in those matters, when the great arteries of communication in the land have been brought into play, there need be no apprehensions as to the ability of India to pay her way. It has been the custom, Sir, of former Indian Ministers, on occasions such as this, to go not only into the financial subjects which are the special business of the budget, but also into those various questions affecting India in regard to which they might have anything to communicate to the House. In consequence, however, of the papers that my predecessor has prepared, and which I hold in my hand, I think it is unnecessary that I should address the House now upon those subjects. I have it here in my hand, but I hardly think it is the wish of the House that I should even dwell in summary upon the contents of this valuable but somewhat bulky mass of information. But at all events, without going into those details, I may take it that the present condition of India is one not of brilliant or rapid, but of steady and real progress. Education is progressing, and not only has the expenditure of the Government under this head been enlarged, but that of private individuals also, who have been ready to extend to others the education of which they have learnt to know the value themselves. As I have shown, public works have progressed, communication has been increased, education is improving, the navigation of the Godavery is progressing, and will be pushed forward with to the utmost extent possible during the present year; the Ganges Canal has been subject to a new survey, and additional means will be taken to make it more capable of performing its enormous office in fertilizing and increasing the communication of the North of India; the Doab Canal has been pushed forward; in short, everywhere in India we find a condition of continual progress which justifies us in believing that the labours and anxieties, and even the apprehensions of former years, have not been thrown away. Sir, it may be expected that I should say something as to what the policy of the Indian Government is to be. If I had no other apology for not doing that than the short period of my tenure of office, I think that would be quite apology enough. But, in fact, our policy in India at the present moment cannot admit of doubt. India is now in a quiet pacific condition, and it is our happiness not to have to produce a policy. To keep peace, and to push on the public works—that is in brief the policy that we have to follow. If we can increase the immense means she possesses for the production of commodities—if we can draw forth the enormous elements of prosperity that lie in the richness of her soil and the teeming millions of her population—if we can impress upon the neighbouring Powers —whether they lie outside her borders or are included in her own dominions—if we can impress upon them that her rulers have renounced for ever the policy of annexation, of territorial aggrandisement, which formerly spread distrust and caused disturbance all around; if we do these things, and if we can spread to all the populations there under our charge the blessings of English civilization and English government; if we can give them the culture which will enable them to appreciate those blessings and to take part in spreading them and in making them effectual; if these things can be done, then this present period of repose and of apparent stagnation will be put to the best use it possibly can be put to. We know that morally as well as physically, a tropical atmosphere is one of terrible uncertainty. We can never tell when the evil day may come, or when this peaceful state of things may be disturbed. Though we cannot see the cloud on the horizon, we cannot predict how far or how near it may be. We can only be assured that if we make the best use of our present opportunities—if we push to the utmost of our power the moral and material improvement of that vast territory and of the teeming nations that people it, we shall then have placed our Empire upon foundations that cannot be shaken.

MR. LAING,

having listened to the very interesting statement that had just been made, said, he was sure that all those who were interested in India might well feel satisfied at the future prospects of that country under the administration of the noble Lord, who had dealt with the various questions affecting the Government and prosperity of that country in such a comprehensive manner. On such occasions as the present it would be useless for Members of that House to discuss an Indian budget, with the same minuteness with which the provisions of the financial statements for England were criticized. The Indian budget was peculiar in its nature; it was agreed to in that country before the particulars of it were known here, and the financial responsibility of the Indian authorities ought to be duly respected and preserved. But, at the same time, it was desirable both for India and for this country that correct and comprehensive views of the real position of affairs over there should be entertained in this country, for her progress and prosperity were influenced, not inconsiderably, by the public opinion of England. The question, for instance, as to whether new and additional taxation ought to be imposed upon the inhabitants of India, or whether the public works ought to be aided by loans, depended upon the feeling that prevailed in England on the subject; and sound opinions could only be the result of accurate and ample knowledge. He might further add that, while deprecating any minute interference on the part of this country with the actions of the Governors of India, yet it might be useful to them to see whether their pulicy did or did not meet with approval in that House and in the country generally. For these reasons, he thought that the noble Lord had set a good example in inviting a fuller and somewhat more comprehensive discussion of Indian questions than was customary on this budget being brought forward. He personally felt considerable responsibility for the present state of the Indian finances, as it was upon his responsibility, in a great measure, that a great many of the taxes affecting the Native population had been repealed during the last year of Lord Canning's Administration, and that thus the apparent deficit now existing was brought about. It was by his advice that the income tax had been reduced. He was also responsible for the licensing system of taxation, which would have affected several millions of the Native population, not being carried into effect. At the time it was doubted whether the course taken by Lord Canning's Government on these points was prudent, and it was said that it was only to be justified by the result proving that the finances of India might be kept in a healthy condition without the aid of these taxes, in which case there could be no doubt upon the policy of repealing them. The real objection to the income or licence tax in India was not only the miserable sum, comparatively speaking, that it realized, but the amount of extortion, and oppression, and irritation to which it necessarily gave rise in attempting to enforce it from the Native population by means of such officials as they were compelled to employ in India. He had no hesitation in saying that for every rupee that might have been obtained by the operation of the licence tax another rupee would have been extorted from the population by the Native officials employed in collecting it. He, therefore, considered it a point of first-rate importance that irritating and oppressive taxes of this description should be abolished, always providing that no financial exigencies made the continuance of them necessary, and he was convinced that Mr. Massey had exercised a very wise discretion in not reimposing them. He should not object to a moderate or modified income tax levied upon the merchants and traders and persons of that class, if Mr. Massey should find himself able at some future period to propose such a tax, but he did not consider that in the present posture of affairs there was any necessity for running the risk of attempting to impose anything like a general income tax. The force of this proposition, of course, depended mainly upon the view which was taken of the intrinsic soundness of Indian finances as they stood at present. On that point the opinion to which he had given expression had been challenged, and he was anxious, therefore, to take the opportunity of showing the Committee the real condition of Indian finance as regarded its past progress and future prospects. For that purpose it would be necessary for him to regard the mutiny as forming, as it did, the era in India of a new system of finance, as well as the beginning of an improved state of things in many other respects. Up to the time of the mutiny India had been engaged in a series of wars, brought upon it mainly by the necessity which existed for the extension of its frontiers to its natural limits. Whether those wars were altogether just or necessary he would not say, but the fact could not be disputed, that from the time when our territory in India was confined to a single fort in Calcutta to the time when, under Lord Dalhousie, it obtained its natural frontiers—the Himalaya Mountains and the ocean—we had on our hands a continual succession of wars, which naturally also brought with them a continual succession of financial deficits. The administration of Lord Dalhousie though brilliant, was remarkable for its wars and its deficits. They would find that during the twenty years preceding the mutiny £50,000,000 were added to the National Debt of India. The mutiny, of course, added to the financial difficulties of the country, and from 1857–60 the annual deficit averaged £12,000,000, adding no less than £36,000,000 in the &three years to the National Debt of India. This brought about such a degree of financial distress in India, as had been truly said went to the verge of bankruptcy. It became necessary, in the last year of Lord Canning's Administration, to adopt a most vigorous means of improving the revenue and reducing the expenditure, and for that pur- pose more sweeping measures were never, he believed, adopted in any country; for upon a total expenditure, open to revision, of scarcely £30,000,000, no less than £6,000,000 were struck off in the course of about twelve months. Thus the equilibrium of Indian finance was restored. The question, therefore, was whether the equilibrium had been so maintained since that period as to hold out a fair prospect for the future. Now, if they took the period which had elapsed since the financial year 1861–2, which was the first year in which the new financial measures were brought into operation and the equilibrium established, they would find that the united surpluses of those six years amounted to £1,905,000, as compared with accumulated deficits amounting to £670,000, showing in the period of what might be called the new era of Indian finance an excess of surplus amounting to £1,235,000. He believed that the fairest way of arriving at an accurate opinion upon this subject was to take the figures for a series of years, because it must not be forgotten that the slightest fluctuation in the opium revenue was sufficient to change a small surplus into a small deficit. The gross revenue during the six years since 1861–2 had increased from £43,829,000 to £47,041,000 a year; and taking into account the surplus in the last year, the whole balance of surpluses over deficits during the six years amounted to £1,235,000, or an average of over £200,000 a year. But the noble Lord bad pointed out to the Committee the reasons which, in the case of Indian finance, rendered a nominal deficit a real surplus. Since 1861–2 there had been a large outlay upon public works and a large outlay for guaranteed interest on railway capital, which was as yet unproductive, because the lines being as yet unfinished no return could be expected. The outlay in these directions had certainly not been less than £2,000,000 or £3,000,000 a year—an expenditure which in any other State in Europe, or in the accounts of any private company, would have been carried to the capital account and not charged upon the revenue. In the last budget of 1866–7 Mr. Massey included an expenditure of £5,770,000 upon public works, a large portion of which would be unquestionably reproductive, though he was inclined to think that the noble Lord opposite had estimated a little too highly the reproductiveness of some of this outlay. But, at any rate, no one could doubt that at least half of this outlay would be really reproductive; and, in addition, it must be borne in mind that in these budgets the very cost of land for the railways was charged to the revenue, although it was beyond doubt one of the clearest charges upon capital that it was possible to conceive. In the same way they would find on the revenue side of the Indian budget of this year not less than £3,000,000 or £4,000,000, which, in any budget except an Indian one, would appear as charges upon capital, and hence the trifling deficit of £72,000 which appeared upon the estimate was clearly, in fact, a surplus of not less than £2,500,000, and possibly of £3,000,000. Now, to discover what was the natural elasticity of the Indian revenue, they ought also to look over a long period before they could arrive at any trustworthy results. In the three years 1854–7, before the disturbing causes of the mutiny came to be felt, the gross revenue of India amounted, in round figures, to £32,000,000. The revenue in 1861–2 —the first year of the new régime amounted to £43,829,000, and at the present period the last returns were, as near as possible, £47,000,000—for the estimate for the budget was £46,750,000, and budget estimates were always somewhat below the actual figures. The result, then, was that in the ten years preceding 1861–2 the gross increase on the revenue had amounted to £14,000,000, but of that amount £6,000,000 were due to new taxes and the acquisition of new territory; so that the increase ought to be regarded as £8,000,000, or a progressive increase at the rate of £800,000 a year. But since 1861–2 the revenue had increased from £43,829,000 to £46,752,000—an increase as nearly as possible of £3,000,000. But that £3,000,000 ought, in reality, to be increased by £2,000,000, the amount which was formerly derived from the income tax when it figured in the budget of 1861–2, but which had been since repealed. The real elasticity of the revenue, therefore, since 1861–2, amounted to £5,000,000, being at the average rate of £1,000,000 a year. The result thus came out as nearly as could be, that for the ten years before 1861–2 the average increase was at the rate of £800,000 per annum, and that for the last five years it had been at the rate of £1,000,000 per annum. Now, they might anticipate that this state of things would continue. It was a highly satisfactory rate of growth, and was certainly as high as he ever contemplated when he made the predictions which had been re- ferred to. But, then, the important question arose, how far could the opium estimates in the Indian revenue be relied upon? Now, no doubt the figures under the head of opium varied a good deal from year to year; but still, on the average of the last twenty years, since opium had been an important part of the budget, the return on the whole had been steadily increasing. There had been no one year of total failure, but there had been variations in price, which had arisen by curtailing the production in order to obtain a higher price. When the price rose, then the Native opium of China came into competition. But still the increase of the revenue had been steady on the whole. Taking the net returns, which was the proper course, from 1861–2, it appeared that the revenue from opium in that year was £4,910,000; in the next year it was £6,199,000; in 1863–4, £4,525,000; in 1864–5, £4,993,000; in 1865–6, £6,702,000; and the estimate for 1866–7 was £6,738,000—so that, taking the last six years, the average net revenue from opium had been £5,676,000, and the last two years had been the most productive. He believed that the opium revenue depended entirely upon the consumption in China, which tended steadily to increase. He had occasion some time ago to look into the figures, and he found that some fifteen years ago China was spending about £6,500,000 a year on Indian opium, while she was now spending no less than £13,000,000, or double the former amount. The calculations which gave that result might be relied on, because the number of chests and the price were known. That showed a steady progression in the taste for Indian opium in China. The noble Lord had expressed some apprehension that there might in future years be some loss of revenue under that head in consequence of other sources of supply being opened. That, he (Mr. Laing) believed, was a point upon which the noble Lord's apprehension would probably be corrected by experience. There was nothing more natural than such a supposition at first sight. If there was such an enormous profit from the sale of opium, was it not likely to be grown elsewhere, and how then could we retain the monopoly we possessed? But those who were practically acquainted with the subject were aware that opium was no more of uniform quality or flavour than claret. Several districts in India had a superiority in regard to opium, just like the superiority of Château Margaux and Lafitte with re- spect to claret. The best test was that of facts. About 1860–1 the production of opium had been greatly diminished, partly owing to the Mutiny, and consequently the price ran up to an extravagant height—some 2,400 rupees per chest, about double the ordinary rate. Encouragement, of course, was given to any possible competition, and Native Chinese opium did enter more largely into the market. And here he would remark, in passing, that it would be a great mistake to suppose that no opium was grown in China, and that we were the only poisoners of the Celestials. On the contrary, the production of Native opium in China was very considerable, but it was an inferior article. Whether owing to peculiarity of soil, climate, or cultivation, it never fetched above half the price of Indian opium in the same market, and nothing but the exorbitant price of the latter could bring the Chinese product into competition with ours. But the moment the price went down to a reasonable sum Indian opium resumed its place, and had maintained it ever since. He believed, therefore, the opium revenue was as secure as the revenue from gin and whisky in this country, provided we followed a prudent course and did not, by greatly limiting the production and forcing up the price, kill the goose that laid the golden eggs. It was always possible to make a single good financial year in India by adopting an imprudent policy. What we ought to keep in view was, during a series of years to get the largest possible revenue out of the article, and that would be done by such a production of opium as might keep the price varying from 1,000 to 1,200 rupees per chest; but if we went beyond that sum there was danger of the Chinese product intervening. He would not enter into the moral aspect of the question, but he believed himself that the effects of opium were very analogous to those of gin and whisky. He believed that taken in excess it led to very deplorable results, but that the great bulk of it was consumed by the mass of the Chinese population with no greater injury than was done to our countrymen in Scotland and Ireland by the consumption of a good many gallons of whisky. He had shown the state of things to be an average progression of Indian revenue at the rate of £1,000,000 a year. The next great question was as to expenditure, because though the revenue might have increased at the rate of £1,000,000 a year, if there should be an unavoidable ad- vance in expenditure at a higher rate we should be in a bad state. Comparing the last year, respecting which we had full and complete Returns, 1865–6, with that of 1862–3, which might be taken as the model year, when the maximum of diminished expenditure in every department was reached and the great reductions of the last years of Lord Canning's Administration came into full play, and there was a surplus of £1,800,000, the total expenditure in 1862–3 was £43,316,000, and last year it was £47,377,000, or an increase of £4,000,000 in four years—that is, at the rate of ££1,000,000 a year, or almost exactly at the same rate as the increase of revenue. Now, it was important to make some analysis of that increase in order to see how far it was Unavoidable, and whether it depended upon causes which were likely to continue in the future. The noble Lord referred to the large amount of fixed charge in the cost of collection of revenue in India. It was quite true the amount was large, but it should be borne in mind, that in the cost of that collection were to be included the charges for manufacturing such important articles as opium and salt, to which there was nothing of an analogous kind in the English budget, and which amounted to upwards of £2,000,000. Now, as to the fixed charges on the revenue. First, there was the dead-weight, including the interest of the debt, the allowances under treaties, and pensions and superannuations. These charges were fixed, and could not be touched. They amounted to £10,700,000 in 1862–3, and to £10,300,000 in 1865–6; so that it was nearly stationary. The saving arose from a decrease in the amount of railway guarantees, which more than balanced the increase in other directions. The manufacturing charges for salt, opium, post office, the mint, telegraphs, &c., had slightly diminished. They were £3,360,000 in 1862–3, and they had fallen to £3,200,000 in 1865–6. The cost of collection proper, for the laud tax, Customs, and such like, had increased within the two periods from £2,760,000 to £3,230,000. So that the dead-weight of fixed charges was nearly the same, having been £16,820,000 in 1862–3, and £16,830,000 in 1865–6. In each case it appeared that only about £30,000,000 out of £46,000,000 was susceptible of economy. The main items of increase were on the army and public works. The budget of 1866–7 gave the Estimates for the army at £13,900,000, but the expenditure on stores was now entered separately. These, however, were military stores, and ought to be added to the cost of the army. The army expenditure had therefore really increased from £12,764,000 in 1862–3 to £14,640,000 in 1865–6—an increase of about £2,000,000. A great part of this increase might be accounted for by the fact that we had since been engaged in two small wars—the war on the North-West frontier, and the war in Bhootan. He had expressly guarded himself, in looking forward to the future income and expenditure of India, by the reservation that no wars should occur; but notwithstanding these two wars, the nominal balance was almost exactly equal, although £2,000,000 more were now spent upon the army. Some portion of this increase was inevitable, because the price of provisions and supplies had risen so much in India that the Government could not, in justice to the men, continue their allowances at the same standard. They were also obliged to make allowances in the shape of batta and otherwise to the officers of the Indian army. Still, he must express a hope that if a tight hand were kept over the military expenditure, the Government might be able to reduce the excess of £2,000,000 to an excess of £1,000,000. He should be satisfied if the increase over the military expenditure of 1862–3 did not exceed £1,000,000. It seemed to him that the "irregular" system, which practically meant having Sepoy regiments with very few European officers, was one that was fraught with very great danger. They had got on well at present, because they had a large reserve of Indian officers of the old army to fall back upon when they wanted them, and who could be added to any Native regiment going on service. But the authorities might find themselves in a position of great embarrassment and danger if they had no more European officers available for the Native army to fall back upon than were supplied by the "irregular" establishment. So long as we kept 70,000 European soldiers in the country we were tolerably safe; but the time would come when it would be impossible to keep that large European force, and then a great deal would depend on the organization which had been given to the Native regiments. Intimately connected with this subject was the constitution of the police force. The expenditure upon the police was, in 1862–3, £2,141,000; in 1865–6, £2,398,000; and by the budget, £2,435,000, being an increase of £300,000. He wished to advert, not so much to the question of increase in cost as to the danger that this force might become a military force. It was laid down by Lord Canning that any police force in India ought to be a mere constabulary with staves in their hands, and not soldiers with muskets. He (Mr. Laing) feared that this excellent rule was infringed upon in many cases, and the noble Lord would find that there was a great tendency in this direction, because the civil officer liked to have a little military force that he could lay his hands on, and such a force added to his importance. There were cases in which an armed police acted beneficially, because more promptly, than the regular army in the suppression of disturbances. The danger of arming these men was, that the number of Native police was so great, and the proportion of European officers was so small, that in case of insurrection they might become like Sepoy regiments with one European officer, and that was a most dangerous state of things. This was the opinion of Sir Bartle Frere—a member of the Council of Lord Canning, who had charge of this department, and directed his attention to the organization of the new police. Next to the increase of expenditure upon the army and police, came the increase on public works. The expenditure on public works in 1862–3 was £4,400,000; in 1865–6, £5,250,000. So far from complaining of this increase, he should be happy to see it even larger. He believed that the Government would do most unwisely to adhere to the rule to do nothing for public works except what they could effect out of surplus revenue. The increase under the items of law and justice had been from £2,074,000 in 1862–3 to £2,398,000 in 1865–6, and in the budget to £2,607,000. The outlay upon education had increased from £400,000 in 1862–3 to £660,000 in 1865–6, and in the budget to £763,000. The practical result of the whole budget was, that there had been for four years an average rate of increased expenditure of £1,100,000 a year, which about corresponded with the yearly average increase of revenue. He trusted that the whole of this increase would not be maintained, because the present military expenditure might, he thought, be reduced by about £1,000,000 a year. His object in these remarks was to endeavour to prove that the general state of the Indian finances, under the new system inaugurated after the Mutiny, was on the whole not at all unsatisfactory. Even although there had been a large expenditure on public works. which had been charged to revenue and ought to have been charged to capital, the last six years showed a surplus of £200,000 a year. The revenue was still increasing, and the expenditure ought at least to be proportionate to that increase. He had arrived at the conclusion that Mr. Massey did quite right not to propose hastily the imposition of new taxes because there was a small nominal deficit this year; and we ought to be very cautious in this country of urging upon the authorities in India the imposition of new taxes which they did not quite see their way to adopting. At the same time he admitted that if they could advise a kind of modified income tax upon a fixed scale, something like our licence taxes for attorneys and others, it might be desirable to adopt it. Whether that were done or not, there was nothing in the position of the finances of India that ought to interfere for a moment with the carrying out of great works of public importance. He agreed with the noble Lord that "Peace and Public Works" ought to be the words inscribed on the programme of the Government of India. The satisfactory results that had followed the construction of railways ought to be an encouragement to proceed further in that direction. Much remained to be done in the construction both of the arterial system and of branches. Both on commercial and political grounds the main line along the valley of the Indus ought to be completed, so as to connect the Punjaub with Kurrachee; and, this line meeting that from Calcutta at Lahore, the railway communication from east and west ought to be prolonged to Peshawur. A line of railway between Peshawur and Lahore might at some time be of as much importance to us as one to Sebastopol would have been to Russia during the Crimean War. Hyderabad and the Nizam's territory ought also to be opened up by a railway. There were other important provinces, such as Oude, in which railways would pay if they were economically constructed. There was, indeed, ample scope for the expenditure of £20,000,000 or £30,000,000 on Indian railways during the next few years. No time ought to be lost in placing the existing lines in a position to carry the immense traffic which was ready for them. Many of them required doubling and an increase of rolling stock. The expenditure that was so imperatively required ought not to be delayed by taking time to consider whether it should be incurred by companies under a guarantee or directly by the Government. No doubt it might be cheaper in some instances for the Government to do the work, either by employing its own engineers, or directly entering into contracts, but if Government called for a large loan a good deal of the money was kept idle until it was expended, while a company, whose capital was in shares, could raise the money by calls as it was required. Although the guarantee system might have cost the Government something, it had been the salvation of Indian railway works, which must have been suspended or stopped if it had not been for that system. It might be adhered to in the main, and at the same time the Government could do something on its own account, either by constructing minor lines or undertaking portions of trunk lines. The same observations applied to works of irrigation, for which there was more urgent need. There was every inducement to proceed rapidly with public works, whether railways or works of irrigation. On the railways £60,000,000 had been expended; the guaranteed interest was only £500,000, and that charge was almost certain to disappear in two or three years. This was an encouragement to spend £30,000,000 or £40,000,000 more. In conclusion, he expressed his satisfaction that on this occasion there was a better opportunity than former years had presented for the full discussion of Indian questions.

MR. STANSFELD

said, that the House was bound to recognize the remarkable ability with which his successor, at such short notice, had submitted the Indian budget, involving as it did, the complications of the accounts for 1864–5, the "regular Estimate" for 1865–6, and the budget Estimate for 1866–7, not to mention the comparison of the accounts for 1864–5 with what was laid before the House as the "regular Estimate" for that year. The accounts for 1864–5 showed a net deficit of £193,000, and the regular Estimate for last year a deficit of £263,000—a difference in favour of the accounts of £70,000. The difference was the result of the much larger difference on the side both of revenue and of expenditure. A comparison of the accounts with the regular Estimate showed a reduction of £631,000 in revenue and of £701,000 in expenditure. Even these amounts, large as they were, were the balances of larger differences both of increase and of diminution on both sides of the account. There was reason to expect that, owing to improvements made in keeping the accounts, these differences would not be repeated in future years. having referred to the budgets, regular Estimates, and accounts of the last three years, the hon. Gentleman said that not only with regard to those three years, but to recent years generally, there were observable not only those characteristics to which his hon. Friend had alluded, but a gradual and unavoidable increase in what might be called the Civil Service Estimates of India — that was to say, in the expenditure upon good and improved government. But the question more particularly before the house that night was whether the budget which the noble Lord had brought under their attention and the budget which Mr. Massey a few months ago sent from Calcutta was to be received, on the whole, as a sound and satisfactory budget. It ended in a deficit of £72,000, although there was a high estimate taken for the opium revenue, and although in the expenditure for the army there might not be all the saving effected that was expected. Yet it did not follow that Mr. Massey's policy was not a sound policy, and, for his own part, he thought Mr. Massey's budget was a sound one and justified by the circumstances of the case. He did not think that it would have been advisable for Mr. Massey in the first year of his administration to enter upon any new or speculative system. Nor was it necessary for him to do so; for, on the one hand, he had provided for an increased expenditure of not less than £1,000,000 for public works, and on the other he had, on his own estimate of the probable requirements of the Indian Treasury, an available excess of £2,000,000 of cash balances on which he could, if necessary, fall back. The growth of the revenue might, under judicious management, be made to keep pace with the growth of the expenditure. The income derived from opium was naturally watched with some anxiety, as it varied considerably from year to year, and was a rather precarious source of revenue; and he agreed with the noble Lord in not looking upon it with entire trust and confidence. Another disturbing element in Indian finance was the expenditure upon public works. The question had been mooted whether some of these works might not be carried out by private enterprize or by means of loans; and the principle of a loan had, indeed, been accepted by Lord Halifax and some other authorities. It was almost impossible to exaggerate the importance of public works of a remunerative character. It might be doubtful whether by making roads, for example, and levying tolls upon them, they could obtain a good return upon their outlay; but still, they could not on that ground alone say that road-making was necessarily an unproductive expenditure of public money. He (Mr. Stansfeld) did not object, therefore, to a loan; but before they entered upon financial operations of that kind they ought to look also at the condition of the revenue, and feel satisfied that it was likely to be sufficient to cover any portion of their outlay which could not, in the strictest acceptation of the term, be referred to a capital account. It was a very tempting thing to spend money that they raised on loan; but it was admitted on all hands that, however objectionable an income tax might be in India, there were wealthy classes there who did not contribute their fair proportion to the public exchequer; and he was disposed to think that, if there was to be an extensive and vigorous prosecution of public works, it was desirable that it should be accompanied — and he imagined that Mr. Massey was not unlikely to attempt it in following years—by some well-devised financial scheme, which would add to the revenue of India, and place it on a sound footing. Adverting to the speech of the Secretary of State for India, he concurred with the noble Lord that the period of conquest and forcible annexation was passed, and that we had entered upon a totally different period which ought to be characterized by the improvement of civil government, and by efforts to promote the contentment, prosperity, and the material, moral, and intellectual progress of the people confided to our charge. If that were the policy of the present Administration, as the noble Lord had announced, it would lead to a two-fold financial result — namely, the keeping down of the military expenditure, and an increase in the Civil Service Estimate. Our old policy had been abandoned, and the time had arrived when we could and ought to con- centrate all our energies on the civil government and expend more money on flaw, justice, and education. He was delighted to find that that was the policy of the noble Lord, and felt certain he would be supported by the present Viceroy and the military and civil servants of the Crown. For his own part he should give his hearty and earnest support to such a policy, fully believing that it would gain for the present Government the gratitude of the people of India.

MR. SMOLLETT

regretted that a little longer notice had not been given of the noble Lord's intention to bring forward his budget. He used formerly to say that the bringing forward of an Indian budget at the very fag end of the Session, and with the attendance of only eight or ten Members, was something like a solemn farce. That expression, however, could not be used this year, for the budget, in his opinion, had been brought forward in a very statesmanlike and judicious manner. A great deal of information had been given to the House, and the debate was calculated to do a considerable amount of good. It used to appear to him that hon. Members took less and less interest every year in the affairs of India, and that the incapacity of the House to discuss Indian matters was very conspicuous. The reason was, that most of the men who were able to supply the requisite information were excluded from the House. At the present time Members of the Council of India were disqualified from sitting in the House of Commons, though formerly many of the Gentlemen who formed the Board of Directors were also Members of the lower House of Parliament. These Gentlemen were fully qualified to discuss any question that might be brought forward on the subject of India. At the present day there was no one in the House, except the Secretary of State for India, and the Under Secretary, if he happened to sit in the House of Commons, who knew what was going on in India, and they were extremely reticent and took care not to let anything ooze out which might lead to any troublesome result. Consequently the Secretary of State for India had become, as it were, an autocrat, and held in his hand the liberties of 150,000,000 of people. He could not give a more pregnant illustration of the ignorance prevailing in this country with reference to Indian affairs than by pointing out what had occurred during the present Session. Hon. Members had talked about the age of annexation having gone by, but he ventured to deny that. From papers which were placed upon the table of the House about a month ago it appeared that during the last two or three years the Secretary of State had been conspiring to annex a principality in India. Everybody was aware that a proclamation under the Sign Manual was addressed to the people of India in 1858, when Lord Derby was in power, and when, he believed, Lord Stanley was Indian Secretary. That proclamation said— We hereby announce to the Native Princes of India that all treaties and engagements made by them with the authorities of the Hon. East India Company are by us accepted, and will be scrupulously maintained, and we look for a like observance on their part. We do not desire any extension of our present territorial possessions, and while we will not permit any aggression on our dominions or rights to be attempted with impunity, we shall santion no encroachment on those of others. Now, there was in Madras a little principality called Mysore, which was held by the present Prince under the guarantee of two treaties. He had always been looked upon as the hereditary possessor of that territory; but the idea went abroad that he intended to bequeath his dominions to the British Government on his demise. The Rajah of Mysore, however, never had, he believed, any such intention. He had an adopted son and heir, in accordance with vice-regal sanction and regal precedent in India, but he was at once informed by the Secretary of State for India that the Government would take no such circumstance into consideration at all. They at last made the discovery that the treaty was merely a personal treaty; that it was framed merely for temporary purposes; that those purposes had now been fulfilled, and it had been resolved accordingly to annex the territory as soon as the Prince should die. Now, the power of acting in that way was one which, in his opinion, no Secretary for India ought to possess, and he mentioned the fact to show that we had not yet done with the policy of annexation. It would be well, then, he thought, that there should be some Members of the Indian Council in that House, from whom information giving timely notice of such tricks might be obtained. As to the financial position of India, he must say he thought it was very satisfactory. The material comforts of its people were never, he was happy to say, greater than at the present moment. The reason was that the prices of all sorts of produce in India had been doubled or tripled within the last few years, while the rent of the land had remained stationary. The revenues which we derived from the land in that country was £23,000,000 sterling per annum, the entire revenue being £47,000,000. The expenditure, which kept pace with the revenue, was this year nearly £47,000,000, but in the last year of Lord Canning's administration it amounted only to £34,000,000, so that between 1856 and the present time the expenditure had increased by £13,000,000, and had more than kept pace with the revenue. We spent nearly £16,000,000 annually, including the charges in England, on our army; and £5,500,000 on public works, which were supposed to be neglected. Now, £13,000,000 in ten years was a monstrous increase of expenditure, and we must, he thought, look not to income taxes or licences in order to make the two ends meet at the close of the year. He had not the slightest doubt that the expenditure might be diminished to the extent of £2,000,000 or £3,000,000 annually, and he hoped economy would be the rule at the Indian Office. He should in the next place proceed, with the permission of the House, to say a few words with reference to reproductive works in India, although the views which he was about to advance would not, he was afraid, be palatable to some Gentlemen in that House. The subject of works called reproductive had received very little attention in that House until within the last ten years. In 1856 Mr. Vernon Smith, now Lord Lyveden, the Minister for India, noticed with great approbation in his Budget speech some reproductive works in the Madras Presidency. He stated that those works gave returns of from 50 to 700 per cent per annum from irrigation alone, admitting at the same time that no works of irrigation in any other part of India produced anything like such results. There was no doubt that was the case, for the returns on which Mr. Vernon Smith relied were not true. The Presidency of Madras, however, which had attained such notoriety, had ever since been engaged in endeavouring to maintain that pre-eminence by manufacturing accounts and making imaginary profits. He could state that on his own authority, having been himself a collector of a district and engaged in the species of manufacture to which he referred. He had not manufactured accounts of his own accord, for he had always dissented from the views of the Government on the point. He had acted under orders. Returns had been sent to him to fill up, and he had declared, in sending them back, that the profits were imaginary. He would briefly explain the way in which those profits were really made. Everybody was aware that laud in India depended entirely in many instances for its productive power on irrigation. That irrigation frequently was procured from reservoirs, which, in all probability, cost a very large sum in the first instance to construct. Now, if one of those reservoirs happened to be breached, owing to a tempest, and the water, as a consequence, escaped, the land was allowed to remain barren, and the loss of a revenue of £10,000 a year might be the result. A reservoir had, for example, been breached by a storm in 1850, and had continued in that helpless condition for two or three years, until the necessary repairs were effected. During those three years there was a loss of some £3,000 of current revenue in the aggregate; but in 1853 an engineer repaired the damage done to the reservoir, probably at a cost of £500. In a few years afterwards he prepared his accounts, and they were cooked thus:—The Returns from irrigation in 1850, 1851, and 1852 were set down at nil, while the Returns for 1853, 1854, and 1855 were set down at 10,000 rupees, as the result of a total expenditure of £500 in 1853, and the profits in that way calculated at 200 per cent. Profits made after that fashion were, however, merely imaginary gains; for, in truth, by the outlay nothing had been obtained except the original rent of the soil; but it was in the manner in which he described that accounts were cooked when he was in Madras, and they were, he believed, cooked in the same way up to the present moment. In 1851 the Government of India appointed Commissions for each Presidency in India to report on the state of public works in the several Presidencies. The Commission for Madras consisted of three persons. At its head was Mr. Bourdillon, a civilian, who was assisted by two military men. Mr. Bourdillon was a gentleman of considerable talent and a capital penman, and he wrote a most readable report, but one which he regretted to say was wholly unreliable. He and his brother Commissioners accepted as gospel all that was told them by the Engineer officers, and they inserted one chapter in their book to show that the works which had been devised by the Government Engineers' Department during the previous ten years — though some undertakings were acknowledged to have turned out failures—had each produced an aggregate profit of 100 per cent per annum. Now, that was absolutely impossible. He would take the case of one great work of irrigation which was at the time being carried out by the Government for the purpose of watering part of the district of Rajahmundry. That undertaking had been in progress from 1848; some most expensive masonry work had to be constructed, which occupied the engineers for a period of two years, and the Commissioners declared in their Report that the work already yielded 70 per cent on the outlay. In 1854 the profit was represented to be 70 per cent, but the account was accompanied by a statement that such a dividend was only a small amount of profit, for in a few years the Commissioners asserted that the undertaking would yield a net return of £300,000 a year to Government, and a clear gain of £3,000,000 to the peasant proprietors. That statement was made by the Commissioners, and circulated over the world; and the Government allowed it to go forth as if it were true, though it was a perfect fabrication. Being on the spot, he set himself to work in order to discover whether there was the smallest ground for the statement of those imaginary profits—and he found that they were entirely fabulous—in point of fact, the weir across the river Godavery was only commenced in 1847. The channels and canals for irrigation were opened in 1851 and 1852: the profits could only commence from that date; and the public accounts proved that the rents in the district had not increased more than £4,000 a year in 1853 and 1854. There had been considerable inquiry into his charges; they were found to be true, and the facts were suppressed; but if any one doubted his statement he was ready to move for any inquiry as to whether those accounts had not been fabricated. In 1858 certain works were planned in connection with the Madras Presidency, of which Sir Arthur Cotton was the projecting engineer. A company was formed in London to carry them out, and it was proposed to raise £2,000,000 of capital, and to carry on the works on a great scale, solely on private account. A deputation from the company went to the India Office, then presided over by the noble Lord the Member for King's Lynn (Lord Stanley), who received them with great courtesy, and assured them that he felt a lively interest in the success of their suggestions. The noble Lord not only gave them a concession in India that they might have an opportunity of commencing their works, but he gave them a guarantee of 5 per cent on £1,000,000 of their capital. On the faith of this guarantee they raised £1,000,000 of capital. In the years 1859, 1860, and 1861 money was plentiful and easily obtainable; the amount was paid at once into the Indian treasury, and £300,000 of interest had been paid under the guarantee, the works not yielding the smallest return. In 1866 the first £1,000,000 was expended and more money was wanted, but not 1s. could be got on the credit of the undertaking itself—and why? The reason was that the monied interests in England did not believe a word of the statements put forth by the projectors of cent per cent profits. Under these circumstances, the company had recently come forward as supplicants for a loan; they had recently asked the India Board to lend them £600,000, and he believed the Government would lend it. If so the money would be thrown away. The works would go on; for the directors received good salaries, and there was a profit to be got by employing their friends as engineers. In fact, the £600,000 would be good money thrown after bad. The same company in 1861 originated other public works. They obtained a concession to join the Mahanuddy river with Calcutta, by means of a canal. The nominal capital was £3,000,000; they had raised a considerable sum of money, under the representation that everything in India would yield cent per cent. But their shares were at £5 discount on £13 paid up, and he believed they would go down to zero: when that took place the company would get up complaints against the Government, and the Indian authorities would, to get rid of them, repay the whole outlay and take the works on public account. Such was the history of some of our public works. There was one more he would mention, the Great Ganges Canal. When in India he examined many of the great works, and found them to be great swindles. The engineer calculated on the works yielding 12½ per cent. Lord Dalhousie spoke of it in the highest terms as likely to be beneficial to the country, and he highly eulogized the engineer, who was made a Grand Cross of the Bath, and was provided with a seat in the Indian Council. Now the scheme was a total failure. General Sir Arthur Cotton condemned the scheme, and proposed one of his own, which in turn was condemned by a body of engineers to whom it was referred. In the face of these enormous failures there was a plan in contemplation by the Indian Government of gigantic magnitude. Colonel Strachey had written to the Governor General, and proposed to make works for irrigation and navigation in all the Presidencies on a lavish scale. Sir John Lawrence approved the scheme; and asked the Government at home to borrow for it £20,000,000. Was this to be done? Were works of this costly nature to be entered upon while neither the Ganges Irrigation Company nor the Madras Irrigation Company yielded a profit? Colonel Strachey said he should not be surprised to see the works productive in ten years. Well, in ten years many of those now present would not be here to see whether the prophecy was fulfilled; and by that time also he was well assured the gallant projector would have retired from the service with a handsome competency. Did the Government mean to support this? If they did he would early next Session move an Address against any borrowing of money for these purposes, without the sanction of Parliament was first obtained.

MR. CRAWFORD

said, that he would not occupy the attention of the House for any long time, because he thought the whole question of Indian finance had been explained to the House in a very clear manner by the noble Lord the Secretary for India (Viscount Cranbourne), by the hon. Member for Wick (Mr. Laing), and by the hon. Member for Halifax (Mr. Stansfeld), whose speech made one regret that the House had not long had the benefit of his talents in the transaction of Indian business. The hon. Member for Dumbartonshire (Mr. Smollett), who had just spoken, had told the House that he, as a Government officer in India, was engaged in cooking accounts.

MR. SMOLLETT

said, that perhaps he had not fully explained himself. What he meant to say was, not that he had committed any fraud, but that the Returns to which he had referred were drawn up in a way to show a profit of 7 per cent, which, in his opinion, was not realized.

MR. CRAWFORD

was glad that he had given to the hon. Member an opportunity of explaining, but he should rather be disposed to wait for the statements of others before he took for granted all that the hon. Member had asserted in disparagement of everything connected with the public accounts in India. He thought that the conclusion which every Member must come to was, that the finances of India were in a very satisfactory state. No doubt that, while the revenue of the country was flourishing, the charges were considerable; but, regard being had to the large amount of money expended on public works, it appeared that there was virtually a very considerable surplus for the public in India. The noble Lord hardly seemed to estimate sufficiently the advantages which would result to the public revenue from the completion of Indian railways, which he ventured to say would have the effect of causing no inconsiderable addition to the revenue of India. The two great Indian railways would connect one side with the other, from Bombay to Calcutta, with a communication from both places to Delhi. Before half-a-dozen years he anticipated an income of 10 per cent on these lines. There was another point connected with the railways and the revenue of India. One effect of the increase of the railway communication in that country would be the greater consumption of salt. Now, the noble Lord when speaking of the falling off of the revenue had mixed up salt and saltpetre, which were two things having no relation one with the other. When the duty was placed upon saltpetre it was believed that the effect of this course would be to incite the inventive minds of the people in this country and various parts of Europe to discover a substitute; and already this had been done to a considerable extent. The noble Lord wa also in error in regard to the public sales of opium in Calcutta. He spoke of private sales, but it should be understood that those sales were entirely in the hands of the Government, who put up such a quantity as they chose, the public having nothing to do with it. He entirely concurred in what had been said by the hon. Member for Wick (Mr. Laing), not fearing any considerable reduction in the revenue on account of the falling off of the sales of opium in Calcutta. It had been said that the Chinese were increasing their supply of this article, but they could only do so when prices were high, and then the taste of the opium of India was preferred to that of China. Reverting to the subject of railways in India, he wished to notice the statement of the noble Lord that the East India Railway had cost more per mile than the Great Indian Peninsula Railway itself. In the case of the latter line great natural diffi- culties bad to be encountered in the shape of mountains to be traversed; but, on the other hand, the East India Railway had to pass over several mighty rivers, and the bridges constructed for that purpose had cost more than the cutting through the mountain passes of the Great Indian Peninsula Railway. On the East India line there were bridges approaching a mile in length, the materials of which had all been sent out from this country, and the whole of those structures bad cost more than £1,000,000. The company had also suffered in various ways from the Indian mutiny, and the total loss they had incurred on that account was estimated at about £2,000,000. He mentioned those facts for the purpose of removing any impression which might prevail that the business of the East India Railway had been wastefully and imprudently conducted. He had every reason to believe that those Indian railways had been conducted in a manner which would do credit to any country in the world, and that they were in every respect equal, and in many respects superior, to our own first class railways. There was another point on which he should be glad to obtain some information from the noble Lord. It was understood that the introduction of a gold currency into India was exciting the attention of the Indian Government. He understood that a Commission had been sitting upon the subject, and that a Report had been already made to the Government. Now, it was a matter of considerable interest to the merchants of this country that the result of the inquiries of the Commissioners should be made known as soon as possible; and he hoped that if Parliament were not sitting at the time their Report arrived, the noble Lord would take care that the public should at once be made acquainted with its purport. The noble. Lord would, perhaps, also inform them whether instructions had been sent out to India to send to this country the accumulations of gold which had taken place in the Indian Treasury. Those accumulations were suffered to amount to from 500,000 to £1,000,000, and the arrival of such an amount of bullion would, under present circumstances, be a matter of some importance in this country. He had to observe that he thought the hon. Member for Dumbartonshire (Mr. Smollett) had done some injustice to Colonel Strachey. That gentleman had for many years been connected with public works in India; and he (Mr. Crawford) believed that there was no other officer in that country to whom the Government, the public, and, in particular, all persons interested in railway enterprize, were under greater obligation.

LORD WILLIAM HAY

said, that as he had spent many years in India he hoped he might be allowed to take an humble part in the discussion. The noble Lord the Secretary for India had expressed some surprise at the small amount of revenue yielded by the Excise duties in India; but the noble Lord seemed to have forgotten that, unlike Europeans, neither Mahommedans nor Hindoos drank intoxicating liquors of any kind; and, indeed, looked upon the tendency of our rule to give encouragement to the use of such drinks as one of the evils by which it was attended. As to the income tax it was most desirable that it should be abolished, not only because a distinct pledge had been given by the Government to that effect, but because it was a tax most unsuited to the country. The noble Lord referred to the excessive percentage of incorrect income tax returns furnished by the Natives of India, and said that they contrasted most unfavourably with similar Returns in England. But he would suggest that if the Returns obtained in England were scrutinized, as in India, by foreigners bent on realizing as much as possible, a very different view of their accuracy might be the result. The noble Lord had said that this was a time when peace and prosperity reigned throughout India, and that there was little to do but to develop the resources of the country, and raise the moral and intellectual character of the people. The great improvements which had taken place in the communications with India and in India by means of railways, roads, and otherwise, had on the other hand not been altogether without danger to our rule, because they had made the Natives better acquainted, not with our strong points only, but also with our weak points, and it was a great mistake to suppose that either the Hindoo or Mahommedan would be content, without another struggle, to see the power which they once exercised pass away from them. Our obvious duty was, therefore, to take measures to render our position more secure, and that could only be done by placing our military defences on a proper footing. He would ask what had been done to protect the ports of Calcutta, Bombay, and Kurrachee? These import- ant seats of commerce were undefended, and he did not believe there was a single gunboat on such rivers as the Ganges and Jumna. But the point he wished to draw particular attention to was the gradual increase of the force known as the police force, which the hon. Member for Aberdeen (Colonel Sykes) last year said amounted to no less than 154,000 men—an armed force, dispersed throughout the country, and at liberty to do what they pleased. Upon that the hon. Member for Perth (Mr. A. Kinnaird) remarked that if they were armed it was the exception, not the rule; and the Secretary for India said that the police did not in most cases carry arms. Now he (Lord William Hay) had himself seen so many of these men carrying arms that he could not place much confidence in these statements; and having written to a friend in India, an excellent authority on the subject, he could state that the account that he had received was totally inconsistent with these official denials. His correspondent—one of the most distinguished officers in India —said that the Indian police force was in reality a Native army in disguise, that they were constantly seen drilling with muskets in their hand, and that for the purposes of a police force they were quite a failure. If the police were unarmed and scattered through the country little danger could arise from them; but, believing that they were armed, he thought they were more dangerous scattered all over the country than if collected in regiments at stations, where they might be controlled by the European forces at our disposal. But the police was not only dangerous on account of its military character, it was also a very expensive body, and there was a most extraordinary difference in its cost in the different Presidencies. For instance, in Bengal, with a population of about 40,000,000, the cost of the police was only —12,000 per 1,000,000. But in Burmah, with a population of 2,000,000, the cost was —119,000; whereas, in proportion to the population of Bengal, it should be —24,000. In Madras, the cost of the police was —353,000; but, according to the Bengal proportion, it should be no more than —276,000. In Bombay the contrast was still more striking, the cost of the police being —390,000; whereas, according to the Bengal proportion, it should be only —144,000. He thought the charge under the head of "Forests" required attention. In 1864–5 the expenditure was £187,000, whereas in 1865–6 it was £300,000. Some reason should be given for this. The increase in the revenue was very small, but the increase in establishment was very large. The hon. Member for London seemed to think that what are described in India as "forests" are tracts of land on which timber trees are exclusively grown; the fact being that in many forests nothing is grown except shrubs, low trees, and brushwood, fit only for fuel. The importance or rather the indispensable necessity of preserving these forests will be readily conceded when it is remembered that many thousands of people and many hundreds of miles of railway must for years to come depend for fuel on the wood grown in them. Hitherto there had been no system whatever in the management of these forests. For the most part they were intrusted to doctors having a knowledge of botany, or military men skilled in sporting; but no attempt was made to introduce a real system of forest management. In Germany, Switzerland, and France, forest management was reduced to system and taught in colleges. It would be the greatest possible benefit to India if persons so educated were sent to India and placed in charge of these forests, instead of their being left in the hands of amateurs. The increase of pauperism in India also demanded serious consideration. He referred to those European vagrants who were now found wandering all over India, many of whom had been soldiers, but whom their comrades were glad to get rid of—a set of ruffians whose violence and misconduct made them a terror to the population, and whose influence on the Natives was an especial source of danger. It would be interesting to know what steps had been or would be taken to remove this great and growing evil. With regard to the amount spent on public works of a remunerative character, there had been a good deal of exaggeration. Many of these works undertaken were indispensably necessary for the defence of the country against internal and external foes; and it would be found, if a calculation were made, that after all very little money had been spent on any other account. Nor did he regret this. It was certainly desirable that in improvement works the initiative should be taken, as far as possible, by the Government; but when they became remunerative Government should dissever itself from them. It had been said that the annexation policy had resulted in the greatest harm to India, but his experience induced him to form a contrary opinion. When he went to India, more than twenty years ago, the Punjaub had not been annexed; it was filled with Native soldiers, armed and trained by Europeans—Frenchmen and Italians—of great energy and ability, and if it had not been taken possession of our position in India would, at this moment, be most insecure. Annexation was, in his opinion, a necessity; it was the policy of the late Lord Dalhousie, to whom England owed the security of her position in India. In conclusion, be would venture to express the opinion that if the Government of India would mainly devote its energies to strengthening the defences of the country, to placing the army and the police on a sound and well-organized basis, and to improving the means of communication both by land and water, the further development of the resources of India might safely be left to English capital and to private enterprize.

SIR JAMES FERGUSSON

said, the short time he had been in office, and the inferior knowledge he possessed on Indian subjects compared with other lion. Members in that House, made him somewhat delicate in expressing his opinions upon this question. Some things, however, had been said in the course of this debate which he thought ought not to be allowed to pass without some remark. The hon. Member for Wick (Mr. Laing) was one of the most friendly of critics, for he had taken a more favourable view of the financial prospects of India than even his noble Friend (Viscount Cranbourne) had done. He (Sir James Fergusson) should not have referred to the remarks of the hon. Member for Wick had he not fixed on the policy pursued since the year 1861 as the cause of India's prosperity. Those who were acquainted with the history of India must admit that its present increasing revenue, its improved condition, and its internal tranquillity were owing very much to the energy and money expended during the years preceding 1861. Though unproductive at the time, the policy pursued in those earlier years had resulted in present benefits in accordance with the expectations of its promoters. The vast drains upon the National Exchequer previous to 1861 were consequent upon the carrying out of great public works in India, rivalling, and in some cases ex- ceeding, in greatness the works of the old Indian princes, and these until very recently had produced no return. As to the process of annexation which had been referred to, and which had, happily, been discontinued, he regarded it as having been forced upon us and pursued from high and imperative motives if not in self-preservation. Then, the great work of uniting the various provinces of India produced its fruits in these later days; at our greatest need the greatest of our recent acquisitions had proved the means of recovering the rest; and in every direction they were reminded that, although the more recent policy pursued in India had been wise and fruitful, those who laboured there in former times should not be refused their meed of praise. The hon. Member for Wick referred to some of the public works that were going on in India of an unproductive character, and amongst those he had classed expenditure for barrack establishments. But though in one sense barracks were unproductive, there was no description of works by which a more desirable saving might be effected. One of the great expenses connected with the Government of India was occasioned by the large casualties among the British troops. It should be recollected that it cost the country £100 to place a soldier in India, and anything that tended to reduce the mortality of our troops there must be looked upon as a work of a reproductive character. Statistics showed that while ten years ago the mortality among European soldiers in India reached 69 per 1,000, the ratio was reduced last year to 21 per 1,000. No better proof of the advantage of such expenditure could be given. The hon. Member for Wick referred to the police establishments in India, but the fact was that the substitution of a less disciplined force for the regular military was only the change of one army for another. In particular districts where there existed circumstances of peculiar danger the police were armed with muskets. But that state of things might be taken as an exception to the general rule. They were at first armed with cutlasses, but these weapons were being gradually substituted for batons, with which they were now generally armed. If they had been a great expense to the country, it would, at all events, be gratifying to know that good results had arisen from their maintenance. From papers which had been recently presented to hon. Gentlemen, it would be seen that in Bengal the police force numbered 26,591 men. That was doubtless a large number, but the returns stated that it was necessary, particularly in Calcutta, to increase it, inasmuch as it was found that the existing force was insufficient to hold the criminal and riotous Europeans in check. Great fault had been found with the old village police, and a disposition had been shown to substitute this more efficient and better disciplined body for the old and uncertain force. In the North Western Provinces the new police force had already shown itself superior to the old force, and especially in what used to be its weak point—the detection of crime. It had also improved in its morale, the complaints of corruption being now exceedingly rare. Measures for the detection of crime were now more effectual, and numerous captures had been made. To whatever cause the increase of crime might be attributable it certainly did not arise from the insufficiency of or deterioration in the police. In the central provinces the number of convictions for burglary and ordinary theft had increased. The proportion of apprehensions and convictions, as compared with the number of cases charged, exhibited a great improvement, although the detective ability of the force seemed still to be rather deficient. The force was rather popular than otherwise among the people, and, with strict supervision, it proved a very valuable body. In British Burnish their discipline was improved and their conduct steady, and, on the whole, the police force of India was looking well, but it was necessary to have strict supervision over it. The hon. Member for Wick had referred to an important question—that of the army—and said that he looked upon the Indian army as containing one of the few elements of danger with which this country was threatened. He (Sir James Fergusson) would not now enter into the question of the organization of the officers of the Indian army, which would have the serious attention of the Secretary of State, and no time would be lost in promulgating the result which might be arrived at. The question formed one of those difficulties the existence of which must involve many complaints; but he was convinced that there had always been a desire to deal fairly with the officers of the army, as with all ranks of the service, and one more attempt was being made to reconcile the differences which existed, and he hoped it would be attended by better results than those which had attended previous attempts. He felt sure —and that was his reason for touching upon this point—he felt sure that no complaints which the officers had made, and no discontent which they might feel with their lot, would ever cause one element of danger to Her Majesty's Indian Empire, or make them less ready than they had hitherto been to do their duty, or to enforce discipline and loyalty among their men. With regard to the question of public works, his hon. Friend the Member for Dumbartonshire (Mr. Smollett) had made statements which ought not to pass unchallenged, alleging that the public money had been expended upon unproductive works. It was not to be doubted, nor was it disputed, that in some cases the works had not realized the expectations of their projectors. In some cases they had been failures, and in some cases they were unfinished; but to say that the public works of India with regard to communication—the hon. Member had not, however, said anything against the railways—to say that those works had not conferred a great blessing upon our Indian Empire, was to say that which was entirely inconsistent with the facts of the case. The hon. Gentleman had referred to the Godavery River. In consequence of the allegation of his hon. Friend when resident in that country an inquiry had been held under the Board of Revenue with respect to the work done there, and one of the results of that inquiry had been that a picture had been drawn comparing the state of the country before those works commenced with the state in which it was placed after they were completed, showing that a district which was before a wilderness had grown into a garden. To procure the irrigation of this district a weir of 3,950 yards had been constructed. The hon. Member referred to that work, and seemed to think that the money expended might as well have been thrown into the river.

MR. SMOLLETT

denied that he had said that. What he had said was, that up to the year 1855 that work, on which £300,000 had been expended, was said to have yielded 70 per cent of profit, and that in a few years it would yield £300,000 of profit, whereas up to the year 1855, it had never returned more than £204,000, and that was only £1,000 more than the amount of the permanent settlement fixed fifty years before.

SIR JAMES FERGUSSON

said, it was not his province to defend the Reports of 1855, but to show the state of the country at the present time. The district was intersected by canals, and altogether 780,000 acres of land were irrigated. As to the Ganges Canal, it was true that, on account of the channel having too great an inclination, the work had not fully realized the expectations that were entertained; but measures were determined on to remedy the defects of construction. It had conferred incalculable benefit on the country that was irrigated by it, as was proved by the revenue derived from it, which in last year alone increased by £21,000. The irrigation works on the Kistnah were in a forward state for a considerable distance. His hon. Friend laid great stress on the Madras Company having as yet got no return, though they constructed the work under the guarantee of the Government, but it would be very odd if they got any before it was completed. Bridges and other extensive operations were being carried out, and there was a provision in the agreement that, if not finished by 1871, the work should be made over to the Government, who would be able to make a good use of it, even if the Company did not previously do so. Her Majesty's Government had been blamed in past years for not having expended more money on such undertakings, but they were certainly not liable to this reproach now. Their grants, however, were made with due regard to economy, and the strictest supervision was exercised. He believed the works now in progress were not unworthy of a great nation, and would prove extremely beneficial to India. In reply to the question whether a loan of £20,000,000 was about to be opened by the Government, he was happy to say that there was not the slightest chance of the Secretary of State rushing into the market with any such alarming project. The policy pursued by the Government was to consider each measure by itself, and when one was determined on to take such steps as might be necessary to carry it out. With regard to road making, he need hardly point out that this was perhaps the most remunerative of all public works in India, for the reason why the traffic on some of the railways was insufficient to yield any return was, that roads to communicate with them were not made fast enough. The noble Lord the Member for Taunton (Lord William Hay) had referred to the defences of India, and he could assure him that measures of defence for the harbours and rivers were being considered, and would, he hoped, be carried out. In conclusion, he defended the character of Colonel Strachey from some observations that had been made, remarking that that officer was devoted to his profession and to the public service, and that no works under his supervision could be either extravagant or ridiculous.

MR. J. B. SMITH

complimented the noble Lord the Secretary of State for India upon the able statement he had made to the Committee after only being a fortnight in office. He suggested the propriety of bringing forward the Indian budget earlier in the Session. He saw no reason why the accounts should not be presented to Parliament on the first day of the Session, so that there would be ample time for discussing their details before the pressure of business became too great to permit hon. Members to go minutely into them. It was a matter which had long engaged the attention of hon. Members interested in Indian affairs, and he hoped the noble Lord would adopt that course in future. He hoped this would be the last time they would see the affairs of India brought forward in that House on the eve of the whitebait dinner. It was a mistake to suppose that between three and four millions of money were expended annually on reproductive works in India. Out of the sum of £5,131,000 put down as expended for public works in 1865, he found that £1,358,000 only was for reproductive works—such as bridges and canals—all the rest being for military barracks and similar works. The erroneous and wasteful practice of the East India Company he regretted to see continued by the Government of India—namely, the execution of great public works out of surplus revenue only. A public work, when commenced, should be finished with as little delay as possible, but the Indian Government had a variety of works on hand to which annual grants were made out of surplus revenue, if any, and consequently they remained for years unfinished, in the end costing two or three times as much as they would have done if completed at once. He was glad to hear that the Government had at length decided upon opening out the river Godavery, a work which he had urged during the last ten years. This river is the Mississippi of India, and will become the highway to the riches of Central India. He hoped, in the execution of this work, there would not be a repetition of the folly of past times. As an example of the way in which public works were made, he would mention that in 1859 the engineer of the Godavery, being in England, obtained a grant of £7,000 for the purchase of tools; but when they arrived in India they were of no use, as he had no means to employ men to use them. It was not until November, 1860, that he received a communication that £30,000 was granted to proceed with the works. It was difficult to meet with suitable workmen on the spot, and some had to be obtained from a distance of 200 miles. He had scarcely begun to set his men to work when an inquiry came from the Treasury whether he had spent the £30,000, and stating that the grant was only made for the financial year ending in April, and the balance unexpended must therefore be returned to the Treasury. He had spent in the five months only about £7,000, and the remainder he had to return: the consequence was, he had to dismiss the men he had with so much difficulty engaged. As soon as Lord Canning heard that the works were suspended, he ordered the grant to be renewed; but the engineer found great difficulty in engaging fresh workmen at 20 per cent increased wages. If the Government will persist in the folly of executing public works out of the public revenue, it should finish one thing at a time, and not give a little to one and a little to another and be twenty years before the whole were finished. Public works ought to be executed by means of loans, and not out of revenue. From a return he had obtained, he found that some of the Madras irrigation public works had paid as much as 200 to 300 per cent per annum, arising probably in these cases from the repair or the completion of old works; but the average return of all the works was 40 per cent per annum on the whole sum expended. Be thought that was an encouragement to proceed with others. It was now found that there were some defects in the engineering part of the Ganges Canal, but it was probable they might be remedied. It would appear that there were two schools of engineers in India pitted against each other—namely, the Madras and Bengal engineers. The Ganges Canal was constructed by the Bengal engineers, and a great controversy had taken place upon the subject. It appeared to him, from reading both sides, that Sir Arthur Cotton, one of the Madras engineers, had the best of the argument. Sir Arthur Cotton had been to the canal, and suggested certain means for remedying the defects, but the Bengal engineers demurred to it, and the Government appointed Major Crofton to decide between the rival engineers. Major Crofton and Sir Arthur Cotton also differed, and the Government then appointed a Commission composed of several other engineers to proceed to the works and report. Sir Arthur Cotton objected to this appointment, on the ground that where there was a difference of opinion it should be reported on by a superior engineer, and he contended that the persons who had been selected had never executed similar works themselves. Major Crofton was to accompany the Commission to the works, and point out what he considered was necessary to be done, and Sir Arthur Cotton complained that he also ought to have an opportunity of showing the Commission what he considered were the defects of construction. The matter was so important that he (Mr. J. B. Smith) suggested that a Royal Commission or a Committee of the House should be appointed to examine into all the circumstances out of which the dispute arose. He saw with regret that there was no decrease in the amount of the military expenditure, and he would suggest to the noble Lord that if the army were armed with breech-loading weapons the number of soldiers might safely be materially reduced. It appeared to him that the best defence of India was founded upon a just government of that country, and he was glad to find that the noble Lord intended to base his rule upon the royal proclamation issued by the present Secretary of State for Foreign Affairs (Lord Stanley)—a proclamation which was received with acclamation by the people, and regarded by them as the Magna Charta of India.

COLONEL SYKES

Sir, at this late hour I will not discuss financial details; but, in the interest of England and India, I will make some observations on the military policy of the British Government since the extinction of the political authority of the East India Company. The East India Company had a local European army, of artillery, cavalry and infantry, latterly exceeding 20,000 men; three of the infantry regiments had been continuously 100 years in India from the battle of Plassy, and the artillery of that army, whether in science or discipline, was equal to that of any western Government. Regimental reliefs were not required, and time-expired men very generally re-enlisted, owing to the prospects of employment in the civil branches of the ordnance, commissariat, or public works; influenced also very much by many having married Native wives, and looking to a permanent residence in India. The Native regiments were effective and sufficiently officered when they took the field; because at that time all staff officers were obliged temporarily to vacate their staff appointments and join their regiments while on the field. The officers and men were attached to each other from long association. Such was the system under the East India Company—efficient and comparatively inexpensive. And now, Sir, I will point out to the House the amalgamation military policy which, since February 1861, has been substituted for this system, and its effects. From a Return which I hold in my hand, and which was ordered to be printed in February 1865, but a copy of which I only obtained yesterday, the number is shown of deaths, time-expired men, invalids, regiments relieved from India, recruits sent out annually, and the regiments sent to India as relief of the Royal troops, together with the cost of transit in the years 1860, 1861, 1862, 1863 and 1864. In those five years the total vacancies of officers and men from all causes have amounted to 40,523, inclusive of 1,041 officers, or at the rate of 8,105 annually; and the cost of the passage money of the time - expired men and invalids (officers and men) has exceeded £500,000, and more than another £500,000—£526,485—has been spent in bringing entire regiments home, consisting of 848 officers, and 21,136 men. The coat of sending out 18,620 recruits and 525 officers, was £232,845. Reliefs of regiments only commenced in 1863 and 1864, and in those two years 465 officers and 10,000 men were sent at a cost of £141,246. An important feature is developed in these two years. The vacancies by deaths, time-expired men, and invalids, amounted to 13,757, including 467 officers; and their places were only supplied by 5,812, including 217 officers. The deficiency in the supply of numbers by deaths and invalids of 7,945 men, was partly made up by sending out stronger regiments than those relieved—namely, 10,465, including 465 officers, against 6,036, including 259 officers, leaving, however, 3,716 vacancies by deaths, &c., unfilled. Sir, I have brought the policy of maintaining an overwhelming European force in India to that point when it must be evident, if the official figures be trustworthy, that we do not supply the vacancies which annually occur in that force, and that it is highly impolitic to attempt to do so, as it is a dangerous drain upon the youthful blood and sinew of our people. In fact, we have 31,000 European troops in India more than the East India Company maintained, including the Royal contingent before the Mutiny, and that number is more than our present relations with the people of India require. And now, Sir, a few words on the subject of our military policy in respect to the Native troops in India. For 100 years past the three Native armies of India have fought our battles, with rare instances of defeat. Their regimental organization and discipline generally equalled that of European troops; and I speak from long experience as a Sepoy officer. The individual cost of the Sepoy was from one-eighth to one-fourth of the cost of the European soldier, including their pensions. They were contented, respectful, and efficient; and the command of a regiment occasioned less trouble than the command of a company of Europeans. Our fatal policy of 1861 has sadly altered this state of matters. Our folly in outraging the religious prejudices of the high caste veterans of the Bengal army, Brahmins and Rajpoots, and bigotted Pathan Mahommedans, occasioned the lamentable mutiny of six - eighths of the Bengal army; but the Native armies of Bombay and Madras remained loyal, and their loyalty saved us from being driven to the coast. The panic, however, occasioned by the Mutiny, occasioned a general distrust of the Native soldiery. It was resolved to diminish their numbers and their efficiency. The veterans were degraded into irregulars, armed with the old musket; and an effectual mode was adopted of weakening the efficiency of Native troops in the field by limiting the number of European officers to each regiment to six instead of fifteen or twenty; for all officers who have served with Native troops know that their serviceableness in the field depends upon the number of their European leaders. The regimental organization of the European officers has been abolished, and they are posted to do duty with regiments with which they have never served, and with the men of which they therefore cannot have any community of interests or feeling. The result of this hasty and blind policy is universal discontent and distrust in the Government by officers and men, the more so as the loyal Native armies of Madras and Bombay feel themselves unjustly punished for the misconduct of the Bengal Native troops. Sir, I have felt it my duty to give this expression of my opinion of the military policy which has been adopted since 1860; and I feel assured that the noble Lord's means of reducing the present enormous military expenditure in India, and reviving the old attachment of the Native soldiery, will only be in the ratio of his approximation to the successful system of the East India Company—namely, a local European force and a properly officered Native army.

MR. LIDDELL

complained that though the Indian budget was not brought forward till so late a period of the Session, the Department had not yet furnished Members of the House with the papers on the subject. The information they contained—to which his hon. Friend the Under Secretary of State for India had made so much reference—were really the only official sources of information open to hon. Members, and it was therefore a fair ground for complaint that the House should be called on to discuss the affairs of India, and to exercise its supervision upon the policy of the Indian Government, before those papers had been distributed. Ho had heard with great pleasure the declaration of his noble Friend that evening, that the policy of the Government would be to push forward the public works to the utmost, but he desired to ask his noble Friend an important question in reference to this subject. He held in his hand the opinion, signed by Sir John Lawrence, and, he believed, by all the members of his Council, that "no reliance can be placed on the ordinary revenue of India for giving effect to this class of works (irrigation works), so essential to the wellbeing of the country." His noble Friend had shown such ability and power in mastering details within a short period, that a subject of this grave importance was not likely to have escaped him. If the ordinary revenue could not be relied on for carrying into effect a proper system of irrigation, what did he propose to do? One of these schemes of irrigation involved no less an ultimate expenditure than £29,000,000, and as much as £20,000,000 within the next ten years. This scheme had received the sanction of the Governor General and the greater part of his Council, and had been sanctioned also by Lord Halifax: it must be considered to have reached a certain degree of maturity, and it seemed to him that it was of so much importance that the House was called upon to express its opinion in reference to it, and not to leave it to be adopted or rejected by the Secretary of State for India. Still, he congratulated his noble Friend upon the success which had attended the inauguration of his policy in the House. He felt that, as an independent Member, he was justified in inquiring of his noble Friend in what way he contemplated carrying out that policy. A very significant speech had been made in the course of the debate by the noble Lord opposite (Lord William Hay), that as soon as the public works in India became remunerative the Government ought to abandon them. But that would be the strongest reason why the Government ought not to undertake them. India was often described as a great trust, and, undoubtedly, it was the greatest trust which Providence ever committed to one nation. It was on behalf of India, then, that he raised this question. While engineers were discussing the merits of schemes, and while Governments were hesitating, the people of India were starving. A remarkable illustration of this was furnished by the fate of the project for the irrigation of Behar. Lord Canning had before him a project for irrigation works in that province, and invited tenders for their construction. But the scheme fell through, and the province had since suffered severely from famine. In fulfilling, therefore, the trust which had been committed to us, these great and indispensable works must not be delayed. How did his noble Friend propose to push them on? By a loan, or out of the revenue of the year? This revenue was declared to be totally inadequate for the purpose, and it seemed to him, therefore, that there was no choice but to proceed by way of loan. The expense of permanent works ought not to be borne by the present generation. The benefit was a permanent one, and part of the cost should be borne by posterity. These works could not be carried out upon the scale and with the rapidity which was necessary, except by loans, and it would be requisite also that competent men should be provided in this country, seeing that in India the staff of engineers would not be sufficient to superintend the construction of such works. His noble Friend had shown such a capacity for mastering in a very short time the de- tails of a difficult and complicated subject that he hoped he would be able to give an explanation on this subject, and that it had not escaped his attention, notwithstanding the brief period during which he had held office.

MR. AYRTON

said, that the great amount of mental labour which the Secretary for India bad already bestowed upon this subject led to the hope that the noble Lord would not follow in the footsteps of his predecessor, and suppose that nothing should be done to improve the administration of India, and that that administration was perfect. He could not help inferring from an observation which had dropped from the noble Lord that he was about to enter upon a very useless proceeding—namely, to invite the House to put upon its journals the very dull and uninteresting historical fact that on the 30th of July, 1865, the revenues of India amounted to a certain sum, the expenditure to another sum, leaving a certain balance. What was the use of the House of Commons resolving itself, into a Committee about a state of things existing a year ago without expressing any opinion upon the subject? We had by law transferred the administration of the finances of India to an authority there with power to legislate upon them, and in the early part of the year a financial statement was made in India. That statement was not laid upon the table of the House of Commons, and therefore the noble Lord had been quoting from a document of which they knew nothing. When we handed over Indian finance to an independent authority in India, we might very well dispense with all reference to the matter here. We might as well deal with the affairs of the reign of Queen Anne as with the Indian finances of 1864–5. What the House of Commons ought to deal with was a very grave matter—namely, that a Minister of the Crown should have power to expend millions without being under the control of that House. When he recollected the sort of contracts late Secretaries of State for India bad been entering upon for the building of ships and other matters, he felt that it was high time to put an end to such a system. He ventured to submit to the noble Lord, who had taken up this business with ingenuousness and frankness, that it would be better to put an end to the farce of late years, and to submit to the House of Commons a statement of the finances for the ensuing year. In such a case as that they would be sitting there to some purpose, for the House would then be charged with a responsible duty, whereas under the present system, when hon. Gentlemen were called upon to attend to a mere historical fact, it was highly creditable to them that they declined to do so, and walked out of the House. A great part of this discussion had turned upon the proceedings of the Government in India with respect to public works. But that was a phrase which was evidently calculated to mislead those who were accustomed to a different state of things in this country. In India what were called "public works" included everything in the nature of expenditure. Now, there was no combined account of the whole income and expenditure of the different departments in India under the several heads. The consequence was there was no accurate statement of the financial condition of India, no correct balancesheet. That circumstance had been admirably illustrated by the various statements that had been made in the course of the discussion of the military expenditure of India for the year. The noble Lord might say that there was at least a detailed account—that there was the expenditure of the army in India and the military charges connected with that army in England. And yet both together did not make up the whole. Though they might have £13,500,000 for the army in India, and a certain specified sum for military expenses in England, there was £800,000 besides in another part of the account to be added for barracks and other military buildings. The noble Lord ought to consider whether he could not produce a complete balance-sheet showing the whole expenditure. It was in vain to discuss the expenditure on public works, for there was no organization at all in India with reference to those works. The whole state of affairs was a perfect chaos in that respect, and no one was responsible. The Council of India was originally of a limited character, and when its defects were brought under the notice of Parliament it was thought right first to appoint a person of legal attainments in connection with it, and afterwards a Minister of Finance. Two great departments were thus placed under the supervision of distinct members of the Council; but they had got no further. The want of responsibility was one of the main causes of that grievous misapplication of the public money which had been so often described, but which was only a small part of the blundering connected with the public works of India. Until they had in the Council of the Governor General persons specially charged with responsibility in reference to the duties of commerce, agriculture, and other particular interests of the country they would have a repetition of the blundering which had been going on year after year, and which had wasted not merely hundreds of thousands but millions in India. If the noble Lord wished to see a real improvement, he must begin by reorganizing the Indian Council and placing it on a footing commensurate with the present condition of affairs. Another defect in the Indian Council was this—according to the law the Governor General was compelled to act by the decision of his whole Council, and everything was to be done with every member of it; but that had become an impossible mode of conducting the business of India, which must be divided into distinct departments, so that the Governor General should have the power of acting with the person charged with each particular department. When the former Government of Lord Derby brought in a Bill putting an end to the old Court of Directors, it was not proposed that the members of the new Council should hold office for life, but, unfortunately, the Committee yielded to a suggestion of Lord John Russell, and appointed them for life, and the Government of Lord Derby, in the circumstances in which it was placed, was almost compelled to accept the suggestion. The noble Lord ought to review this matter, and if he would promise to legislate next Session so as to limit the office of Member of the Council of India, he would be certain to receive support from that side. The time had come for infusing new life and energy into the Council which was falling into decay from extreme old age. If new life were infused into it, he felt certain that, combined with the noble Lord's own energy, business would be conducted with much greater satisfaction to the people of India. At present it was deplorable to have to transact any business with the Secretary to the Council, or with the Indian Government. He had been told that it was impossible to get a letter answered by them under twelve months. At present vast resources in India were locked up from the incapacity of the Government. If they were opened up he expected to see a great and permanent increase in the agriculture and commerce of India; but until they struck at the root of the evil, things would go on as they had done for the last few years.

MR. H. D. SEYMOUR

must congratulate his noble Friend the Secretary for India upon the success which had attended his statement to-night, and also upon the liberal policy which he had announced on the part of the Government. He wished to ask him whether he had taken steps to have the Indian accounts made up at an earlier period—say the 31st of December —so that they might be printed in time for the meeting of Parliament. He was glad to hear from the noble Lord that the new Ministry were not in favour of the policy of annexation. He understood that an unquiet feeling existed in India on this subject, that there were officials in high places who had designs upon Sindia and Holcar, and that even the past services of the princes of the Rajpoot States were in danger of being forgotten. In Mr. Massey's able statement a doubt was expressed as to the best mode of carrying out public works—whether it should be by private or by public enterprize. It was said that the Indian Council were divided in opinion on that point, and that higher authorities were for doing away with private enterprize for such works. Yet these men had been themselves the servants of a joint-stock company which had first conquered and then governed India. There was no policy so dangerous as that of erecting a great bureaucracy in India for the exclusive execution of all the public works. He approved the expenditure for public works, but he was informed that the department was in a most disorganized condition. There was a want of supervision, and ho doubted whether the sum of £5,000,000 or £6,000,000 was spent as profitably as if the same sum were employed by private enterprize. The education department was increasing, but there was reason to believe that a large and increasing proportion went in high salaries to officers and a very small proportion in the real education of the people. Could the noble Lord give the House any information about the department of public accounts? Lord Halifax told them that two gentlemen had been sent out from England to put the accounts in a better state. Unfortunately, they both succumbed to the climate and died shortly after their arrival. He rejoiced to hear of the liberal policy of the Government. It was an ominous fact, and one that ought to be explained, that the reve- nue from Customs was not increasing, and there was reason to fear that in India, as was once the case in France, large masses of silver were buried in the earth. If the Natives could be induced to invest their wealth in the development of agriculture, there was no reason why the progress of India should not equal that of the United States.

VISCOUNT CRANBOURNE

acknowledged the friendly spirit in which his statement had been received by all who had taken part in the debate, and especially by the hon. Member for Halifax (Mr. Stansfeld), and said that so many questions had been addressed to him that it would be impossible for him to weld his replies into a consistent whole. He did not know how much harm might result if he were not to repudiate the terrible idea broached by the last speaker, that there was some notion of dethroning the rulers of Sindia and Holcar; but he did not know what foundation there could be for it unless the hon. Member had received a private telegram from Sir John Lawrence. Towards all the Native princes with whom we were on terms of amity the Government earnestly desired to continue the moderate and friendly policy inaugurated by Canning. There was no foundation for the tragic tale that two Treasury officials who had gone out to India to arrange the accounts had died in the attempt. On the contrary, it appeared from the statement laid on the table of the House by his predecessor that the two gentlemen had returned and presented their final report of the measures adopted. He sympathized with the complaints made as to the way the public works were entered in the accounts. It was impossible to determine with accuracy whether public works ought to be charged to capital account or to revenue account; but the alterations that were necessary for obviating this difficulty might easily be made. He would not renew the controversy as to the buoyancy of the Indian revenue, of which the hon. Member for Wick (Mr. Laing) was a better judge than himself; but the hon. Member misunderstood his argument, which was that the admitted increase arose from articles upon which we could not permanently rely. He sincerely hoped that the view of the hon. Member would prove to be the accurate one. He was anxious to correct the impression, not shared by the hon. Member for Halifax, that he censured the course Mr. Massey had taken. Under the circumstances he admitted that Mr. Massey had no choice but to refuse to raise any further taxes. It was obvious that the state of affairs in India and the condition of the money market would have made it exceedingly inexpedient to impose new taxes. Considering, too, the large amount he was placing to the credit of public works, there could be no doubt he would not have been justified in throwing additional burdens upon the inhabitants. No one could doubt that a railway to Peshawur was a necessity, but it was a question of money; it would cost five or six millions, which was not easily obtained. With respect to the questions whether he would carry on public works out of taxation or by loan, he would be sorry to pledge himself not to ask for a loan, or not to submit any scheme that Parliament would support and that ought to be adopted. At present, however, a loan was simply impossible, and would only damage the credit of the railway on account of which it was asked for. It seemed to be imagined that if money were found public works would of course advance, but labour was not always to be had, for, large as the labour supply of India was, it had been taxed enormously, and in some places wages had been quadrupled. After such a rise it was clear that there must be a limit to the expenditure in labour. The difficulty in the way of concentrating expenditure was that labourers could not be brought together, and money was necessarily expended upon separate public works, because it was expedient to utilize the supply of labour which existed in different parts of the country. As far as he could ascertain, it was a mistake to suppose that the existing railway companies had not at their disposal sufficient means to provide the necessary rolling-stock. This was one of the first matters he inquired into, and he believed that the only limit to the supply was the ability of those from whom it was ordered to furnish it. He should have been thoroughly ashamed of the mistake imputed to him by the hon. Member for the City of London that he had confused salt with saltpetre; but the hon. Member himself could hardly be aware that a certain amount of chloride of sodium, or common salt, was produced in the manufacture of saltpetre; and, therefore, the production of saltpetre and the salt increased or diminished together, and the two trades were correspondingly affected. With regard to the question of a gold currency for India, it had been referred by the Governor General to a Committee, which had not yet made its Report; but when the Report came home he hoped it would be acted upon as rapidly as circumstances would permit. A good deal of anxiety had been expressed to have the financial statement for India made at an earlier period of the Session, and in India they had changed their financial year so that it should end on the same day as the financial year in England—namely, the 31st of March. That would enable the accounts to come home in the middle of April instead of May; and then it would be open to the Indian Minister, if he could secure a day for the purpose, to bring forward his budget when he pleased. But the difficulty as to making the Indian statement earlier in the Session did not arise with the Department but with that House. It was not easy to get the House of Commons to take an interest in Indian affairs, and when he heard the hon. Member for Stockport's complaint on that subject he could not help thinking of the epitaph to Sir Christopher Wren, Si monumentum quœris circumspice. The array of green benches while that discussion was proceeding best explained the reason why the Indian budget was not brought on earlier in the year. If he were to ask the Leader of the House to grant him a much earlier day for that purpose, he was afraid his application would be futile; and he had rather that the hon. Member for Stockport himself should make such a request to his right hon. Friend. With respect to the suggestion of the hon. Member (Mr. Ayrton) for the immediate execution of the Indian Council, he confessed that he did not feel the moral courage requisite for the operation; and he was bound to add that he did not see the necessity for it. He did not himself admit that they were a decaying or stagnant body, but, as far as he had seen, they were an able and active body; and if the hon. Gentleman were only present at the Council to-morrow lie would see a much more lively scene than was witnessed in that House that evening. Whether the entire Constitution under which India was now governed was ono that was to be approved in all respects he would not then discuss; but he must protest against any proposal to alter that Constitution which was founded on any want of activity or of fitness on the part of the gentlemen forming the present Council. He had now only to thank the house for the indulgence it had extended to him.

MR. KINNAIRD

urged the propriety of making increased grants for education in India if we desired to leave behind some traces of our beneficent rule in that country.

Resolved, That the total Revenue of India for the year ending the 30th day of April 1865 was £45,652,897; the total of the direct claims and demands upon the Revenue, including charges of collection and cost of Salt and Opium, was £8,978,504; the charges in India, including interest on Debt and the value of Stores received from England, were £30,473,716; the charges in England were £4,802,401; the Guaranteed interest on the Capital of Railway and other Companies, in India and in England, deducting net Traffic Receipts, was £1,591,797,—making a total charge for the same year of £45,846,418; and there was an excess of Expenditure over Income in that year amounting to £193,521.

House resumed.

Resolution to be reported To-morrow.