HC Deb 27 July 1868 vol 193 cc1837-70

Considered in Committee.

(In the Committee.)


Mr. Dodson, I think there is nothing in the statement with which I shall have to trouble the Committee to-day which calls for any very lengthened remarks from me. I must express my obligations to my right hon. Friend the Member for Kilmarnock (Mr. Bouverie) for having allowed the House to proceed with the Business of the day without raising a preliminary discussion in accordance with the Notice which he placed on the Paper. As I just now remarked, I shall have very little to say; but at the outset I must take the opportunity of expressing my regret that this is the last financial statement on which any Minister of State will have to comment which has been drawn up by my right hon. Friend Mr. Massey. As the Committee is doubtless aware, Mr. Massey has left India and returned to this country, although the period during which he might have expected to hold the position of Finance Minister of India has not yet expired. I am anxious to express my great regret that India has been deprived of the services of Mr. Massey; although, looking at the matter from a purely English point of view, I am sure the Committee will rejoice with me at Mr. Massey having again come among us, and will concur with me in expressing a hope that we may see him once more a Member of the House of Commons. I am quite sure that whenever Mr. Massey takes his place among us again, India will feel the advantage of there being present in the House of Commons another statesman who is able to speak with personal information and personal knowledge of the state of that Empire. These intercommunications between England and India are, I feel satisfied, very advantageous to both countries; and I must express a hope that in future we may have the advantage of Mr. Massey's frequent advice upon Indian affairs. I am particularly sorry, however, that Mr. Massey's retirement should have occurred at this particular moment; because at the time he left India he was engaged in prosecuting an inquiry in reference to a reform in the system of the financial arrangements between the central Government of India and the local Governments. This is a reform to which I attach very great importance; and I think he would, perhaps, have been better able than anyone else to effect it. However, the matter has been set on foot, and by-and-by I shall have occasion to refer to it more particularly. The good work which Mr. Massey has initiated will, I trust, not be allowed to fall through.

And now, Mr. Dodson, I will begin, according to the usual practice, by referring very briefly to the actual accounts which we have received for the year 1866–7—that is, the year ending on the 31st March, 1867. The Committee are aware that the statement made last year with regard to these accounts was a statement founded partly on information and partly on Estimates. It was founded on information extending over about eight months of the year, and on Estimates for the remaining four. Now that we have the actual accounts we shall, of course, find some slight difference in the results, though it will not be so striking as the difference on which I had occasion to comment last year between the actual accounts and the Budget Estimates of the preceding year, 1865–6. Last year it was estimated that the revenue of the eleven months ending the 31st March, 1867, would be, in round numbers, £42,000,000, and the expenditure £44,300,000. The actual accounts show that the revenue for that period was £42,013,000, and the expenditure, in-eluding that for public works extraordinary, was £44,530,000. Therefore, there is an excess of expenditure of £2,517,000, against the expected excess of £2,300,000; and the difference may be explained by the difficulty of making a clear estimate when one month of the year is omitted. I now turn to what is of more importance—the regular Estimate for the year 1867–8. Last year we had before us the Budget statement or Estimate for the year ending the 31st March, 1868, showing that the revenues and receipts would probably amount to £46,783,000, and the charges and expenditure of all kinds, including public works extraordinary, to £48,610,000; showing, therefore, a deficit, according to that calculation, of £1,827,000. The account which we now receive shows that the revenues and receipts are estimated at £48,258,000, being an improvement of very nearly £1,500,000 upon the revenues. But, on the other hand, the regular Estimate for charges and expenditure of all kinds stands at £49,364,000, instead of £48,610,000, showing an increase of £754,000. The general result, therefore, is that, instead of a deficiency of £1,827,000, which we expected, the account for the years 1867–8 only shows a deficiency of £1,106,000. The Committee must understand that when I speak of a deficiency I am indicating the difference between the estimated revenue and the estimated total expenditure of the year, including the public works extraordinary, But it was never intended or contemplated that the revenue would be sufficient to cover all the charges for public works extraordinary. Nor has it been usual to include the public works extraordinary in these comparative statements of revenue and expenditure; but it has now been considered more convenient that I should take them in this form. I only wish to put this caution before the Committee that they may not be alarmed when I speak of deficiencies to such a large amount; for if you exclude these public works extraordinary, and charge their cost to capital, then the accounts would show a large surplus, instead of a deficiency. I put, then, the revenue as £1,500,000 better, and the expenditure as £750,000 greater by the accounts which are just received. Now, what are the items on which the improvement of revenue has taken place? There are three principal items on which almost the whole of the increase has arisen. There is, first, a better return from the Licence Tax, which was estimated to produce £500,000, but which is now estimated to produce £658,000. There is next a gain under the head of Customs of £188,000; and the last is the most important increase of the whole—on the item of opium the increase has been no less than £1,100,000. Opium is estimated to produce £8,814,000, which is decidedly the largest amount that opium has produced for a great number of years past. [Colonel SYKES: Unhappily.] The increase on the whole of these items amounts to £1,446,000, which is very nearly the whole amount of improvement on the revenue. At the same time some changes have taken place in other items; some have increased and others have fallen off—the increase and decrease nearly balancing each other. There has been an increase under the heads of "Land Revenue," "Excise," "the Post Office," "Miscellaneous," and some others; and, on the other hand, there is a decrease in "Salt," "Stamps," "Mint," "Telegraphs," and one or two others—I mean a decrease as compared with the Budget Estimate, not that the revenue itself has decreased as compared with the revenue of former years. Stamps, for instance, have fallen short by £93,000 of the Estimate of last year; but, in point of fact, the revision of the judicial stamps has proved financially a very satisfactory measure, and has led apparently to an increase in the revenue of some £400,000. The item of Customs shows, I think, a very satisfactory improvement. Comparing the revenue—as far as it has yet been estimated—for the year 1867–8, with the year 1865–6, the last complete year—for the intermediate period of eleven months was a broken year, when a change was made in the date of closing the accounts—I find that in the year 1865–6 the revenue under this head was £2,279,000, and the actual Estimate for this year is £2,545,000, showing an improvement in the recent yield of Customs of some £270,000. Considering what depression there has recently been in India, consequent upon the cessation of the cotton demand, and upon the various other troubles, of which this House is aware, I think we may consider it very satisfactory that there has been this improvement, more especially when we remember that the whole system of Customs duties has recently been revised, a great number of duties done away with, and the tariff reduced to great simplicity. It is also satisfactory to observe that the addition made to the export duty on grain—of which I expressed doubts last year—has not been attended with any evil effect. Mr. Massey, in his statement, makes this observation— From the accounts we have received at the Custom House, it will be found that during the eleven months the increased duty has been in operation the exportation of grain has increased from 355,000 maunds to 645,000 maunds, so that it is clear that the increased duty on exportation has not caused any diminution in the quantity exported, but that the exportation has gone on and increased very largely. Under these circumstances, Mr. Massey naturally says that he is not inclined to take off or to alter the duty. But I feel bound to say that, upon general principles, I regret that there should be any imposition of export duties, and I hope that in process of time it may be found possible to dispense with them, and that we shall find the benefit in the encouragement of trade as soon as these duties are taken off. This, however, is matter of theory; in practice I am bound to admit they have not worked badly.

To convey a complete view of the case to the Committee, I must now inquire under what heads the expenditure has increased by £750,000 or thereabouts. Indian expenditure is divisible roughly under four heads. There are, first of all, the ordinary charges of India, including the whole of the army and public services of the country; then there are the charges for public works extraordinary; then the head for the net expenditure in England, which includes the stores sent out to India; and, lastly, the head of guaranteed interest upon railway capital. Upon three of these four heads I find that there has been an excess, and a saving only on the: fourth. I am sorry to say that the saving is upon the one head on which I would have gladly seen an excess, and that is the head of public works extraordinary. Under that head the Budget Estimate provided for a sum of £3,513,000, but the regular Estimate only anticipates an expenditure of £2,761,000, so that there is a difference of about £750,000 between the expenditure as originally estimated and as afterwards determined on. [Colonel SYKES: Is that decided on by the excess of revenue?] It has nothing to do with revenue. There is an increase in the ordinary charges in India of £265,000; there is an increase in the net expenditure in England of £580,000, and there is an increase in the guaranteed interest (less traffic receipts) on railways in India of £660,000. On these three items, put together, there is an increase of £1,400,000 or £1,500,000, which would pretty nearly have balanced the improvement in the revenue. In fact, if there had not been the reduction in the account on public works extraordinary the great increase on opium and the Licence Tax and Customs would have been entirely swallowed up by the increase in the expenditure under those three heads. That is certainly not a satisfactory statement. I have looked into the causes of this increase; and first, as to the increase under the head of ordinary charges in India, which amounts to £265,000, the increase is due, in the first place, to some considerable advance under die head of opium. The large receipts from opium may have caused some increase in the charges in respect to it. I find it stated that the increased receipt under opium is due to the sale of an increased quantity at a higher price, while the increased expenditure is due to the payment of arrears of the past year and advances to cultivators. There is also an increase in the marine charges; but it is chiefly due to expenditure in the purchase of stores at Bombay, probably for the Abyssinian expedition. That is a matter of account, and will be repaid from the Imperial Exchequer; therefore it is not of much importance. There is, however, an increase in the army charges, arising from a variety of small additions, which, I am afraid, must be taken as indicating a tendency to an increase rather than a restriction of expenditure under that head; and this is a matter which requires very carefully to be watched. With regard to the net expenditure in England, including stores sent out for the public service of India, there is an increase of £580,000. Of that, about £100,000 is merely nominal—that is, there are certain items which were formerly provided under different heads which have now been included in the payments under this head. Other sums have to be deducted, and the adjustment will be made with the Imperial Government on account of troops serving in India. A sum of £100,000 has been paid by the settlement of old claims, and there is £28,000 on the furlough allowances. There is a considerable sum—£91,000—for passages of officers and troops, £44,000 on account of the overland service, and a further sum on account of the Victoria Hospital at Suez, which are items that have been introduced by the system of overland transport. [Colonel SYKES: What is the amount paid to Lord Clive's representatives?] £23,079. The other head in which there has been an increase is the guaranteed interest on Indian railway capital, which amounts to £660,000—that is, the additional sum paid in interest and the falling off in the traffic receipts have caused the balance of the account to be to that extent against us under that head. That is mainly due to the accident on the Great Indian Peninsula line, which caused a considerable falling off in the traffic, and to the diminution of the cotton trade. There has also been a falling off on the East India line. In one way or another the result of the year has been less favourable to us in that respect, and the amount we have to pay is £660,000 more than was estimated at the time the last Budget was brought forward. Under all these circumstances, there is nothing in the out- turn of 1867–8 that we can look at with any great satisfaction. Undoubtedly the net result looks satisfactory; an Estimate was made that we should have a deficiency of £1,800,000, and we have only a deficiency of £1,100,000. That looks as if matters had improved, but we find a great increase of revenue due to the increase of that most uncertain of all sources of revenue—opium, while the increase in the expenditure is of a character which I fear I must describe as permanent; and, in point of fact, we should have had no improvement at all but for the fact that the sum we expected to spend on public works has not been spent. With regard to that non-expenditure, it is certainly not the duty of the Government of India to force any expenditure. It is better that we should be careful in undertaking projects which, however promising, may, after all, involve the State cither in loss, or in the necessity of lying out of its money for some time. It is proper to be cautious in these matters. Money will be quite quickly enough spent if it be well spent. I do not find any fault with the Government of India for not spending the whole money they had estimated to spend. I believe they were very careful in examining the different projects submitted to them, and we now find the benefit of their caution. At the same time, this is not a matter—the non-expenditure of the estimated amount on public works—on which we can look with any pride or pleasure. That, then, is the account of the regular Estimate of the year ending on the 31st of March last. The Committee understand that it is an account made up from actual information for about eight months of the year, and from a close Estimate for the remaining four. I now come to the Budget Estimate for the current year—the year which expires on the 31st of March next. I estimate the revenue and receipts at £48,586,900, and the charges of all sorts at £40,613,394—leaving a deficiency of £1,026,494. That is the gross amount, allowing all public works extraordinary to fall under the head of charge. Under the head of public works extraordinary there are charges of £3,092,090; and if that were removed from the Budget and charged to capital you might convert your deficiency into a surplus of £2,065,596, just as in the preceding year, if the same thing were done, instead of a deficiency there would be a surplus of £1,600,000. And I think it would be perfectly fair if I were to make such a statement to the Committee, leaving the item of public works extraordinary out of the expenditure, and representing to the Committee that we have a good surplus for the last two years. But I think it wiser to take the course I have adopted, and that, as prudent men, we ought not to run away with the idea that financially we are in a better position than we actually are. And I am bound to say that this distinction between public works ordinary and extraordinary is one which I view with extreme jealousy. I assent to the principle, as it was enforced by my noble Predecessor (the Marquess of Salisbury), and I have adopted it in my Budget Estimate. I entirely agree with the principle that it is a fair and right thing to provide for that class of public works which are of a reproductive character by raising money on loan. I think it may fairly be compared to the conduct of a landed proprietor who keeps his household expenditure properly within his income, but for real improvements on his estate calls in aid his credit and borrows the money which, in the course of time, the improvement itself will repay. That is a perfectly legitimate and fair operation; but he will be open to the great temptation of transferring to this land account a portion of his ordinary expenditure, which ought to be met out of the year's income. He will be inclined to add a new wing to his house, or to put a new conservatory in his garden, and thus he may go on borrowing to a greater extent than he is aware, and yet all the while he may appear to be keeping a pleasant account at his bankers. No doubt, the temptation will be equally strong on the Indian Government to charge to loans public works that are of an ordinary, or, at all events, not of a reproductive character. I observe that, under the old system, before this distinction between public works ordinary and extraordinary was made, large sums were spent on certain classes of works without having recourse to borrowing. But I find that, since this new principle has been adopted, the extraordinary public works have grown to a very considerable extent, while the charges for ordinary public works have shrunk in a corresponding degree. For instance, in the year 1865–6 we spent upwards of £5,000,000 on public works, and charged the amount to the income of the year. But this year there is put down in our statements of public works charged as ordinary no larger sum than £3,800,000, being a difference of £1,200,000. It certainly seems curious that, whereas the system of making a charge for public works extraordinary was adopted with a view to undertaking works of a remunerative character, the charges for other works should be reduced. This year we have for extraordinary works a charge of £1,820,000 for military buildings, barracks, and embankments; £800,000 for irrigation works; and £170,000 for special fund works. With regard to the latter two classes of works, there is no doubt that they are precisely the description of works for which it is legitimate to borrow money. Irrigation works, if properly conducted, will, no doubt, in time recoup you, while the special fund works will do so directly because they are works undertaken by municipalities or other independent bodies to whom money is lent by the Government upon proper security. Therefore, as regards this sum of £1,270,000, it is perfectly legitimate to charge it to extraordinary public works in the Budget. With regard, however, to the items for military buildings, barracks, and embankments, we ought to be very chary of allowing them to be treated in the same manner. No doubt, with regard to these latter works, there is a large exceptional expenditure going on which should be included within certain definite limits, and when the contemplated works are finished that exceptional expenditure ought to come to an end. It may not be unfair that such exceptional expenditure should be provided for by a loan, so as to spread it over a certain number of years. That is a principle which we adopt in this country with regard, for instance, to fortifications. Instead of constructing such works out of revenue, we raise money by terminable annuities, which we expect to pay off within a certain definite period. That is n principle, however, which I myself have never liked, and I should be sorry to see it carried further than is absolutely necessary. But in India the safeguards that exist with respect to that system in this country are not to be found, because the money is not there raised by terminable annuities, but is treated as a certain excess over the income of the year, about which we need not trouble ourselves, and is provided for by either reducing the balances or by borrowing the money necessary without any special provision being made for the reduction of the debt. That is a rea- son for looking with jealousy upon this kind of expenditure, and another reason for doing so is, that there are items in the revenue of India—especially that of opium—which are so uncertain that it is desirable that we should be careful how we incur anything in the nature of debt. Under all these circumstances, there has been some confusion not only in this country but in India—as to what is the actual condition of our finances, and a question has arisen which has disturbed even the minds of several members of the Governor General's Council—namely, whether we can be fairly said to have a surplus or not in the present year, and the question was raised whether it was or was not necessary to have recourse to further taxation. The whole difference turns on the question what is to be reckoned extraordinary expenditure. Under these circumstances I thought it desirable in the despatch which I have addressed to the Government of India, in reply to their financial despatch, to lay down the rule that in future years irrigation and special fund works ought to be the only works which should appear as public works extraordinary. There may be good reason why, when the expenditure upon public works ordinary is very heavy, it may be necessary to meet it by a loan; but the fact should always be recognized that the deficiency to be so met is a deficiency to be provided for out of revenue. Until we lay down that rule we shall never be safe in borrowing money for public works.

I wish now to make one or two observations on the Budget for the present year as compared with that for last year. Taken as a whole, the Budget for the present year shows an increase of £328,000 in revenue, and an increase of £248,000 in expenditure over that of last year. In point of fact, however, the increase on both sides is merely of a nominal character. There is a substantial increase in the item of Land Revenue, which will be £362,000 better this year that it was last year, and this increase is owing to the improved condition of Orissa, and to some new settlements which have taken place. On the other hand, it has been thought prudent to take a reduced Estimate for the opium revenue, which is estimated at £8,385,000, being £400,000 less than the Estimate of last year under that head. The Estimate under the head of Customs duties is less by about £100,000, on account of the decline in the sugar trade in the Central and North-Western Provinces, and other causes. The total estimated revenue is about £48.500,000, of which upwards of £8,000,000 is estimated to be received from opium. Seeing that opium is estimated to produce more than one-sixth of the whole revenue of India, and seeing that that sum is considerably in excess of the average revenue it has produced during the past ten or twelve years, I think it would be prudent that we should put some limitation upon the amount that we ought to take credit for from this source of revenue, and, therefore, I have suggested to the Government of India that it would be better if, instead of forming each year an estimate of the amount which may be yielded by opium, and taking the full credit for that amount in estimating our revenue for the year, we took a certain sum to place to credit as representing the average revenue we derive from that article, and thus arrived at a fixed and reliable basis upon which to estimate our revenue. In those years in which the revenue from opium exceeds the sum so taken, the excess may go towards strengthening the balances and defraying the charges for the construction of the public works, and should it fall below that sum we might be able to draw upon the balances to meet the deficiency, or we might go into the market for a somewhat larger loan to meet the public works expenditure. I think that by adopting such a course as I have suggested we should be able to get something like consistency and fixity of taxation and of expenditure in India. By making some such arrangement, in combination with an improved system of advances for public works, and by introducing some more careful mode of keeping the accounts of the reproductive fund which we may hope will arise from these public works, we may establish a system of carrying on public works by means of borrowed money upon a solid and secure basis. At present, however, I feel considerable uneasiness with respect to that particular feature in our financial system, because, while I fully recognize as a good one the principle of borrowing for works that are to be reproductive, I am afraid that in carrying it out in detail we may lose sight of the reproductive element, and that we may carry all that comes to us from the public works to the credit of the Land Revenue; and, that so losing sight of it as belonging to a particular fund we may cease to extinguish debt, and may allow it to increase upon us to an extent that may be very undesirable. Under all these circumstances, I think the policy pursued by Mr. Massey and the Government of India on the present occasion is a perfectly sound and right one—I mean with regard to the maintenance of the existing sources of taxation. It was questioned whether, looking at the account in the more favourable aspect in which, I admit it is capable of being regarded, it was necessary to renew the Licence Tax. To have extinguished ft was a course so popular that the Government might have been much tempted to adopt it. The amount raised by its means was not a very large one—only £658,000 last year, and undoubtedly there were some features in the tax which gave annoyance and which it was necessary to alter. That alteration reduces somewhat the value of the tax, even as it exists; but I think the Government of India were perfectly right in resolving to maintain this mode of taxation. It is after all but a slight burden on the classes who have to pay it, and it maintains a sort of regard to the principle that those who are the possessors of wealth and those who are exercising profitable occupations should contribute something to the interests of the State. I would call the attention of the Committee to the progress in late years of the different branches of taxation. I have compared the taxation, of 1856–7 with the taxation proposed in the present year, taking it under three different heads. In the first place I take the Land Revenue, which can hardly be called a tax, but which is a very important—by far the most important—source of revenue to the State, and the revenue in 1856–7, from this source amounted to something less than £18,000,000, being in fact £17,900,000. In 1868–9 the revenue from this source had risen to £20,400,000, showing an increase under this head of £2,500,000, or about 14 per cent. Then I take the group of taxation which bear upon the consuming population—the Excise, Salt, and Customs. In 1856–7 these three produced £5,700,000, and in 1868–9 they had risen to £10,600,000, showing an increase of very nearly £5,000,000, or about 85 per cent, in this class of taxation. I take thirdly the class of duties which fall upon the mercantile and trading communities and upon the possessors of wealth, such as the Stamps and the Assessed Taxes. In 1856–7 there were, of course, no Assessed Taxes, and the revenue from Stamps only amounted to £612,000. The revenue from these sources in 1868–9 was £2,942,000, showing an increase of £2,330,000, or about 380 per cent. In the former year the Land Revenue yielded 53 per cent of the whole revenue, while now it produces only 42 per cent. I think, under all the circumstances, that it would have been a pity to attempt to get rid of the Licence Tax, and therefore in retaining it and depriving it, as Mr. Massey has done, of its more objectionable features, I think he has exercised a wise discretion. The Government did not think it wise to turn it into an acknowledged income tax. It is, indeed, very little else but an income tax, and I am not sure that it would not have been well to have given it that name, and to have rendered it a little more productive. But that is a matter upon which the Government of India—who ought to be better acquainted with the feelings of those with whom they have to deal than we are—can better judge than the Home Government, and I am ready to accept their opinion on this point.

I have now gone through the principal heads of the Budget of 1868–9. There is one point, however, relating to the Home charges, upon which I should wish to say a few words. I wish to call the attention of the Committee to the fact that we have this year made an alteration, or, rather, an addition to the usual accounts which are presented to Parliament. We have added to the Return a new account, giving a comparison of the estimated with the actual receipts and disbursements of the Home Treasury for 1866–7, and another account giving a comparison of the original with the regular Estimate of the receipts and disbursements of the Home Treasury for 1867–8. I think it is very desirable that the Members of the House of Commons should have an opportunity of getting fuller information with regard to these Home accounts than they have hitherto had, and I have introduced a new form of account for the purpose of showing what are the differences between our original Estimate and the amount which is ultimately furnished, with a column giving an explanation of the increase or the decrease, so that, in point of fact, they resemble very nearly the accounts of the army and navy expenditure which are laid upon the table, and which are in the hands of hon. Members when the Estimates are before them. This account shows in what respect the expenditure has or has not exceeded what was estimated. In addition to this, we have adopted this year a new system of referring the accounts to the Standing Committee on Public Accounts, in the hope that they will examine them and will put any question they may think desirable to the auditor or the officers of the India Office. I am quite satisfied that it is desirable that Parliament should exercise that kind of control and criticism over the whole of the expenses. I am not, however, of opinion that it would be desirable that Parliament should take into its own hands the direction of our expenditure, or that it should endeavour to introduce a system of voting the money that we should spend. I think any system of that sort would prove not only delusive, but positively mischievous, for we all know how few Members of Parliament take a real interest in the subject or have sufficient knowledge to enable them effectively to criticize the details of Indian expense; but frequently a strong pressure would be put upon Parliament by persons having an English interest in the expenditure of Indian money, and this might lead to expenses which are avoided under the present system. I believe that the minute control exercised by a body of men like the Council of India is much more advantageous than any control exercised by this House would be; any acceptance, too, of the responsibility by Parliament which such a control entails would also, in my opinion, tend to introduce laxity into the supervision which that Council exercises in those matters, inasmuch as they would be to a great extent relieved from the responsibility which at present attaches to them.

The statement which I have now laid before the Committee is one, I think, which can excite no great amount of enthusiasm one way or the other. If there is nothing very unsatisfactory in that statement, there is, on the other hand, nothing in it of which we have any great reason to be proud. Our revenue, undoubtedly, keeps up, but it does not increase very largely, and though our expenditure exhibits no large increase, there is a tendency to creep up. We are, undoubtedly, spending a good deal of money on very beneficial undertakings, such as public works and railways; yet, on the other hand, there are many excellent works which we are unable to undertake from want of funds. In the past year I have had to lament that we have been obliged to refrain from carrying out those sanitary and educational measures which we could wish to see adopted, but the consideration of the Government has been turned to these measures, and we are, I believe, making progress. We have established a sanitary Department in our Office, and we are in communication with the Government of India in respect to improved sanitary arrangements. An impulse has been given to the educational movement, but what the result is likely to be we are not in a position to say. What we have to do is to keep our eyes upon the details of the expenditure, and that is by no means an easy thing to do in this country. It must be done mainly in India, but still we believe that much can be done even here. One step of some importance we have taken; we have put a stop to the system of sending home continually by every mail proposals for an increase of salary or expenditure in this or that Department. We have directed, instead, that all those proposals should be reserved and sent home at one time, so that the whole of them may be considered together; and though this is apparently a very simple measure, it is exactly one of those measures which are likely to tend to economy. I hope it may be found possible in the matter of civil, and more particularly of military expenditure, to exercise a more rigorous control over some details than, I think, has been exercised hitherto. At all events, that is the object to which we are now devoting our attention. I have already said, respecting public works, that we are endeavouring to devise a system by which we shall be able to discover what returns we get from the money laid out upon the re-productive principle. Respecting railways, we are now in communication with the Government of India, requesting them to lay before us a complete scheme for the further prosecution of railway works, and to state what railways should be first completed, and at what rate we can safely and properly proceed. There are some lines which must be very speedily taken up by the Government, from political motives, and there are others which it may be desirable to take up with a view to commercial improvement. I have also spoken of the advisability of establishing proper financial relations between the central and local Governments. I very much regret that more progress has not been made in that undertaking since last year, but those who are acquainted with Indian affairs will readily understand that this is a matter which gives rise to much difference of opinion and to considerable discussion between the central Government and the local Governments; and it is not surprising that although Mr. Massey prepared a plan and submitted it to the local Governments, we have not yet received the full Reports which have been sent in. We have before us the nature of the proposition in outline; we have also remarks of certain members of the Council and some influential persons upon it, but we have not yet received the views of the Presidencies of Bombay and Madras upon the subject. That, however, is a matter which will be proceeded with. Altogether I think we may congratulate ourselves upon the financial position of India, that our credit keeps good, and that there is a very fair relation between the revenue and the expenditure. Under these circumstances I will not longer detain the Committee, but I will move the Resolution I have placed in the hands of the Chairman, which differs somewhat in form from that of past years, because while it records the figures as usual, it also contains a reference to the Report of the Committee on Public Accounts for the year, and expresses the assent of this Committee to that Report.


said, he saw very little to except to in the clear and judicious statement of the right hon. Baronet the Secretary of State for India. No one could doubt the judiciousness of the conclusion come to by Mr. Massey and the Indian Government, and which had been affirmed by the authorities in this country, that there should be no alteration in the taxation for the current year. Whatever objection there might have been to the policy of the Licence Tax when it was first imposed, it would, in his opinion, have been impolitic, without a much larger surplus, to repeal taxes simply because we had had an exceptionally good opium year. He also generally concurred with the right hon. Baronets's observations as to the danger of allowing items of expenditure on public works to be improperly carried from revenue to capital under the head of extraordinary expenditure. Such a practice resembled the condemned system of keeping railway capital accounts open. But he wished to say a few words on Indian finance generally, because it seemed to him that there still remained a disposition in the Home Indian Government to take a rather too gloomy view of the financial position of India, and that might lead to bad results. About five years ago very important practical questions were at issue, arising out of the doubt as to whether the restoration of the Indian finances after the Mutiny had been so complete that practically the equilibrium had been established. If the equilibrium had been established it would have been obviously right to incur a more liberal expenditure in useful and reproductive works than would otherwise be possible, and it was also clearly right not to impose an excessive amount of unpopular direct taxation to maintain an unnecessary surplus. On those questions he had taken a different view from that of the Secretary of State of that time. That controversy between Lord Canning's Government and the Home Government should guide them for the future. He most cheerfully bore testimony to the fact that the administration of the Home Indian Government under the right hon. Baronet and the Marquess of Salisbury had been of a much more liberal tone than the policy of earlier times; but he could not help thinking the right hon. Baronet had spoken too gloomily of Indian finance, and he (Mr. Laing) proposed to point out why a more cheerful view of things should be taken. During and after the time of the Mutiny, the financial condition of India was one of extreme distress—there was an accumulated deficit in the four years from 1858 to 1861 of £42,000,000, so that the average deficit for the four years was £10,500,000 per annum; and during 1860 and 1861, two years after the Mutiny, the annual deficit amounted to the formidable figure of £5,250,000. Great efforts were then made towards the establishment of an equilibrium, and since 1861 those efforts had been practically successful. During those six years they had been paying their way. For three years there had been a surplus, and for three years a deficit, but the six years together showed that the debt had slightly diminished; at the commencement it was £113,000,000; in 1867 it was £108,000,000. The interest paid in the year 1862 was £5,160,000, and in 1867 it was £4,829,000. It was true, however, that the cash balance in 1862 had amounted to £17,000,000, and that it stood in 1867 at only £11,000,000; so that to within a few pounds India was in the same position as regarded her public debt, less cash balances, now as she occupied in 1862. This, he thought, proved the soundness of the view entertained by Lord Canning's Government as to the preservation of an equilibrium in the Indian Budget. And he thought it right to ob- serve that the equilibrium of the Indian Budget was very different from the equilibrium of any European Budget, because in the former works were charged to revenue which in the latter would be charged to capital. From 1862 to the present year the cost of the public works undertaken in India was £28,667,000; of which no less than £16,000,000 was for original works and improvements exclusive of the cost of maintaining. Just about one-half of that £16,000,000 was for new civil and military buildings, and might be regarded as adding to the value of the public estate; the other half was for strictly reproductive works; so that £8,000,000 had been charged to revenue, which he ventured to say in the Budget of any other State in the world would have been charged to capital. In India the compensation for land taken for railways was charged to revenue, though it was as strictly a charge against capital as was the cost of constructing the railways themselves. During the last six years £15,000,000, or £2,500,000 a year, had been charged to revenue in India, which, if we took the analogy of any European State or any private railway company, would have been charged to capital. During the same period, though there had been no large war, India had not been completely tranquil and some of the military operations there had been attended with considerable expense. If there had been no increase in the cost of pay and provisions there ought to have been a diminution of £1,500,000 or £2,000,000 as compared with the military establishments of 1861–2; but, instead of a decrease, there had been a small increase. He thought, however, that the expenditure under this head would not have been an increasing one, and he believed that if peace continued, it would be possible to effect a reduction. Here he would observe that his experience led him to believe that if we wanted economy in military matters we must have a civilian primarily responsible for that expenditure—a Minister for War in England and a Governor General in India. In other words, we must not allow a Commander-in-Chief to control his own Estimates. But the Estimates being under the control of a civilian, one man ought to be made responsible for carrying out all the details; and a military man thoroughly acquainted with all the practical details of his profession, was best adapted for this latter duty. He believed that in respect of this matter second thoughts in India had been the worst. In his opinion the original plan was best, and the amendments made on it by the Treasury were not improvements in regard of economy. A point of difference between him and others who took a sanguine view of Indian finance, on the one side, and those who did not take that view on the other, was in respect of the revenue from opium. He bad heard it said that this was a precarious revenue; that it was a reed which some day or other would break in our hand, and that therefore, we did wrong to depend on it. In 1862, he had occasion to look into the matter very closely, and he arrived at quite an opposite conclusion. He came to the conclusion that there was no reason why the revenue from opium should be more precarious than any other revenue depending upon an artificial taste widely diffused among a large population. He at that time ventured to predict that there would bean increase rather than a decrease in the Revenue from opium within the next few years. He did so because having looked back for a few years he found that in China the expenditure for opium had been steadily and rapidly increasing. For the five years ending in 1857 that expenditure had been £8,000,000 per annum. During the next five years, from 1857 to 1862, it was about £11,000,000 per annum. In 1857 the gross revenue from opium in India was in round numbers £5,000,000, and the net £4,000,000. From 1857 to 1861 the average receipts from the same source were £6,080,000. In 1861 they were £6,676,000 gross, or £4,160,000. He might observe that in the case of opium the net revenue was the thing to look to, as the article was one of Government manufacture. Between 1861 and 1867 the gross revenue had risen to £7,380,000 and the net to £5,600,000. In 1867–8 the gross revenue was £8,814,000, and the net £6,951,000. That appeared to him to be as little like a precarious and declining revenue as anything could well be. The enormous population of China preferred opium to any spirit or other stimulant, and, as the experience of the last twenty years proved that, practically, India had a monopoly in the supply of that article to China, the trade in that article would increase as new communications were opened up. He was altogether unable to see why there was anything more objectionable financially in a revenue derived from the sale of opium than in one derived from the sale of spirituous liquors, or, as in Russia, from the monopoly of brandy. He was anxious to call attention to a few facts showing the progress of India; for he believed that while it was important to encourage a reasonable and prudent liberality with regard to public works, it was not less important to exercise a wholesome influence upon public opinion, which was being very rapidly created in India. He should be the last person in the world to indulge in anything like self-laudation or puffery, believing that it always defeated its own object; but, feeling convinced that our government in India was not only the cheapest and best of any oriental nation, but perhaps one of the cheapest civilized governments in the world, he felt it to be only right that the facts should be known generally, and that the Natives should not be led into the mistake of supposing that the British rule was bad, economically, or in any other respect. The first question to be considered was the intrinsic elasticity of the revenue. In 1862 Lord Canning's Government had to decide upon the important question of imposing a Licence Tax, and, accordingly, before this resolution was adopted it became necessary for him to go into very minute calculations with regard to the revenue. Excluding all those additions arising from annexations of territory, to which the right hon. Baronet had referred, and looking merely to the inherent elasticity of the revenue, he found that for the previous ten years an increase at the rate of more than £700,000 a year had been going on, and he ventured to hazard the opinion that the tendency was still further to increase. That was in 1862, and in the last six years the revenue had increased from £42,900,000 to £48,935,000, being an average increase of over £1,000,000 a year. [Colonel SYKES: From opium?] Of course, a portion of the increase was derived from opium, and he had already tried to show that this was as legitimate a, source of revenue and as little injurious as any other. But to show that opium was not the only source of increased revenue, he would investigate the progress made during the five years from 1861 till 1866, the date to which the latest complete Returns were available, which seemed to him a period more applicable to the present state of things than some of the examples given by the right hon. Baronet. By comparing the Returns of 1861 with those of 1866 it would be seen that the Land Revenue had increased from £18,500,000 to £20,478,000. Yet during that period there had been no annexations of territory and no increase in the rate of assessment; the whole of that increase, therefore, must be due to the prosperity of the agricultural interests of India, causing additional and i waste lands to be brought into cultivation. During the same period the Excise Returns showed an increase from £1,778,000 to; £2,612,000; and the yield of the salt tax had risen from £3,805,000 to £5,342,000, the Estimate for next year being even higher. The latter was a very important, increase, because the salt tax was perhaps; the only one affecting the great mass of the population of Hindustan. There was no man so poor as not to consume salt, and the progress therefore of the revenue from salt in India might be regarded very much in the same way in which the Excise Returns in this country were supposed to throw light on the condition of the great body of the people. Stamps during the same time had risen from £1,182,000 to £1,994,000. These were all items independent of opium, and they exhibited a rapid and satisfactory state of progress. The Government grants for education had increased in five years from £235,000 to £440,000; but, besides this, he found from official Returns that the amount expended upon education from local and private sources, other than grants from the State, had increased from £128,000 to £330,000—that was to say, had increased nearly three-fold in five years. The average attendance of scholars had risen from 333,000 to 559,000, or 66 per cent. The increase of intelligence was shown in another way; the number of letters and newspapers sent through the Post Office had increased from 47,077,000 in 1861 to 59,931,000 in 1866. In fact, reviewing the career of India for these six years, he knew no other country in the history of the world in which such a great material progress had been made. The increase in the imports and exports was something almost fabulous. The aggregate imports and exports which in 1861 amounted to £68,000,000 in 1866 had risen to £123,000,000—that was to say, had very nearly doubled in five years. The amount of bullion imported into India during the last six years amounted to no less than £115,000,000. The tonnage of shipping entered and cleared rose from 5,101,000 in 1861 to 7,621,000 in 1866, and the railway mileage increased from 1,028 to 3,452 miles. The gross receipts upon these lines stood at £730,000 in the former year, and £4,607,000 in the latter. Contrasting these figures with the financial working of the government of any other country in the world that he was aware of, the results, he believed, must prove most creditable to British government in India. He was the more anxious to dwell upon these points because last year an authority no less eminent than the Marquess of Salisbury expressed, in language which had since become memorable, a doubt whether, as a whole, British rule in India had proved a benefit to the Natives or not. He was very glad that doubt had been expressed, because it had led to what was no doubt a very useful inquiry, and to the production of a body of most valuable Reports, which must convey to the mind of any gentleman who read them attentively the impression that British rule had undoubtedly been of the greatest possible benefit to India. The taxation of India was lighter than that of any other civilized country in the world. There could be no reasonable doubt that the revenue raised from land there was in the nature of a rent, and that if it were not paid to the State it would be paid to private proprietors. The large revenue from opium, moreover, was not really paid by India, but by the consumers in China. If these two items were deducted, the whole amount of revenue raised in India would be only £18,000,000 a year; but even of this limited amount about £1,500,000 accrued from the tribute paid by other native princes, and for services, such as that of the Post Office, for which an equivalent was given. A careful analysis, therefore, of the taxation levied in India for the purposes of the public administrations, civil and military, would show that this did not exceed £15,000,000 a year, which would be about 2s. per head on the population of British India, numbering 150,000,000. But, even if the question affecting the nature of the land revenue were waived, and this were treated as an Imperial tax, even then the taxation of the population would be under 5s. a head. in no country in the world, making a pretence to civilization, was the taxation upon so low a scale; he did not refer merely to highly taxed countries like England or France, where the taxation was at the rate of over £2 a head, but to such countries as Turkey, Egypt, or Russia, where, with the comparative amount of civilization which they possessed, the taxation was from 15s. to 20s. a head. Take, again, the Public Debt of India. The annual charge was a shade under £5,000,000 sterling, which was but one-tenth part of the revenue of India; and it had been stationary at this rate since 1861; whereas in other parts of the world, not only was the debt large and rapidly increasing, but the annual payment of interest upon it amounted, perhaps, to one-half, or, as in the case of England, to 33 per cent of the annual revenue. And what had been obtained in return for a portion of the obligation so undertaken? No less an amount than £65,000,000 of British capital had been expended upon the construction of railways in India. In India no less than £65,000,000 of British capital had been expended in making water communications and carrying out other invaluable and important public works. Now, while he quite agreed with the right hon. Baronet as to the importance of economy, and deprecated launching out into extravagance in small matters, yet he had come to the conclusion that, in the present condition of Indian finance we, ought not to starve great, important, and necessary public works. We ought not to mind contracting a national debt in India for purposes of primary importance. Although he was as averse as anybody could be from keeping a small capital account open, yet he could not help seeing that it was a totally different thing from contracting a debt in order to carry out public works of a political and commercial necessity, such as railways and irrigation works. It was obvious, for instance, that a system of railways leading up to Peshawur, on the frontier of the Punjaub, was a primary necessity. The political use of such an undertaking must be evident to everybody. As Russia was extending her dominion in Central Asia it was patent that our policy should be to keep on friendly terms with her, and, while allowing her to do what she liked on the north side of the range of mountains, to put themselves in an efficient state of pefence on the south side. With that object we ought to construct a line of railway to Peshawur, and to complete another up the Indus Valley from Kurrachee. He also thought that the Benares irrigation scheme ought to be proceeded with without delay. On the whole, he was in favour of the Government executing these great works, instead of intrusting them to private companies; and this opinion was, he believed, shared by most of the Indian authorities. At all events, he was anxious that there should be no delay; because, while we were higgling with the company which had pos- session of the field, we might lose the opportunity of raising the money when the money market was in an easy state. Indeed, he particularly wished to impress on the right hon. Baronet the importance of taking advantage of the present condition of the money market, and of the high credit of India to make ample provision for the wants of that country for a series of years to come. It would be necessary to expend at least £20,000,000 during the next eight years or so. He did not mean to say that a sum of £20,000,000 should be borrowed at once, and then locked up to remain idle. He thought that the right hon. Baronet might very well take a leaf out of the book of some railway companies, which had been making provision for paying off their terminable debentures as they fell due over a series of years. The lenders should be allowed either to pay up in full, or leave a deposit of perhaps 10 per cent, on the remaining calls, so as to insure their being paid. Under such a system the necessity was avoided of disturbing the money market by raising a large sum in any one year, while, on the other hand, there was a certainty of getting the money year by year as it was required. By this method the right hon. Baronet might raise the money he wanted within about 5 per cent or so as cheaply as if he were to take the whole at once, and in the present state of the money market the amount would probably be advanced at a very favourable rate. So far as regarded finance. As to general questions, he should not refer to them at any length, though he must say a few words as to the measures to be adopted for maintaining in India the excellent government which she had enjoyed during the last six years. A question had been raised as to the relative merits of personal government and of Councils. In his judgment the question was one of degree. Everybody must, on the one hand, admit that personal government and personal character was the mainspring of everything in a country like India; but, on the other hand, it stood to reason that all matters could not be intrusted to individual impulse, the more especially as the Secretary of State for India in this country necessarily changed with the Ministry. It was absolutely necessary that he should have the benefit of the advice of experienced Indian officials, and he would suggest that it was of vital importance that men of eminence, like Sir Bartle Frere or Sir Robert Montgomery, should, in returning from India, receive a kind of official retainer to give advice lo the Secretary of State for India. In conclusion, he wished to state that he had listened with great satisfaction to the statement of the right hon. Baronet, whose administration had been on the whole a very enlightened, a very economical, and a very successful one.


Sir, I should have been sorry if this conversation had come to an end, without my having had an opportunity of expressing my very great regret that one of those untoward accidents, to which the House is subject, should have prevented the hon. and gallant General, the Member for Frome (Sir Henry Rawlinson) bringing before us a subject, which will, I fear, however favourably matters may turn out, exert a sinister influence on many future Indian budgets. I allude, of course, to the recent advance of Russia on Central Asia. I am as far as possible from being an alarmist on this question. Some who have given much attention to it say that I am too little of an alarmist; but I do think that even in this crowded Session this matter should not have been passed by. There is a difference between panic and wise foresight. A discussion, inaugurated as it would have been by the hon. and gallant General, with whose views some of us do and some of us do not agree, but whose acquaintance with a certain portion of the subject we all admit to be great and almost unique, would have enlightened opinion in Europe, strengthened the hands of the Viceroy in what I consider his wise policy, and above all calmed opinion in India. Far be it from us to wish to see a revival of the anti-Russian feelings of thirty years ago; but let us not deceive ourselves. This is a grave matter. It is for the interest of all of us, and above all for the interest of the Government for the time being that all the best information and all the best thought about Russia, which exists in Western Europe, should be called out for our guidance, and it is known to everyone that the most sovereign means of calling out all the best knowledge and all the best thought existing in Western Europe on any political subject is a discussion in the British House of Commons.


said, the right hon. Baronet had brought forward the Indian Budget in a spirit of great fairness. He could not agree with the hon. Member for Wick (Mr. Laing) that great progress had been made in the trade of India, seeing that the exports and imports showed a great falling off. It appeared from the official Progress Report of India recently printed that the export trade between 1865–6 and 1866–7 had diminished £17,453,698, and that the import trade, including treasure, for the same period had diminished £ 10,919,196, in all£28,372,894, or 23 percent on 1865–6, and 19 per cent on 1864–5. The number of sea-going vessels had diminished 917, with a tonnage of 227,547, and the coasting trade 11,555 vessels, with a tonnage of 318,907. This was matter for serious consideration. He would urge the desirability of a more speedy issue of these Returns. He thought that the House should not, at the end of July, 1868, he called upon to discuss the Budget and policy of India only up to the 31st March, 1867. In his opinion, the revenue derived from opium could not be a source of gratification to the moral sense of this country, since it rendered us responsible for the destruction of the physique and morale of the Chinese, who were the chief consumers. It was satisfactory to find that education was making rapid strides in India. There were 17,117 schools in India in 1864–5, with an attendance of 435,818 scholars, at a cost of £613,000. In 1866 there were 18,562 schools, with an attendance of 559,317 scholars, at a cost of £770,834. The Government Colleges and private institutions had increased; the Colleges from 295 in 1865–6 to 305 in 1866–7, and the institutions from 2,266 to 2,602 in 1866–7, and other schools from 197 to 425—in all from 2,758 to 3,332, and the scholars in these schools from 121,286 to 134,640, and in the private schools from 7,433 to 13,460. The number of Colleges was increasing; but he must point out that the Natives, who received a superior education at these institutions, would expect employment in positions suited to their attainments, and that, unless such employment was provided for them, they would naturally become discontented. They would not be satisfied with small Government clerkships. In illustration, he would take the number of scholars in the University of Madras who had gone up for matriculation examination. In 1857 there were only 41; but in 1866–7 there were 895, and the total number in ten years was 3,161—of these there had graduated in degrees and honours in the different faculties from 1857 to 1867:—Bachelor of Arts, sixty-three; from private tuition, twelve, Bachelor of Civil Engineering, five; Bachelor of Laws, twenty-three; Fine Arts examination, 168; and from private tuition, ninety-seven. One candidate has taken the degree of M.D., and three others have passed preliminary examinations. The successful scholars of the Calcutta and Bombay Universities are even more numerous. With regard to finance, he agreed with the right hon. Baronet (Sir Stafford Northcote) in thinking that a distinction should be drawn between extraordinary public works, whether remunerative or otherwise, and ordinary annual works. If this were done, instead of throwing extraordinary public works upon revenue the Budget would show an annual available surplus, and this surplus, if devoted to extraordinary public works, would enable us to make considerable progress, particularly with regard to irrigation; for completing extraordinary works recourse should be had to loans. There was a growing feeling of dissatisfaction and discontent with reference to the prospective state of the Indian army. Before the transfer of that army to the Crown regimental bonuses for senior officers on retirement were subscribed to by the officers; but those who have joined the Staff corps have no longer any motive to subscribe, being promoted for length of service alone; the consequence was that the bonus system fell through in all Native regiments, and officers who had expected to retire with a bonus of £5,000, or £6,000, were still kept in the service and deprived of every shilling they had subscribed. Committees had sat in India upon this subject, but with what result? In a literally trading and huckstering spirit the officers had been asked how much they had received in additional pay at every previous step of promotion in their career, and they were told that so much should be deducted from their bonus—that is to say, from the money they had actually subscribed. This had created great dissatisfaction and resentment, and could not have been intended by the kind liberal spirit in which the despatches of Viscount Cranborne and the right hon. Baronet on this subject was conceived. He was glad to observe that the health of both European and Native troops had been very satisfactory—the death-rate of Europeans which formerly was 10 percent, including invaliding, being in 1865, 64,405, 2½ per cent for the death-rate. And in 1866, on 59,941, it was no higher than 2 per cent. The invaliding in 1865 was 4.4 per cent, and in 1866 it was 3.4 per cent. The rate of deaths in the Native army in 1866, on 99,036, was only 1.2 percent, and the invalided were only 1.7 per cent, the happy results, it is to be hoped, of sanitary measures for the European and Native troops. He observed, however, that while the number of troops had diminished by 183,023 officers and men since the Mutiny, the expense had increased by £5,000,000. This opened a wide field for inquiry, and, he hoped, for reduction. While the cost of the Company's army had never been more than £10,300,000 a year from 1851 to 1857, except on two occasions, in 1854 and 1855, when it rose to £11,000,000, the cost of the army in India now was £15,825,791—with an increased number of Europeans it was true, from 42,000 in 1857 to 59,941 in 1868, but with the Native force reduced nearly two-thirds, from 300,000 men to 99,036. Upon the whole the prospects of India, he was glad to think, were not unfavourable. He entreated his right hon. Friend to consider the question of the Native regiments being without officers. In the late Abyssinian expedition some of the regiments had not one of their own old officers. If it were resolved to have only six officers to be named by the Commander-in-Chief with a regiment, surely he would have the common sense to keep the old officers with the men with whom they had served, and between whom and themselves a feeling of sympathy had grown up. To put strange officers with the men was decidedly impolitic and even dangerous.


said, while thanking the right hon. Gentleman the Secretary of State for India for the statement which he had laid before the House as to the Indian finances, he felt it was deeply to be deplored that the interests of 200,000,000 of men should come on for discussion only at the very eve of the prorogation of Parliament; and he trusted that in future the subject of India would be brought before the House at a time when it could be really discussed. Nothing would contribute more to the prosperity of India than attention not only to the rights of labour, but to proper investments in public works. A large amount of money had been expended that would be really unproductive; but he did not know that too much had been laid out upon productive works. They wanted in India supplies of water, not only for irrigation, but also for communication. The Punjaub furnished an example that might be followed with advantage in every part of India. With regard to railways, it was to be observed that, while we in this country had about 14,000 miles of them laid down, in India there were not, probably, 4,000 miles. In the United States of America there were probably 40,000 miles of railway. He submitted that in India, instead of 4,000 there ought to be 40,000 miles of railway communication. He congratulated the right hon. Baronet on the prospects connected with the thirty years' tenure of land. It was very probable that there would every year be an increasing revenue from a continually increasing rent; and he was glad to hear that land, in an uncultivated state, was let at as low a price as 1½d. per acre per annum for a certain number of years. At the end of thirty years it would let for 1s. an acre. He rejoiced to hear that efforts were being made to increase the quantity and improve the quality of the cotton, and that, according to the gentlemen who had traveled through the cotton cultivating districts, that there was an improvement in the crop. He would be glad to see an agricultural inspection of cotton through the whole of India, and also that there should be a system of agricultural statistics. By that means India would attain a state of prosperity to which she had hitherto been a stranger. One great proof of the progress that had been made was that the price of labour had been considerably increased. He wished very much to see a remission altogether of the duty upon salt, as no greater boon could be conferred upon the inhabitants of India, He trusted that every effort would be made to develop the resources of the country; and in that case he thought that India had a great future before her. In a word, he asked for no favour for our Eastern possessions, he only demanded that justice should be done them. To see palatial structures rising and costly entertainments given at the expense of India was not creditable to us. We should not only give the people of India our language and civilization, but in all our intercourse with them we should be careful to do them justice.


said, that it was only because he believed that British rule, as had been proved to demonstration by the speech of the hon. Member for Wick (Mr. Laing) had done good to India, that he rejoiced that we were placed there. He rejoiced also that there was an increasing number of Natives coming to this country, who would learn to value our institutions; and he believed that history would yet do us justice, and show that there never was a nation in the world that had won a country by arms which had so applied itself to promote the interests of the people as we had done. He had been very much gratified to hear from the right hon. Baronet that it was the intention of the Government to increase the amount devoted to education. Such was the appetite the Natives had for education, and such their desire to improve themselves, that it would be found to be a wise economy to increase the grant for education that had been made. By means of grants in aid much had been done in this country, and much, too, had been done in India already. He entirely concurred with the hon. Member for Wick in what had fallen from him on the subject of irrigation, and he hoped the wise advice that hon. Gentleman had given would be followed. He hoped, too, if they were to meet in another Parliament, the right hon. Baronet would grant him the Committee which he had moved for this Session. With regard to opium, he would suggest whether there were not moral considerations which outweighed the financial advantages of the revenue from this article, and upon this subject his right hon. Friend had promised to lay before Parliament some valuable Papers which had not yet reached the Home Government. He thought that with regard to another point alluded to by his right hon. Friend, it was a mistake to suppose that Mr. Massey had defrayed the sanitary expenses and barrack charges out of loans; injustice to Mr. Massey it should be understood that they were really defrayed out of revenue. The only other point to which he need allude had reference to the Council of India, and he believed that, in withdrawing the Bills which he had introduced on this subject, his right hon. Friend would explain that next year, if in Office, he meant to move for a Select Committee to go into the whole question with reference to the Council. The subject was certainly one requiring grave consideration, for the Council as now constituted did not command out-of-doors the confidence which it ought to inspire. There was a general feeling that it did not contain sufficient new blood, and that most of the members had left India so long that they were not acquainted with the existing wants of the country. When the Bills were introduced he had suggested the appointment of a Select Committee, and he hoped that next year this course would be followed.


said, that it was a little disheartening to a Minister, who took an interest in the Government of India, to address empty Benches on this subject. [Sir STAFFORD NORTHCOTE: Hear !] The dozen Members present constituted a sorry display of the interest felt in the welfare of 150,000,000 of human souls. He thought that the Indian Government should advertise for tenders whenever they wanted freight or stores. The chain cables and anchors sent out to India should be the subject of public competition. He noticed that estimates had been given at £37 5s., but those which had been taken were at £85 and £90. And so with provisions. He had been told that a gentleman recently offered to send out coals to Annesley Bay at 10s. a ton cheaper than the Government were being supplied, but that the offer was declined.


, in reply, said, he took the criticisms of the hon. Member for Finsbury (Mr. Alderman Lusk) in good part. It was very useful for India as well as for England, that a check should be placed upon expenditure by such criticisms; but he believed that the principle upon which the Government went on supplying stores of a naval character to India was to go to the Admiralty contractors and adopt the Admiralty scale of prices, feeling that on this point the Admiralty were better judges than the India Office could be. In the case of the chain cables and anchors alluded to by the hon. Member, he believed that there was a special reason why a patented article was necessary, for serious losses had arisen from the drifting of vessels in a cyclone, and it was thought advisable to have a certain description of anchor which would hold more firmly than the ordinary description. With regard to provisions, he knew nothing, but he remembered a gentleman coming to him and offering to send coals to Annesley Bay at a lower rate than that at which the Government were being supplied. At that time, however, the arrangement had already been made with the Peninsular and Oriental Company, and he believed that the offer made applied only to a very limited quantity of coals—one or two ship-loads, which would: have been insufficient for the purpose, He was sorry if he conveyed the impression that Mr. Massey had this year thrown the barrack charges upon loans. What he meant was that Mr. Massey had put down barrack charges in the category of public works extraordinary, and that the principle recognized was that you might provide public works extraordinary by loan. It was not so on the present occasion. It happened that there had been no loan in India this year, for last year a larger loan than was required had been raised in anticipation of public works, and the balance was available for use in the present year. He would not follow the hon. and gallant Member opposite (Colonel Sykes) into all the points he had named, which, no doubt, required attention. With regard to trade Returns, it was rather discreditable that we did not get them of a later date. He was not cognizant of the deficiency until the other day, when, in preparing what he had to say, it occurred to him to make a comparison, and he found that the Returns did not come down later than April, 1867. He thereupon gave instructions that they should be sent within a much more reasonable time; and he did not see why we should not get them quarterly, if not monthly, so that we might know what was going on. The hon. Member for Manchester (Mr. Bazley) made a large call upon the Government of India when he asked for the remittance of the salt duty, which produced £6,000,000. A question had been raised as to the propriety of making any addition to the salt duties in Bombay and Madras, in order to bring them up to the Bengal standard; that, however, was prevented by remonstrances that were made, and he was glad that it was. The whole question of the salt duties was being considered with a view to an arrangement. He thanked the hon. Member for Wick (Mr. Laing) for the kind way in which he had spoken of the financial statement. That of the hon. Member might be taken as a counterpoise to the insufficiently sanguine view which he had taken; but it was better for one in his position not to be too sanguine and not to encourage expenditure and the increase of debt. He admitted that the hon. Member's picture of the finances of India was, upon the whole, a very fair one; and there was one point he was glad the hon. Member called attention to—namely, the importance of developing the railway system in the direction of the North-West. He already concurred in the importance of that policy. He regretted, as much as his hon. Friend opposite (Mr. Grant Duff) did, that the hon. member for Frome (Sir Henry Rawlinson) had not had an opportunity for bringing forward the whole subject of the foreign policy; but he was quite certain that the true policy was that which had been indicated—that we should abstain from any action which would provoke collision or would produce complications on our frontier, and that we should take all the means in our power to develop our system of communication. This year steps have been taken which would make a considerable stride in the development of communication in the North-West. The Government of India had been called upon to give a general view of the railways with which they thought it best to proceed—keeping separate the commercial system from the political railways, especially on the North-West. In regard to the political railways, the Government had said that, without waiting for anything further, steps ought to be taken for proceeding with, at all events, a portion of them. The Government of India were about to undertake, at Government expense, the construction of a railway from Lahore in the direction of Peshawur, though not further than Rawul Pindee. Commercially it would be a long time before this line would pay, but it was to be constructed for a great political object, and, therefore, it seemed to be an undertaking for Government rather than for a private company. To guarantee a company was a good system when there was a probability of a line paying, but where there was no reasonable probability that it would do so, it seemed desirable to try the experiment of Government making the line. The surveys were being commenced and arrangements made for bridging the rivers and opening up a communication with the salt mines of Rawul Pindee. He attached great importance to the missing link on the Indus Valley system; but it was best to do one thing at a time, and in this case a great deal depended upon the report to be made respecting the harbour of Kurrachee. Sir Seymour Fitzgerald had made a visit to Kurrachee, and sent home a very good report on the state of the works. They had consequently sent out Mr. Parker, an engineer, to see what was the effect upon the bar of the monsoon wave; upon his report it would depend whether Kurrachee was made a first or a second class harbour, and that would determine the direction of the railway. The suggestion to borrow £20,000,000 was not one to be passed over slightingly; but he thought it was a bad principle to borrow money merely because it was cheap, and that it was just as advantageous in the long run to go boldly into the market when money was wanted. There would be no indisposition on the part of the Council of India to raise money for useful works, whether of irrigation or communication.

Resolved, That it appears by the Accounts laid before this House that the total Revenue of India for the year ending the 31st day of March 1867 was £42,122,433; the total of the direct claims and demands upon the Revenue, including charges of collection and cost of Salt and Opium, was £7,637,527; the charges in India, including Interest on Debt, and Public Works ordinary, were £29,848,640; the value of Stores supplied from England, was £873,363; the charges in England were £5,549,345; the Guaranteed Interest on the Capital of Railway and other Companies, in India and in England, deducting net Traffic Receipts, was £731,049, making a total charge for the same year of £44,039,924; and there was an excess of Expenditure over Income in that year amounting to £2,517,491.

House resumed.

Resolution to be reported To-morrow.