HC Deb 06 August 1872 vol 213 cc562-96

Order of the Day for Committee upon East India Revenue Accounts, read.

Mr. GRANT DUFF and Mr. FAWCETT rose at the same time.

Mr. SPEAKER calling upon Mr. Grant Duff—


said, he rose to Order. He had distinctly understood the Speaker, in answer to a Question put by him, to say that on the Motion for going into Committee he would be at liberty to move the Amendment of which he had given Notice.


The hon. Member for Elgin rose to address the House, and, as I understand, proposes to conclude with a Motion.


then said: I regret that the hon. Member for Brighton has not thought fit to accede to the suggestions that have been made to him; because the course he proposes to take will put many hon. Members to much inconvenience. To me, personally, that course is neither convenient nor inconvenient; but it obliges me to modify the usual order of proceedings, and to make some observations in moving that you do now leave the Chair which I would, in the natural order of things, have made in Committee; since, if I were not to do so, the House would be put in the strange, and indeed impossible, position of being asked to pass a Resolution about Indian Finance before it has the least idea what the state of our pecuniary affairs in India really is. Hon. Members will, I hope, give me their indulgence, and I shall do my best to be brief. Even under other circumstances I should not have felt justified in trespassing at any great length upon the attention of hon. Members; because, while a Select Committee is sitting on Indian Finance and Financial Administration, controverted questions must be considered as referred to its judgment and reserved for its decision.

Without further preface, then, I proceed to state the largest, and only the largest, financial facts of the past few years in India; speaking, as usual, first of the year of Actuals—that is, of the year which ended on March 31, 1871; secondly, of the year of the Regular Estimate—that is, of the year which ended on March 31, 1872; and, thirdly, of the year of the Budget Estimate—that is, of the year which will end on the 31st March, 1873. It has twice been my lot to move the Budget Resolutions when I could give no very cheerful account of our pecuniary circumstances. It has once been my lot to do so when I could give a tolerable account of those circumstances, and it is only fair that on this, the fourth occasion, the destinies should have been more propitious, and should enable me to give what I may call by comparison a very cheerful account of our actual state and immediate prospects.

First, then, let me compare the accounts of 1870–71, as they actually turned out, with the Regular Estimate which we offered to this House in May, 1871. We expected then to receive in the financial year 1870–71, £51,017,000—we actually did receive £51,413,000—so we were agreeably disappointed by more than £396,000, thanks almost entirely to cautious estimating under all heads. On the other hand, we expected to pay £49,933,000—we did pay £49,930,000—so that we were again agreeably disappointed by £3,000, thanks to the same cause. The general result was then this: We expected a surplus in the year 1870–71 of £1,083,000. We bad a surplus of £1,482,000.

Next I will compare the actual receipts and disbursements of the year 1870–71 with those of the previous year 1869–70. In the year ending 31st March, 1871, we received £51,413,686. In the year ending 31st March, 1870, we received only £50,901,081—so that we were, as a Government, better off last year than we were the year before by £512,605. This relatively favourable result was chiefly due to increase under Assessed Taxes, Excise, Customs, Salt and Stamps. In the same year—the year ending 31st March, 1871—we paid £49,930,696, while in the previous year we paid £50,782,412, so that we paid less in the year 1870–71 than we did in the year 1869–70, by £851,716. The decreases of expenditure were, of course, numerous, the largest being under Public Works Ordinary—that is, public works of comfort and convenience, for which we do not think ourselves entitled to borrow. The general result was, therefore, as follows:—In 1870–71, we had, in round numbers, £500,000 more Revenue, and £850,000 less Expenditure than in 1869–70.

Passing now from the year of Actuals, I come to the year of the Regular Estimate—the year for part of which we have accounts to go upon, but for part of which we have only calculations and conjectures. It appears from the Estimates recently laid before Parliament that the Revenue is expected to be fully £50,000,000 (£50,013,686) and the Expenditure £47,282,356, or £47,250,000, leaving a surplus of £2,700,000.

I come now to the present financial year—the year of the Budget Estimate. The Financial Member of Council expected on 6th April to receive during this financial year £48,771,000—say £48,750,000, and to pay £48,534,000, say £48,500,000. The anticipated surplus was, therefore, about £250,000—that is, rather less than the amount of surplus for which the Secretary of State in Council desires to see the Budget framed.

The only items of anticipated receipt to which I think it necessary to call attention, are, first, Opium, from which less is expected than we have received in 1871–2, thanks to the short crop of last season, and to the state of the market; secondly, Assesed Taxes, on which a falling-off of £254,000 was expected by Sir Richard Temple, partly in consequence of the minimum income assessed to the income tax being £100 a-year in 1872–3, as against £75 in 1871–2.

With regard to items of expenditure, it will probably be sufficient to point out that there is a large increase in the grant for charges connected with the collection of the Revenue, chiefly in the Opium department. There is a slight increase of £71,000 in the Military department; an increase of some £66,000 on Provincial Services; a decrease of about £100,000 on Public Works Ordinary; a decrease of about £96,000 under the head of Interest on Debt, owing to the conversion of the Five Per Cent, or Mutiny Loan, of £16,250,000, into a loan bearing interest at the rate of 4½ per cent for seven years, and thereafter at the rate of 4 per cent only.

It remains to ask and answer the question—How much bad India at her bankers on the 31st March, 1872? India had at her bankers on that date, £24,983,440, of which £22,162,349 was in India, and £2,821,091 in England. That is an exceptionally large cash balance, so large as to have given rise to a good deal of remark. The explanation is, however, easy to give. About £1,300,000 of this is merely money lying in our Treasury, the property of certain persons who, having been holders in our Mutiny Loan—which, as I have mentioned, was recently converted into a loan bearing less interest—have elected to receive their money for the purpose of investing it elsewhere, but have not yet actually received it. About £2,500,000 is money raised by loan, and intended to be laid out on that class of public works for which we pay out of loans, but which has not yet been paid away. And the residue, so far as it is in excess of the normal £15,000,000 in India and England, is chiefly the result of our large surpluses of 1870–71 and 1871–72. Our usual practice is to aim at a cash balance of, say, £12,500,000 in India, and one of £2,500,000 in England; but as the chief cause of the present state of things is our exceptional prosperity, and our caution in not pressing on extraordinary works without proper deliberation, it is not to be considered, as one newspaper did seem to consider it the other day, as anything very calamitous. I may observe, in passing, that nothing is commoner than to hear complaints of our too large cash balance in England These complaints proceed from persons who do not know how very large, how frequent, and how uncertain the payments made on account of the Government of India by the Secretary of State in Council really are. We could not possibly get on with less. If we tried to do so, the Secretary of State would certainly be unable some fine morning to meet his liabilities without borrowing. Every care is used to utilize the balance by lending it in the City; and if anyone thinks that the interest we get is not sufficient, just let him go and try to get more interest. He will find it anything but an easy operation. There is little doubt, I fear, that our exceptionally large balance at our bankers will not long continue. Be this as it may, it is, at least, clear that we shall not be forced by our necessities to borrow for any purpose during the financial year now in progress, either in England or India. The facts which I have cited, will, I think, be held to entitle me to say that the immediate pecuniary prospects—the pecuniary prospects of the year passing over our heads—are very good, and that the pecuniary results of the three previous years were also good.

But now let us look a little further back. If we take the years 1867–8, 1868–9, 1869–70, 1870–71, for which we have actual accounts, and the year 1871–2, for which we have Estimates approximating to actual accounts, and ask what is the general result as to surplus or deficit on our ordinary account—our accounts, that is, exclusive of expenditure on extraordinary public works—we come to the following results:—The two first years mentioned were years of deficit, and show £3,781,725 to the bad. The next two years were years of surplus, and show £1,601,659 to the good. The fifth year—the year of the Regular Estimate—was a year of surplus, and shows £2,731,330 to the good. That is, it swept away the balance of deficit on the previous four years, and gave us £551,264 to carry on to help the year now in progress, for which we, as at present advised, expect a surplus of not less than £237,000.

And now let us look a little further back still. The abnormal state of things caused by the Mutiny ended with the financial year 1860–61. Prom the 1st May, 1861, up to the 31st March, 1873, we have received—or have good reason to expect to receive—£569,193,362, and we have paid £576,578,142—that is to say, including all our public works ordinary and extraordinary, paid out of loan, and not paid out of loan, we shall only have overspent our income by £7,384,780. Now in return for that sum, what will the people of India have got in actual property? for I put aside for the moment all questions as to improved government, education, civilization, and so forth. It has got, in round numbers, £37,500,000 worth of property in the shape of public works which India must have, if it is to be a civilized instead of a barbarous portion of the world. This £37,500,000 is thus made up:—£7,500,000 have gone in Roads and other means of communication, exclusive of Railways; £8,000,000 in Canals and other Works of Agricultural Improvement; £1,750,000 in Harbours, Reclamations of Land from the Sea, &c.; £6,500,000 in Civil Buildings, Court Houses, Police Stations, and the like; £11,000,000 in Military Buildings, Barracks, Fortifications, and so forth; £2,750,000 in State Railways. Now, let anyone make any deduction he pleases from the £37,500,000—which, be it understood, is wholly exclusive of the cost of Repairs, Establishment, Tools and Plant, together with the whole purchase-money of the services done to India by all the Guaranteed Railways paid for by Government on behalf of the people of India in the shape of Guaranteed Interest, less net traffic receipts—let him say the barracks are bad, or the fortifications bad, or that anything else is bad; but, if in his senses, he will admit that a vast portion of this sum was expended for things which are a distinct addition to the wealth of India. Then let him put the amount he leaves against the £7,500,000, and India has an enormous sum to the good. Hon. Members will observe that some of the figures I have just cited—those for the year ending the 31st March, 1873, and those for the year ending the 31st March, 1872—are taken from the Budget Estimate and the Regular Estimate respectively; and they will remember that complaints are often made that Indian Estimates are exceptionally inaccurate. All Estimates are inaccurrate; and Indian Estimates are inaccurate; but is it true that they are exceptionally inaccurate? It is not true. Take the past 10 years of the Indian Budget, from 1860–61 to 1869–70. The average difference per annum between the Budget Estimate and the completed accounts has been £1,798,830. That may sound a very large amount; but what do you think the average difference has been between the Budget Estimate and the actual accounts of the United Kingdom, upon not very much larger figures, during the last 10 years? It has been £2,149,600; and remember, that the second largest item of Indian receipts is Opium, which rises and falls in a way which has hitherto proved utterly inscrutable to human intelligence, depending as it does upon the vicissitudes of seasons in India, and upon a whole group of causes in China and elsewhere, of which we only catch glimpses now and then. Then consider the facilities which there are for estimating in England compared to what there are in India; consider that the English Chancellor of the Exchequer is working a system which has existed for generations; that the Indian Chancellor of the Exchequer is working a quite new system, invented only the other day by a man whom, perhaps, half of us remember in this House before he went to India. Then remember how near everything is in this little island. Contrast this with the enormous distances which separate the different persons in India with whom it is necessary for the Indian Chancellor of the Exchequer to communicate before he can make his calculations; and I think the Committee will be of opinion that there is something to be said for him as against his English brother.

I have been defending hitherto our Budget Estimate. Now for the Regular Estimate, which gives our views as to what the results of the year will be after we have the approximate actual figures of six or eight months before us. It has been said that this Regular Estimate is just as misleading as the Budget Estimate; but is that true? The figures show that in the 10 years ending with the 31st March, 1870, the Regular Estimate was wrong by only £875,204—that is to say, it was nearer right than the Budget Estimate by an average of £900,000. No English Chancellor of the Exchequer will stand up in this House and say that he could make, after six or eight months Actuals were known, a better Regular Estimate than is made in India. The experiment has not been often tried; but when it has been tried the success has not been extraordinary.

There are one or two other matters about which hon. Members usually like to hear a little on this occasion. For instance, they like to hear what was the amount of our troops, European and native, by the last Returns. The number of our European troops by the last Returns, was 63,036, of which 4,388 were cavalry, 46,347 infantry, 12,036 artillery, 265 engineers, with 348 field guns. The number of our native troops by the last Returns was—cavalry 19,657, infantry 111,250, artillery 1,680 with 32 guns; total, 132,187. These 195,223 troops, assisted by a relatively inexpensive police, preserve order amongst 150,000,000 of men, aid your policy in preserving it amongst 50,000,000 more, keep all enemies far from your borders, or chastise, as in the recent case of the Looshai raids, any rash disturbers of the great British peace—the first and the greatest of the innumerable blessings which British rule confers upon India. It is the fashion of the hour to depreciate these blessings; but if our rule produced no one blessing to India but the blessing of peace, it would be splendidly beneficent. Remember, that when not a few Gentlemen now in this House were boys at school the state of anarchy in India was such that one of the few British poets who have been inspired by India, can make his hero, speaking of those times, say with perfect faithfulness to historical probability— My father was an Affghan, and came from Candahar, He rode with Nawab Ameer Khan in the old Mahratta war, From the Deccan to the Himalay, five hundred of one clan, They asked no leave of King or Chief, as they swept through Hindustan. Then hon. Members may like to hear a word or two about the progress of those public works for which we borrow. Some years ago, during the American War, this was a most popular topic; but now the development of the resources of India is no longer a phrase to conjure with, and our critics are much more prone to shake their heads over the public works we are making than to incite us to make more. The Government of India, at home and abroad, shares the fashionable depression as little as it shared the fashionable enthusiasm. It is going on with its State railways and its canals as quickly as it can with due regard to the state of the labour market, and to other considerations which must govern the action of a Government in such matters.

Then there is another matter about which there has been some little talk of late, on which hon. Members might like a little reassuring—I mean our local taxation. Now, when people hear of Indian local taxation, they no doubt think of something like our English local taxation, and a terrible array of figures rises up before them. So let me say at once that the whole local taxation of India—equal in size, remember, not to little England but to all Europe save Russia—is, only on an outside estimate, somewhere about £5,000,000, and this after the passing of the new Acts, which considerably increased the said local taxation. A great part of this local taxation is levied through municipalities for municipal purposes—say, nearly £1,500,000; and the whole of the £5,000,000 is levied for and spent on local purposes—such as roads, police, hospitals, bridges, cleansing of towns, ferries, educational and charitable works. Is there anything alarming either in the amount raised, or the objects for which it is raised, even if it were to be thought of as Imperial taxation under an alias, which is not the case? But having made these very few remarks to correct some prevailing misconceptions, I must admit that local taxation in India requires the closest watching; and I trust that the Finance Committee will go fully into the subject next year.

The Imports and Exports of India fluctuate, of course, a good deal; but the annual average since the American War, as stated by Sir Richard Temple, is £102,000,000 as against £52,500,000, the annual average of the five years before that War. It would not accordingly be a great exaggeration if I were to say they had almost doubled since the great demand for cotton, caused by the Confederate struggle. How far this very high figure will be maintained is of course doubtful, and many good authorities hold that the reviving prosperity of the Southern States will make Manchester draw her supplies ever more and more from the West.

The Suez Canal, which is bringing back animation to the Venetian lagunes, is doing much, and will do more, for the trade of India. 155 vessels, with cargoes valued at £13,000,000, passed, according to Sir Richard Temple, through the Canal to Calcutta alone in 1871.

We continue to receive very cordial and useful aid from Dr. Hooker, of Kew, in the introduction of medicinal plants into India, and in many other ways—as, for example, by the publication of the first part of The Flora of British India.

The Indian Exhibition at South Kensington contrasts, as it seems to me, favourably with that of last year, and will, I hope, do something to increase the taste for Indian manufactures in this country. The cotton collection, illustrating everything that relates to that important plant—from the soil it grows on, to its appearance in the shape of Dacca Muslin—is singularly complete, and creditable to all concerned in getting it together.

I am assured by competent authorities that our sanitary publications keep up their high character; but the great work of Dr. Fayrer on Indian venomous snakes is our chief contribution of the year to scientific research.

The state of the Indian Funds is most satisfactory, and must almost, one would think, break the heart of the enemies of the Government of India. The louder they complain of Indian financial mismanagement, the higher the Funds are quoted. If Sydney Smith thought so badly of the intelligence of the Three per Cents, what must these persons think of the Indian Fours?

When I have congratulated hon. Members upon the prosperous conclusion of the little war which was made necessary by the incursions of the wild Looshai tribes, and the prompt suppression of the Kooka disturbances—a suppression which would have deserved high commendation instead of censure, if wise and moderate counsels had guided the persons engaged in it when the disturbers of the peace were at their mercy—when I have noticed the fact that not even the terrible tragedy of Port Blair created the very slightest political eon-fusion, and that the Government has arrived at the conviction, after most careful investigation, that the murder of Lord Mayo had nothing whatever to do with politics, hon. Members will be prepared for the very few words I have to say as to the general state of India. No one is fit to have anything to do with the affairs of that country who is not thoroughly impressed with the belief that whatever fate may have in store for us the time has not yet come when we can say that all is safe and quiet beneath that volcanic soil. Possibilities of danger are always around us, and he must have read Indian history to little profit who is surprised if at any moment some unregarded trifle leads to infinite trouble and alarm. Having once made that admission, I wish to give the most emphatic and categorical denial possible to the statements that one sometimes hears in society, or reads in the Press, to the effect that India is in an exceptionally discontented or unprosperous state. India, thank God, is usually kept out of the vortex of party here; but party passions in India rage as furiously as they do in any country. Nine hundred and ninety nine alarmist statements out of a thousand which are repeated amongst us with regard to Indian affairs are the mere exaggerations or fabrications of persons who are disgusted at not seeing their own particular views adopted or their own particular interests forwarded by the local authorities. The letters and articles of such persons find their way to this country, and are taken au grand sérieux by those who do not know the secret sources of their discontent. My noble Friend at the head of the India Office is, from the nature of things, in the closest communication, private as well as public, with those who have in their hands all the threads of Indian government, and who know whatever is to be known about the state of India. That being so, I assert, in the most unqualified manner, that if India is in a bad way, it is a fact quite unknown to the persons in India who are directing her destinies from Simla, or Calcutta, or Madras, or Bombay.

The revival which has been going on in many religious communities since the end of the last century has extended to the Mussulman world, or has, to speak more correctly, had its antetype there. That is an element in Indian affairs not to be neglected, although it would be easy, very easy, to exaggerate its importance. The strange recrudescences of fanaticism which have so often been seen in non-Mussulman India are assuredly not yet over. The influence of extended education and of contact with Europeans is beginning to show itself in the stirrings of what it would be premature to call Indian public opinion, but of what may be called native class and sectional opinion, with which it is quite necessary to reckon, though we must take care not to confound it with the opinion of the dumb millions when they have an opinion. To their interests it is often violently opposed.

The railway and the telegraph have vastly increased our power; but they have also to some extent increased the power of those who love us not. An enormous stride forward has been made in legislation during the last 10 years, and perhaps the time has come for a period of repose, a time when—sinere res vadere ut vadunt may not be the least wise motto for a statesman. There are symptoms that we have been improving India not too fast, but perhaps faster than we can consistently with that perfect financial ease and comfort which is so great an element of power. These are only a few of the more important considerations that are present to my mind when I say that in India we should walk warily, and not boast of the morrow. And having noticed them, I once more assert that the great experiment of governing India—the greatest and most beneficent experiment in government that ever was made—is going on as satisfactorily as reasonable persons who know its difficulties can expect, and that there is not more but less occasion for anxiety as to the immediate future than is usually the case.

And now I might sit down if it were not for the Resolution which the hon. Member for Brighton has put on the Paper. That Resolution divides itself into three parts. The hon. Gentleman lays a foundation by quoting some words of Lord Mayo, he then expresses a strong opinion about the Indian Income Tax; and, on the foundation of the words of Lord Mayo and his own opinion about the Indian Income Tax, he builds a conclusion as to what we ought to do with regard to the Indian Income Tax in the coming year. First, then, as to Lord Mayo's opinion. The quotation which the hon. Member makes from the late Viceroy's Minute is quite correct. I have no doubt that if Lord Mayo were here, and could stand up again amongst us as so many of us have often seen him stand, he would put upon his words a construction very different from the one which the hon. Gentleman attaches to them. But let that pass; no part of my argument will turn upon that supposition. My argument will turn on the answers to two questions which I am just going to ask. First, what was the date of the document from which the hon. Gentleman quotes Lord Mayo's opinion; and, secondly, were there any peculiar circumstances which made it natural that Lord Mayo should have recorded the opinion which he did record at that particular date? Now, to these questions I reply, the date was the 3rd October, 1870, and the circumstances were such as to make it natural that Lord Mayo should at that particular time record the opinion which he did record. Let us see what were the financial circumstances of the 3rd October, 1870. They were most peculiar. Lord Mayo landed in India in the beginning of 1869. The income tax, which had been abolished some years before, was non-existent. Lord Mayo and his advisers—as I think wisely—reintroduced the income tax. Six months after Lord Mayo and his advisers suddenly—to the regret but with the acquiescence of the Secretary of State in Council—doubled the income tax and increased the salt tax. Six months after that again, in the spring of 1870, Lord Mayo and his advisers—with the reluctant acquiescence of the Secretary of State in Council—still further increased the income tax—raised it, in fact, to the normal English rate. The Minute from which the hon. Gentleman quotes was recorded by Lord Mayo in the autumn of 1870, when Lord Mayo, looking back on his own financial administration, could not but observe that in about 18 months he had reintroduced, had doubled, and had trebled the tax which of all others in India is most obnoxious to the persons who make opinion—that is, to our own European officers, to the head men in villages and the like, and, above all, to the whole class which owns, writes in, and influences the newspapers. Lord Mayo, who was always observant of what was passing around him, was very much struck by the way in which the irritation of those persons who paid the tax, and therefore quite naturally hated it, was communicated all over the country to hundreds of thousands who did not pay the tax; and the words quoted reflected very fairly what I know to have been the prevailing mood of Lord Mayo's mind when he thought of financial subjects in the later autumn of 1870. But, unfortunately for the hon. Gentleman's argument, I am acquainted not only with what Lord Mayo thought about the financial situation, and about the nature of the grumbling or discontent arising from taxation in the later autumn of 1870, but with what he thought about it under the altered circumstances of 1871. And I know that before this time last year Lord Mayo was perfectly reassured about the discontent to which he had alluded in his Minute, which forms the foundation of the hon. Gen-Gentleman's Resolution. The House will remember that the hon. Gentleman brought on a discussion about Indian Finance in June of last year. Now, if Lord Mayo could have taken part in that discussion, I can tell the House with absolute certainty the substance of what he would have said. He would have said something to this effect—"I trust that the hon. Member will withdraw his Motion. If anyone states that general discontent as to our financial position now prevails among the natives, he asserts what I believe to be absolutely contrary to the fact. Great discontent did, doubtless, prevail last year; but, since the income tax has been reduced, the state of things is quite changed." If such were the views of Lord Mayo a year ago—and I repeat that I am absolutely certain that they were his views à fortiori—would he have held views at least as encouraging now, when the limit of assessment of the lowered income tax of 1871 has been altered so as to make it strike a much smaller number of persons, and when the general financial situation is very decidedly improved. But if this is so, what becomes of one-half of the foundation upon which the hon. Gentleman's Resolution is based? It is sapped and destroyed, leaving the unhappy Resolution in the extremely evil plight of having no relation at all to the actualities of 1872, however much it might have been, I do not say fit to be discussed, but not obviously, and at the very first glance unfit to be discussed, while the circumstances of 1870 continued.

Now, then, for the second half of the foundation. One-half of the hon. Gentleman's Resolution rests, as I have shown, upon opinions which would not have been those of Lord Mayo at present, and had long ceased to be his opinions when he met his death. The other half of it is just about equally stable. It is the assertion of the admitted un-suitability of the income tax to the circumstances of India. Now, I flatly deny that its unsuitability is admitted. For every opinion as to the unsuitability of the income tax that the hon. Gentleman can bring forward, I can bring an opinion at least as good in favour of its suitability. Out of a whole pile which I have here by me, and which I could inflict on the House if I were sufficiently cruel, or it sufficiently patient, here are two only. The first is from a native paper, one of the best in the Bengali language, The Shôm PrakâshWe learn that the Anglo-Indian cries against the income tax have by this time reached England, and that probably it will be reduced, if not altogether abolished. We are further informed that a London newspaper has denounced this tax as unsuited to our countrymen, natives of India. We are thankful to that newspaper for pleading on our behalf; but, in reality, we poor natives have very little to do with the income tax. This tax has the merit—as we have frequently pointed out—of leaving the lower orders completely intact. We have shown in a former issue that it affects 1 only in 400 of our countrymen, and that it is the most equitable of taxes, inasmuch as it takes from those alone who are able to give. The second is from a speech by Mr. Ellis— He (Mr. Ellis) had received letters from General Barrow, the Chief Commissioner of Oudh, now in England, who said that since his return to England he had had many correspondents amongst his native friends in the Province, upwards of 40, if he (Mr. Ellis) was not mistaken, and these not of one class, but including taluqdárs, merchants, and others, all liable to payment of the income tax. General Barrow stated that his correspondents had written to him freely and unreservedly, and told him all the grievances of themselves and other people in regard to decisions of the Settlement and Civil Courts, their disputes among one another, and other matters public and private, but not one of these correspondents had ever mentioned a single grievance in connection with the income tax. If General Barrow—who is one of our greatest authorities on native opinion and native feeling—is next year well enough, I will ask him to come before the Finance Committee to give evidence to the following effect:—that it is absurd to try to make out that the outcry against the income tax is a "native" outcry, and that it affects our hold in India, when, as a fact, the whole arises from the objections raised by Europeans, and that it is absurd to believe those who cry out about the oppression. He will, further, I believe, say that those people pursue a mischievous course who tax the native collectors with oppression; that they would do more to make the Government popular and our rule safe if they took the opposite view of native character; that to treat them as rogues is certainly not the way to win them over; that, as a rule, the native tehsil-dars do their work well; that exceptions to the rule do not go undetected; and that in his experience natives are ready enough to talk of oppression if it exists. Observe, I am expressing no opinion whatever of my own as to the suitability of the income tax to India— Adhuc sub judice lis est. It is a most hotly controverted question; but what is the use of appointing a Committee upon Indian Finance and Financial Administration, if without asking it for its opinion as to the suitability or unsuitability of an income tax, we are to decide so important a question off-hand before the Committee has heard almost anything that is to be said in defence of that tax. Hitherto, the attitude taken by the Government upon the Finance Committee has been this—it has done all it could to get clear explanations of our Indian receipts and expenditure laid before the Committee; it has done its best to encourage persons who had anything to say by way of criticism on its financial administration to come forward and state it to the Committee; but it has reserved all its most important defensive evidence for next Session, being desirous, of course, to hear all that could be alleged against it before it made its defence. The hon. Member for Brighton will, no doubt, say that most of the witnesses were officials. Of course they were officials, for no others could explain the facts of receipt and expenditure into which the Committee was examining; but they were not officials called to defend the policy of Government, and in repeated instances they took a view, and stated a view, that did not correspond with the view of Government. The Committee may take it from me, who am responsible for the management of the Government case before that Committee, that on no one controverted point of importance has the Government fully or authoritatively stated its policy before the Finance Committee. Why will the hon. Member be always backing out of the lists which were arranged to a great extent for the purpose of enabling him to show his prowess against the Indian Government? If the income tax is such a bad tax, let the hon. Gentleman try to get the Committee to report that it is a bad tax. If the hon. Gentleman is dissatisfied with the Report of the Committee after it has reported, then let him come down to this House and appeal to it against its own Committee; or if he is dissatisfied with the action of the Government of the day, whatever it may be, on the Report of the Committee, let him come down and appeal to the House against the Government of the day; but surely it is little short of an insult to the Committee, and not very just dealing by the House, to come down now and to ask the House to pass a judgment upon such a subject as the Indian income tax, before the Committee has had an opportunity of saying one word to the House upon it.

So, then, the second half of the foundation of the hon. Gentleman's Resolution crumbles like the first. But even if the foundation had been stable the superstructure would have been bad; for the hon. Gentleman asks us to pass a Resolution to the effect that the income tax should not form a part of the Ways and Means of the coming year. Why, who knows what will be the financial circumstances of the coming year in India? I am sure I do not, and I am sure no mortal can do more than vaguely guess at them. Sufficient to the year is the finance thereof; and yet the hon. Gentleman's proposition to the House is not only to give the go-by to its own Committee—which has expressed no opinion on the income tax—but to take the administration of the finance of next year out of the hands of the persons whom Parliament holds responsible for Indian financial administration—the Viceroy with his Council, and the Secretary of State and his Council. I am convinced that no House of Commons which ever existed would pass so wild a Resolution even if that Resolution had been founded upon realities, and not upon a total misconception as to the facts with regard to Lord Mayo's opinion, and a further misconception of the facts as to the state of the controversy with regard to the income tax.

The House will see that I am most careful to confine what I am saying to the finance of the present year. I have not the least idea what view the Committee may take about the income tax when it reports—as I presume it will report—at the end of next Session, nor have I the least idea what view Lord Northbrook may take about the income tax in its relation to the Ways and Means of the coming year. I know that Lord Mayo, in his very last days, after passing through various phases of opinion about the income tax, inclined against it as a permanent element of Indian finance; but I also know that he considered that the income tax stood only third in the order of the things which he wished to see changed in Indian Ways and Means. Lord Mayo, if the state of things in India had continued as prosperous as it was when he sailed for the Andamans, would possibly have tried to get rid of the income tax, if he had remained long enough in India, after he had dealt with the salt line and equalized the salt duty; but certainly not till then. His views as to that are on record in a Paper which has been laid before the House; but I may add that to my certain knowledge Lord Mayo, within three weeks of his death, expressed his general concurrence in the views which I have quoted as those I should expect General Barrow to state before the Finance Committee. Lord Mayo never believed a tithe of the stories about the oppression caused by the income tax, and quite believed in its justice even when he inclined against its expediency as a permanent element in our Ways and Means. Now, without expressing either agreement or disagreement with Lord Mayo's earlier or later views as to the income tax in India, I will venture to say that they are views that are sure to be carefully and respectfully considered by Lord Mayo's successor. They are views adverse to the perpetual continuance of the Indian income tax, but not adverse to the continuance of the Indian income tax as part of our Indian Ways and Means for a considerable time to come. They may be right views or they may be wrong views; but they at least show that Lord Mayo would have had no sympathy whatsoever with the hon. Gentleman's wish immediately to do away with the Indian income tax. I venture, then, to submit to the House that the superstructure which the hon. Gentleman has raised in his Resolution is as crazy as the foundation on which he has raised it; and that the House will act more in accordance with its traditions if it passes no opinion at all, favourable or unfavourable, upon the Indian income tax, until it has heard the views of its Committee upon that subject.

As to the very last words of the hon. Gentleman's Resolution they are mere surplusage. That the picture or the book would have been the better if the artist or the author had taken more pains is very old and meagre wisdom. That taxes might be reduced in India as in all other countries if Governments were wiser, and that the first taxes to be reduced are the exceptionally burdensome taxes is a most respectable platitude, but not one the assertion of which will very much mend matters. The history of British rule in India is the history of the remission of exceptionally burdensome taxes. The patient labours of the Finance Committee, and the sort of stir which these great periodical Committees, which have ever formed part of our Parliamentary supervision of Indian Government, always cause, will, I should hope, be of considerable use in helping Lord North-brook, than whom no one is more anxious to reduce expenditure and to have safe finance; but I fear we shall not gain much dry light from listening to the views of the hon. Member for Brighton, which he has formed upon very imperfect knowledge of the facts, and which he proposes now to enunciate in defiance of the recommendation of the Finance Committee, which is worded as follows:— No just opinion should be expressed or can be formed on allegations which have been made before your Committee respecting important financial affairs, until the requisite explanations have been afforded, and the evidence relating to them is complete. In opposition to that recommendation the hon. Member divided, not, I hope, for the last time, in a minority of 1.

After an expression of opinion so distinct from a body so authoritative as a Select Committee, any further protest from me would, of course, be unavailing; but I cannot help pointing out, in conclusion, that all our business in this House is arranged on the understanding that we are to be guided to a very considerable extent by the opinion of our Colleagues, and that the minority must bow to the decision of the majority. Any half-dozen Members taking the course which the hon. Gentleman is about to take, and absolutely refusing to be bound by this understanding, might make business impossible.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."—(Mr. Grant Duff.)


rose to move— That this House, considering the statements of the late Lord Mayo that 'a feeling of discontent and dissatisfaction exists among every class, both European and Native, in our Indian Empire, on account of the constant increase of taxation which has for years been going on,' and that 'the continuance of that feeling is a political danger the magnitude of which can hardly be over-estimated,' is of opinion that the Income Tax, which is generally admitted to be unsuited to the people of India, might during the coming financial year be dispensed with; and that other Taxes exceptionally burdensome to the people of India might be Country were administered with adequate care and considerably reduced, if the finances of that economy. He rose, he need scarcely say, with some little trepidation, after the Under Secretary of State for India had announced, in prophetic language, that anything he (Mr. Fawcett) could say on this question could not be of the slightest consequence or importance. He thought, however, that it was only due to the House that he should state at the outset a few words in justification of the course he was about to pursue. If he required any justification for that course he should find it in the late period of the Session at which the Indian Budget was introduced. No one who was acquainted with the feelings of the Indian people would deny that this shelving of the Indian Budget till the fag-end of the Session would be interpreted by them as a determination on the part of Her Majesty's Government to treat the affairs of India with neglect. The Prime Minister, when pressed to give a somewhat earlier day for the discussion of the Budget, had declared that it could not be discussed till all the essential business of the Session had been disposed of.


said, he stated no such thing. What he said was, that after the business essential to the winding up of the Session the Indian Budget would be taken—having reference, as the hon. Member must know, to those Bills the House intended to pass, and the introduction of the Appropriation Bill, which would require a certain number of days for its passing.


said, he would gladly accept the explanation of the right hon. Gentleman, because if there was any truth in the statements he was about to bring forward there could be no doubt that the discussion of the Indian Budget was essential to the winding-up of the Session, The delay of the Government on this subject would probably be attributed by them to want of time; but that plea was of little avail when it was remembered how many evenings were frittered away on the Royal Parks and Gardens Bill, a measure which, according to the Government's own confession, had left the question more complicated than it was before. Now the time that was lost in a series of contradictory proposals with regard to illiterate voters might have been given to a consideration of the affairs of a great dependency. The Government were able to devote the whole of an Evening Sitting in July when they wanted to obtain money to defray the expenses of ex-Governor Eyre, and many questions had been disposed of that should have been looked upon as of secondary importance rather than incur the suspicion of treating the affairs of India with neglect. It might be said that he was adopting an unusual course; but the unusual course adopted by the Government in bringing forward the Indian Budget on the 6th of August fully justified what he had done. It was true that he was a Member of the Select Committee; but if that were to preclude him from speaking on this subject he would at once cease to be a Member of that Body, and to his colleagues on that Committee he had given full notice of what he intended doing. The time had come when Indian affairs must be discussed, and he meant to discuss them; and it was only due to the House that what he had to say upon the subject should be first stated in that House rather than on the platform. The Under Secretary of State had stated that out of the vast amount of expenditure in India of £36,000,000, there was only a deficiency of £7,500,000. £7,000,000 deficiency meant as much borrowed money, the remaining £29,000,000 being provided out of the revenues of India, and these revenues meant taxation, which already pressed so heavily upon the people of that country. The Under Secretary insinuated that he was the spokesman of certain discontented persons in India. All he could say in answer to that was, he would not even refer to one of their complaints, but rest his assertions solely on the highest official authority. His only object was to direct attention to the fact that the Government were maintaining a financial policy that had produced great dangers in the past, and was calculated to perpetuate and increase those dangers in the future. This was the characteristic feature of Indian finance—the revenues were inelastic, while the expenditure was elastic, for two reasons: 1st, the cost of administration; and 2nd, the general rise of prices. The land, the most important item of revenue, yielded about £21,000,000 in gross, and £18,000,000 net. At least one-fifth of this, that yielded by permanently settled districts, was absolutely fixed; the rest was settled for 30 years at a fixed rent, and could only slightly be increased as the estates fell in. Mr. Campbell, Lieutenant Governor of Bengal, had said this increase would be counterbalanced by a reduction of revenue in Madras, the land of which was let direct to the ryots, who were too highly assessed. Salt was the next great source, yielding £6,000,000 altogether, and every eminent authority agreed that the duty on salt could not be further increased; in fact, a belief obtained among those authorities that it would be desirable to reduce the amount of the present duty, as in all probability a larger revenue would be the result of such a policy. This tax varied from 500 to 2,500 per cent on the original cost of the article—an impost upon a prime necessary of life never before heard of in the history of the world. Opium, which produced £6,000,000 or £8,000,000 a-year, was a very uncertain source of revenue, as already stated by the Under Secretary. The Indian Government had obtained the highest price for this article, because they traded in it quite as much as an ordinary merchant would do; but, according to Sir Rutherford Alcock, our late Minister in China, no revenue could be more precarious than that obtained from opium. Although desirous of dealing with opium as a financial question only, he could not refrain from expressing the fear that some might think us hypocritical in forcing a deleterious drug upon the Chinese in our anxiety to obtain revenue and profit from opium, while Members of the Legislature permitting it made moral speeches and took infinite credit for restricting the sale of intoxicating liquors at home. Sir Rutherford Alcock stated the Chinese regarded our cultivation of opium with great jealousy, were increasing the cultivation of it themselves, contemplated prohibiting its importation in the hope of stopping its growth, and now taxed it 100 per cent; the reduction of this tax he assumed would inevitably reduce our revenue, and he concluded by stating that had he been able to make concessions in the shape of restricting the importation of opium from India he might have secured almost any terms from the Chinese in the treaty he was negotiating as regards "admitting English commodities." Nothing, therefore, could be more uncertain than the revenue from opium. The other source of revenue was £2,250,000 from excise on spirits and drugs, and £2,750,000 from Customs, which could not be materially increased. If Customs duties were increased, foreign importations would be checked, so that little additional revenue would be yielded by an increase. The £750,000 raised by stamps could not be increased, and it was impossible to increase a similar amount from tributes. It was clear from this review that the revenue was inelastic. The expenditure, however, was extremely elastic, and these two facts gave the clue to the financial difficulties of India. The Army nominally cost about £16,000,000, but that was not all. Adding indirect expenditure for medical and ecclesiastical charges, on military roads, and on railways—the latter being used mainly for strategic purposes—the total expenditure incurred by the Army was no less than£18,000,000. One startling fact was presented by this expenditure of £18,000,000, that the Government, owning the greater part of the land in India, absorbed the whole of its net value in military organization. But the cost of the Army had increased, and was likely to increase. War equipment was becoming more elaborate and costly. This could be proved, for between 1863 and 1871 the Indian Army was reduced by 13,000 Europeans and 4,000 Natives—that is, about 20 per cent of Europeans; but the expenditure had increased from £14,800,000 to £16,600,000. But the elasticity of expenditure in India was still more strikingly shown when they examined the various items of civil administration. Mr. Harrison, the Controller of Accounts at Calcutta, was examined for several days on those, and at last they found that it was a repetition of a twice-told tale. Certain items of expenditure in 1856 were so many thousands of pounds; in 1871 the same items had increased by 70 or 80 per cent. If the change was one connected with the Presidency of Bombay, the increase was usually yet greater. For example, the cost of printing in 1856 was £90,500, and in 1870 it was £233,000. The Bombay establishment in 1856 cost £208,000, and in 1870, £365,000. The household charges of the Governor of Bombay in 1856 were £7,000, and in 1870, £21,000. The charge for the Secretariat of the Public Works Department in 1856 was £14,000, and in 1871, £31,000. The medical charges in 1857 were £157,000, and in 1870, £523,000. Similar instances might be multiplied indefinitely, and they all showed that an inevitable tendency was at work in India making administration more expensive. Possibly, that might be due to the fact that they governed India more carefully or better; but, whatever the cause, the fact remained, and it was powerfully assisted by a general rise in the price of commodities; which meant that all the materials the Government were obliged to buy were dearer, and also that if the cost of living rose there must be an ultimate increase of salaries. Some of the subordinate salaries already had to be considerably increased. Sir Bartle Frere, Sir Robert Montgomery, and a host of other authorities admitted that the rise of prices in India during the last 20 years amounted to something like 40 or 50 per cent, and they further acknowledged that it must add greatly to the cost of Government. The statistics of the trade of India would show the cause to which that rise of prices was chiefly due. During the last 11 years the exports from India amounted to £541,000,000, and the imports to only £311,000,000, leaving the enormous balance of £230,000,000 due to the country. That had been partly liquidated by an excess of import of treasure over export of £172,500,000. The remaining £60,000,000 might probably be taken as some measure of the sum which India had to pay England for the expenses of the Home Government, for pensions, salaries, and other sources of income to residents in this country. Of the £172,500,000 of specie which had been poured into India during the last 11 years, a considerable portion had, of course, been added to her circulation. That had naturally produced a rise in prices, and a similar effect had followed the increase of the paper currency consequent on its being made a legal tender. From the peculiar nature of Indian trade, it seemed almost certain that the importation of specie would continue, and if so, the rise in price would also continue. That rise in price would be assisted by the general rise in prices now going on throughout the world, which was due to the depreciation of the precious metals—a fact now admitted by almost every economist and financier of eminence. Moreover, in India expenditure was far more affected by a rise in prices than revenue. In India there had been constant deficits during the last 11 years, and the greatest difficulty in making both ends meet. Sometimes when there had been a surplus it was purely fictitious, and obtained by devoting capital to income. It might be said that the difficulty of balancing revenue with outlay was greatly owing to the natural increase in the cost of administration and the general rise of prices to which he had referred, and which could not be controlled by the Government. That, however, only made the proposal before them all the more alarming. Waste, mismanagement, and extravagance could be easily prevented; but, so far as the difficulty was due to natural causes, it could only be met by rigid economy, by checking expenditure, and by the House of Commons doing all in its power to express disapproval of a policy which was certain to land them in increased liabilities. There was a cardinal distinction between the financial position of India and that of England. If £5,000,000, £10,000,000, or£15,000,000 of additional taxation were required to meet a national emergency in this country, the money could easily be obtained. The tea, sugar, or malt duties could be increased, or the income tax raised to 8d. or 1s. in the pound. But in India they had no available source of fresh revenue left. They had forced up every tax there to a maximum: their only desperate reserve was the income tax, and if they wanted to raise an additional £5,000,000 of taxation next year in India for a national exigency, he ventured to assert, after careful inquiry and consultation with many great financial authorities, that no person who knew anything of the present condition of India would have the temerity to say he would raise that £5,000,000 and at the same time answer for the peace of that country. He would support what he had stated by a quotation from one who was practically well acquainted with India. He could not give a more striking corroboration of his argument than by adducing the testimony of Mr. Mathie. He said rigid economy was absolutely necessary in India because of the inex-pansiveness of the revenue. If in the slightest degree they outran the constable they must land themselves in a deficit. They had used up all other sources of taxation for the future, and they had no other recourse but the income tax. But if the revenue was inexpansive; if there were no new sources of revenue; if taxes had been imposed up to the maximum, did it not become absolutely as certain as the demonstration of a mathematical proposition that if we did not curtail the expenditure, and change our policy, in a very few years we should want £5,000,000 of additional taxation? And where was that taxation to come from except from the income tax? Now, the income tax, as he should show, had been condemned by a most extraordinary consensus of opinion; and we should come to this conclusion—we had to look forward to this—unless we checked expenditure that we should be met by increased taxation, and that this taxation must be provided for out of the income tax. A simple comparison of revenue and expenditure for the last few years in India would give no adequate or correct idea of our financial position there. So desperate had been our position, so difficult to make both ends meet, that, like embarrassed traders, we had been constantly appropriating to capital what should have been employed to reduce debt. In fact, we had been performing that financial operation which was known as discounting the future. He would give some remarkable instances of this. In the accounts of 1869–70 there was stated as an item of income a miscellaneous receipt of £427,000. After a good deal of cross-examination it was found that this sum represented the accumulation arising from the sale of waste lands. The land was virtually the property of the Government, and, therefore, at the very time that they were pursuing a policy of borrowing they sold property and used the proceeds as income. Again, certain Civil Service and military funds had been handed over to the Government, and these either had been or were proposed to be devoted to income. The Controller of Finances admitted, among the miscellaneous receipts of 1869–70, that an item of £240,000 was part of the capital which had thus been appropriated. Therefore, this sum, instead of being in any true sense of the word income, was simply a measure of the prodigality with which the Government was spending its capital. He would give another instance, which, though the sum in question was small, was very significant. £115,000 of borrowed money had been expended by the Indian Government in the Alexandria and Malta Telegraph. The telegraph, turning out a failure, was afterwards sold at a great discount, and the proceeds of the sale were appropriated as legitimate income. So that if £1,000,000 had been borrowed for the construction of some public work, and if it was afterwards sold for £750,000, that sum would be appropriated to income, and might be used to secure an apparent surplus. No mercantile firm could carry on business in that way; if they did, they would quickly find themselves in the Insolvent Court. In the annals of railway mismanagement we had striking examples of the results of the policy of applying capital to income. There might be a few years of meretricious prosperity; shares might be at a premium, large dividends might be paid, but the day of reckoning must come. It might be said that India, in this respect, was only following our own Government at home; but there was an essential distinction between the two countries. India was carrying out vast industrial undertakings in the construction of railways, irrigation, and other works, which in this country were done by private traders or companies. India should, therefore, be bound by the same considerations as bound ordinary mercantile transactions. With a slowly increasing revenue, and a rapidly increasing expenditure, India, after using up all the capital that could be got hold of, had no other resource but an increase of taxation. That state of things was sufficiently serious in a country like England; but it was a hundred times more serious in India, where there was no article of general consumption that could be taxed. He would quote the testimony of Lord Mayo on that point. Whether Lord Mayo condemned the income tax in India or not he could not say; but, at all events, he was entitled to the benefit of the language of the noble Lord when he said that the tax had given rise to great discontent in that country, and created a political danger, the magnitude of which could scarcely be over-estimated. The increase in this tax was going on year by year. One striking peculiarity of Indian finance was lately pointed out in one of a series of most able articles that had appeared in The Times on Indian affairs—namely, that she had no financial reserve. Even in times of peace her resources were strained to make both ends meet. Three successive Finance Ministers—Sir Charles Trevelyan, Mr. Laing, and Mr. Massey—had been most strongly opposed to the continuance of the income tax in India as a dangerous impost. The only conclusion that could be drawn, if the Government persisted in saying that the income tax could not be dispensed with during the present year, was that our financial situation in that country was desperate. But this was not all; if this tax were our last desperate resource in time of peace, it must be our chief reliance as expenditure increased. It might be fairly said that those who asserted that the income tax need not have been imposed during the present year, and that other taxes might have been reduced by a judicious curtailment of expenditure, were bound to show how the attainment of that object might be practically realized. Before commenting on specific acts of waste and extravagance, it might, in the first place, be remarked that the Government of India was so arranged as to reduce the guarantees for economy to an absolute minimum. In the days of the East India Company, India was, to a certain extent, protected by the self-interest of the proprietors—at any rate, they would have seen with jealous watchfulness that India was not unfairly charged for many things for which England ought to pay. Under the present system there were four or five distinct persons who could spend. There was the Secretary of State, the Governor General, the Governors of Bombay and Madras, and the Lieutenant Governor of the North-West Provinces. Thus there was no individual responsibility and no distinct control. There were also various great spending departments. It was impossible to define the powers of the Secretary of State. It was, of course, maintained that the ultimate control of all financial questions was exercised by the Secretary of State; but directly that Minister began to know his work he might have to retire, or he might be shifted into some other department; and, moreover, as India was not represented in that House, her public opinion was but lightly regarded. Thus India might be neglected, her money might be wasted, her affairs might be mismanaged; but unless the interests of party were affected, this mismanagement would scarcely raise a ripple on the surface of politics. A recent Finance Minister had distinctly stated in a letter to The Times that the finances of India were repeatedly sacrificed to the wishes of the Horse Guards and to the exigencies of English Estimates. Thus, India had been obliged to pay two-fifths of the cost of an almost worthless telegraph cable laid down between Alexandria and Malta; she was made to pay an extravagant price for recruits; she had contributed a large part of the Abyssinian Army; and she was made to pay for the Persian Mission and for the Consulate charges in China, in which she was in no way interested. When the Sultan visited our shores a niggard hospitality was relieved by a splendid banquet at the India House; and, by a masterly stroke of injustice and meanness, this was charged to the Indian accounts. When a Royal Prince visited India the expenses of his travelling companions were defrayed from the same source. Every gentleman must be ashamed of these facts, and also that there was no sufficient pressure of public opinion in England adequate to protect the interests of India. Her interests had been sacrificed when they clashed with ours, either politically or commercially. India seemed to be regarded as if specially created to increase the profits of English merchants, to afford valuable appointments for English youths, and to give us a bountiful supply of cheap cotton. Twenty years ago we commenced the system of guaranteeing 5 per cent on railways and other public works in India, and it was impossible to devise a scheme which would more inevitably lead to waste and extravagance. On the Great Indian Peninsular Railway, it was reported that 2,000 bridges, viaducts, and other masonry works would require reconstruction. Up to the present time about £90,000,000 had been spent on guaranteed railways, and the amount of interest which the Government had had to make good up to the present time had been £33,000,000. The contracts were arranged on conditions the most unfavourable to India. Government could at any time be compelled to take over a company and to repay to the shareholders, not the actual value of the line, but all the capital which had been wasted on ill-constructed works. On the Calcutta and South-Eastern Railway about £600,000 was expended; on this outlay 5 per cent was guaranteed; this scheme proved a disastrous failure; and the Government took it over at par. On the Jubbulpore branch of the East India Railway £3,000,000 was expended; 5 per cent was guaranteed, and the line only just paid its working expenses. On the Scinde, Punjab, and Delhi Railway £8,000,000 was expended; the net returns were about £50,000, and the Government annually lost about £400,000 by this undertaking. Yet, disastrous as it had been in itself and to those who had to pay for it, it was remarkable that the guaranteed shares of the company were marked at 6 per cent premium; of course they paid 5 per cent dividend regularly. Again, some years ago, £1,000,000 was expended on the Madras Irrigation Board, at a guarantee of 5 per cent. He need not say that the actual cost of the works exceeded the original Estimate by £600,000, and no doubt before all was finished the sum would be equal to £2,000,000. Those works had not yet paid a single farthing profit, and he was told that they were not likely to do so; yet the shareholders in it had been receiving their 5 per cent regularly; the whole burden of it had fallen on the people of India. Again, in the case of the Orissa Irrigation works, £1,000,000 had been raised by a private company; yet the shares went rapidly down, as it was natural that they should, and stood at 60 in the Stock Exchange list, and were, he believed, unsaleable even at that. But what did the Government do? They took over the company at par, giving £100 for every share that was marked at £60; and, in addition to that, they paid a sum of £50,000 to be distributed among the employés of the company. Surely the directors and shareholders who had just made so good a bargain might have borne that small expense among themselves. To the Calcutta Port Fund was advanced £200,000, which had been written off as a bad debt. In the Port Canning scheme £250,000 of public money had been Lost. It was difficult to form an estimate of the loss which would result from the taking over of the Elphinstone land scheme. Many other instances might be given, yet he feared that there were signs that the policy of carrying out public works by State expenditure was to be persevered with. No wonder that, under such a system, it was difficult to make both ends meet in India. England should at least remember this—if no higher arguments could induce her to direct her attention to the matter—that not less than £180,000,000 of English capital was invested in India and her securities. England should also remember the critical position of Indian finance. Let them also remember that, in regard to the money that had been advanced on Indian securities, there was no moral or legal obligation on the part of this country to be responsible for them. If anything should go wrong in India those who had invested their money in Indian securities would have to run the risk. It was desirable that that fact should be plainly stated; because he thought that a contrary impression had got abroad, owing to the Act passed a few years ago, by which trust moneys were allowed to be invested in Indian securities, the conclusion being drawn in consequence that England was, directly or indirectly, responsible for them. He saw no end of the difficulties that we might incur in connection with our Indian guarantees, as the whole subject was well worthy of the most serious attention. Another great source of revenue was our military force in India. Mr. Massey had endorsed the opinion that probably £1,000,000 might be saved by a more systematic revision of the Estimates; and Lord Sandhurst, when retiring from his position of Commander-in-Chief in India, said that economy and increased strength would result from merging the two armies of Bombay and Madras. But perhaps the most essential service which that House could render to India was to express its opinion on the policy which the Government seemed determined to pursue of carrying out a great system of public works with borrowed money. As long ago as 1863, Sir Charles Trevelyan said— Has the Government yet to learn that it is beyond their power to furnish a proper industrial outfit for such a country as India? The limits have already been passed when they can exercise an effective control, and with regard to works carried out directly by the State there was certain to be careless and wasteful mismanagement through an inattention to details. Were such warnings as those to be disregarded? They were threatened with an expenditure of £30,000,000 upon State railways, and by whom would the money be administered? It would be administered by a department which allowed a vast outlay to be made on barracks, some of which, as soon as they were built, tumbled down, and others were so faulty that they were pronounced useless. The expenditure of the money would be watched over by a department whose accounts were, by its own confession, in inextricable confusion. Mr. John Strachey, the moving spirit of the Department, admitted that the accounts were not kept in such a way as to enable an intelligent person to ascertain whether works called reproductive were really so. It could not be told whether the money voted for them was actually spent in them. The Under Secretary had said that the effect of the Amendment would be to repeal the income tax in India; but that was not so; it would only serve to draw attention to the subject. The great truth to be remembered in our rule of India was that we governed her too expensively. She was a poor country; we often forgot how poor she was. It was a country in which labourers were paid at the rate of 4d. a-day, and land let for 4s. an acre. This was the country that we were saddling with all the waste and expenditure inseparable from a system of State subsidies. Railways and other public works might be extremely useful in themselves; but if they were carried out on too costly a scale, if there was no effective supervision, and if there was that careless and wasteful management through inattention to details which Sir Charles Trevelyan spoke of, the most useful works might become extremely unprofitable. The Under Secretary had quoted a native paper—The Shôm Prakâsh—and General Barrow in favour of the tax; but officials connected with the Finance Department were surely those who should be consulted, and he would appeal to three successive Finance Ministers. Sir Charles Trevelyan left office rather than bear the responsibility of levying it. Mr. Laing said there was no worse or more obnoxious impost; that it was un-suited to the Oriental mind; that it exercised a demoralizing influence, and that for every rupee it yielded at least two rupees were taken by extortion and corruption from the people. Mr. Massey condemned the tax even more strongly, saying that the people looked upon it with dread, and regarded it as a great machine kept in reserve for the purpose of extorting money; and he added that no power on earth should induce him to continue Finance Minister in India with the duty of levying the income tax as an ordinary source of revenue. Except Sir Richard Temple, no Finance Minister could be quoted on the other side. According to the Lieutenant Governor of Bengal, it fell most heavily on the poor ryots and small cultivators, some of whom, spite of the antipathy of Hindoos to migration, threatened to migrate to avoid it. Mr. C. H. Campbell, the Lieutenant Governor's brother, collector in the district round Bengal, stated that no measure had ever produced so deep a dislike to English rule; and Mr. Ingles, speaking in the Legislative Council of Calcutta, said that though only one in 300 was legally liable to pay it, at least half the 300 were exposed to annoyance and pressure when the preliminary lists were made out; at least 20, too, being improperly assessed for one legally liable. The Lieutenant Governor, on examining a host of officials, found this opinion unanimously confirmed. Mr. Robinson, another member of the Legislative Council, had also spoken of the sullen discontent which the tax had produced throughout the Empire. After hearing these opinions the House would come to the conclusion that the Government were in a dilemma, because either their resources were at present so severely strained that it was absolutely necessary for them to maintain the income tax with all its disadvantages in order to obtain £500,000, or else the finances of India were in the prosperous condition represented by the Under Secretary and the tax might be dispensed with. But in the face of the official warnings he had mentioned, such a tax would not be maintained if the Government could do without it, especially as Lord Mayo, who was no theorist or alarmist, but distinguished for his common sense, and, as proved by his untimely end, was courageous to a fault, had pointed out that the increase of taxation had produced a political danger the magnitude of which could not be over-estimated. He himself believed the tax could this year be easily dispensed with—namely, by introducing a different system of government, checking the expenditure on public works, and revising the military expenditure. Not only could the £500,000 be thus saved, but the salt duty and other taxes which pressed hard on the people might be reduced. As to public works, private enterprize was extinguished, when a little pressure would effect a guarantee or State aid; but English capital went freely into every quarter of the world, including hazardous speculations like American mines, and it was a reproach to Indian administration to assert that it would not go to India. When a deputation applied for a guarantee or for expenditure on a public work they should be invited, if they believed it would be profitable, themselves to undertake the enterprize. What India required above all things at the present moment was rest. She was worried by constant proposals for new taxation; and the rest of which she stood in need nothing would be so likely so secure her as a firm resolution that there should be no more guarantees, and that for some time at least no public works should be constructed except from any surplus which might be saved out of ordinary revenue. The next subject to which he wished to refer was the decentralization scheme of the Government, which would throw several charges which had hitherto been Imperial on the Provincial Governments. A fixed sum was in the first instance to be voted from Imperial funds for those charges; but the sum was at the outset confessedly inadequate to meet them, and the charges were certain to increase. The deficiency, therefore, would have to be met by a constant augmentation in provincial taxation. Now, we were beginning to recognize the fact that the growth of local taxation in our own country was one of the most serious questions which could engage our attention; but local taxation in India would soon become of far greater importance. The growth of local taxation there was less visible than that of Imperial, and was, in consequence, a more insidious evil.

And it being ten minutes before Seven of the clock, the Debate was adjourned till this day.

The House suspended its Sitting at Seven of the clock.

The House resumed its Sitting at Nine of the clock.