COMMITTEE. ADJOURNED DEBATE.

HC Deb 06 August 1872 vol 213 cc598-639

Order read, for resuming Adjourned Debate on Question [6th August], "That Mr. Speaker do now leave the Chair" (for Committee on East India Revenue Accounts)."

Question again proposed.

Debate resumed.

MR. FAWCETT

, in continuing his speech, said, he entirely agreed with one part of the speech of the Under Secretary for India. That hon. Gentleman had expressed in forcible language his opinion of the great services which Dr. Hooker had rendered to India, and that House could not do better than recognize those services. He (Mr. Fawcett) further thought that the Government would only have pursued a course which was due to the House of Commons if they had offered hon. Members an opportunity of expressing their opinion as to his services rendered not only to India but to England also. As to extravagance, it was the same with individuals as with Governments; when there was absurd extravagance in large matters there was equally absurd economy in small details. Royal entertainments might be given in this country at the expense of the Indian people, and £155,000 might be expended to build a country house for a local Governor; and this could be done by a Government which, as if waking from a dream, said that we must be economical. It was scarcely necessary for him to observe that the particular saving which had been adopted had led to a keen sense of injustice among the people of India. A few years since, in order to enable the natives of India to compete in this country in the Indian Civil Service Examinations, scholarships were established of £200 each, which had enabled many most distinguished natives of India to obtain high positions in the Indian Civil Service. Those scholarships had now been abolished, and the result was that a net saving of one-fifth the interest on the sum expended in erecting a local Governor's palace had been effected, greatly to the disgust of the Indian people. The promise which had been made to give annually a certain number of natives direct appointments in the service had been allowed to become a dead letter. He earnestly entreated the House of Commons and the country not to delude themselves with the belief that such things as these were not commented upon and noticed by the people of India. In that country millions of human beings felt that they had been unjustly dealt with, and a spirit was rising which it would take all our wisdom and statesmanship to allay. He was aware that it was a somewhat thankless task to bring a subject such as this before that House. The subject was a great one, and it required the labour of years to obtain anything like an adequate knowledge of it. For some years past he had devoted all his spare time to the study of the subject, and yet the only result of his endeavours to bring it under the notice of the House had been to excite the Under Secretary for India and to subject himself to Ministerial rebukes. But no feeling of irritation on the part of the Under Secretary for India—no Ministerial rebukes—could be of the smallest consequence to him compared to the importance of the subject itself and with the duty he felt incumbent on him to do all that lay in his power to improve the position of the people of India. His experience in that House had taught him this lesson—that when a Minister was very angry it was but a clear invitation for the offending party to persevere in the course that provoked that feeling. He intended to persevere in what he had undertaken with regard to this question, and he trusted that he had cleared himself from the reproach that he was afraid to speak his mind in the House of Commons. It was not his fault that he had been obliged to utter his sentiments before a thin and exhausted House on the 6th of August; the fault rested with the Government, who had determined not to bring in the Indian Budget until every important matter connected with this country had been disposed of. We had been taunted with the fact that Indian affairs were better understood in Germany than in this country, and he was afraid that there was much truth in the assertion. In his opinion, the loss of India would be the greatest dishonour that could befall this country, that it would be fatal to our prestige, and the greatest misfortune that could happen to the people in India. Fifteen years ago the Queen issued a Proclamation, which occasioned one universal feeling of interest throughout India, Her Majesty having therein said— We hold ourselves bound to the natives of our Indian territory by the same obligations which bind us to our other subjects, and by the blessing of Almighty God those obligations we will faithfully and conscientiously fulfil. Those pledges had never since been carried out. A large and unnecessary expenditure was still carried on without any check or hindrance—a state of things which produced a wide feeling of discontent and a condition of political dangers, the magnitude of which could not be over-estimated. The hon. Gentleman concluded by thanking the House for the patience with which they had heard him.

MR. W. M. TORRENS

rose to second the Motion of his hon. Friend in compliance with his desire that he should do so, though he did not affect to entertain the same convictions of the pre-eminent mischief of the income tax, or the same hopes of the benefit that would accrue from its abolition. With recent mitigations and exemptions this obnoxious impost, it was calculated, would yield more than £500,000; and he could not but ask himself the question, would the alleviation of fiscal burdens to that extent appreciably tend to lighten the springs of Indian industry, or to allay social and political discontent? He wished to state, without exaggeration on the one hand, and without extenuation on the other, the true relations financially existing between Parliament and the people of India. Fourteen years ago, Parliament had advised Her Majesty to assume the responsibilities of executive rule in Southern Asia. They had pledged themselves in the most solemn manner—not by specious words merely spoken in debate, or by Resolutions that might be neglected or forgotten—but by the solemn terms of a statute, that every year the account of public receipts and disbursements for Government purposes in India should be laid upon the Table, together with a full statement concerning the moral and material condition of that vast dependency. But was the bundle of unexplained facts, and loose Estimates, flung down at random by Government, and summarized rather than explained by the Under Secretary of State in an empty House on the 6th August, a faithful or substantial compliance with that mandatory law? He was not about to criticize the speech of his hon. Friend (Mr. Grant Duff.) It was no doubt his duty to make the best case he could for the Administration he served. But if, with all his ability and assiduity, what they had heard that day was the best that could be said for the financial condition of India, how unsatisfactory was that condition, and how imperative was the duty of Parliament to ponder deeply its immediate causes and imminent consequences; not for the sake of India only, but of England likewise. When the present Government came into office the Duke of Argyll inaugurated his administration of the Department by in-diting an elaborate despatch, in which he laid it down broadly that the military expenditure had become excessive; that the financial burdens it entailed were incompatible with the public welfare; and that reductions to the extent of £1,600,000 ought to be forthwith begun. Had his Grace enforced his own behests, or had he not suffered the efforts made by the late Viceroy to comply with them to be systematically frustrated and foiled, there would have been no deficits to be made good and no pretence therefore for an income tax. But, unfortunately, this had not been done. Lord Mayo—as the published despatches of 1869 and 1870 proved—was even more anxious than the Secretary of State to cut down excessive expenditure. What he could venture to do, within the bounds of his own discretion, he did with promptitude and success; and for reductions on a wider scale he sent home not merely one or two distinct schemes of retrenchment, but no less than four separate plans for the purpose; all of which, on one pretence or another, were negatived by the India Office. After taking counsel with Sir Henry Durand and Sir William Mansfield, and many of the chief officers in subordinate command, the late Viceroy recommended that fewer English regiments should be kept in India, and that many native regiments should be disbanded. Sir William Mansfield did not hesitate to place on record his opinion, when holding the office of Commander-in-Chief, that the Army was greatly over-officered, and that, consequently, reduction might, without compromising its efficiency, be made in the staff. But when Lord Mayo recommended economy which would have had the effect of reducing materially the military patronage of the India Office and the Horse Guards, his advice was set at nought; and the actual figures in the public accounts for 1871, confess an Army expenditure of upwards of £16,000,000. Of four years talk about economy that was the sum. The Secretary of State had denounced it as unnecessary; the Governor General had deplored it as excessive, and had tried hard to get leave to cut it down. But there it stood unlopped of any material branch or bough overshadowing the industrious and peaceful capabilities of the land. When the Company bore rule, the annual cost of the Army was no more than £12,750,000. With the Mutiny came a period of exceptional increase; but in 1862 the normal condition of things as regarded expense had been resumed, and the charge was brought within the amount of £13,000,000 a-year. Peace had prevailed ever since then, yet here we had the actual outlay on bayonets and sabres last year, £16,074,000. There was, indeed, a promise in the current Estimates of a reduction of £250,000; but a similar promise had been held forth for the year ending in May, 1871, which had not been realized; and the unreliability of Indian Estimates was too notorious to allow them to reckon with any confidence of the hope now held out being realized. He (Mr. Torrens) had heard with astonishment the allegation made by the Under Secretary, that whatever the late Viceroy may have said in 1870 respecting the evils of excessive expenditure and the dangers of excessive taxation, there was reason to believe that he had altogether changed his opinions; and, because he had acquiesced in the prolongation of the income tax and the cost of the Army, that he had ceased to regard either with disapproval. He (Mr. Torrens) challenged the accuracy of these assertions, and, happily for the memory of his noble Friend, there existed ample means for their confutation. Sudden and unexpected as had been his removal from the scene of his official labours, he was not left without a testament or a political executor. Three months after his death, an elaborate account of his administration, and of the principles on which he was known to have acted, was prepared by Mr. John Strachey, who throughout had been associated with him in the preparation of measures, and the observation of their working. In the form of a Minute, that account had been submitted to the Supreme Council at Calcutta, and adopted by them without hesitation or reserve. It was to be regretted that so important and instructive a document had not been laid before the House with other Papers; but he held a copy of it in his hand, and from it he would read two or three sentences, which he thought would settle the question as to what were Lord Mayo's unchanged opinions. Mr. Strachey said— He repeatedly declared that it would be impossible to continue for any long period to tax the people of India for an Army which was not required;" and "it was with deep regret that he found himself compelled to maintain a military expenditure which he believed to be excessive. The blue-book laid upon the Table contained not a syllable justifying the supposition that the late Governor General had recanted his former sentiments in favour of economy. Mutilated and mangled as was the Correspondence laid before them, it pointed the opposite way, and what it was produced for, side by side with unreduced Estimates, it was impossible for the uninitiated mind to conceive. For himself, he often wondered what the India Office meant by forcing on primary education and encouraging great masses of the people to learn how to read and write, when the inevitable result must be to let them know, as otherwise they could not, the capricious injustice with which they were ruled, and the deplorable neglect of its protecting functions by Parliament. What must be the effect in India when, through the columns of a free Press, it became known that not one day would Ministers grant for the discussion of the fiscal grievances and complaints of 150,000,000 of people, until the Session was virtually at an end? With what feelings would they learn that during the statement of the Under Secretary in bringing forward the Budget, and of his hon. Friend the Member for Brighton when impeaching it, not 30 Members were present? In the name of humanity, of policy, even of decorum, he would ask was this the way in which the Ministers of the Crown obeyed the statutable mandates of the Legislature, and vindicated the plighted word of the Queen solemnly given in 1858, that her subjects in Asia should be governed with the same consideration and regard for law as Her subjects in England? Could any demagogue scatter seeds so prolific of disaffection and distrust? The fault he found with this Budget was not of detail or of minutiœ but that it was, in truth and fact, no Budget at all. It left all the admitted-evils untouched; it left all the admitted perils unabated. What were the excuses set up by the India Office for retaining the Army of Madras at its present unnecessary-strength? For many years that Army had not seen a shot fired in anger. Recruited from a population born under a tropic sun, and inured to the higher forms of discipline by none of that experience which their comrades in the other Presidencies had frequently been exposed to, it was notorious that the native soldiery of Madras did not stand on an equal footing of hardihood with that Army of the North, who had to keep watch and ward along an extended frontier overlooked by the fierce tribes of the desert, and liable to be brought at any moment face to face with the well-armed highlanders of Nepaul. There were obvious reasons for not reducing the native forces of the North-West Provinces; there were no reasons equally obvious for maintaining the Southern Army of Madras. Yet whenever the Viceregal Executive proposed to cut down the latter the answer of the Secretary of State in Council seemed—either reductions pro rata in each of the three presidencies, or else no substantial reductions at all. There was, indeed, a dark and sinister reason suggested in one of the Minutes of the present Commander-in-Chief, which could not be passed over. Without provocation, as far as they knew, and apropos of nothing that went before, Lord Napier of Magdala, when called on to advise about reductions, deemed it his duty to remind the British Government that some day the Madras Army might have to encounter in the field the forces of the Nizam, whose dominions constituted the chief native State of importance in the Madras Presidency. For generations the Court of Hyderabad had lived in amity unbroken with the paramount Power in India. In the day of our sore trouble, when defection from British alliance would have been a serious matter, the Nizam remained staunch and unsuspected. His able Minister, Salar Jung, a man of rare qualities, natural and acquired, had been decorated and thanked by the representative of the Queen, and it was only the other day that from limited resources the sum of £1,000,000 had been voluntarily subscribed by the Nizam to make a railway through his dominions, on which our Government had set its heart. In the face of these facts, and in the absence of a single circumstance indicating insincerity or hostility, what could have been the motive which induced the Secretary of State to publish to the world such a suggestion as that which he (Mr. Torrens) had just quoted from a confidential paper by the Commander-in-Chief in India? Was this the way to cherish or to establish native confidence in British professions of forbearance or of good faith? The Nizam's territories were completely surrounded by ours. His isolated Army, however brave and well equipped, could not be a cause of serious anxiety or misgiving. Why, then, wantonly poison the relations heretofore subsisting between the deferential Court of Hyderabad, and the overshadowing might of the Supreme Council at Calcutta? For himself, he agreed in every word of the admirable speech delivered by Lord Mayo in the Durbar of Ajmeer to the assembled Princes of Rajpootana, in which he declared in terms of impressive earnestness, unqualified by any reservation, that "the days of annexation were passed;" and that the Imperial Sovereign would scrupulously recognize all the separate and local rights of native Princes, on condition that they kept the general peace, and ruled their people with justice and humanity. But how could Hindoo or Mahommedan chiefs rely upon promises thus emphatically made if they were forced to read them by the light of such commentaries as that which he had cited? For his own part, if he must choose, he preferred to ascribe the perverse maintenance of the Army of Madras on a scale which the general taxation could not afford, rather to the unworthy desire of keeping up patronage, than for unacknowledged purposes of further annexation. Closely connected with this subject, he wished to say a word or two as to certain alternative methods of economy which he knew had been sometimes recommended, but which he believed would prove most scandalous as well as most costly expedients in the way of retrenchment. He alluded to the design ascribed to former Viceroys of cutting down the pensions and stipends guaranteed to native Chiefs by express terms of Treaties, or by other public engagements on the part of the paramount Power. No saving thus effected could ever prove otherwise than ruinous in the long run as a financial speculation; and, looking back at the whole course of our dealings with the States and with the rulers of Southern Asia, it was deplorable to think that men were still to be found in high places who could think of harbouring such schemes. When the Crown took upon itself the Government of Hindustan, the chief plea urged was, that the territory acquired by the Company was grown too vast to be fitly or efficiently ruled over by an association of merchants. They lacked, it was said, the elevation of ideas, the breadth of view, and the magnanimity of soul which should animate and regulate Imperial rule. Part of their income was derived from the profits of indigo, silk, and tea—articles of comfort and luxury, ever increasing in demand, and all consumed within our own confines. But what had happened? Why, that the Government of the Crown, instead of trading in these articles, had taken to the monopolies of manufacturing salt, and cultivating and crushing opium The former were, at all events, innoxious trades, but they were permanent staples of much value; whereas nothing could be more uncertain, and few things more immoral, than the stimulated traffic to the amount of millions sterling in a drug which no human being pretended was useful as an article of popular consumption, and which many regarded as pestilent and poisonous. Nevertheless, well-nigh a fifth of the whole income of India was dependent on this miserable trade. What would be thought if the Chancellor of the Exchequer should come down to the House and propose that the Treasury should turn maltster and distiller? No qualm of political conscience would stand in the way; for the First Lord of the Admiralty had told them not long ago that the prosperity of the people was measurable and provable by the increased consumption of gin. Compared with reliance on a crop which an untimely shower might destroy, a revenue derived from corn would be tolerably safe; for with open ports, there was little danger of our being left without barley, or some other grain fit for the production of alcohol. Nor was the idea altogether new. In the course of the present Session it had been gravely propounded in "another place" as worthy of consideration by a noble Lord who had been Secretary of State, and who was the near relative and friend of one of the present Cabinet. But the instincts of right and of prudence he trusted would always withhold the House of Commons from the ruinous expedient of substituting Imperial trade for Imperial taxation. Such expedients were to be deprecated in every shape and in every form; for they were utterly at variance with every sound principle of national economy: and if they were wrong in England they could not be right in India. It was a grave error to suppose that the system of finance which incessantly landed the Indian Government in deficits only to be met by unpopular taxes or expensive borrowings, was no concern of the taxpayers of England. It was emphatically and essentially a matter of deep concern, even in a pecuniary sense, to the people of England; not only because of the innumerable ramifications of commerce, whereby the mercantile community in both countries were inextricably bound together, but because it was a mere illusion to suppose that the public credit of the Indian Department of the Government could be suffered to fail, while the domestic Department of the Treasury was able to make good the loss. It was all very well to talk of the separate Exchequers of Whitehall and Fort William; and it might be convenient and right as matter of account to keep up the distinction between the liability of Asiatic revenues to pay the interest on loans contracted for Asiatic objects, and the liability of the Home revenue to meet the charge for the European debt. But from the day when by statute our possessions in the East were taken from the Company of Merchant Adventurers, by whom they had been acquired, and incorporated as part and parcel of Her Majesty's dominions, governed by the advice of Ministers appointed by Parliament and by officers, civil and military, named and paid by the Crown, the possibility of maintaining in the last resort financial severalty and reciprocal unaccount-ability, came to an end. So long as they were able to wring from the natives of India money enough to pay the interest on the Government debt and the Government guarantee of Indian railways, the question in a practical shape might not command general attention here. But should the day unfortunately ever come, through the failure of the opium trade, or from political causes, that the credit of the Calcutta Treasury was shaken, in one shape or another aid would be prayed from the British Treasury, and aid would inevitably have to be given; for the Indian debt, whether funded or for public works, was not held by Indians or in India, but by Englishmen in England. Small as the exception to this rule had heretofore been, it was annually becoming less and less; and, sooner or later, they must make up their minds to an obliteration of a fictional severalty of the liabilities which both, as a matter of debit and of credit, were the same. A curious and instructive precedent existed in the records of Imperial finance for treating the subject in the manner he proposed. When Mr. Pitt sought to persuade the taxpayers of Great Britain to agree to the absorption of Ireland into the corporate unity of the Empire, he thought it expedient to set up the whimsical form of two separate revenues, two separate debts, and two separate Exchequers, under one Crown and one Parliament, For 16 years after the Union this twofold mechanism was kept going. But money could not be borrowed on Irish account at the same rate as on English; and the Revenues of a disaffected and dejected community could not be relied on with certainty to provide for the Vice-regal expenditure, military and civil, and to pay the interest on the debt which the Government continued to contract in Ireland. In 1817, the farce could be no longer tolerated, and a statute was passed consolidating the two debts and the two Exchequers, even though, for some years longer, the two Revenues were not assimilated. He (Mr. Torrens) believed that what had been done with regard to Ireland would have to be done with regard to India; and if it had the effect of rousing the Parliament and people of this country to a livelier interest in affairs now unhappily too much neglected, he thought it would materially tend to the consolidation and the safety of our Oriental Empire. There was a feature in the present Budget wholly novel, but one which deserved to be noted with jealous care. He meant the omission of certain large items, such as those for education and the administration of justice, which it was proposed to hand over to the provincial authorities, with an allotment of about £4,000,000 in all, from the general Revenue, upon the condition that should the sums thus allotted prove insufficient, local cesses and taxes should be imposed to make up the deficiency. This was called a measure of financial decentralization; and if the provincial or municipal councils were really free to choose what they might do, and how to do it, he, for one, would not object to the change. But constituted as these bodies then were, he was certain that the amount of expenditure and taxation would be really fixed by the official subordinates of Government who everywhere dominated in them. The danger was, that thus imposed the taxes in question would be less regularly and less willingly paid than they had been to a less amount under the Supreme Council. Meanwhile, the items would be withdrawn in the annual Statement from the cognizance of Parliament, and another step might be made in the wrong direction—that of irresponsibility. They could not regard the normal condition of native opinion as safe or satisfactory. Last year, the Under Secretary had tried to lull them to sleep by assurances that India was contented and calm. In the interval that had since elapsed, Chief Justice Norman had been assassinated in broad day on the steps of the Court House; the Viceroy had been struck struck down in the midst of his guards; and to quell a tumult in a remote and obscure district, it had been declared necessary to blow from the mouths of guns 49 disarmed prisoners without trial. Such a state of things one might have thought would have deserved the consideration of Parliament for, at least, one summer's day while Parliament was still at the full. But Ministers had overruled all remonstrance and importunity on that score. Something else was always declared to have a prior claim to legislative attention; and the Petitions and complaints of 150,000,000 of people were not worth being listened to until there were scarce a quorum left to listen. In his judgment, this was a sad and disreputable spectacle; and if next Session anyone would move that the first Supply night after Whitsuntide should always be devoted to the Indian Budget, he would be happy to second the Resolution. He trusted that next year a real and not a sham Budget would be submitted, and that the example of England as to how the accounts of a great country might be safely conducted would be followed in India.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "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 considerably reduced, if the finances of that Country were administered with adequate care and economy,"—(Mr. Fawcett,) —instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."

MR. R. N. FOWLER

thanked hon. Gentlemen for the excellent speeches they had made on this subject. He could not, however, support the Motion of his hon. Friend the Member for Brighton (Mr. Fawcett). He (Mr. Fowler, admitted that it would be well if an income tax could be dispensed with in India. People would be glad to get rid of it in this country; but it having been reduced to a moderate amount, there was no hope of its abolition, and though its pressure was probably more keenly felt in India, the outcry against it appeared to proceed from Europeans rather than natives. Opium was, however, a more objectionable source of Revenue, both on financial and moral grounds. Mr. Laing and Mr. Massey looked upon the Revenue derived from opium as satisfactory, because, in their opinion, it was permanent. But to his mind it was most precarious, for what guarantee had we that the Chinese might not grow sufficient opium for their own consumption? But apart from such considerations, he considered that the raising of our Indian Revenue by this means was one of the most disgraceful passages in the history of England. The highest authorities had condemned it. We raised our Revenue by the sale of a poisonous and deleterious drug to another country, though we did not allow the Indian subjects of Her Majesty to use it. Was that creditable to us as a civilized and Christian people? Was it right that we should get money into the National Exchequer derived from the poisoning the natives of a friendly and neighbouring country? To such a question it seemed to him that but one answer could be returned. In regard to the tax upon salt, the moral objection was not so strong; but to say the least, it was very unfortunate that a tax should be levied which occasioned such great hardships on the native population. He knew that it was said that it was the only form in which they contributed to the Imperial Revenue; but on the same ground that in England the Corn Laws were objected to—because they were a tax upon the food of the people—must the salt tax of India be condemned. It was an impost on a necessary of life, and he deeply regretted that no better substitute for it could be found. The hon. Member for Brighton had referred at great length to the question of public works in India. It certainly was disappointing that so many of those works were unproductive; but it must be remembered that they had been undertaken for the good of the people of India, and that in the long run they could hardly fail to be highly beneficial to the native population. In India, as in England, the railway enterprise had doubtless been costly; but that was an evil that could hardly be avoided under the circumstances. He joined with the hon. Member for Brighton in regretting that the Indian Financial Statement had been deferred to so late a period of the Session. The House ought to give a practical, not a nominal, attention to the affairs of India, or the happy consequences anticipated from the abolition of the East India Company would never be realized. He hoped that in future years the Statement of the Indian Minister would be made at a much earlier period.

MR. T. E. SMITH

said, that the evidence hitherto given before the Committee on Indian affairs had been so contradictory that he should make no reference to it on the present occasion; but it would be very unfortunate if the fact that the Committee was sitting was held to exclude a full and fair discussion of Indian topics by the House. The income tax had undoubtedly occupied the minds of our Indian subjects beyond any other question. The Under Secretary had spoken rather disparagingly of the feeling in that country against it, stating that while there were three classes who were opposed to it—namely, the Europeans, the great landowners, talookdars, and zemindars, and the leaders of public opinion, the masses of the people had no feeling on the question. But could the hon. Gentleman have said anything stronger in condemnation of the tax, and did either the Irish Church Bill, the Reform Bill, or the Ballot Bill come before the House of Commons backed by any stronger support? It might be taken for granted, he thought, that the tax was viewed with profound dissatisfaction through the length and breadth of the land. When the income tax was originally levied by Mr. Wilson, the people generally believed that it was levied upon them for the attempt made during the Mutiny against the Government. But when they saw it levied without any distinction they then felt that it was an imposition. It was the fact in India, that any person who went to serve a Government schedule against anyone made some claim on his own account—it might be a handful of rice only, but still he obtained something from those to whom he was sent. This gave rise to great oppression. The tax was also made the means of gratifying religious spite, which could be easily done by those who had the charge of the schedules. It had also a demoralising effect, because the vice to which the people of India were most subject was the vice of deceit, as there was a system going on throughout India of double book-keeping, the false set of books being intended for the evasion of the income tax. According to the Report of Sir Richard Temple, this tax was forced on the people of India for the sake of obtaining a paltry sum of £500,000. When Government was dealing with a Revenue of £50,000,000, it struck him as but poor financiering not to be able to meet £500,000 either by additional receipts or reduced expenditure, so as to get rid of a tax against which there was so much strong feeling. If they deducted the amount derived from the income tax from the current Revenue, there would be a deficit of £250,000, and this income tax was levied to create the deficit into a surplus. Sir Richard Temple had estimated the receipts at too low a rate. Not only had he done that, but in the case of opium he had estimated for a much lower amount than it would produce. He had better have risked a deficit than forced on the people so unpopular a tax. Government had been extending the cultivation of opium in Bengal, and he believed that the income tax had been levied simply and solely for the purpose of developing and increasing the opium cultivation in India. He was sure there was not one who had the slightest wish that the money of the Indian or the English people should be invested in the furtherance of the opium trade. What would they think if the Chancellor of the Exchequer put on an income tax of 1d. in the pound to form a profitable investment in some foreign gambling tables? Yet the case was really not very dissimilar. The moral of the Motion of the hon. Member for Brighton (Mr. Fawcett) was that taxation in India had increased, was increasing, and ought to be diminished. Now, he could not support the proposition that taxation was increasing. The taxation of India had been placed on a sounder basis. The greatest amount of the Revenue was derived from the land. At the present moment the cultivator did not pay more than one-sixth of the produce of his farm to the State; whereas under a native Government he would have to pay considerably more—probably upwards of one-half. But there was something more to look at, and that was the purpose for which taxation was levied, and the purpose to which it was applied. In former times the whole of the taxation beyond what was necessary for the military keeping down of the people was devoted to the luxury, the extravagance, and the sensuality of the man at the head of the Government; but now the Revenue raised from the people of India was devoted to the development of the resources of the country. Although he did not agree with the hon. Member for Brighton that taxation was increasing, he believed that more attention ought to be paid to a re-organization of the resources of India. The two principal subjects which had been alluded to in the course of this discussion were the opium Revenue and the salt tax. With regard to the opium tax, he thought it most objectionable. At the same time, we could not adopt the principle of Free Trade, because that would only increase the amount of demoralization. It was a question to be seriously considered whether it would not be possible to alter our system of traffic in this drug in such a way that we should only levy a duty on the opium and not be partners and confederates in the cultivation of it. We advanced money to the cultivators of opium, and obtained a profit on that cultivation. The Revenue derived from the Bombay trade was £2,500,000, and the expenses were nominal. The Revenue derived from Bengal varied from £3,500,000 to £5,250,000; but this amount was only obtained by means of investments amounting to something like one-half of the revenue eventually received. Both the Chinese and the Burmese people suffered very much by our encouragement of the opium traffic. He believed that the only way in which they could avoid responsibility in the matter was by acting as collectors of an Excise duty, in which case he thought they would get as large an amount of revenue as they did now. The only other question he wished to touch upon was that of the salt duties. It was said that those duties could not be raised, and in a great part of India that was, no doubt, true; but he felt sure that great economy might be exercised and a much larger Revenue obtained if the salt duties were equalised all over India, instead of differing in the various Provinces. If that were done we should not need to keep up the large and expensive staffs which we were now obliged to maintain in order to prevent smuggling. One other point on which he wished to say a word was with regard to the Government of India itself. That Government was often spoken of as though it consisted of a body of men half of whom were imbeciles, while the other half had no object in life except to "shake the pagoda tree." As a matter of fact, however, there had never been a Government in India which had shown more intelligence and more disinterestedness than the Indian Government of the present day, and the one great feature which had characterized them had been their respect for private rights and property.

SIR DAVID WEDDERBURN

The hon. Member for Brighton has drawn a gloomy picture of the financial condition of India; he has used darker colours than I should have done, but I believe that the general outline is correct. He seems, however, to have laid too much stress upon the evils of what may be called the Imperial income tax in India. As it now stands, at a greatly reduced rate, and with a minimum for assessible incomes of 1,000 rupees (£100) a-year, it is by no means open to the same strictures which were justly passed upon it when it was first imposed. On the other hand, the so-called "non-agricultural cess" of Bombay has intensified all the evils of the old income tax. It is a local impost of 1 per cent upon all non-agricultural incomes above 50 rupees (£5) a-year. Now, 50 rupees is as small an income as it is possible for a man, having anyone dependent on him, to live upon, even in India; and the total estimated returns from this tax are only six lacs of rupees (£60,000), paid probably by about 600,000 taxpayers. Thus for a paltry sum a great hardship is inflicted upon a large population, to to say nothing of the power of oppression placed by this tax in the hands of subordinate native officials. Altogether, it appears to be certain that the limit of taxation in India has been already reached, and the one thing needful in order to make the two ends meet is retrenchment. There is no danger in India, either political or military, except such as is involved in the financial difficulty. With the increasing price of the necessaries and luxuries of life, we cannot attempt to effect any considerable reductions of the salaries or pay of those whose services the Indian Government really requires. On the other hand there are changes, now rendered practicable by the progress of events, which would result in very large saving of expenditure. Now that our dominion extends throughout India, and the various Provinces are connected by telegraphs and railways with the central Government, all necessity for independent Governments of the minor Presidencies has passed away. The Governors of Bombay and Madras might very well be placed on a similar footing with the Lieutenant Governors of Bengal, the North-west, and Punjab, while their functions, and those of their Councils, should be executive merely, and not legislative. The existence of separate Commanders-in-Chief with their staffs in Bombay and Madras seems to be productive of great expense without any military advantage whatever. The House is perhaps not aware that these officers command the native forces only, and have nothing to do with the European troops. Then a saving might be effected by a revision of treaties with native Princes, under which treaties large bodies of auxiliary troops are maintained in various States. In many cases all necessity for these troops has passed away, and they are rather a source of inconvenience and danger. For example, in Cutch, the Rao is bound to maintain a regiment, intended originally to be available against the Ameers of Scinde, now one of our best affected Provinces. In all probability these native Princes would pay us considerable sums in order to be relieved of such burdensome obligations. Then considerable saving could be effected by a more general employment of natives in the higher branches of the public service. A certain number of Europeans in the Indian Civil Service is essential in order to maintain the high tone for which that service has long been justly famous, and it is also essential for this purpose—that the European element should be the very best obtainable. On the other hand, as Europeans are expensive, there should not be more than are absolutely necessary, and the burden of proof should be thrown upon those who would exclude natives from any appointment. At present, there are a few native gentlemen in the covenanted Civil Service, but these are paid at a needlessly high rate, as the best native talent can be secured on the spot at far lower rates. I would therefore suggest that a Civil Staff corps should be established, of limited numbers, and selected by competition as at present; that these Civil officers should receive fixed rates of pay, according to their rank in the service, whether specially employed or not. Then, all Civil appointments should be thrown open, and be paid at such fail-market rates as would secure the services of good native officials. When it was thought necessary to appoint a British official, he would draw the pay of the appointment, together with the staff pay of his own rank, while an outsider, native or European, would draw the pay of the appointment only. I believe that a similar system prevails in the case of engineers in India; an officer of Royal Engineers drawing the pay of his rank in addition to that of any appointment which he may hold. Under such a system economy might be combined with efficiency, and native officials might be amply paid without giving such salaries as would be objects of desire to influential, but ill-qualified Europeans. At present the Indian Governments are subjected to considerable pressure on behalf of gentlemen from England, who are not members of the Civil or military service, and are unacquainted with India. There are other points to which I would gladly refer; but I will content myself with offering these suggestions as to departments in which it seems practicable to combine retrenchment with reform.

MR. EASTWICK

Sir, I fear that, notwithstanding the very able and interesting speech of my hon. Friend the Under Secretary of State, and the able and incisive speech of the hon. Member for Brighton (Mr. Fawcett), there cannot be, on the present occasion, a full, satisfactory, and exhaustive discussion of the Indian Budget. Some hon. Members, who take an interest in the subject, and who are best entitled to speak upon it, have already gone away—as, for instance, the hon. Members for Gravesend (Sir Charles Wingfield) and King's Lynn (Mr. Bourke), and, in particular, the right hon. Gentleman the Member for North Devon (Sir Stafford Northcote); and few, I suppose, will give the same attention to it as they would have done had it been introduced at an earlier period of the Session, as was the case last year. This year, no doubt, the lamented death of Lord Mayo naturally caused delay; but next Session the Government will, I hope, revert to an earlier period, or rather I trust, if the present financial year is to be maintained, that some day between the 1st of May and the 1st of July will be fixed for the introduction of the Indian Budget, and that, in view of the great importance of the subject, nothing will prevent a day being allotted to it in that part of the Session. But I must own I see no reason why the suggestion made some time since by my hon. Friend the Member for Gravesend should not be carried out, and the Indian financial year be made to close on the 31st of December. The financial year would then coincide with the agricultural year, for the Kharif, or autumnal crop, is all got in by the 15th of December. If that arrangement were made, the Indian Budget might be brought in in April. There is another matter which, with all deference to the hon. Member for Brighton, should, I think, tend to restrict discussion on the present occasion—I mean the prolonged sitting of the Indian Finance Committee. That Committee has accumulated an amount of evidence which it will take months to digest; and I should think most persons would hesitate to express opinions which may be modified, or even completely altered, by further evidence, or by a more full consideration of that already adduced. It requires, too, almost an undue confidence in one's own views to assert them now, when they may turn out to be opposed to the general, or even to the unanimous voice of the Committee. I shall, therefore, reserve my opinion on most points connected with Indian finance; but there are one or two on which I feel bound to make a few observations. In the first place, I must say that I altogether dissent from the very unfavourable opinion which has been expressed in some quarters regarding the general character of this Budget. For instance, The Friend of India of the 12th of April last tells us that— In commercial circles in Calcutta there is but one opinion of the Budget of 1872–3, and that is, that it is the very worst that Sir Richard Temple has delivered. The worst Budget, in my humble opinion, would be that which showed the greatest deficit. But, certainly, a Budget like this, which while showing a surplus of £237,000, proposes to meet the Extraordinary Expenditure of the year without raising 1s. by way of loan, and which announces a cash balance of £24,346,015, can hardly be a very bad one, if the figures on which it is based be correct. But the truth is, that the unpopularity of the present Budget—assuming it to be unpopular—is owing to the retention of the income tax—that bête noire of the Anglo-Indian press. That tax is now reduced to two pice, or 1/96th of the rupee—a little more than 1 per cent on all incomes of 1,000 rupees, or £100, and upwards, and will this year produce, it is estimated, £570,000. It will affect only 180,000 persons, or about 1 in 800 of the population of British India. Such a tax can hardly be very obnoxious to the masses of our Indian fellow-subjects, and it appears to me not quite candid to represent it as being so; but, at all events, pending the decision of the Select Committee, I think Sir Richard Temple was quite justified in retaining the tax on its present footing. As to the objections which have been urged by the hon. Members for Brighton (Mr. Fawcett) and Tyne-mouth (Mr. T. E. Smith) against this tax, they maybe classed under four heads—First. It is said why have this tax, when it yielded only about £500,000 sterling? That argument reminds one of the old saying— My wound is great because it is so small. But I must remind the objectors that even £500,000 is not to be swept off from the receipt side of the Indian Budget, until provision is made, in some way or other, to meet the deficit. The next objection was, that this tax led to a deplorable amount of extortion on the part of the native collectors. The answer to this is, that there is no tax collected in India with respect to which attempts at extortion are not made. But a great deal of that extortion is now shut out by the minimum of taxable incomes being raised to 1,000 rupees, and severe repressive measures would soon put down the scandalous propensity of the natives to squeeze their poorer fellow-countrymen. The third objection is one which I must admit to have considerable weight—and that is, that while Europeans are led by a sense of honour and religious feeling to return their incomes correctly, the rich natives, not being swayed by those influences, systematically deceive the Government collectors, and defraud the Revenue. I cannot but acknowledge the truth of these assertions; but I do not think this objection is by itself of sufficient weight to oblige us to discard the income tax, when there are other no less weighty considerations for retaining it. As to the fourth objection—that it induced the natives to deceive, and encouraged them in keeping double books of account, one set for the Government inspection, and the other for themselves—I cannot attach much weight to that; for I regret to say that there always has been a class of men amongst the natives who are not at all ashamed of dissimulation, and who cannot be touched with a sense of shame respecting such matters, because there is nothing in their creed which denounces such frauds. It was, however, desirable to retain the income tax, because it was the only tax that could reach certain classes of rich natives, who, while possessing—some of them—millions of rupees, lived upon rice and a few condiments, went about half-naked, and spent nothing on taxable articles except salt. Another important consideration is that the income tax is the only tax that admits of ready expansion in case of any dangerous emergency. Having passed through much odium in introducing the thin end of the wedge, I think it would be very imprudent to abandon all at once, in consequence of a cry which has lost its vitality, a tax which might be our only resource in the event of a sudden and critical war.

Further, I must say of this last Budget that, setting aside some minor defects—such as a not very lucid arrangement, and the incessant repetition, in round numbers, of every set of figures given—which seems to me a sure way to beget inaccuracies rather than precision—it is by far the best and most encouraging Budget that has appeared in the last seven years. But to whom are we indebted for its best features? I am sure they would be ascribed by those who know most about it—by Sir John Strachey, and by Sir Richard Temple himself—to Lord Mayo. In the three years before he became Viceroy there had been a total deficit of £8,200,000, of which only £2,000,000 were for Extraordinaries. The record of his administration will show that to his invincible determination to bring the public expenditure within the public income, and to nothing else, we are indebted for the announcement of a surplus in the present Budget.

But, Sir, I go on to notice what is to me the most unsatisfactory part of this as of every Indian Budget. It is that which may be called the opprobrium, and in one sense the glory of Indian Finance Ministers—the opium revenue. Certainly, if ever there was a glaring instance of the uncertainty of this Revenue it was exhibited in the year just ended, 1871–2. In the previous year opium played, indeed, its usual rôle, for it changed the Budget surplus of £163,440—I am using the figures used by Sir Richard Temple—into a surplus in the Regular Estimate of £997,100, and an actual surplus of £1,482,990; but this change was effected in a sober, matter-of-fact manner, simply by the crop turning out larger than was expected, and thus yielding £1,074,519 more Revenue than was estimated. But in 1871–2 the alternation was far more startling, for the crop in Bihar fell off 14,743 chests, or 26 per cent, and yet the actual revenue from opium exceeded the Estimate by £1,845,100. Of course, this could be, and has been, explained. It being known that the crop was deficient, prices rose, and Government, having a large reserve stock from previous years, were able by watching the market, and feeding it cautiously, to sell as much as they wished at the enhanced prices. On the other hand, as the crop was deficient, the estimated sum for labour was not required, and thus £491,600 was saved on the side of expenditure. Still the fact remains, that the Finance Minister, with all the facilities for calculation which his position gives him, is unable to tell within nearly £2,000,000 what he will get from opium, the second largest source of Revenue that India possesses. Hitherto this uncertainty has turned out well; but it is an amphisbœna with two heads, and one may some day wound as the other has caressed us. In the Budget of 1872–3 the opium revenue is estimated at £1,553,400 less than the sum it reached last year; but all that can be safely predicated of these figures is, that from some cause or other they are sure to be wrong. Indeed, the Finance Minister himself has expressly told us that he can form no opinion about opium likely to be correct, for at page 7 in his Statement for 1871–2 he says— The improvement of the Indian opium trade in China must, of course, have had its causes, which causes may be connected with the condition of the indigenous culture of the drug in China itself; but what exactly those causes are I hesitate to state to the Council. I may have my opinion and conjectures; but I really do not know, and I have not heard of any one who does know. Nothing can be more candid and convincing than this declaration of ignorance, and after hearing it, it is impossible to regard the estimates of opium revenue as anything better than guesswork. In short, opium is the real disturbing element in Indian Budget calculations; and while some persons may look for the mistakes which have occurred in one direction, and others in another, I am disposed to think that we shall never have a correct estimate as long as this drug continues to be one of the chief sources of Revenue.

The great uncertainty of this large branch of Revenue must, I should think, force upon all minds the necessity of preparing for a sudden deficit as large as, or larger than, the surpluses which have hitherto accrued. I think, too—and here I agree with the hon. Member for Brighton—that it will be admitted, with equal unanimity, that this preparation can be made in only one way—that is, by further reductions and economies; for it is impossible to devise new taxes, the raising of which will not cause disaffection too serious to be voluntarily encountered. And it is only too true, as is here said at page 27 of the Financial Statement, that— The State income fails to evince that elasticity and tendency to rapid growth which we might desire to see, and which would be looked for if the requirements of progress in the expenditure are to be met. Where, then, are these economies to be effected, in face of the continual rise of prices, and of the incessant extension of Public Works, which are called reproductive, and may be so as regards some people, but which, do not recoup Government by bringing into the Public Treasury as many rupees as they extract from it? After repeatedly examining the items of expenditure, I see nothing which admits of considerable reduction except the cost of the native Army, and there, I think, reduction should begin forthwith, not by all at once discharging a number of men to swell the ranks of discontent, but by stopping recruiting until our native Army of 130,000 men is reduced to 60,000. At the same time, I think we might fairly say to the three great Princes of Central India—Sindhia, Holkar, and the Nizam—"You are protected by us from foreign invasion; your forces are considerable, and you are absolutely safe from aggression—we shall look to you to take part in maintaining the internal tranquillity of India." I am sure we might safely rely on the loyalty of those Princes; and I believe that to place confidence in them, and to give them something to do in the general administration of the Empire, would bind them to us. It is, at all events, certain that the European force we have in India, supported by the 20,000 Englishmen employed there in other professions, is quite irresistible, and that from the Russian frontier to the sea there is nothing that could stand against it. What, then, is the necessity for a great native Army, when the duties which were once performed by sepoys are now sufficiently discharged by police? Rather, I would ask, is there not more danger than utility in such an Army? I say that there is, and must be; for without entering into the question of the fidelity of native troops, it is certain that if we go on taxing the people of India for an Army which is not required we must always be in a financial difficulty, and a financial difficulty will sooner or later beget a political difficulty. This, I believe, was the opinion of Lord Mayo, and I understand he advocated a far larger reduction of the native Army than has yet been effected. I appeal, therefore, to his authority in support of these views. On the subject of the Army, I will only add that the reply which is given at pp. 11 and 12 of this Financial Statement to Sir George Balfour's letter, published in The Times of April 13 last year, does not seem to me at all satisfactory. The fact remains that the expenditure on the Army in India is not less than in 1862–3, though troops that cost fully £2,000,000 have been reduced.

The next thing I wish to notice is a statement, at page 29 of Sir Richard Temple's speech, that— The increase of £44,000 in political agencies is partly owing to important negotiations respecting territorial boundaries with the Shah of Persia. Now, at page 42 in the Home Accounts I find that the expenses of General Goldsmid's mission are estimated at £11,747, which is but a fourth of the above sum. I should be glad, therefore, to know whether any additional charges have been incurred; and, if so, to what amount? At all events, it would appear that in 1872–3 Persia will cost India at least £30,000, reckoning the usual quota of £12,000 for the expenses of the Mission at Tehran—the almost equivalent sum for General Goldsmid's mission—the cost of the Residency at Bushahr, and the other charges usually defrayed by India. This is a fact which I think should be carefully recorded.

One word now about railways, regarding which, at page 32 of the Statement, we read— On the whole, the conditions of the guaranteed railways during the year have added one more to the many anxieties of Indian Finance. Sir, I must say the anxieties respecting State railways seem likely to be at least as great as those attaching to the guaranteed. We are told, at page 16, that— There has been expenditure on the lines between Lahore and Pesháwar, Delhi and Rewri, Agra and Ajmír, Multán and Kotri, Nîrwar and Indor, and Dharwar and Karwar. I fear that the lines between Lahore and Pesháwar, and Multán and Kotri—which are by far the longest and most costly in this list—will for years to come entail a considerable loss; but I admit them to be necessary for political reasons. I do not, therefore, complain of their construction, nor do I find fault with their being made on the narrow gauge of 3 feet 3⅜ inches; because as these lines touch the frontier, the same reason may be urged for making them on the narrow gauge as for its adoption on similar lines in Russia—namely, that an invading Army would have the inconveniences of a break of gauge, and the resources of a foreign rolling stock would be unavailable in passing the frontier. But what I do think admits of doubt is, whether it was prudent to adopt the narrow gauge on the other lines I have mentioned which belong to the internal railway system of India, and more particularly on one which has been, for reasons to me unknown, passed over in this Statement—namely, the line from Khandwa to Indor, 84 miles in length, and for the extension of which to Ni-mach and Ajmír surveys are being made. Now this is a very important line, as it will shorten the distance between Bombay and Delhi by 300 miles, and a break of gauge upon it will be a most serious evil. Supposing, for instance, there was an urgent necessity for sending 10,000 men from Delhi to Bombay, or vice versâ, then, according to the calculation of one eminent engineer—Mr. Bidder—you would require changing stations for trains 10 miles long, and on such vast platforms the delay and confusion would be intolerable; and, besides, for this comparatively short narrow gauge line it would be necessary to have 2,000 carriages. On the other hand, the saving, as far as Indor at least, would be very small; and though in the level country it would be considerable, the question remains—could not nearly all that saving be effected without any alteration of gauge by using light rails and light rolling stock? The most eminent engineers affirm it to be so; and I should be glad to hear from my hon. Friend the Under Secretary of State why their advice has been disregarded?

Sir, I have only one other point to mention, and that is the cash balance. I have seen it stated in several journals that our Indian cash balances are excessive, and certainly £24,346,015 is an enormous sum. It is true that this may not be a perfectly correct statement, for serious mistakes were often made by the officials at the head of the provincial treasuries in reporting their balances. So much was this the case, that Lord Canning sent round a circular calling on the Revenue authorities to attend to their addition. But assuming the amount to be correct, it must be remembered that in August, 1873, we have to pay off £5,000,000 of 5 per cent debentures, and in April, 1874, £12,000,000 of East India stock. In view of such liabilities, I think it highly desirable that the cash balances should be maintained at the highest figure possible; and without examining the advantage which Sir Richard Temple says trade derives, from our balances being so large, or inquiring whether that is a legitimate ground for keeping them so, I think that with reference to the enormous sums we have to pay before very long, and the desirableness of maintaining our credit at the highest point, in case we should have to borrow, that it was wise to show the cash balance which appears in the present Budget.

MR. DICKINSON

said, when he looked at the clock and remembered how many Gentlemen were kept waiting merely to make a House, he had some hesitation in taking part in the debate, but he felt it necessary to urge the claim of India to a fuller share of representation in Parliament. He thought it was desirable that our relations with the native Princes of India should be put on a better footing than at present, by something like the German Confederation being introduced, with the view of getting them to work along with us in the administration of the country. The Customs duties being levied for the defence of the whole country, ought so to be applied that native States should have the benefit of them as well as the territory under direct British administration. There should be only one Legislative Council, and England should be made to bear its share in the expenses of the Government.

MR. KINNAIRD

entirely concurred with the hon. Member for Brighton (Mr. Fawcett) in his condemnation of the income tax as thoroughly opposed to the feelings of the people of India, and thought that, considering the small amount gained and the hardships arising from the system of collection, a substitute might be found for that impost. At the same time, he could not agree in the hon. Member's tirade against the only policy by which India could have been covered with railways. He instanced the deplorable results of competition in the construction of railways in England as powerful reasons in favour of the principle on which the Indian railways had been made.

SIR JOHN LUBBOCK

argued that without the income tax it was impossible to have a just system of taxation in any country, and above all in India, where the existing taxation pressed with unusual weight on the very poorest classes of the community, and really exempted the richest.

MR. MAGNAIC

did not think that in India the income tax could be made a fair and equal burden upon all classes. He hoped this would be the last time that so important a question as the Indian Budget would be brought forward at a Morning Sitting within the last few days of the Session.

MR. FAWCETT

said, that he had been anxious to press the matter to a division; but it would not be respectful to do so in a House of about 26 Members. He would, therefore, withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question, "That Mr. Speaker do now leave the Chair," put, and agreed to.

Accounts considered in Committee.

(In the Committee.)

MR. GRANT DUFF

said, it would not be expected of him that, at so late an hour, he should enter into the various matters which had been referred to by the hon. Gentlemen who had taken part in the debate. Much had been said about the inconvenience of discussing the question of Indian Finance at so late a period of the Session; but although he should prefer to have the discussion at an earlier date, yet he thought that the discussion of the present evening was the most interesting one at which he had ever assisted. He believed that next Session they would have the Report of the Euphrates Valley Committee, and he would then be able to state the views of the Government upon the subject.

Motion made, and Question proposed, 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 1871 was £51,413,686; the total of the direct claims upon the Revenue, including charges of collection and cost of Salt and Opium, was £9,266,931; the charges in India, including Interest on Debt, and Public Works ordinary, were £30,925,543; the value of Stores supplied from England was £1,315,750; the charges in England were £6,587,661; the Guaranteed Interest on the Capital of Railway and other Companies, in India and in England, deducting net Traffic Receipts, was £1,834,811, making a total charge for the same year of £49,930,696; and there was an excess of Income over Expenditure in that year amounting to £1,482,990; that the charge for Public Works extraordinary was £1,167,810, and that including that charge the excess of Income over Expenditure was £315,180."—(Mr. Grant Duff.)

MR. BRYAN

Mr. Chairman—Before you put the Question, I should like to ask the Under Secretary of State for India a question relating to one item in these Finance and Revenue Accounts now before us. In the details of expenditure for the year 1870–71, I see at page 33, under the head of "Allowances in accordance with Treaties or other Engagements," that in the Province of Bengal credit is taken for £52,306, paid to the Nizamut Stipend Fund, among the items of the allowance made to His Highness the Nawab of Bengal. On referring to the Estimates for Bengal for this year I cannot find any similar credit. Perhaps the hon. Gentleman will be kind enough to inform us as to the nature of that Fund, and where credit is taken for it in the Estimates now before the House?

MR. GRANT DUFF

The hon. Member for Kilkenny County asks me what is the nature of the Nizamut Stipend Fund? For a considerable period of time it has been the habit of the Indian Government—not in accordance with the provisions of any treaty or agreement, but because it considered, on the whole, it was the right and the wise thing to do—to allot a sum of about £170,000 a-year to what it has been in the habit of describing as Nizamut expenses. These Nizamut expenses consist partly of a sum paid personally to the Nazim, partly of other sums paid to the Nizamut family, and partly of sums paid to a variety of other persons. But after all these expenses have been paid, a certain sum remains unpaid, which it has been the habit of the Government of India—and will continue to be its habit—to consider in each year as a liability which the Government of India will, one day or another, be obliged to liquidate. That money it has been in the habit of describing as passing into a fund; but that fund has never had any real actual existence at all. That fund is simply a book-keeper's expression for the aggregate liabilities which the Government of India have conceived they may sometime or other be liable to pay for the purposes of the Nizamut family. What those purposes may be, will depend entirely upon the view that the Government of India shall take of the whole sum of its relations to the Nizamut family, at the time when the present head of that family shall cease to exist. I do not know whether there is any other question the hon. Member would like to put to me?

MR. BRYAN

I must apologize to the House for pressing questions at this late hour, but the answer of the hon. Gentleman is so very unsatisfactory about this Fund being a "book-keeper's expression," and on other points, that I must really beg the attention of the Committee for a few minutes to this matter. I intended to have brought the subject fully and more properly before the House at another period of the Session; but from the autocratic monopoly of time, which the Government have assumed, independent Members have not had the slightest chance of bringing forward any Motion. I have taken the trouble of going very carefully through the official accounts of the Bengal Nizamut for the last 12 years, and I should like—because this is really a serious matter—to make one or two observations about them. I hold in my hand a statement or analysis of these Nizamut payments extracted from the accounts annually laid before Parliament from 1859–60, which was the time when the Queen's Government came in and the East India Company went out; and one of the first items is a sum of £15,048 put down as paid to Munnee Begum, who died in 1813. That item is continued every year up to 1864–5. In 1865–6 there is nothing; but in 1866–7 it figures at £45,144. Again, in 1867–8, there is £15,048, the same in 1868–9; and in 1869–70, £13,794. But in 1871–2, for the first time, we find £52,306 credited to the Nizamut Deposit Fund. Well, I have also found that this Fund is not by any means represented by that small sum which I have mentioned, but amounts, in round numbers, to £850,000, mostly unaccounted for. I will be very brief with the Committee; but I must call attention to the proceedings of the India Finance Committee which is at present sitting upstairs, and of which the right hon. Gentleman the Chief Commissioner of Works is Chairman. They had under examination recently Sir John William Kaye, who is, I believe, the principal officer in the India Department. The Chairman put the following Question:— (No. 7,328.) "With regard to the Fund which you have just mentioned—the Nizamut Fund—will you explain what is the amount of that Fund?—Yes; there is a sum of 20 lacs, 85,000 rupees"— that would amount in English money to £208,500— which has been invested, and, out of the interest of the sum thus invested, our own British establishment, which we call the 'Agency,' is paid. Of course, there is no objection to that. But he goes on to say— Then there is another sum of between 10 and 11 lacs of rupees, which is kept in hand to meet extraordinary unforseen claims—according to the statement here, it is 10 lacs, 73,508rupees"— which would am out to £107,350. These extraordinary expenses are the marriages of daughters and repairs to public buildings, and things of that kind." Then it goes on to say—"The other sum of 55 lacs, 33,261 rupees—referred to in the India Office despatch as accumulations, has, in reality, never been paid into any separate fund. Now, the hon. Member for Brighton (Mr. Fawcett) puts a question to Sir John Kaye, as follows:— (No. 7,329.) "When you speak of the Nizamut Fund, £850,000, what you mean is that there is a fund that ought to exist to this amount, but that £550,000 of that has been spent; and therefore instead of being a fund, so far as this amount is concerned, it is simply a liability?—It is simply a liability. The Government of India described it in past days as a book-debt. I ask the attention of the Committee to this Question— (No. 7,331.) "But to look to the future financial position of India, India is £550,000 worse off, and will be worse off, of course, than it, would appear from the statement that this £850,000 is a fund?—Most certainly the Government of India owes that amount to the Nizamut family. Then the Chairman comes to the rescue, and asks this Question— (No. 7,332.) "The Government of India does not consider itself under any obligation to account for that £550,000?—The Government of India do not consider themselves under any obligation to pay interest on that fund; but they do consider—because they cannot help it, by the terms of Sir Charles Wood's despatch—that they must devote the whole of that money, in some form or other, to the benefit of the family. (No. 7,333.) "I understood that Sir Charles Wood's despatch was a suggestion, not an order?—I beg your pardon. It was, in the most emphatic terms, laid down in Sir Charles Wood's despatch that the whole of that money was the property of the Nizamut family; but it was suggested that the accumulations in that fund might be made a permanent provision for the family. Very well. There is nothing in this Revenue Statement in 1870–71, or in 1871–2, to show the existence or disposition of this £550,000. From another source we are informed that there is a deposit of £550,000 which appears no- where in this account, and the hon. Gentleman gives us no information on the subject. Where does this money go to? To whom is an account of it to be rendered? I will ask the hon. Gentleman to state to the Committee how this money has been applied, and who is responsible for its disbursement?

MR. GRANT DUFF

Mr. Chairman—I have no remark to add to what I have said before. Some years ago the name of fund was very unfortunately used with regard to this liability of the Government of India, and it seems to have given rise, in the minds of the hon. Member and of some other persons, to the idea that there was somewhere a definite fund or sum, which, in some way or other, went out of the power of the Government of India and into the power of the person in whom the hon. Member seems to be interested—the Nawab Nazim. Nothing of that kind is the case. There is a much smaller amount, an invested fund—to which I do not understand the hon. Member to allude—a sum which has been invested, and the proceeds of which are regularly used for Nizamut purposes. But the large sum known as the Nizamut Deposit Fund is a mere liability of the Government of India to itself, which liability it will, some day or other, have to recognize and to pay as, in the whole or in part, a provision for this Nizamut family. If the Committee would like to hear a fuller account of the matter, I have, since the hon. Gentleman began to speak, procured an extract from a despatch of the Government of India—one of their most recent despatches on the subject—which gives, I think, a very full and clear, though somewhat lengthy, account of the matter. If the hon. Gentleman and other hon. Members would like me to read it, I will do so. The Nawab Nazim states that Lord Dalhousie wrongfully converted the deposit fund into a book debt bearing no interest; that the several funds were created by his ancestors for special purposes, and ought to bear, and have borne, interest; that the orders of the Government were that interest should be re-invested as received; that, in reality, the funds have been created (1) from lapsed stipends arbitrarily diverted for that purpose; (2) from family property to which the Nawab Nazim would have fallen heir; and (3) from a sum of two lacs a-year paid by the Nazim. Now, the facts are, that the fund consists of two parts: (1) invested, and (2) uninvested. The invested funds, to which the Nawab Nazim never contributed anything, but which, with exception of a portion of Munnee Begum's treasure, invested with the consent of the Nazim of the day, consists entirely of lapsed stipends, over which the Nawab Nazim had no control whatever, have always borne interest, and bear interest to this day. Part of the interest is devoted to the purpose for which the corresponding portion of the investment was originally made—viz., the agency establishments, although it is insufficient to meet the expenditure, and has had to be supplemented with grants from the other portions of the fund; and the remainder goes for Nizamut purposes over and above the payments made from the Government Treasury. If the interest of the Begum's fund has not been re-invested, as directed in 1823, it is because that fund never really came into existence, and the Nawab Nazim himself failed to carry out the arrangement by which he was to credit Rs. 56,000 a-year to the fund. He himself wrongfully appropriated the lapses, and so far from his having any claim, Government had actually to forgive him a debt of Rs. 2,70,137 on account of misappropriated lapses, and for this the Government of India incurred the censure of the Court of Directors. In regard to the uninvested portion, not only was it never intended that it should bear interest, but it would be contrary to all the Government rules regarding deposits, if interest were granted upon it. Deposits in the Government Treasuries do not bear interest except under specific arrangements made with the depositors. Since the first day of its formation the deposit has borne no interest. It was not Lord Dalhousie who made it a book debt; the uninvested portion of the deposit fund has never been anything else than a book debt ever since its formation in 1836. What Lord Dalhousie wanted to do was to abolish the fund altogether, and to re-credit the uninvested balance to Government; but to this the Court of Directors objected. If the fund had been invested it would at one time have been bankrupt. The demands upon it are heavy and fluctuating. A reference to the Report on the fund, which is enclosed in our separate despatch, No. 149 of this date, will show that it has not always been able to meet its liabilities. Between 1842 and 1851, for instance, there was a cumulative deficit varying from a quarter of a lac to nearly two lacs. Much confusion has, indeed, arisen from styling the balance of the 16 lacs a fund. The uninvested portion of the so-called fund is a mere account of certain liabilities which the Government of India may, at some indefinite time in the future, be called upon to meet. There is no obligation expressed or implied to give interest on this account; and on two occasions on which the present Nawab Nazim has brought forward his grievances, although apparently assisted by persons fully acquainted with all the facts of the case, he has not been able to adduce anything which implies a promise on the part of Government that interest would be allowed. This appears to have been the view of Her Majesty's Government in 1864. At that time interest had never been paid on the uninvested part of the fund. The Nawab Nazim complains that the fund was converted into a book debt by Lord Dalhousie in 1854. The despatch of June, 1864, however, says not a word about interest, but merely decides that the 'unappropriated portions from year to year of the 16 lacs stipend unquestionably belong to the Nazim and his family, and can properly be expended only for their benefit.' This is precisely the principle upon which the fund has been administered. The Nazim's interest in it consists in his right to have certain expenses defrayed out of it (subject to the approval of Government) which would otherwise have to be paid by himself out of his personal allowance. His family's interest in it consists in their right to have a provision out of it at his death, as Government may then consider proper. It is true that the balance is now large; but there can be no doubt that at the death of the present Nazim, which may, of course, occur at any time, very heavy claims will come upon it."—[3 Hansard, ccvii. 1152–3.] I have really nothing more to say upon the subject.

MR. FAWCETT

I am not going to say a single word upon the Nawab Nazim. What I do want to point out—for I do not think we ought to allow these Accounts to pass this evening—is simply as to a matter of keeping accounts. What takes place? £52,000 is put down as existing income, and the Under Secretary admits that instead of its being income it is the exact measure of future liability. It is future liabilities which have been appropriated to income. In this one case he admits amounts of £52,000. This is an illustration of what I pointed out in the previous part of the evening—that the Government of India constantly devote capital to income; and if the Committee had sufficient time to go through these Accounts no doubt we should discover similar instances. The Under Secretary says—it is very improper to call this a "fund." Well, who calls it a fund? What can we think of accounts, when we find things constantly called a "fund" when they simply represent liability? And if it had not been extracted by the cross-examination in Committee, we should not have discovered that this "fund" to which the hon. Gentleman refers—which we supposed to represent a property of £550,000—was, in fact, a liability. I put this to the Committee seriously—Are we, at 2 o'clock in the morning, justified in passing accounts which are discovered to be kept in this way:—that a sum of £52,000 is put down as ordinary received income when, according to the admission of the Under Secretary, that sum does not represent income at all, but is simply a measure of future liability?

MR. EYKYN

When this matter was discussed last year, the House refused to grant a Committee to inquire into the merits of the case of the Nawab Nazim of Bengal. But the statement made by the Under Secretary for India has left such a confused impression on my mind in regard to this matter, and as to the way in which this fund is dealt with, that if any steps should be taken to re-ventilate this subject at a future time I should certainly lend every aid in my power to unravel the mystery. I am convinced that a good deal of injustice has been done to an Indian Prince who is at present staying in this country for the purpose of obtaining remedy; and it is quite impossible for him to prove the merits of his case unless a Committee is granted. No one person alone, for instance, will be able to fathom the obscurities of this account, which—if I, as a man of business, may venture to pass an opinion—is one of those kind of things it is impossible to understand in its present condition. It is quite beyond my comprehension. I have, unsuccessfully, endeavoured to gather from the statement of my hon. Friend what has become of the money, balances, book-debt—or whatever else it is—of £550,000; because I find in this account submitted to the House a sum of £52,000 entered as transferred to the credit of the Nizamut Stipend Fund, which the hon. Gentleman confesses is no fund at all.

MR. GRANT DUFF

There appears to be some strange confusion in the mind of the hon. Member for Brighton. He is under the impression that this sum is a receipt. It is nothing of the kind. It is a sum which we charge as a disbursement—a charge to our debit. It is not a receipt, or anything in the nature of a receipt.

MR. BRYAN

May I ask the hon. Gentleman another question? There appears to be no doubt that there is a sum of money somewhere, which has been received by somebody, and I suppose there are some accounts kept. May I ask the hon. Gentleman to state to the Committee where these accounts are, or to whom the Indian Government consider themselves to be accountable for them? Is it to the House of Commons, because no record of them appears in the Statement laid before us?

MR. GRANT DUFF

Mr. Chairman—Certainly the Indian Government is responsible for this sum of money to nobody but itself. From year to year the Government of India considers that the sum that is not paid in the course of that year for Nizamut purposes will some day or other, at some indefinite future period, have to be used for Nizamut purposes; and therefore it transfers that sum—it puts it aside—makes itself unable to meddle with it by putting it down in its accounts as a debit; and it carries it to the account which is one day or another to be settled with this Nizamut family.

MR. FAWCETT

I am still unable to understand this matter. I do not know whether it is that in consequence of this late hour my brain is confused. What I want to know is—what becomes of the money? It is spent, is it not? What is going to be done with this £52,000? understand it will be spent. "No, no!"] Where is the money? Mr. GRANT DUFF: The money is lying in cash.] Then, as I understand, these cash balances—according to what has been said this evening—are liable at any moment to be spent if war breaks out. What is the justification of this enormous sum of money—of £24,000,000 of cash balances? The only justification of them is that they represent a reserve which may be spent. We find that they are partly composed of these liabilities, and can be spent as any ordinary income. And, therefore, whether the Government puts it to ordinary income or to cash balances, it has appropriated money which represents future liabilities.

MR. BRYAN

The hon. Gentleman distinctly admits to the Committee that there is a fund, and that whatever it amounts to it belongs emphatically and exclusively to the Nizamut family. I would ask him to be kind enough to tell me whether he does not consider that, under those circumstances, there is an obligation on the Indian Government to give an account of it, either now or at some future period, to the head of that family?

MR. MAGNIAC

Before my hon. Friend answers the question, I should wish to say that in the discussion of a question of this kind in an irregular way, I think it extremely possible and probable that statements may be made and observations let fall which may hereafter be turned in a position adverse to the interests of the people of India. If you are to discuss this question of money it is extremely desirable that it should be discussed in a precise manner. Hon. Members below me have stated on two occasions—or rather put words into the mouth of my hon. Friend that I, sitting near him, did not hear him say. It has been stated that the amount of this fund represents a distinct and precise liability of the Government of India. My hon. Friend below me stated most positively that this amount represented an undefined liability. [An hon. MEMBER: But still a liability.] I think if the hon. Gentleman will take what I say in all good part, "undefined liability" and "liability" are two totally distinct things. An "undefined liability" is an unsettled account. A "liability" is a settled account. I think it is desirable that the question should be put precisely, because what falls from hon. Members may be used on a future occasion to the detriment of the people of India. As I understand the question, it is this:—The Government of India considers it advisable to apply to a fund—and to that it applies—a certain amount in regard to an undefined liability. It applies that amount, and it retains it in cash balances; but it does not go out of its pocket. It holds itself liable if hereafter called upon to pay; but as money, it does not go out of its own care. It comes to the same thing, as regards liability, whether it keeps no account and pays 50 years hence, or whether it treats it in the way named.

MR. R. N. FOWLER

The hon. Member for St. Ives says this is an irregular discussion. I would ask my hon. Friend and the Committee whose fault is it? Not the fault of the hon. Member for Kilkenny; because he had a Notice down for Tuesday night, and was prevented from bringing it forward because the Government claimed Tuesday night for Government business. I agree with the hon. Member for St. Ives that this might have been raised in a better way by a regular discussion; but I venture to remind him that it is no fault of the hon. Member for Kilkenny that that has not been done.

MR. MAGNIAC

I do not wish in the least to blame the hon. Member for bringing it on. I merely stated a fact.

MR. R. N. FOWLER

What I wish to remind my hon. Friend is, that it was owing to the circumstances of the Session that the Government took that evening—very necessarily very likely; but I think the hon. Gentleman opposite is taking the only course open to him, when, owing to the period of the Session, he is deprived of the opportunity of discussing the question at the proper time, in raising this discussion on the Indian Budget.

MR. BRYAN

Will the hon. Gentleman answer my question?

MR. GRANT DUFF

Whether the Government considers itself liable to give an account of this fund to the head of the Nizamut family? Most certainly not. The head of the Nizamut family is one of those persons who, by the favour and kindness of the Indian Government, have for the last 100 years enjoyed certain benefits. He is, on the whole, the most favoured—by far the most favoured member of that family, and receives very much the largest amount. The Government does not recognize in the head of the Nizamut family the very slightest right of any sort or kind to be consulted as to what is to be done with regard to this matter. It from time to time makes grants to the head of the Nizamut family of the day, and it has made very large grants to the present Nawab Nazim; but it never has recognized—at any moment, at any period of history—any right or title whatsoever in the Nawab Nazim of the day to give his opinion as to what it ought to do, or how it ought to apportion its grants.

MR. W. M. TORRENS

Sir, I cannot sit here and listen to the doctrines laid down by my hon. Friend without strongly protesting against them. I deny, with all the emphasis of which I am capable, as a matter of fact, the accuracy of the Under Secretary's statement, that there is no right or title, further than that of a recipient of mere benefits or favours in the present head of the Nizamut family. I believe that is entirely contrary to the history of the case. I have taken no part in the discussion in this House upon the subject; but I venture to say that if you give a Committee—as I think you ought to have done last year, and as you have prevented the hon. Member for Kilkenny from asking this year—facts would be adduced which would change altogether the aspect of the case—as presented by the Under Secretary. I believe the facts to be that the present Nawab Nazim is the legitimate successor of the person with whom you made a solemn Treaty to surrender—first, the finances of his country; then the control over his army; and, eventually, the control of the territory of which we thus gradually became the possessors. And the condition on which that Treaty was signed, sealed, and delivered was, that there was a certain annual sum to be given to his posterity. I am quite aware that this is not the time to argue that question; but as it is so broadly stated that this is a mere benefaction and favour, I cannot, as an independent Member of this House, entertaining the opinions shared by many hon. Members near me, sit silent and let that statement go unchallenged. I think, on the contrary, the Nawab's title is a good and substantial one; and I think it most lamentable that the Government of a great country like this should set up special pleas of any kind, because they know that the person entitled to plead against them for a sum of money is helpless to enforce his rights. But this House has rights of jurisdiction which it can—and, I believe, eventually will—exercise above all Executive Governments; and I hope my hon. Friend (Mr. Bryan) will take this or some other opportunity before we separate, to show that he will next Session follow up this matter in the way in which he has begun it, when the whole mass of mystery in which it is enwrapped will be thoroughly investigated by a Committee of this House.

SIR JOHN LUBBOCK

The hon. and learned Member seems to have admitted what is entirely destructive of his own case, because he admitted that if a Committee had been granted, there would have been brought forward facts which would have entirely altered the aspect of the case.

MR. W. M. TORRENS

As presented by the Under Secretary.

SIR JOHN LUBBOCK

I did not hear those words. The hon. and learned Member said—"Would have entirely altered the present aspect of the case."

MR. W. M. TORRENS

The hon. Member has no right to put words into my mouth. I know best what I intended to say, and I am entitled to repeat or explain what I said; and he has no right to repeat afterwards that that is what I said when I have denied it.

SIR JOHN LUBBOCK

The hon. and learned Member did not contradict my statement.

MR. W. M. TORRENS

I did, distinctly.

SIR JOHN LUBBOCK

I beg par don. My statement was, that the hon and learned Member said that he would be prepared to adduce facts which would alter the aspect of the case. The hon Member did not deny this, but he said he added the words—"as presented by the Under Secretary for India."

MR. W. M. TORRENS

I was replying to the observations of the hon Member the Under Secretary of State for India. He put forward a case. I challenged that case. I repeat, Mr. Chairman, that it is not according to the courtesy practised in this House—in which I have perhaps had more experience than the hon. Member for Maidstone—for one hon. Member to persist in construing the intention with which another hon. Member used words, when he has explained that such was not his intention.

SIR JOHN LUBBOCK

I do not wish to press the matter against the explanation of the hon. and learned Member below me. I was only explaining that I did not hear him say the words he uses now.

MR. W. M. TORRENS

I did not say I used those words, but their equivalent.

SIR JOHN LUBBOCK

Then I do not understand the point of the hon. and learned Member below me. He does not deny having said that evidence was producible which would alter the present aspect of the case. He appears to have used those words in some sense which I do not understand, and, of course, I accept his explanation.

Motion agreed to.

Resolution to be reported To-morrow.

House adjourned at quarter after Two o'clock.