MR. FAWCETT rose to call attention to the Financial Statement recently made at Calcutta by Sir John Strachey; and to move—
That this House regrets that the people of Madras and Bombay should be burdened with the increased salt duty which has been recently imposed upon them, and is of opinion that such increase would be unnecessary if the finances of India were administered with greater economy; that this House, whilst admitting the expediency of creating a fund in India for the relief of famines, objects to the trades licence tax, which will alone be imposed on those engaged in business, and will moreover fall upon small traders and artizans with undue severity; that, in the opinion of this House, it is desirable that the fund which is to be created in India for the relief of famines should not be expended on public works, the returns on which are uncertain, but should be devoted to the reduction of debt, or should be kept in a separate account as a reserve duly invested.
The hon. Member said, he felt sure that there was no greater service which the House could render to the inhabitants of India than to convince them that, so far
as lay in the power of this country, they were determined to secure to them a just taxation, and to protect them against the infliction of unnecessary burdens. The Financial Statement of Sir John Strachey was remarkable for the grave admissions it contained about the present perilous position of Indian finance. It showed that the ordinary revenue would only just balance the ordinary expenditure of the country; and, secondly, that if any contingency occurred, the whole of the money required to meet that contingency must be provided by adding to the Debt of India. The special Famine Fund that was to be provided was proposed to be raised in five ways. To the two last of these he proposed to call especial attention—namely, to the increase in the salt duty in Madras and Bombay, and to the imposition of a trades licence tax. With regard to the former, he might say that he had never been one of those who had advocated its immediate and entire abolition; but he thought that the House would see that there was the widest and most essential difference between the proposal altogether to abolish the salt duty and the proposal to increase it as it had been lately increased in Madras and Bombay. He should like to ask the Representatives of the agricultural interest in that House what they would have to say if articles essential either to the feeding of cattle or the cultivation of land were to be taxed at the rate of 1,500 per cent? There was not a Chamber of Agriculture or a market ordinary throughout the Kingdom which would not be in a state of open discontent. Yet that was the case with this salt tax, which was imposed upon an article of food, essential, also, to agriculture and to various branches of industry. It was sometimes said that a still heavier salt tax was imposed in France. But a bad thing in France did not make a thing good in India. It had not been defended by a single European financier. The tax in France was not imposed on salt used for cattle or manufactures, and it was imposed on a country infinitely richer than India. This salt tax was undoubtedly most burdensome, and it had been condemned by many Indian authorities. Mr. Pedder, a gentleman in the Indian Civil Service, who had been specially employed to inquire into the salt duty in Bombay, was examined
before the Indian Finance Committee, and said that if the duty were raised above two rupees in Bombay it would check consumption. In 1840 the salt duty in Bombay was only eight annas amaund. Consequently, the duty had been increased since 1840 by 400 per cent. He said, further, that the cost of salt in Bombay would average two annas per maund without duty; and, consequently, the duty would increase the price 2,000 per cent. Mr. Cassels, formerly a merchant in Bombay and member of the Legislative Council, said also, in the course of his evidence before the Committee, that he thought the salt tax a very heavy burden on the poor, who had to bear many taxes from which the rich escaped. A similar opinion was expressed by Mr. Geddes, one of the three members of the Bengal Civil Service specially selected by Lord North-brook to administer relief during the Bengal Famine. The right hon. Member for Tiverton (Mr. Massey), formerly Finance Minister, also gave strong testimony. He said—
I am exceedingly opposed to any increase of the salt duties; I think it is a most oppressive tax upon a class of people who have no means of defending themselves. I think, as a matter of policy, it is not expedient to increase the salt duties, and certainly not as a matter of justice and humanity.
Lord Lawrence had also given important testimony on this point. The noble Lord said—
I went into the subject most carefully and most minutely, and I may say I ought to know something about it (the salt duty), for I have seen the working of it for the last 40 years.
The noble Lord then referred to the deep discontent produced among the people subject to English rule by the high price they had to pay for salt, when they knew that it could be got at a merely nominal price in the Native States, such as Rajpootana. In reply to the argument that the Natives did not complain, Lord Lawrence said—
There is no doubt that they do not complain, but I do not see how they can complain. They must say to themselves— 'The Government do this, and what, then, is the use of going to the Government officers and asking them about this?' The Government officers will say—'This is the law and you must pay, and if you do not like to pay you need not eat the salt.' But when they can, they do show their disinclination to the tax, and show it in a very marked way Not only does the salt duty limit the consumption as regards
human beings, but I think it limits the consumption very much as regards cattle; and I believe myself that a great deal of the loss of cattle from murrain in India has arisen from the want of salt.
He might, again, ask what would be the feeling of English agriculturists if anything like a similar state of things arose in this country? It was urged in support of the increase in the tax that it would only fall upon 47,000,000 people, as compared with the 130,000,000 people who would have the advantage of a decrease; but it must be remembered that the people upon whom the increase would fall had just emerged from a state of famine—the increase was, therefore, likely to call forth a wide-spread feeling of surprise and discontent. It might be said that each person in India would have to contribute but a small amount to this tax; but that was a most fallacious argument when it was applied to a tax upon a necessary of life. This salt duty equalled, in fact, an income tax of 2 or 3 per cent. The argument would, doubtless, be pressed against him that, inasmuch as this sum of £300,000 to be raised by this duty was urgently wanted, he was, if he objected to it, bound to show that the money could be provided either by increased economy or by some other mode of taxation. He accepted the challenge. He believed that he should be able to show that the money might easily be obtained by increased economy, and also that it might be supplied by a method of taxation which no man in India would regard as being unjust or oppressive. With regard to the possibility of increased economy, Sir John Strachey had pointed to the fact that in a period of profound peace, after we had been for centuries consolidating our rule in India, our military expenditure in that country was £17,000,000, absorbing no less than 45 per cent of her entire net revenue, and that this expenditure had increased by £1,000,000 since 1875—this increase being principally due to the growth of the home charges. Sir John Strachey went on to say—
I do not assert that the whole of the additional expenditure on the Army has not been incurred for excellent objects or that it could have been avoided; but that the Indian revenues are liable to have great charges thrown upon them without the Government of India being consulted, and almost without any power of remonstrance, is a fact the gravity of which can
hardly he exaggerated. … We may hope that some reconsideration of the burden thrown upon us on account of this branch of charge may be found profitable which shall lead to an arrangement more consistent with, our own views of what is equitable to India.
If, therefore, economy were practised in military expenditure in India, and if the home charges were adjusted more equitably towards India, a saving could easily be effected compared with which this sum of £300,000 to be raised by the salt duty would be a mere nothing. Not only Sir John Strachey, but official after official, had shown that the maintenance of separate armies in Bombay and Madras, with all the costly paraphernalia of separate Commanders-in-Chief and separate staffs, was not only extravagant, but useless. The home charges of India, amounting to no less than 35 per cent of her entire revenue, were spent in this country under the authority of the Secretary of State. By making the Trade Licence Act more equitable, the £300,000 might easily be raised; but at present there was no tax more unjust in its incidence or associated with more indefensible conditions. He would prove all his allegations. A Petition against the trades licence tax had been signed by 8,460 of the inhabitants of Bombay, both European and Native, including representatives of every important mercantile firm in that place. The petitioners said the Licence Tax Bill was not only faulty in details, but odious in principle. This tax was an income tax of 2 per cent on people with an income of £10 a-year; but if a man derived £5,000 a-year from trade, it was 1 per cent; if £10,000 a-year, it was only ½ per cent; and if £20,000 a-year, then it was only ¼ per cent. He ventured to say that the strongest Government that ever existed in this country would not be in Office a single week if they brought in such a proposal as that. What would be said in this country if a Government imposed, on the occasion of a national emergency, an income tax of 6d. in the £ on small incomes of £10 a-year, but only levied 3d. in the £ on incomes of £5,000 a-year, 1d. in the £ on incomes of £10,000 a-year, and ½d. in the £ on incomes of £20,000 a-year? Yet that was a literal and exact description of this income tax which had been imposed in India. This inequality, however, with-
out precedent as it was, was by no means the worst feature of the tax. Every small trader and petty artizan, with an income of £10 a-year, might be brought under its operation; while the wealthy professional man, the doctor, the barrister, the solicitor, the official, the Commander-in-Chief with £10,000 a-year, and the Governor General with £25,000 a-year, did not contribute a single farthing of the tax. This was no Party question; and he would ask what would be thought in this country if, to pay the expense of a war, to relieve wide-spread famine, or to meet any other great national emergency, the Government imposed a heavy income tax, falling with most severity on the poor artizan and the small trader, but diminishing in severity in proportion to the wealth of the trader, and leaving the professional men, the officials, the Ministers of State, and the officers of the Army absolutely untouched? No Government would insult the common sense of England by such a proposal, and what would be denounced as unjust in England could not be more just in India. The Government of India had defended its proceedings by extraordinary arguments. They said that if the professional men and the officials were made subject to the tax, it would be a revival of the income tax; but, whether or not the extreme necessity which would justify an income tax had arisen, he declared unhesitatingly that every argument which could be used against the income tax applied with twofold force to the licence tax in its present form. He denied that, as had been said, the traders of Bombay had been benefited by the famine, for the export trade was for many months almost paralyzed, because the railways were taken up with the work of relief. In the next place, it was said that if they taxed an official they virtually reduced his salary. If that was true in India, it was equally true in England; and, in consistency, the next time they increased the income tax, they must come down to the House and say no official, no officer, no Minister should pay income tax. Then it was said the Civil Service in India should be exempted from tax on account of their services during the famine. But if they had conferred a special service, they ought to receive a special reward, not in the form of exemption from taxation. It was only a
small portion of the official class that had anything to do with the famine; but these exemptions applied to all officials, even those who were 1,000 miles away from the famine district. There was no precedent to justify these exemptions. In 1851, while Lord Lawrence was Governor General, a trade licence was imposed; but it differed in essential particulars from this. It did not touch incomes below £20 a-year. It did not tax low incomes more than high ones. It was levied on professional men, and every official and every civilian having the pay of a captain in the Army was subjected to it, and it was not complained of. The Governor General paid it. The Commander-in-Chief paid it also. He invited the earnest consideration of the Government to this circumstance, that it had been calculated that if the exemptions were abolished, and the tax was made like that of 1867, pressing more heavily on the larger incomes, the extra amount realized would be £300,000, the exact amount which was to be obtained from the increase of the salt duty. Consequently, from one end of India to the other, they were going to tell the people that millions who were just recovering from the terrible affliction of famine were to have the price of the first necessary of life materially increased in order that the official classes and the professional men might enjoy immunity from taxation which was owing to a great national emergency. Could there, he asked, be a more perilous thing to do? Before concluding, he asked the House to allow him to make a few remarks on the manner in which the Famine Fund which was proposed to be raised should be employed. The object of the Famine Fund, as far as he understood, was to provide a reserve which would enable a future famine to be relieved without adding to the Debt of India. Lord Lytton did not speak with the simple clearness of the Marquess of Salisbury; but, as far as he (Mr. Fawcett) could understand, the Government did not mean to say this £1,500,000 should pay off debt or be a credit reserve, but they meant to invest it in a speculative undertaking on Indian public works. He was not about to enter upon a discussion on Indian public works; a Committee was sitting upstairs on that subject, and he would not an-
ticipate their Report. All that it was necessary for him to do was to prove that the return on money invested in public works in India was not encouraging. The money which had been invested by the Indian Government on State Railways at the present moment only yielded a return of 1 per cent. The conclusions formed with reference to irrigation works were more definite and precise. Speaking at Manchester in January, 1875, the Marquess of Salisbury said—
The difficulties which surround the question of irrigation are very great. We can scarcely yet be said to have had one genuine instance of financial success. The irrigating projects that have been carried out, if they have had for their basis the former works of Native Rulers, have in many instances been a financial success; but then, of course, that favourable appearance of the account has been obtained by not charging the former expenditure of the Native Ruler. In those cases where we have begun the projects of irrigation for ourselves, we have not reached, I believe, in any one instance, the desired result of a clean balance-sheet
And the noble Lord the Under Secretary (Lord George Hamilton), speaking in the House on the 22nd of January last, said—
It appeared from the last account, that there had been expended about £12,500,000 in Bengal—that is, on irrigation—and the result, including direct and indirect receipts, gave a return of 3½ per cent on the capital. But the moment this sum was analyzed, it was found that this revenue was almost exclusively derived from two canals, the Jumna and the Ganges. The capital expended on these two works was £3,500,000, and the result was 10½ per cent. On the whole remaining expenditure in Bengal, which amounted to £9,600,000, there was only a return of ½ per cent.
If the Famine Fund to be created was to be employed in this way, what security was there that it would constitute a re-serve to meet future famines? The Indian Government was the landowner of India. If the owner of a private estate yielding £100,000 a-year spent that sum, and if every four or five years there occurred an extraordinary event which threw on him a charge of £20,000, and he had no reserve or contingency fund, and raised the money by borrowing or effecting mortgages, his agent would say— "This won't do; these charges will recur; you will be overwhelmed by indebtedness; you must bring the money in from some other business." Suppose he brought in £5,000 and employed it, not in forming
a reserve or making a safe investment which could be got at any moment, but in a speculative undertaking which he could not readily realize, and which would not yield 1 per cent, his position would be exactly the same as before; and that would be the position of the Indian Government if security were not taken that the Famine Fund should be employed either in the reduction of debt or in constituting a fund to meet future famines. Above all things, he was anxious that the discussion of a subject involving the welfare of the millions of India should not become a mere Party question; and, personally, he had always criticized Indian Administration with the same frankness and candour whatever Party was in power. Some of them had been taunted with indifference to the interests of our great Indian Dependency; but he believed our Empire could only be endangered by misgovernment. A great statesman, who spoke on Indian affairs with an authority to which few could lay claim, said recently—
Our Empire in India will never be endangered by foreign aggression; the only thing we have to fear there is foreign intrigue.
But a seed would no more grow on a barren rock than foreign intrigue would find a field for its machinations among a people whose growing contentment was secured by just laws and equal taxation.
§ MR. SPEAKER
asked if the hon. Member intended to move his three Resolutions separately or altogether as one Resolution, stating that he was at liberty to pursue either course.
Motion made, and Question proposed,
That this House regrets that the people of Madras and Bombay should be burdened with the increased salt duty which has been recently imposed upon them, and is of opinion that such increase would be unnecessary if the finances of India were administered with greater economy."—(Mr. Fawcett.)
MR. GRANT DUFF
said, he regretted that it would not be in his power to vote for the Resolutions which the hon. Member for Hackney had brought forward. It would be doing him bare justice to recognize that his action had nothing whatever of a Party character about it, and he was convinced that the hon. 426 Member would have brought forward the same Resolutions if his own Party had been in power. But he (Mr. Grant Duff) thought that the three Resolutions summed up with great neatness and precision everything which ought not to be believed with reference to Indian, finance at this particular juncture. They were invited to say that they regretted that the people of Madras and Bombay should be burdened with an increased salt duty. That sounded like a truism. To do otherwise than regret the imposition of a tax would appear to be in almost all cases an indulgence in what Bentham called "the pleasures of malevolence;" but this was one of the very few cases in which it was otherwise. The addition to the salt tax in the Presidencies of Madras and Bombay was made the occasion for taking a step towards the equalization of the salt duties; which would be ultimately a very great benefit to the people of Madras and Bombay, as well as to all other parts of India. But it was said that the salt tax was an altogether bad impost—an impost which should not be suffered to exist; but he utterly denied it. All imposts were bad. It would be desirable that the blessings of order and protection to life and property, and all those other good things which the British Government had brought to India should not be bought with a price by the population, but be supplied gratis like the air, the sun, and the rain. That, however, being unhappily impossible, and justice requiring that all the population benefited by British rule should contribute some fraction to pay for it, he did not believe that, considering the circumstances of the population of India, it would be possible to imagine any tax that would be, on the whole, less burdensome than the salt tax, provided always that it was equalized over the whole Peninsula; and that those reforms in communication which were now being effected for the purpose of bringing salt more easily into some districts that had suffered from the want of it were carried out. We did not introduce the salt tax into India, we found it there. This was not the time nor the place to tell the story of our dealings with it; but during the last 50 years our dealings with it had become progressively wiser in the light of experience, and when the equalization of the salt duty, which the Go- 427 vernment of the Viceroy had so much at heart, had been completed, it would be one of the best taxes which it was possible to imagine. It seemed particularly unfortunate that the financial proposals of Sir John Strachey should have been made the occasion for a Resolution directed against what appeared to him the right policy—the only practicable policy with reference to the salt duty—for he could not name any Indian statesman who had, within his own knowledge, been more anxious to put the salt duty on a thoroughly wise footing, and more anxious, by promoting easy and rapid communication with the great salt-producing lake of Sambhar, by wise Treaties with the Native States, to cheapen salt to that part of the population of India which had to pay most dearly for it. He passed now to the second half of the first Resolution, in which they were asked to say that the proposed addition to taxation in Madras and Bombay would be unnecessary if the finances of India were administered with greater economy. That view was quite erroneous. Doubtless, all finances in the world could be administered with greater economy than they were, and exceptional vigilance was required to keep down expenditure in India. But, as our knowledge of that country extended, and as our means of government became more perfected, he thought our administration got more economical in proportion to the results produced; and, although it was wise for the Executive Government always to keep pressing greater economy upon their servants, he thought that those who knew the facts would do wrong in allowing the House to be told without a protest from them that the expenditure of India admitted at this particular moment of any very large reductions— any reductions that would have made the two ends meet without increased taxation. He came next to the second Resolution, with which he agreed as little as with the first, and for a reason that could be stated in one or two sentences. There was no individual Member of that House who looked into the subject who would not object to the trades licence tax. But it was simply a necessary evil, and it had been made so to a very great extent by the action of those whom the hon. Member for Hackney represented in that House—that was to say, by the very class of people who got up the 428 meeting in Bombay the other day—the noisy opinion of the Presidency town—which sometimes was wrongfully and very improperly attempted to be confounded with the opinion of the people of India. How was it that the trades licence tax, which, as he said, could not be defended for a moment if it were to form part of the system of Indian finance, had become necessary? Because the action of certain persons in India obliged the late Government of Lord Northbrook to do away with the income tax. No one could say that a considerable addition could be made to Indian taxation without making part of it fall on the trading classes. No classes benefited more by our rule, and none paid so little towards the maintenance of that rule. But, it was said, that might be; but why burden those classes, leaving the professional and official classes without additional taxation? The answer was very simple. Because, if they did not do so, they must re-introduce the income tax. For himself, he believed that a low income tax was an absolutely necessary part of any system of Indian taxation that was to be permanent. But very good authorities indeed were of a totally opposite opinion. The right hon. Member for Tiverton (Mr. Massey), who always spoke with the highest possible authority on these subjects, and another Indian Finance Minister, the hon. Member for Orkney (Mr. Laing), held a diametrically opposite opinion to that which he entertained. How, then, would it have been possible for the Viceroy's Government to have re-imposed the income tax so very soon after it had been got rid of? The thing was utterly out of the question. He believed that the Government of India, after a very few moves, would be obliged once more to re-impose the income tax; but the time was not yet come. The very agitation which was now going on in Bombay and elsewhere against the trades licence tax was an admirable preparation for the income tax. But he hoped the Government of India would not re-impose it till it was quite certain that it would be able to defy the pressure that, in the future as in the past, would be brought to bear against it; and he trusted that the re-imposition of the tax might be coupled with some distinct benefit to India, such as a reduction in the tariff. He would now pass to the third Resolution. To 429 the proposition there set forth, he was as little able to agree as he had been to the two other propositions which he had been combating. He was entirely opposed to two separate schools of Indian opinion with reference to public works. One school of Indian opinion, which was more powerful a few years ago than it was at the present time, said that the panacea for all evils in Indian finance was this—that the Indian Government should go into the market, and raise a sum of many millions, and spend that money in improving the railway communication of the country. The other school was entirely different, and its views were, to some extent, lately ex£ed by his right hon. Friend who sat near him (Mr. John Bright). The view of that school was that the Indian Government, devoting comparatively little attention to railways, should go into the market, raise a very large sum of money, and invest it in irrigation. To both these extreme views he was very much opposed. Nevertheless, he believed that those were entirely in the right who said that famine in India must be chiefly fought by irrigation and by railway communication; but the two must be kept in proper proportion to each other. Neither irrigation without railways nor railways without irrigation would mitigate the terrible calamity of famine when it came. Undoubtedly, in past times, the Government of India had made many mistakes with regard to its public works; but that Government, like all other Governments, and above all like those which had to govern distant and little understood Dependencies, had had to learn by experience; and he asserted, with little fear of contradiction from those who knew the facts, that recently the Government of India had been almost with every year becoming wiser and wiser in the management of its public works. He held that it would be the greatest possible mistake in any way to discourage the judicious expenditure which was now going on upon public works, just as he held that it would be madness to throw our finances into disorder by rushing into schemes which, even if they were not, as he thought they were, chimerical, would unquestionably damage our borrowing power by startling the capitalist. He believed that in this, as in many other things, the motto festina leute was a good one. For those 430 reasons, among others, he was entirely opposed to the three Resolutions brought before them alike in whole and in part. He believed, after looking as carefully as he could into the whole circumstances of the case, that Lord Lytton's Government had made the wisest financial proposals that could have been made in the very trying and difficult circumstances of the time, and he should give them all the support that was in his power.
§ MR. MACIVER
, in rising to move the following Amendment:—That this House regrets that the people of Madras and Bombay should be burdened with the increased Salt Duty which has recently been imposed upon them, and is of opinion that such increase would be unnecessary, provided that the Trades Licence Tax, which will be imposed on those engaged in business alone, were supplemented by a similar Tax, to be imposed on those who derive their incomes from other sources; and further, that, in the opinion of this House, it is desirable that the fund which is to be created in India for the relief of famines should be expended on public works,said, in his opinion, the hon. Member for Hackney was wrong in many of his views; yet he believed that the hon. Member deserved the thanks of our fellow-subjects in India for his endeavours to direct the attention of the House to Indian affairs. The hon. Member seemed to impute something like blame to the present Government with regard to the imposition of the salt duties; but, if blame attached to any party, it should be to those who had made the salt duties what they were. In the main, the present proposal was a reduction of the duties by equalizing them, and those engaged in this country in the salt trade approved of the change. The Government, no doubt, would only have been too happy if they could have abolished them, for they pressed heavily upon the poor of India. It had long been a cruel tax, and they ought to thank the Government for reducing them by their equalization. Wages in Bombay were only 5½d. per day; and therefore a tax, which seemed but a trifle when measured in money by an English standard, was a serious matter to the poor people of India. He had only recently returned from Bombay, and he could speak of the feeling of the people there with reference to the trades licence tax. The hon. Member for Hackney had not put the effect of the meeting that took place there in a proper light. The tone of 431 that meeting was not that they objected to a licence tax, but that there should be no exemption from it, and that it cut somewhat too low. The revenues of India did not admit that any reasonable course of revenue could be put aside, but that it must be retained and amended, so as to give relief to the poorer classes. The licence tax was more beneficial to India than the income tax. The Bombay merchants said there were great objections to the income tax from the Natives making wrong returns, and then bribing the collectors; which caused the tax to fall mainly on the English, who made fair returns, or whose incomes were known, and had to pay on the full amounts. He regretted the continuance of a salt tax for India in any form. The prosperity of India depended on her means of internal communication, and there could be no greater safeguard against future famines than by an extensive railway and canal communication. The hon. Gentleman concluded by observing that he did not know if his Amendment would be seconded, because he had not applied to any hon. Member to do so.
§ There being no Seconder,
§ SIR GEORGE CAMPBELL
said, he objected to the increase of the salt tax in India. He had spoken upon the question before, and the noble Lord opposite (Lord George Hamilton) did not touch upon the points which he submitted to him. So far as answering those points was concerned, he believed that no answer could be forthcoming. The noble Lord had only said that he (Sir George Campbell) had not told the House how he could raise the money, and had not suggested any other tax in the place of the salt tax. He would deal with the subject of taxation presently; he wished now to say a word with regard to expenditure. He had never been one of those who argued that the great Indian deficit might be made up by a reduction in the expenditure. He knew the Government had been anxious to reduce the expenditure, and they had made great efforts to that end. With regard to the military expenditure, he did not think that it would be possible very greatly to reduce it. The distinguished and right 432 hon. Gentleman who was now come to the charge of Indian affairs, had on former occasions told them that, in looking into the military accounts, he considered that the adjustment was rather favourable to India than otherwise. Perhaps he would now take another view, and the truth might be between the two views. He (Sir George Campbell), however, was convinced of this, that in regard to some matters, economy might be effected if they were very hard pressed. There were some things in regard to which reduction in the expenditure could be resorted to, rather than increase the salt tax. He did think that that increase was a most injurious and unjust step to take. It was a most important question, and the House should consider seriously the taxation which affected those dumb millions who were unrepresented in the House. They heard comparatively little about the objections to the salt tax in India or in this country; but the reason was that the tax affected what he considered he had rightly called the dumb millions of India. He, therefore, beseeched the House to give its serious attention to the subject. The hon. Member for the Elgin Burghs (Mr. Grant Duff), who had represented the Indian Government in the House, had announced himself to-day as an uncompromising advocate of the salt tax; and when the hon. Member went the length he did, and said that, in his view, the salt tax was the best which could be imposed, he (Sir George Campbell) must most entirely differ from him. It seemed to him that the tax was a great evil, and he could not understand that the hon. Member, who had had so much experience in Indian matters, should have put forward the arguments he had. The hon. Gentleman stated that the salt tax was an impost which we had inherited from the Native Governments. That, however, was not the case. The tax had been invented by Lord Clive, and the hon. Member would see its farther history if he read the speech lately delivered by Lord Lytton on the subject. The salt tax had gradually grown up in substitution for multifarious and mischievous duties. The Viceroy, in the speech to which he referred, had done him the honour to refer to a Report he had made when Chief Commissioner of the Central Provinces, and to claim him as a supporter of the salt tax. It was, no doubt, true 433 that he had spoken of the salt tax as being preferable to the wasteful and injurious transit duties and petty customs for which it became a substitute. But he considered that the duty should not be excessive; and what he complained of was, that after the tax was raised for that purpose, in order to add to the resources of the revenue, the Government had continued to add burden upon burden, until the salt duties had become excessive and injurious to a great degree. He wished to submit three points to the House, and the first was regarding the argument which had been used by Sir John Strachey and others, that the proposition of the Government was not the increase of the salt duties, but only a measure towards the equalization of those duties. He thought such an argument was perfectly puerile, and contended that there would be no difficulty whatever in effecting the equalization without increasing the total of the duties. It was not a mere measure of equalization, but one to bring in a larger revenue to the Government of India. The next point was this—granting, as he did, that equalization, or rather approximation, was a desirable measure, he was prepared to argue, as did Lord Mayo and the late Secretary for India, and the noble Lord opposite himself, that that object should for the most part be effected by levelling down, and not by levelling up. There was ample proof of his assertion if they looked at the tax as it was levied in Madras and Bombay; since it was a fact that could not be controverted, that, at the lighter rate, the people of those Presidencies paid a higher salt revenue per head than the people of the other Provinces—less than one-third of the population paying more than one-third of the revenue. The third point he wished to bring to their notice was that, granting that it might be necessary that some increase might be proposed so as to promote the equality of the salt tax, he considered that the present time was singularly inopportune to make such an alteration, when those Provinces were oppressed by famine. It was not at all certain that the abolition of the Customs' line could be carried out. Therefore, he did say that at the present time the increased salt tax should not be carried out in those famine-stricken districts. He hoped 434 such considerations would be well weighed by the Government. Then he came to the question as to what other tax could be levied? The noble Lord said that he (Sir George Campbell) had not proposed any other tax. Well, he had not done so, because he could not expect to command immediate assent to any proposal; but if the noble Lord was prepared to give them a week for the discussion of Indian taxation, he would submit some propositions, and a decision might be arrived at. He would, however, say a few words on the issue which had been raised as to whether we should prefer the income tax or the taxes which the Government of India now proposed. He had never committed himself to an advocacy of the income tax pure and simple; but, taking the issue now raised, he did not hesitate to say he should prefer the income tax to the taxes which it was intended to substitute for it. The £2,000,000 which the income tax yielded was the very amount which the Government of India now found it necessary to raise. He maintained that Lord North-brook was not forced to abolish the income tax. His Lordship went to India believing that the tax was a bad one, and he accordingly abolished it, although most of the Members of his Council who had Indian experience, and the Duke of Argyll, then Secretary of State for India, were not of his opinion in this respect. The licence tax was nothing more or less than a disguised income tax with certain exemptions and omissions. The persons exempted were the rich, the great, and the noisy; those whom the tax reached were the poor, the uninfluential, and the dumb. To begin with, a pure and simple income tax was levied in the shape of an assessment upon land. That tax was imposed in the same form as the original income tax upon land, only there was this difference—that the assessment was carried down to the lower class of holders. Where the former income tax was imposed upon one, it was now imposed upon 100—that was, upon every agriculturist. Under the licence tax classes who would have been taxed under the original tax were exempted under the present tax. The Europeans were practically exempt from payment, both as public servants, and as holders in joint-stock companies, and large mercantile 435 firms, and professional men. So were the very rich Natives, and great Native firms and Native lawyers. The tax had, on the other hand, been imposed upon the very poor, which formed the greatest class. The Government of India originally proposed that the maximum licence tax should be £1; and, at the same time, they proposed to carry the tax down, not only to incomes of 100 rupees (£10), but even to 50 rupees (£5). But the Secretary of State very wisely objected to so very partial a course, and the maximum tax was raised to 200 rupees (£20), and eventually to 500. He was glad that the agitation in which he himself took a part had had this success. Although he admitted the tax was considerably improved, yet the hon. Member for Hackney was still right in saying it was still an inequitable tax. A tax on salt was nothing less than would be a tax on bread in this country. Could any Ministry in this country stand for a moment if they were to impose an income tax that would spare the rich and press upon the poor? If, for instance, they were to exempt all the rich, put the tax on small incomes down to £80 per annum, and make up the difference by a tax on bread? If increase of the income tax, as the hon. Member for the Orkneys said, would necessitate an addition of 50,000 men to the Army in India, these new taxes would require an addition of 500,000 men to the Army. The men who would be hit by those taxes were the agricultural classes and the small landowners and ryots. The richer class of tradesmen, who were not likely to rebel, were let off; but the small traders and artizans would feel the weight very heavily, and they were a class very likely to rebel. It was, therefore, a tax which would necessitate an addition to the Army 10 times greater than would be required by imposing the income tax. If he were Secretary of State, he should telegraph at once to the Indian Government to say they had made a mistake, and that they ought to reduce the salt tax from 2½ to 2 rupees, and impose the additional taxation on the class who were now exempt. He would try to reduce the duty to that level, but on no account would he increase it, and would impose on the richer classes the additional taxation which might be considered necessary. With regard to the 436 third Resolution of the hon. Member for Hackney, he entirely agreed with it, and was of opinion that the famine and the public works accounts should be kept separate. He thought the House and the country had been somewhat unfairly treated with respect to Indian finance, only one side of the matter having been placed before them. The opinions of the Indian Government had been stated; but nothing was known of the views of the Council at home, nor of the Governments of Madras and Bombay. He could not be satisfied until these were produced. On these grounds, while not agreeing with all the views of the hon. Member for Hackney, he was prepared to give his Motion general support.
§ MR. SMOLLETT
said, he did not intend to say a word about the salt tax or the licence duties; but he was prepared to support the Motion of the hon. Member for Hackney (Mr. Fawcett) on the broad ground that the revenue of India, as formerly levied, amounting to £50,000,000 or £51,000,000 sterling per annum, ought to be sufficient not only to meet the necessities of the Indian Government, but to leave a large surplus for the reduction of taxation or of the public debt. He should feel it his duty to say something about the management, or rather the mismanagement, of affairs in India during the last 12 months, especially with reference to the Famine. He had often heard it stated that it was the unexpected which always happened, and certainly nothing more strange or more unexpected had ever occurred in his recollection than the Indian Famine scare of 1877. That scare had lasted for six or seven weeks, and had collapsed just as suddenly as it had originated. But how had it arisen? The attention of the Indian authorities had been directed during a great part of 1876–7 to the necessity of providing famine relief in that country. There had been a great dearth of rain in the Presidency of Bombay and in the districts of Madras, and money was wanted to feed the people. In March, 1877, a Council was held at Calcutta, under the presidency of Lord Lytton; and Sir John Strachey, who held the lucrative, and, in his opinion, sinecure, office of Finance Minister, made a long statement, in which he said that £3,500,000 would be found to have been expended on 437 famine relief in 1876–7, and that £4,000,000 had been expended on extraordinary works, which were, for the most part, unproductive. There was, of course, under management like that, a great deficiency. In point of fact, the Finance Minister assumed that the excess of expenditure over income in the year would be not less than £6,000,000. Sir John Strachey proceeded to say that for the year 1877–8 £2,250,000 must be expended on famine operations, and that £4,000,000 or thereabouts would have to be expended on public works extraordinary, which would be to a great extent unproductive. He then calculated that there would be a deficit of £4,250,000, and that deficit he proposed to make good by borrowing money. He suggested that a large loan should be raised in London, and a small one in India, adding that if that were done, and the cash balances in India were somewhat reduced, both ends might be made to meet. The Budget of Sir John Strachey was sanctioned by the Secretary of State for India (the Marquess of Salisbury), and a Bill was introduced into that House at the end of last July enabling the Indian Government to borrow £5,000,000; although the Under Secretary of State, in bringing forward the measure, said it would probably not be necessary to borrow more than £2,500,000. The Bill passed with but little opposition, he himself being almost the only one who had objected to it; and he did so on the ground that, as a matter of fact, the money was not required in India for the purposes of the Famine. He had contended that the loan was required only to carry on public works extraordinary; and that, if these works were abandoned or postponed, it would not be necessary to borrow the money at all. To that opinion he still adhered; but the Bill was passed as it stood, and about the 18th of August the Prorogation took place. Hon. Members retired to their country seats and grouse lodges in Scotland, in the happy belief that they had done their duty and had provided for every want of India. Means having thus been taken to meet every contingency, he (Mr. Smollett) was certainly astonished to learn from London newspapers of the 18th August last, that at the very time the Bill was going through the House of Commons Indian finance was in a state of collapse. It 438 appeared that a meeting had, on the 9th of August, been held at Madras, under the presidency of the Duke of Buckingham, for the purpose of considering the condition of that Province. It was stated at that meeting that a calamity had befallen Madras which could not be exaggerated. It was alleged that a catastrophe had befallen the Madras Presidency which would change the course of history, that 18,000,000 of Her Majesty's subjects were brought face to face with famine. The immediate cause of this calamity was the failure of the July rains; but complaint was also made of the action of the Supreme Government. Lord Lytton had, it seemed, sent to Madras at the commencement of the year, a gentleman from Bengal named Sir Richard Temple, to ascertain how Famine relief was going on there; and Sir Richard Temple, who had had great experience in dealing with the Famine in Bengal in 1874, and who was supposed to have been rather profuse in his administration of the funds for its relief, was declared at Madras to be an awful screw. Sir Richard Temple, it appeared, found fault with the extravagant outlays of Madras officials. He declared that the rations issued were more than enough to maintain life, and these orders, it was alleged, had led to a frightful mortality. Hence the necessity of imploring eleemosynary aid from the British public. Now this was a strange step for the Duke of Buckingham to take. Surely, if the population of Madras were suffering under the action of Sir Richard Temple and the want of rain, it was the duty of the Duke of Buckingham and his Government to have made representations on the subject to Lord Lytton; and if Lord Lytton turned a deaf ear to those representations, to have telegraphed to the Marquess of Salisbury. Nothing of the sort, however, had been done, and an act of disloyalty had been committed towards Lord Lytton, of which, he trusted, a full and sufficient explanation would be given before the present discussion closed. He was perfectly prepared to admit that in consequence of the Famine the Government of Madras was reduced to a position warranting some anxiety and even alarm. It became necessary to contiuue the Famine relief a month or two longer than had been contemplated; but everyone who was acquainted with the sea- 439 sons in Madras must be aware that the hopes and prosperity of the agricultural population in the South of India were based on the North-East monsoon. That brought rain, and if rain fell copiously from October to January the crops would be abundant; but at the end of August the Duke of Buckingham had ignored the possibility of rain in October and November, and had asked for help from England, although Parliament had already supplied the Government of India with ample funds. He had always been at a loss for an explanation of that appeal for English help till he read a letter to The Times, dated from Madras, in August last. It appeared that a Mr. Pogson, a gentleman who held the office of Astronomer to the Government, and who also dealt in astrology, had been looking at the Sun's disc, and had discovered in the month of July that two or three opaque spots had suddenly disappeared. Alarmed at this phenomenon, Mr. Pogson consulted the stars, and prognosticated that nothing but famine, calamity, and pestilence to Madras would be the result. He was fortified in this view by a Dr. Hunter, of Madras; the Duke of Buckingham took the alarm; and an appeal was made to the benevolence of England, and in a short time no less than £500,000 had been collected; although, in truth, what was wanted at Madras was not money, but harmony of action. In the course of the next few weeks the theory or prophecy of the astronomer was falsified. Early in August plentiful rains fell in Bombay. During the entire month of September the rains were more than usually abundant, and in October the North-East monsoon began at Madras with more than ordinary vigour, and all fear of famine was averted. The Duke of Buckingham telegraphed home to say that no more money was wanted, and the works were abandoned on which the famine-stricken population was to have been employed. While the apprehension lasted, all sorts of wild suggestions had been made. Parliament was to be summoned, and the Chancellor of the Exchequer was to send £3,000,000 to India as a gift, and to ask for a Vote of indemnity; the right hon. Gentleman the Member for Birmingham advocated a loan of £30,000,000 for irrigation works; and it was stated that the 440 revenue of India for the year 1877–8 would lose to the extent of one-third. In many quarters a deficit to the extent of £20,000,000 sterling was anticipated. In the meanwhile the officials were silent; but, in October, the Marquess of Salisbury, speaking at Bradford, had expressed a hope that the people of England would not suppose that millions of money were wanted for the purposes of the Famine. He deprecated the suggestions made for enormous outlay on works of irrigation to avert dearths, and showed distinctly that many of the recent works had been failures and paid no return to the Government. Now, these observations were wise and salutary; but he (Mr. Smollett) must insist that the Marquess of Salisbury was himself mainly responsible in spreading the belief in the necessity of great works of irrigation to avert famines for the future in India. In a speech delivered in "another place," on the 9th June, 1874, the Secretary of State for India said that this was his conviction. For that end he declared that new works were being devised. In addition to irrigation works then in the hands of the Public Works Department, estimated to cost £18,000,000 sterling, he said he had sanctioned a fresh undertaking at the estimated cost of construction of £14,000,000. This, his Lordship said, would be a most profitable outlay; for it would obviate the necessity of spending £6,000,000 or £8,000,000 every 10 years on Famine relief. This great scheme, with others, had been shelved because exposures had been made in Parliament of millions of money wasted on the irrigation works of the Toombudra, and in the Cuttack, the Orissa and Leone River schemes. But for these exposures tens of millions would have been wasted upon adventures that rarely paid their working expenses. The Marquess of Salisbury, although deprecating, at Bradford, large outlays of money upon irrigation works, spoke much about measures for ameliorating the condition of the masses of the people. He spoke of introducing better systems of revenue management, he dwelt upon the necessity of teaching the masses habits of thrift and of economy, and of rescuing the agricultural classes from the fangs of the ruthless usurer. Philanthropic sentiments like those always brought down the applause of ignorant spectators, but they 441 exhibited marvellous ignorance in a Secretary of State. What was the actual position, and what the condition of the 1,500,000 paupers who, in August last, were being fed at the cost of Government in the Madras districts? The vast majority of those poor creatures were agricultural labourers living with their wives and families in poor mud huts, and cultivating extremely small holdings, paying rent to the Government. The majority of these men lived upon less than £5 or £6 a-year, and to talk of teaching them thrift and economy was an absurdity. They were the most industrious and economical people on God's earth. When the noble Lord spoke of rescuing these people from the grasp of the usurer, he spoke of a thing of which he had no knowledge, for usurers could not possibly live in these village communities. When a ryot wanted a small loan he got it from one of the headmen of the village, to whom he paid 12 per cent interest, together with the principal, by instalments, or in labour. It was the Government in India which was the usurer, by not writing off the rents which accrued due in times of scarcity; for by this action it perpetuated famine long after the periods of actual dearth had passed away. What the people of India wanted was not an increase, but a diminution, of taxation, and this could only be accomplished by the exercise of economy. There was no Department in the public service of India which could not bear reduction. To begin with, the office of Finance Minister ought to be abolished altogether. It was established about 18 years ago, had attached to it a salary of £10,000 a-year, and had passed through eight or 10 hands. Lord Ellenborough and Lord Dalhousie were their own Finance Ministers, and he saw no reason why Lord Lytton should not follow in their footsteps. The Ministry of Works, too, with its accompanying annual salary of £10,000, ought also to be abolished. That office was created four years ago, and the appointment was made against the advice of the then Viceroy, Lord Northbrook. The covenanted Civil Service was also capable of considerable reduction; for if the large number of uncovenanted civil servants now appointed did their duty efficiently, they must relieve the covenanted servants, and render it unnecessary to go on largely increasing their number, as was 442 now done year after year. In the military service, too, a reduction could be made in the retiring allowances and in the constitution of the permanent staff. The Public Works Department cost in wages and other emoluments not less than £1,500,000 annually—a sum which ought to be reduced to £600,000, or £650,000 at the utmost; and, if that was done, the amount expended on the works themselves could be brought down from £8,000,000 to £5,000,000 annually. With that reduction, and the reduction in salaries and allowances to which he had alluded, reduction of taxation would be easy and practicable. To speak in that House, however, of economies in India, was an irksome and unprofitable task. The subject did not commend itself to the official mind, and out-of-doors no one cared about it; but, at the same time, he thought it might be practised with advantage. The late Lord Mayo—the only Governor General of India in the last 20 years who had shown any administrative ability—when he went to India, in 1869, found the finances of the country in a state of utter confusion and prostration. He discovered a deficiency on the preceding financial year of £4,144,000, and he at once declared that such a deficiency should not recur during his Viceroyalty. From 1869 to 1872 Lord Mayo enforced a severe system of economy in Indian finance, which resulted in his having in the latter year a real surplus of £1,500,000, the total Indian expenditure for that financial year amounting to £48,600,000, including £1,500,000 for extraordinary works, while the Revenue amounted to £50,110,000. What Lord Mayo had done, any other Governor General could accomplish, if he were a man of the same will, determination, and energy. He did not say that Lord Lytton did not possess these qualifications, nor did he seek to throw blame upon him. He believed that, under the guidance of the late Secretary for India, reductions could not be made in the expenditure; because the Marquess of Salisbury was a man of the most profuse disposition, who never hesitated to sanction any proposed outlay for unnecessary and speculative undertakings in India. He trusted, however, that, as there had been a change in the head of the Department, there would also be a change in the policy, and 443 that the new Secretary for India would revert to the policy of Lord Mayo, and, by reducing the amount of the expenditure, would confer a great blessing on the people of that country. He should support the Motion of the hon. Member for Hackney.
§ MR. GRANT
, as a new Member, asked for the indulgence of the House while he referred to the Petition from Bombay on the subject of the new taxation imposed upon India in order to make provision in the event of a future visitation of famine. He would endeavour to place himself in the position of the petitioners of Bombay; and he was the better enabled to do so by having resided long in that Presidency, for the welfare of which he had always entertained a very warm feeling. The Viceroy of India, in a speech which he made in reference to this new tax, was reported to have said that the measures which were being brought forward by Sir John Strachey had the general support and cordial appoval of all classes in India. All he (Mr. Grant) could say was, that when the Viceroy used those words, he must have been in lamentable ignorance as to the state of feeling in Bombay with regard to those measures. When the measures were introduced in the local Council of Bombay, the community approached the Government, praying that before those measures were finally passed, they might be allowed an opportunity of expressing their opinion with regard to them. That was at once refused to them. They then asked the Government of Bombay to let them have the use of their own Town Hall—a very reasonable request, it seemed to him—in order that they might hold a public meeting and discuss the measures which were being passed in Council. That also was harshly refused, and, he thought, most unwisely refused. Under these circumstances the measures were hurried through Council by the support of the official members, notwithstanding the protests of the non-official members. But the inhabitants of Bombay were not thus to be baffled in their desire to express their opinion on matters affecting their welfare; and, when denied the use of their Town Hall—which he humbly ventured to think was the most appropriate place in which the meeting should have been held—they were driven to take refuge in the tent of some itinerent 444 equestrians—and there, the most numerous and influential meeting ever held in Bombay decided unanimously that a Petition should be sent to the House of Commons, for the reason that they despaired of getting even a hearing from the local Government. This was what the Viceroy described as the generous support and cordial approval of all classes of the community in India. As to the different provisions in this taxation, he would wish first to refer to the increase of the salt tax. Now, anyone who knew anything of India must be aware that any addition to that tax must inevitably cause a great amount of hardship, inasmuch as it fell upon the very poorest class of the community. At any time that change ought only to be made for a very strong and sufficient reason; but, at the present time, the poorer class over a great portion of the Presidency were only just emerging from Famine, and were necessarily distressed and impoverished. Yet this very time was chosen to increase the tax to 2 rupees 8 annas per maund, an increase of 35 per cent on the former tax, which meant an increase of 50 per cent on the price of the article before it reached the consumers. The Government gave, as an explanation, that at some future time—time not mentioned—they intended to raise the salt tax to the uniform level of 2 rupees 8 annas per maund. Yet, although this change was promised in the distant future, they thought the present was the proper time to come down on these miserable ryots of Bombay, when they were only just recovering from the terrible effects of famine. He thought that was very like quenching the smoking flax and putting out the flickering spark of new industrial life, which was just struggling to re-appear since the crisis of the Famine had been passed. The Government would have done well to have waited a little while before imposing that additional burden on the very poorest class in the Presidency. The Government had begun to collect an insurance tax against future famine from the poor people, who could not be said to have entirely relieved themselves from the grip of the Famine which was just now passing away. At a meeting in Bombay it was said that in various parts of the Presidency the sad sight might be 445 seen of long strings of carriers returning from the coast empty-handed, because their usual customers had neither grain nor money left, and it was of no use to take salt back. The next proposal was a licence tax, to be paid by all the traders throughout the country. Now, the trading class, both European and Native, freely admitted that the burdens on the cultivators of the land were so great that it was not unfair that they should be exempted from the incidence of that new taxation. That showed that the opposition in Bombay to the licence tax did not originate in any mere selfish impatience of taxation. The new licence tax, by its machinery, would fall to the heaviest extent on a very poor class—on the petty traders—many of whom were scarcely able to keep body and soul together. Persons who were deriving the magnificent income of £10 a-year were to be charged 2 rupees, or equal to 2 per cent on their miserable earnings; while the man with £2,000 per annum would pay 1 per cent, and the man with £4,000 only ½ per cent on their incomes. The tax was, in fact, so constructed that it fell lighter and lighter the larger the income of the taxpayers happened to be. But the great grievance, the crying evil, the gross outrageous injustice belonging to this licence tax was the exemption from its incidence of the official and professional classes throughout India. The House would scarcely believe that the great Civil Service in India, the men who framed the laws of India, and who were, perhaps, the best able to contribute, deliberately legislated themselves outside of the limits of that tax. The Viceroy assigned as a reason for that exceptional legislation, that in the distressed districts many members of the Civil Service had worked very hard and made sacrifices. No doubt that was so; but the proper way to compensate those particular men who had rendered extra services was to give them the rewards or promotions to which they might be individually entitled; but it was most ridiculous and unjust, because a small part of the official class had been overworked and had made sacrifices, to relieve all the wealthy class distributed over India from contributing to the fair burdens of the State. Again, it was urged that the servants of the Government had suffered severely within the last few years from 446 the depreciation in the price of silver. But, then, the trading class had suffered quite as much, and he almost ventured to say more, than the official class from that very same cause. He would appeal to anyone with any knowledge of India to say if, in the last few years, there had not been great depression among the mercantile classes of India. The Government, however, said that large profits had been made by the trading community during the Famine, and that, therefore, they were able to bear this exceptional tax; but he ventured to deny that statement. He admitted that in some instances a few favoured individuals might have made money out of transactions in grain and breadstuffs. They were requested by the Government to go into the business, and the Government were grateful to them for doing so, and no doubt their doing so saved thousands of lives. They were entitled to a fair reward for their enterprize and risk; but if they were now to be mulcted by exceptional taxation for what they had done, it was not very encouraging for them to repeat their operations in any future Famine. But he denied that any profits of the kind had been made by the mercantile class generally, which in Bombay of late years had made many losses and but little profit. Then, the Viceroy of India had stated that if they did not exempt the official class they could hardly exempt the professional class, and that if they did not exempt the professional class they would be inexorably brought back to the hated income tax. He could not see this conclusion. It was not necessary to return to the "hated income tax" merely because the official and professional classes were to be included in the licence tax; because machinery could easily be arranged for including all classes in it. The objection to the income tax was its inquisitorial nature, which certainly made it hateful to the Native mind; but no inquisitorial action was necessary with regard to the salaries of the official class, for the Government knew what they were. Why should the professional class be considered to be more hardly used under the licence tax than their mercantile brethren? He saw no justification for exempting those classes from the action of the tax. Was the official class poor and unable to pay the tax? Surely that was not the case. He had 447 always been given to understand that the Civil Service of India was the very best paid Service in all the world. He saw that the salaries paid to young men at their immediate entrance into the Service were£600 or £700 a-year, and the higher branches drew from £5,000 and £6,000 up to £10,000 a-year. Were the Government going to take 2 per cent from the miserable hawker with £10 a-year, and let the man who drew £6,000 or £7,000 a-year—more in one day than the other got in the whole year—go scot free? Were the Civil servants over-worked or over-burdened in some other way? So tempting was the Service, that crowds of the very flower of our youth every year pressed forward to compete for a place in its ranks. He would ask them, were they to send out to India, to govern India, men who were to draw their swollen salaries and enjoy all the privileges of citizenship and high position, and who were, at the same time, to frame the laws in such a manner as to exempt themselves from paying their fair share towards the public burdens of the country? Well, indeed, might one of the speakers at the Bombay Meeting make the apt quotation—Ye put heavy burdens, grievous to be borne, on other men's shoulders, but ye yourselves refuse to touch them with one of your fingers.He should conclude with an expression of hope that the House would pass the Resolutions of the hon Member for Hackney, and show their disapproval of this hasty and ill-considered legislation on the part of the Government of India, and that they especially disapproved of the exemption of any privileged class from taxation. As he saw the new Secretary for India in his place, he would appeal to him, on taking up the reins of his Office, to let this be one of the first subjects to engage his most careful attention.
§ MR. BIRLEY
regretted that the hon. Member for Hackney was not satisfied with the discussion, but meant to go to a division. They must all regret any increase of the salt duty in India—and, indeed, that there should be any salt duty at all. It was an onerous and most objectionable tax. But a little inquiry had satisfied him that, if they were to have any taxes in India, the salt tax was perhaps the least objectionable, because it raised a certain sum 448 from all the inhabitants of India. But the efforts of the Government were now very wisely directed to the mitigation of the evils of the tax; which, in fact, arose chiefly from the difficulty in the transit of salt, and from differential duties. He could not accept the Resolution of the hon. Member for Hackney with reference to this point, because it implied that the Government had simply raised the tax and done nothing to mitigate it. Then, as to the second proposition of the hon. Member for Hackney as regarded the administration of finance, it was simply a truism; and, as to the want of economy, the charge, he feared, fell on every Government. He was quite unable to see how a trades licence tax should be objectionable. Solicitors in this country paid a licence tax, and so did bankers. But he admitted the tax pressed hardly on the poorer traders. With regard to the third proposition of the hon. Member for Hackney, it was right that the money expended on the construction of public works should be laid out with great care and caution. The proper administration of the funds applied to public works was one of our great difficulties in India. He thanked the hon. Member for having introduced the subject, which ought not to be relegated to a late period of the Session; but he could not help remarking that, while that hon. Member urgently insisted on relieving the Natives of India from taxation, he had not shown much sympathy with the endeavour to remove the import duties on cotton manufactures; but it was a gratification to find that something was being done to reduce the cotton duties, and he hoped the new Secretary would, in this respect, follow in the footsteps of his Predecessor. The Government, in this matter, had taken a step in the right direction. He accepted it as a proof of goodwill, and of their sincere intentions for the welfare both of India and England.
§ MR. ERNEST NOEL
said, the House and the country owed gratitude to the hon. Member for Hackney for bringing these subjects forward. He was glad the Resolutions had been divided, because, though he could not vote with the hon. Member on the first, he could vote with him on the two others. As to the first Resolution, he felt that it implied more or less a vote of censure on Sir John Strachey and his Budget. 449 He had no doubt that everybody would regret with the hon. Member for Hackney the increase of the salt duty; and he felt that, with greater economy in the administration of the finances of India, the duty might not have to be increased. But, while stating that which was nothing but a truism, it would be unfair, he thought, to Sir John Strachey, if the House were to pass the Resolution as it now stood, as it meant that the House regretted the action of the Government of India in increasing the salt duties in the Southern Provinces, as showing an intention on the part of the Government simply to increase those duties. Now, he did not believe that the Government of India had that intention, and nothing more. He believed that the Government, in the change they had made, intended to make the incidence of the tax more uniform throughout the whole of India, and thus to get rid of the causes which made salt dearer in many parts of that country than it was in others. If he thought it was the intention of the Government of India simply to increase the tax upon salt, he should support the hon. Member for Hackney in his first Resolution. But, believing, on the contrary, that it was the clear and manifest intention of the Government of India to reduce the salt tax whenever they could safely do so, he felt that it would be unfair on the part of the House to pass a censure upon that portion of Sir John Strachey's Budget. He had noticed that, in the discussion of questions of Indian Finance in that House, it was constantly forgotten that India was a poor country, and a country with a very small middle class and a very small rich class, and that any tax to be really productive must be laid upon the great mass of the people. He asked the House not to be led away with the idea that this was a tax upon bread. It was nothing of the kind. It was only an infinitely small part of the expenses of the millions of people in India. As Sir John Strachey had pointed out in his Financial Statement, the increase upon the poorer classes in the South would amount to about 2d. per head; which, when spread over a whole year, did not represent a very sensible amount, even in the very small incomes of the people of the South of India. It was to be remembered that, with the exception of the land tax—which, as everyone ac- 450 quainted with India knew, was no tax at all—there was not a single tax levied in India at the present time against which the strongest objections might not be urged. The salt tax was a bad one, and he had no doubt that if anybody could point out a better, which would be equally productive, the Government of India would be only too glad to adopt it. The hon. Member that had preceded him in this debate had spoken of the cotton duties. Well, he (Mr. E. Noel) admitted that they were bad; but, again, these duties had to be continued in spite of what the late Secretary of State for India had said about them, because revenue was required for India, and it was difficult, if not impossible, to find a substitute for them. Certainly, they all agreed that economy ought to be used in the administration of the finances of India, and he, for one, believed that there were economies which might be effected in respect of the Indian Army. But, he considered, that was a question which might be decided not so much by the Government of India as by the Home Government. As to any reduction in the Civil Service Estimates of India, he believed that it was now simply impossible to reduce that expenditure, if the Government of India were to be carried out in a manner which should render it advantageous to the great majority of the people. He cordially agreed with the hon. Member for Hackney that it would be a great misfortune if the money which was to be raised for the relief of Famines should be lost, as it were, by being expended upon public works, where it could not be touched when occasion might require it. Let them do what they liked in the way of irrigation, they could not prevent the recurrence of famine in India, and they could not look to irrigation works to return in the form of revenue anything like a fair proportion to the outlay upon them. Therefore, he trusted that Her Majesty's Government might, after a more careful consideration of this subject, see that it was desirable that the Fund for the relief of Famines should be kept perfectly distinct from all other sources of expenditure.
desired to call attention to the arguments which Sir John Strachey had adduced in support of the Budget, as they had been rather ignored in the course of this discussion. If he 451 understood Sir John Strachey rightly, what he said was in substance this—"We must have £2,000,000 of additional taxation, partly because we require an annual surplus, and partly because we must have some assurance against these recurring famines. We have already taxed, or are about to tax, the Northern Provinces of India by laying upon them a land tax or a cess; and we must put some corresponding tax on the Southern part of the Peninsula—or, in other words, on Madras and Bombay. Now, there are only two taxes which could touch the mass of the people in Madras and Bombay—namely, the salt tax and an increase of the land tax. The fact that these people have been suffering from famine is a strong reason for not putting both taxes upon them, and, consequently, we have to choose between the land tax and the salt tax." In these circumstances, Sir John Strachey, with the assent of the Government of India, chose the salt tax. This was, in his opinion, a judicious choice, for they would thus be able to abolish the great Customs' barrier which stretched from one side of India to the other. Some hon. Members opposite said the salt tax was a very hard impost, because it pressed upon the poorest part of the population. The hon. Member for Kirkcaldy (Sir George Campbell) talked of the dumb millions who would be oppressed by the tax. Of course, everybody must sympathize with the poor, but there were reasons for thinking that the poor people generally should not be exempted from the additional taxation. £1,500,000 out of the additional £2,000,000 required by the Indian Government was wanted for purposes of famine insurance. It was just and right, therefore, that the persons who were to obtain the assurance should pay, at any rate, part of the premium. He did not propose to enter into the comparative merits of the licence tax and the income tax; but he would pass on at once to the third Resolution of the hon. Member for Hackney, which referred to the manner in which this fund, if raised by taxation, ought to be expended. The whole subject had been before a Select Committee. So far from public works being unprofitable, he believed they would give a return of 5½ or 6 per cent, as against 4 per cent yielded by ordinary Indian investments. It was also a clear advantage to provide 452 people with the means of irrigation—that was to say, with the means of averting famine, instead of bestowing charity or semi-charity upon them when famine had begun. By adopting the former course, they would substitute prevention for cure. He could not support the Resolutions.
§ MR. MASSEY
said, he gladly bore testimony to the energy with which the Indian Government had prosecuted the work of financial reform for some years past; but felt bound to differ from them as to the propriety of the salt tax, as they proposed to levy it. In itself a salt tax was legitimate enough. A contribution to the requirements of Government must be obtained from the working classes in India in some shape or another, and every other mode than by that of the salt tax had been considered by successive Governments in India; but they had come to the conclusion there was nothing less objectionable than a well-regulated salt tax. But, unfortunately, that tax was not well administered. It necessitated the employment of an army of 8,000 revenue collectors along a frontier of 2,000 miles; and, besides the objection which the enormous expense thus involved constituted, there was the further objection of the wanton inequality in which the tax was assessed throughout British India. Sir John Strachey told them that this change was preliminary to financial reforms, and the re-adjustment of the salt tax, if they adopted the measure which was the subject of debate that evening; but he could not follow the reasoning by which Sir John Strachey came to that conclusion. Madras and Bombay had been selected for the increase of the salt tax, from the fact that it was lower there than in the other parts of India. The tax was proposed to be raised from 3s. 7½d. per bag of 82lb. to 5s., which was a material addition, when they considered that it was a tax paid by the labouring population, whose rate of wages was so low as to be almost incomprehensible here. It was said that no complaints had been made by the people of India against the tax; but they had no trades' unions and no organization to resist what they might consider unjust taxation, so that if the Government imposed double and treble the amount of the present taxation of India the people would endure it in silence; but was not that a reason why the House should be careful 453 and vigilant in guarding these helpless multitudes from the oppressive taxation of their masters? Passing from principles to details, he could see no reason why Bengal should be benefited at the expense of Madras and Bombay. The Government of India actually proposed that populations which had suffered from famine should be subjected to this increased taxation, and that nearly half of the proceeds should go to the relief of a Province which had not suffered in the same degree, and which Sir John Strachey—in whom, personally, by the the way, he had the greatest confidence—declared to be in the enjoyment of a state of general prosperity such as had never before been known within the memory of man. It was true the salt tax in Bengal was higher than in Madras and Bombay; but if that was an injustice it ought to be remedied by an equal adjustment or by a diminution of the salt tax in Bengal—certainly not by a subsidy to Bengal, as was proposed. But, although the manner in which the salt tax was manipulated appeared to him unjust and unwise, he could not take it upon himself to say that the sum which the Indian Government proposed to raise was unnecessary. He must assume that unless they required the money they would not seek to raise it. Neither could he take upon himself the responsibility of saying that economies could have been effected to an extent which would have enabled the Government to dispense with that sum. Therefore, he felt great difficulty in voting for the first Resolution of the hon. Member for Hackney. With respect to the second Resolution, he had no such difficulty. The licence tax, which had been imposed in 1867, had commenced at £20, and went up by a graduated scale to a very considerable amount. The Civil Services, moreover, were included under it, and it cost little or nothing in the collection. How different was the tax which was now imposed by Sir John Strachey! It was levied upon the small trader, and the Professions and Civil Services were excluded from its incidence. A considerable amount of clamour had, no doubt, been caused by their inclusion in 1867; but the Indian Government of that day deemed it to be their duty to disregard that clamour, and it disappeared, the tax took root, and produced fruits in accordance with the Estimates which had been 454 made. He thought it would have been better had the same course been pursued by Sir John Strachey, and the tax replaced on the footing on which it stood in 1867, commencing at 200 rupees instead of 100; for so strong had been the representations made in 1867 as to the oppressive manner in which the tax bore upon the poor, who could ill afford to pay it, that it had been determined to raise the minimum from 200 to 500 rupees—an alteration which, he might observe, hardly recommended itself to his mind. He objected, however, to the tax being levied so low as 100 rupees; and, for these reasons, he should give his cordial support to the second Resolution. With regard to the third Resolution, he thought the appropriation of the money which was raised had better be left to the discretion of the Indian Government, and, therefore, he could not support it.
MR. C. BECKETT-DENISON
said, he was not at all enamoured of the Budget of the Indian Government; but in considering abstract Resolutions such as those before the House, he felt bound to ask himself would they, if passed, be productive of good or evil? They were a Vote of Censure upon the Indian Government, and especially upon Sir John Strachey, and would compel them practically to undo all their work at a critical moment without having any clear and definite means of providing further sources of revenue. He did not think the salt tax in India was a bad tax, and believed it would always remain one of the sheet anchors of taxation in that country. As regarded the augmentation of the tax in Madras and Bombay, he would merely observe that an increase of only 11 annas per maund was so infinitesimal that it did not admit of being expressed by the mention of any known coin. Besides, the Government of India stated that the augmentation was made with a view to equalize the incidence of the tax throughout India, so that they might at the earliest possible moment be able to reduce the amount. His only fear was that the increase, combined with the abolition of the large army of revenue collectors which had just been referred to, might give an impetus to Native smuggling throughout the States of Upper India; for there was a coarse Native production which could be used after very little prepara- 455 tion. That might be preferred to the superior article if any large increase in the price of the latter took place, and consequently to a falling-off in trade. Looking, however, upon the proposal as an experiment, he was not prepared to say that the Indian Government, with the latest information at their command, were wrong in the decision with regard to the tax at which they had arrived. He was, therefore, unable to vote for the first Resolution. As to the licence tax, he concurred in almost every word with respect to it which had fallen from the right hon. Gentleman the Member for Tiverton who had just sat down. The licence tax began too low, and the result was that in the poorer classes the irritation was very great, while the produce of the tax was inconsiderable. The Government would have done better to have taken 300 rupees as the lowest level for the new tax. The exemption of the European community from the incidence of the tax, while the Natives remained subject to it, could not be defended on principle, as it gave ground for suspicion on the part of the Natives with regard to the motives which actuated the Indian Government. At the same time, it should be remembered that the Europeans paid income tax at the rate of 10 or 12 per cent, as the rate of exchange was always adverse to them. That circumstance had to be taken into account, and he would, therefore, lay stress upon the exemption of a particular class. As for the third Resolution, he preferred to wait for the Report of the Committee with respect to the Famine Fund; the question was both difficult and delicate, and as the Committee was sitting, he could not vote with the hon. Member.
§ MR. LYON PLAYFAIR
said, they must all agree that the motives underlying the Budget of Sir John Strachey were highly meritorious. He had seen enough of Famines in India to treat them as events that must occur, and that they were necessary to be met by insurance, which he calculated at £1,500,000 annually. The hon. Member for Cambridge (Mr. Smollett) had sneered at the Duke of Buckingham for listening to the teachings of science in relation to this famine. Although it was not established that famines in India came during the particular years when sun spots were not visible on the sun, 456 still there was so much truth in the connection between the dull state of the sun and the diminished rainfall of different countries, that it was most important for the Government of India to give consideration to that in future. Out of the 22 great observatories of the world, in 18 the minimum rainfall coincided with the time when there were no spots on the sun. That was as true in Edinburgh as in Madras; it was as true at St. Petersburg as in Australia. It was, therefore, essential for the Government of India to take this into consideration in calculating as to when famines were likely to occur. The Secretary of State for India acted wisely in sending out a photographer to the Himalayas to take photographs of the sun; and, having seen those photographs, he was sorry to say that in none of them were sun spots to be detected. The converse was also true that excessive rain came in maximum sun-spot years; for these years indicated intense activity of the sun. In raising a Famine Fund, the various sources of taxation had to be brought into review. Sir John Strachey said he looked at tobacco, succession duty, and a tax on marriage; but he found that none would produce a sufficient sum. Then he looked at the income tax, which would have produced a sufficient sum; but it was so unpopular that he could not propose it. His (Mr. Lyon Playfair's) objection both to the licence tax on trades and to the increase of the salt tax was that they fell on persons inversely in proportion to their ability to pay them. The salt tax was, in the words of Sir John Strachey himself, a rude and barbarous tax. Salt was as necessary to life as air and water. They might get different kinds of food, but they could not escape from the necessity for air, water, and salt. The consequence was that the man who was poor paid as much as the man who was rich. Experience showed that each man required nine £s of salt per annum. That was equal to 2 per cent on the income of the peasantry of India. Such an amount could not justly be called a small tax. It was a considerable tax. Hon. Members to-night argued that because the tax was only ½d. per lb. the people did not feel it. If that were true, why all the enormous precautions against smuggling? In the Madras Report of the Salt Commission, they read of towers built in the centre of 457 manufactories to watch them by day, of all workmen being turned out at sunset, and of moats round the works patrolled by the police at night. They read of the miserable salt extracted from the earth being seized, and thousands punished for using this illicit salt. What did all this mean, if the population did not suffer from the high price of a necessary of life? Sir John Strachey, in his comprehensive speech, said it was not a large tax, and was in use in many countries, and was still larger in France. Let them see what the French economists thought of this tax. Buffon wrote—That the salt tax was a law of proscription against the well-being of man and the health of animals. It was a law of misery against unborn generations.That was the opinion of political economists in a country which Sir John Strachey quoted as an example. It had produced more insurrection, more misery, more heart-burning in France than any other kind of taxation. More than any other one thing, the salt tax was the cause of the Great Revolution in France. It must necessarily be a poll tax, not levied differentially according to the ability of the man to pay it, but one in which the poor man had to pay more than the rich man. For this reason—the rich man had various kinds of food, with various condiments and spices, and did not use so much salt as the poor man. The poor man lived largely on rice, and was in the same position as the Irishman once was with the potato. Men were obliged with starchy food to eat more salt than with any other kind of more generous food, such as a meat diet. Therefore, the tax fell more on the poor man than on the rich man. No one who knew the finance of India would say that the salt tax should at once be swept away. That was impossible. £6,000,000 out of £50,000,000 were derived from this tax, and it was acknowledged that to provide a substitute would be a matter of difficulty. The Resolution was only a condemnation of the increase of the tax. It was an expression of regret that in the famine-stricken districts of Madras and Bombay the tax should be raised in amount as was now done. It was raised 40 per cent in the poor districts, and reduced 4 per cent in the prosperous dis- 458 tricts. If a man had a wall surrounding his property, and had one part high and another low, and intended to reduce it to a level condition, he would not build the wall to an equal height and then reduce it to a low level afterwards. That was what they were doing in India. Sir John Strachey said four Administrations had condemned this tax and desired its reduction. But, in spite of all these protestations, he found it continually accumulating. In Bombay, in 1840, this tax was 8 annas per maund. In the present year it would be 40 annas per maund, or 140s. per ton, as against 28s. per ton in 1840. The article itself was manufactured in India at 12s. 6d. per ton. Why did they not try reduction in the hope of the usual result following, that low price would increase consumption and thus maintain the revenue? In England the tax was abolished in 1823, and by 1840 its consumption augmented 470 per cent. [Mr. C. BECKETT-DENISON: That was an increase from manufactures.] The hon. Member for the West Riding was perfectly right; it was from manufactures, and that was what India should aim to attain. At present, her population was mainly agricultural, and they grew food only sufficient for their daily wants. A country in this position was, as Lord Lytton himself remarked, only a few degrees removed from barbarism. But this salt tax kept the country in that condition. Salt, either by itself, or its products, lay at the basis of most manufactures. It was required, converted into soda and bleaching powder, for cotton manufactures, which surely ought to be encouraged in India. It was required for soap, for glass, for pottery, for the extraction of metals from their ores. But none of these great industries, all suited to India, could grow with a tax of 140s. per ton upon salt. They were strangled in their infancy. Even the salting of food and the feeding of cattle were prevented. There were 400,000 of a fishing population in Madras, and their surplus fish must rot because it could not be salted. A few miserable attempts had been made, under intolerable restrictions, to liberate salt for fish curing, but they were contemptibly small. Labour in India was wonderfully cheap, and if there were no impediments to the growth of manufactures, they would grow luxuriant in the presence of cheap labour. 459 The Government of India wanted an insurance fund for famine, and they imposed taxation to provide it. The best insurance fund would be to create wealth by removing restrictions which rendered industrial development impossible. They as a nation were responsible for the future of India; and yet, by a system of rude and barbarous taxation, they arrested its progress.
§ LORD GEORGE HAMILTON
said, that for the third time within the space of 10 weeks the attention of the House during a time of great general excitement had been directed towards the Indian Budget of 1878–9. The whole purport of this, as well as of preceding discussions, had been to question the propriety of the increased taxation proposed by the Indian Government. Of the assailants of this financial policy, the most formidable and vigorous had been the Proposer and Seconder of this Motion. Their intimate knowledge of Indian Finance had been exhausted in depicting in the gloomiest colours the injustice of certain portions of Sir John Strachey's Budget, and, no doubt, conscious that the duties of an Opposition were chiefly those of criticism, they had altogether ignored the purposes for which the taxation was imposed, as well as the comprehensive fiscal and administrative reforms coupled with it. The burden of proof, no doubt, rested on the shoulders of those who proposed fresh taxation. If it could be shown that these additional burdens were unnecessary, in consequence either of extravagance on the part of the Indian Government or on account of the unsound financial policy which had crushed or curtailed the existing sources of revenue, then he admitted the proposals of the Indian Government should not be sanctioned. But if, on the other hand, it could be shown both that the Indian Government had thrust upon them fresh duties and responsibilities, and that they had to perform fresh functions without increasing their expenditure, and that an increase of taxation was necessary from circumstances beyond their control, he thought it would be admitted that the whole aspect of the discussion would be greatly changed. He, therefore, proposed to state the circumstances which had rendered this taxation necessary, then to explain what Sir John Strachey's scheme was, and then 460 he should endeavour to meet the criticisms to which it had been subjected. He would take this course in consequence of the tone which the debate had assumed. The right hon. Gentleman who had just sat down had strongly deprecated any increase in the salt duties, and anyone would gather from his remarks that the Indian Government was endeavouring to extract an increased salt tax throughout India. Exactly the reverse was the case. The object of the Indian Government was to equalize the differential duties throughout India, to remove the Customs' lines, and give the people as cheap and as abundant a supply of salt as was compatible with the financial requirements of the Indian Government. He would ask the House to look back for five years. It was in 1873–4 that the abolition of the income tax was demanded, and, for the present, he would exclude all account of the money advanced for works extraordinary. Lord Mayo had succeeded in effecting more than an equilibrium in the Income and Expenditure, and Lord Northbrook abolished that which three years before brought in some £2,000,000. No one could dispute that the income tax was just in theory; but, on the other hand, no one could dispute that it was most unpopular. The peculiar circumstances which led to the abolition of the tax had rendered its re-imposition a matter of great difficulty. Notwithstanding its abolition, the Revenue so increased that there would have been a surplus of £2,000,000 if the Famine had not broken out in Bengal. From that moment until now, however, the Indian Government never was able to shake off the terrible scourge of famine, and to meet the scarcity of the last five years. The Debt had been increased by about £16,000,000, and the interest on that at 4 per cent was about £620,000. Then, a very large portion of the disbursements of India had been made in this country in gold; and, although the House would scarcely believe it, the difference between the loss through exchange in 1873–4 and 1878–9 was £2,000,000. But there was another charge over which the Indian Government had no control. Lord Cardwell was careful to state, when he introduced his Army Reforms, that he believed no additional charges would fall on the Indian Revenue in consequence of the 461 proposed re-organization. He did not think those hopes had been realized, and he calculated the increase which they had to pay under this head in the last five years was about £400,000. Taking, therefore, the famine charges, the losses caused by the fall of silver, and the increased home military charges, they had an increased expenditure to bear since 1873–4 of over £3,000,000, and which was quite outside their command. Now, the whole of this enormous increase to their annual expenditure had been met out of the ordinary revenue without a single farthing of additional taxation; but it had absorbed the whole of the annual surplus, which until last year was about £2,000,000, as well as the annual increment of the revenue and the increased receipts from the guaranteed railways. With the exception of the charges referred to, the Indian Government had, notwithstanding the almost daily assumption of fresh duties, responsibilities, and functions, kept down its administrative expenditure; but this feat did not seem to entitle them to any praise from their present critics. At the commencement of last year, therefore, the Revenue and Expenditure of India were barely balanced when Sir John Strachey became Finance Minister. Two courses were open to him. He might have done nothing to improve his revenue, simply trusting to some lucky windfall. If he had taken that course, he might have spared the people of India fresh taxation; but, undoubtedly, he could not have effectually saved their lives if another famine had occurred. Of all the onerous duties undertaken for the welfare of the Native populations of India by the British Government, none had been more dwelt upon and more enforced by public opinion in these Islands than the absolute necessity of preventing the wholesale starvation of their fellow-subjects from famine. That House would never tolerate for one moment the state of things now existing in the coterminous Empire of China; where, from the impotence and impecuniosity of the Administration, the people were dying by millions from starvation. But to effectually cure famine in India something more was required than a mere increase of revenue. Famine was usually produced by drought, and the two material agencies by which the consequences of 462 drought could be best averted were irrigation and railways. But these works hitherto had been only constructed out of loans raised on the security of the Imperial Revenues, and the local Governments had no power to raise funds for this purpose or to control the works when constructed. Moreover, should a famine occur in any locality from insufficiency of food, the central Government found the money to buy food and the local Government spent it. Inevitable friction ensued at the supreme moment when all should have heartily co-operated; for the local Government, principally anxious for the condition of its own people, were apt to be somewhat indiscriminate in their almsgiving; the Supreme Government, on the other hand, being alone responsible for the outlay, was somewhat rigid in its enforcement of economy. To apply, as far as was possible, the sound principles of local self-government by localizing financial responsibility and expanding local resources so as to make each Government primarily responsible for the maintenance of its own people, was the most difficult but necessary part of the work of the Indian Government. This could only be effected by giving each local Government more control both over its expenditure and income, especially in that relating to works likely to avert famine, an interest in economical administration, and a share in the annual growth of its own revenue. But something more was required. No one had ever attempted to defend the salt tax as it was at present, with its arbitrary inequalities, and the costly and lengthy inland Customs' line for its enforcement. To equalize the salt duties, sweep away the inland Customs' line, and to give the people of India uniformly as cheap and as abundant a supply of salt as was consistent with the financial exigencies of the Government, had been the wish of four successive Governments. He claimed on behalf of Lord Lytton and Sir John Strachey that they had had the courage, the skill, and the statesmanship, to combine all these objects in their financial policy this year; and that, although there might be inequalities and objections to certain portions of their Budget, as there must always be to any increase of taxation, yet he would show that they had contrived to give India a sufficient surplus, coupling this increase of taxation with 463 the establishment of sound administrative and financial principles, capable hereafter of almost indefinite expansion. The famine expenditure of the last five years being £16,000,000, Sir John Strachey declared that he must, for famine purposes alone, have an annual surplus of £1,500,000, to be applied to the reduction of debt, which he appropriately called a Famine Insurance Fund. As the sources of some of the branches of the Indian Revenue were somewhat fluctuating, it had been an invariable rule of late to provide, if possible, for a surplus of £500,000. The Revenue had, therefore, to be improved by £2,000,000. How was this to be obtained? The income tax was not available, for the peculiar circumstances of its abolition rendered its re-imposition at that moment practically impossible. By a simple but masterly extension of the principle of decentralization, and by handing over to the local Governments control over certain services and revenues, and, above all, over reproductive works built for the benefit of the locality, Sir John Strachey effected an improvement in his Estimates of £400,000. By this he did not mean that certain taxes were transferred from the collectors of the central Government to the local. He meant, that by simply re-adjusting the relations between the local and central Governments, £400,000 was saved. £1,600,000 remained to be obtained. The taxable classes in India might roughly be divided into agricultural and non-agricultural. Now, it was notorious that since the abolition of the income tax, the latter had not contributed their fair share of taxation. Sir John Strachey proposed to apply to the whole of India, including Bombay and Madras, a licence tax, to be levied upon the mercantile and commercial classes. An Act of this kind was last year passed in the North-West Provinces, and had worked well and had given little dissatisfaction. The Act of this year was very similar, and it was estimated would bring in £675,000. To make the agricultural classes contribute their share towards the Famine Insurance Fund was but fair, as they chiefly were the class in time of scarcity to be maintained. A small land cess last year was raised in Lower Bengal for this purpose, and collected without any difficulty. It was proposed to extend it to the whole Presidency of Ben- 464 gal, but not to Madras and Bombay, and it would bring in about £425,000. This, with the licence tax of £675,000, and the saving of £400,000 in decentralization, would give Sir John Strachey £1,500,000 surplus. There still remained £500,000 to be got. The increment of the revenue might be put at £200,000, leaving £300,000, which was to be obtained in the following ingenious manner:—The equalization of the salt duties had hitherto been stopped by the immense difference between the duties levied in different parts of India. An anna was l½d., and a maund 82lb. The duties in Madras and Bombay were 29 annas per maund; in the Punjab and North-West, 48 annas; in Lower Bengal, 52 annas. To lower the duties to the Madras and Bombay level would cause a large financial loss, and it would have been quite impossible for Sir John Strachey to propose heavy new taxation, and, at the same time, to reduce largely his existing sources of Revenue. To raise the salt duties of Lower India to the Bengal level would be equally impolitic, for it would have involved a heavy increase of duty upon a necessary of life. Sir John Strachey boldly suggested a third course, and rendered it practicable by a simple but very ingenious arrangement. He had ascertained that a uniform rate throughout India of 40 annas a-maund would secure to him his present salt revenue, and enable him to sweep away the whole inner Customs' line and its attendant abominations. Now, a uniform rate of 2 rupees 8 annas, or 40 annas, per maund, would involve an increase of 11 annas, duty on Madras and Bombay, a reduction of 12 annas in Lower Bengal, and of 8 annas in the North-West Provinces. The incidence of the tax would then be as follows:—On 45,000,000 of people there would be an increase of 11 annas; on 70,000,000 there would be a decrease of 8 annas, and on another 70,000,000 a decrease of 12 annas. [Sir GEORGE CAMPBELL: When?] When these arrangements were completed. There was not a single Viceroy during the last 10 years who had not expressed a wish to do something towards this equalization, and Lord Northbrook took substantial steps towards the attainment of that object. But, without increasing the duty in Bombay and Madras, it was quite impossible to accomplish this great reform. 465 The increased taxation imposed upon Upper India had mainly been due to the inability of the minor Presidencies to support themselves during the past two years of scarcity. They had been purposely excepted from the land cess imposed upon Upper Bengal, in order that by bearing taxation in another form—namely, an increase to the salt duties—they might contribute towards the realization of that fiscal reform, the abolition of the inland Customs' line and the equalization of the salt duties; the object, however, being not to increase the annual revenue derived from salt. Sir John Strachey applied a certain portion of the increased duty obtained from Southern India to a reduction of the duties in Northern India, thus giving a guarantee that the Government were sincere in their wish to equalize the duties, and that the raising of the duty in Madras and Bombay was not a mere pretext for obtaining more revenue from salt. The increased revenue to be obtained from Madras and Bombay would be £500,000, of which £200,000 was absorbed in reducing the duties in Northern India; the remainder gave Sir John Strachey his required surplus of £2,000,000. He claimed, with some justice, for the scheme he had unfolded, that it was comprehensive and statesmanlike. The House would now be the best judge of that claim. But the scheme was so nicely balanced, that if they were to veto one part of it they would overthrow its whole equilibrium. What they, therefore, had to decide was this—was the scheme, as a whole, worthy of support, and could he, on behalf of the Indian Government, give satisfactory assurance that those parts of the scheme which might seem objectionable should be so carefully watched by the Indian Government as to prevent their pressing heavily upon the lower classes or in any way affecting life or health? He had abstained from answering the speeches made by the opponents of the scheme; but he would now take each Resolution by itself. The first was to the effect that the House regretted that the people of Madras and Bombay should be burdened with the increased salt duty which had been recently imposed upon them, and was of opinion that such increase would be unnecessary if the finances of India were administered with greater economy. Well, if the salt duty was imposed for 466 any other purpose than that of obtaining the great fiscal reform of which he had spoken, then he admitted that the passing of that Resolution would be justified; but it was not. The object of obtaining the £300,000 was the reduction of the duty in Northern India, so that it had nothing to do with the financial exigences of the Government. The latter part of the Resolution might be applied to the expenditure of any country; but it was only fair to remember, when the Indian Government was charged with want of economy, that during the last five years they had effected a saving of £1,500,000 in the Civil Service, and their military expenditure had been but slightly increased. He did not, therefore, think, after the explanation he had made, the House of Commons would be inclined to adopt the latter part of the Resolution. Then, as to the second Resolution, which said that the House, while admitting the expediency of creating a fund in India for the relief of Famines, objected to the trades licence tax, which would alone be imposed on those engaged in business, and would fall upon small traders and artizans with undue severity, he confessed that there was a certain amount of justice and fairness in the criticism. No one admitted that fact more candidly than did Sir John Strachey, as hon. Members would see by his second Statement, which would soon be in the hands of hon. Members. The House would, however, remember that there was no alternative between the income tax and the licence tax, and he could not think that they would take upon themselves the responsibility of forcing the Government of India to impose the income tax on the people of India. He thought, however, that good might come from the agitation against the licence duty, because it would possibly result in the re-imposition of the income tax. However that might be, Sir John Strachey assured the Government the incidence of the duty would be most closely watched. If the inhabitants of Bombay were as anxious as, judging from their Petition they were, to have an income tax substituted for the licence tax, he had no doubt that Lord Lytton and Sir John Strachey would be happy to accommodate them. The third Resolution of the hon. Member for Hackney related to the manner in which 467 funds created for the relief of Famine were to be applied. On that head of the subject, he might ask to be excused from speaking, on the ground that a Committee, now sitting upstairs, had the whole question in hand; but the point was so clear that he might venture to say a few words upon it. For some years past, the Indian Government had borrowed money for railway and irrigation works; but the loans did not impose any additional charges upon the revenues of India. They were merely additions to the capital account; and in this country there was an addition of 3½ per cent to the railway capital, which showed that the undertakings were sufficiently prosperous to enable the companies to work at a cheap rate. It was proposed in future to divide the Debt of India into productive and unproductive classes—the first being money borrowed for railway and irrigation and other works which earned an income, and the second being funds borrowed for war purposes and the relief of famine. The interest of the first-named moneys would be charged against the current receipts from the works; the profits derived from the old works would, it was believed, be sufficient to pay the interest on that branch of the Debt, and the whole surplus revenues of the year would be used for the purpose of paying the interest on, and gradually redeeming, the unproductive debt. On the whole, he thought the House would agree with him that the Resolutions of the hon. Member for Hackney were drawn in too abstract a form, and were too hostile to Sir John Strachey's whole scheme, to meet with general approval. The Indian Government had, during the past five years, undertaken responsibilities greater than had ever fallen upon any of their predecessors, and it was absolutely necessary that their revenues should be increased. With regard to the fears expressed by the right hon. Gentleman the Member for the University of Edinburgh (Mr. Lyon Playfair) lest the increase of the salt tax should decrease the consumption of the article in the Presidencies affected, inquiries would be made; and if it was found that the consumption of the article had decreased and the health of the people was affected injuriously thereby, the attention of the Indian Government would be directed to the point, in order that steps 468 might be taken to counteract the evil. One of the greatest dangers to which Indian Finance was subject was the increased charges on loans contracted in his country. There was a strong temptation to the Indian Government to contract loans in England, owing to the advantages which they gained through the difference in the exchanges; but the interest on the loans so contracted had subsequently to be obtained from India, and the system had the effect of establishing in India a false surplus at the expense of future years. Sir John Strachey's arrangement was to have the whole money provided without borrowing in England, although they expected to lose £3,000,000 on the exchange transfers. Now, that there were certain inequalities in the proposed taxation he did not deny; but he could undertake that their incidence would be closely watched, and, if necessary, remedied. But the real question before the House was, whether the scheme of Sir John Strachey was worthy their support as a whole, or whether it should be overthrown by the adoption of vague Resolutions? That it was worthy of support he thought he had proved, and to nobody would he more confidently recommend it than to the British House of Commons. No one could dispute that during the last 35 years an enormous improvement had occurred in the prosperity of this country. Various influences had contributed to that result; but the two most potent instruments had been generated by that House, by the application of sound principles to the administration of the Poor Law, and by the adoption of a wise fiscal and financial policy. The instrument by which the latter had been carried out had undoubtedly been the annual imposition of an income tax. If objections such as they had heard that evening had prevailed against the imposition of that tax, the present condition of the trade and commerce of this country would be widely different. By an agitation, in which the hon. Member for Hackney largely participated, the Indian Government had been deprived of the use of that tax. If they were still able to use it, they would not have advocated the taxes under discussion. The Indian Government, after full and anxious deliberation, brought forward the most practicable and least unpopular sub- 469 stitute for the income tax; and they distinctly said that, if their proposals were not overthrown, they would apply to India, as far as they could, the local, administrative, and financial policies which had during the last half-century conferred upon these islands such inestimable benefits. If the House would take into consideration the facts he had recapitulated, and would impartially weigh the scheme now before them, he felt confident that, by a substantial majority of hon. Members on both sides of the House, it would decline to censure or condemn the wise, comprehensive, and statesmanlike financial policy recently introduced by Sir John Strachey.
§ GENERAL SIR GEORGE BALFOUR
pointed out, that it was the annual progress of the Indian Civil Expenditure which required the serious attention of the House of Commons. The statement lately made by the Finance Minister of India of a large increase within the last 10 years of the purely Civil charges was entirely incorrect. There were figures to show that, so far from this Civil Expenditure in India having been reduced by £1,500,000, it had been considerably increased. Within the last 10 years—taking the figures in the accounts as usually exhibiting the Administration charges at £11,124,383 in 1867–8—then the like figures in 1875–6 showed a total of £13,249,381; and these sums excluded loss by exchange and the outlay on famine relief. He also contended that, although the military expenditure was excessive, yet it was the only class of expenditure which had been reduced within the last 10 years. As to the salt duties, the noble Lord who had just spoken, might satisfy himself from Papers in his own Office, that the increased tax upon salt in Madras had very considerably diminished its consumption. The population had largely increased since 1852–3, and yet the consumption of salt had not shown any extended consumption. In that year the selling price was 1 rupee a-maund, and the net revenue from salt was about £432,000. At present, with the selling price at 2 rupees a-maund, the net revenue was only £1,166,000; whereas, in proportion to the increase in the population from 22,000,000 to 31,000,000, the augmented revenue ought to have been far greater with the doubled price. No part of India yielded so large a surplus revenue as Madras, and yet it was 470 the portion of India which secured the least consideration from the Government of India. But with the state of impatience of the House to take a division, he would not further enlarge on the ill-treatment Madras received.
§ MR. FAWCETT
said, it would be necessary for him to trouble the House with two divisions, one on each of the first two Resolutions. His right hon. Friend the Member for Tiverton had said he should vote for the second Resolution, but that he could not vote for the first; whilst several other Members had said in the course of the debate that they could vote for one of the Resolutions and not for the other. In regard to the third Resolution, he would, in deference to what had been said by the Under Secretary as to its traversing the opinion of the Select Committee on the subject, not press that Resolution to a division, but be content with the decision of the House on the first two.
§ Question put.
§ The House divided:—Ayes 87; Noes 163: Majority 76.—(Div. List No. 93.)
Motion made, and Question put,
That this House, whilst admitting the expediency of creating a fund in India for the relief of famines, objects to the Trades Licence Tax, which will alone be imposed on those engaged in business, and will moreover fall upon small traders and artizans with undue severity."—(Mr. Fawcett.)
§ The House divided:—Ayes 96; Noes 159: Majority 63.—(Div. List, No. 94.)