INDIA — EAST INDIA REVENUE ACCOUNTS—THE FINANCIAL STATEMENT.

HC Deb 13 August 1878 vol 242 cc1871-927

COMMITTEE.

Order for Committee read.

MR. E. STANHOPE

said, it was not his intention to presume upon their indulgence after his short experience by affecting to speak with authority upon any of the numerous and intricate subjects connected with the administration of India. All that he should endeavour to do was to put as clearly as he could before the House the present actual condition of Indian finance. Any lengthened statement on his part was unnecessary, inasmuch as the financial arrangements of the year, as far as they were already known, had been the subject of discussion in the House on two occasions during the present Session, and once also in "another place." But, as the present aspect of the matter was of special importance, and so constituted, it might be a new departure in the history of Indian finance, he should hardly be doing justice to the Government of India if he did not, however shortly, give a comprehensive account. On the present occasion, the comparison that was usually made between the different years under consideration by the House was rendered more than usually difficult by changes in the form of accounts. At the same time, he believed that the changes were so substantially advantageous that they would in the end gain general acceptance. Anybody who chose to look into the matter for himself would find that the general result of those changes was to add something like £4,500,000 to both sides of the account. The statement of the three years which he should have to present to the House would show the accounts of the first year as they had actually turned out, of the second year as they were almost certain to turn out, and of the third year as they were estimated in the Budget. The accounts for 1876–7 showed a Revenue of £55,995,785, and an Expenditure of £58,178,563, leaving a deficit of £2,182,778. Making allowance for the change in the form of accounts to which he had referred, and independently of the charge entailed on the Government by the Famine, those results corresponded very satisfactorily with the Budget Estimate of two years before, the two principal variations being caused by the growth of the receipts on the guaranteed railways, and by the Famine expenditure. If the estimated cost of the Famine in Southern India during the financial year were deducted, the result was that the surplus estimated for the year now under review had been exceeded by more than £1,000,000 sterling. Coming now to the regular Estimate for 1877–8, the Revenue was placed at £58,635,472, and the Expenditure at £62,018,853, leaving a deficit of £3,383,381. The most noticeable feature of the year was the enormous increase in the receipts of the guaranteed railways, which amounted to no less a sum than £1,693,800. The Revenue from salt exceeded the Budget Estimate by the sum of £223,000—a fact which was especially worthy of notice, inasmuch as it was considered that it was only in a slight degree due to the alterations in the rate of duty made in December last. The House would hear with pleasure of an item of receipt of £50,000 for cinchona bark, which was a much larger sum than had been anticipated. Under the head of the Mint there was an increase of £274,000, which was due to the large coinage operations necessi- tated by the great influx of silver. The only material decrease was a falling-off of £837,800 in Land Revenue, owing to the Famine. That, again, had been the great disturbing element which almost prevented any useful comparison with ordinary years. His noble Friend estimated the direct charge for Famine expenditure during the year 1877–8 at £1,425,000. That amount had been very largely exceeded; but if, as in the former year, they excluded the Famine charges, they would find that the financial result of the year was, on the whole, more favourable than his noble Friend anticipated by the sum of £1,250,000, which was more than accounted for by the receipts of the guaranteed railways. When the Estimates for that year were framed, it was anticipated that all cause for anxiety on account of the Famine might pass away with the arrival of the monsoon. That hope was destined to be disappointed. The late coming of the rains caused a continuance of distress in Madras and Mysore long after the period at which they hoped it would terminate, and the drought which prevailed in other parts of India produced a great strain on the finances. But the strain on the finances caused by Famine must be more a matter of estimate than anything else; because it depended not only on the amount of direct Famine relief, and on the loss on the Land Revenue, the Customs, and the Excise, but also on the indirect expenditure, caused by the necessity of pushing on public works, of increasing the rolling-stock upon railways, of providing loans to Native States, and other items. Estimated upon that basis, and in the expectation, he was happy to say that the Famine expenditure of the present year would be recouped by the arrears of Land Revenue, which it was hoped to receive, they arrived at a total loss due to the recent Famine, directly and indirectly, of £9,750,000, of which £6,500,000 occurred during the last financial year. When they came to estimate the results of that expenditure, it was more difficult to give the House exact information. But many hon. Members had desired to arrive, if possible, at some idea of the degree in which life had been sacrificed. That feeling had been shared by his noble Friend, and by the Government of India also, and they had accordingly caused a partial Census to be taken of the distressed districts in Southern India. The Returns made under that Census were now on the Table of the House, and hon. Gentlemen would observe that the Government of India, while expressing their opinion that there had been a deplorable diminution of the population, thought the results were not sufficient to enable them to form any correct estimate of the mortality. In that opinion his noble Friend entirely concurred; but as the estimates on that subject which had reached this country were of an exaggerated nature, and as it was represented by the Correspondent of The Times that the mortality exceeded 6,000,000, and as other influential persons had adopted the same view, the Government had felt it to be desirable that, however imperfect the Returns might be, they should endeavour to give some estimate of the mortality arising from Famine. The result, as far as they could gather it from the figures sent to them, was as follows:—They estimated the mortality in the Bombay Presidency at 260,000 lives; in Madras at 690,000, and at Mysore at 400,000— making a total of 1,350,000 lives. No words of his could adequately express the deplorable nature of that result. At the same time, it was, as the House would see, much more favourable than some of the estimates which had been formed. All he could say was that he was afraid it was almost hopeless in India in every case to prevent mortality; but they recognized, to the fullest extent, the gallant efforts made by all the officers in India, of all ranks, to avert or mitigate the great calamity which had befallen that country. He trusted that the Famine would not fail to leave useful lessons behind it. The House would have heard with satisfaction of the appointment of a Famine Commission, not only to investigate the principles on which Famine relief had hitherto been administered, but also to endeavour to ascertain how far it might be possible to prevent the recurrence of future disasters, or to put the population in a better condition for enduring them. From the labours of that Commission, aided as it would be by the valuable and independent assistance of Mr. Caird, they hoped for very excellent results. But the second lesson to be derived from the recent Famine was the necessity of recognizing, without delay, the fact that the periodical recur- rence of Famine in India ought to enter into their calculations upon making financial provision for their ordinary needs from year to year. After the Bengal Famine of 1874, Lord Northbrook declared that in India Famines could no longer be looked upon as wholly abnormal or exceptional phenomena, and that the grave obligations incurred in respect to Famine must be recognized, met, and provided for, among the ordinary charges of the year. That opinion had been approved and reaffirmed by successive Secretaries of State, but was for the first time put into practical operation by the Government of Lord Lytton. Choosing a moment when public opinion was sufficiently excited in regard to endeavours for mitigating the calamities of Famine to strengthen their hands, they had not shrunk even from the unpopularity of imposing new taxation to accomplish that object. It had been estimated by Sir John Strachey, that in the course of every 10 years they had to expend £15,000,000 on Famine relief. Get a real surplus, he said, of £1,500,000, and apply that to the reduction of Debt, and the result would be that at the end of 10 years they would have met all their expenditure on Famines without any addition to the Debt. Hardly any part of that £1,500,000 could be met out of existing sources of taxation. Before the recent Famine, it was estimated that the state of Indian finance showed pretty nearly an equilibrium. In fact, the only source whatever from which they could expect material assistance was from the extension of the system of decentralization which was introduced by Lord Mayo, and which was expected to yield, in the year before them, £400,000 in addition to what was previously obtained. That policy had been pursued with great energy in the past year, and although it was too soon to form a strong opinion as to the results it would achieve, especially as the provincial finances had been disturbed by Famine, still all the Reports received by the Government of India testified to the satisfactory nature of the change which had been made. In Bengal, where that system had got into full working order, the Lieutenant Governor said that its operation had induced a careful scrutiny into all branches of the Public Expenditure, had led to improvements in dif- ferent branches of the Revenue, and had prevented that friction which might otherwise have existed between the local and Imperial Governments. There remained, then, as the House would see, £1,100,000 to be provided for Famine insurance. Could any part of that sum be met by the diminution of Expenditure? They had had Petitions sent from Calcutta to that House and to the other House of Parliament, urging the adoption of that course; and in presenting a Petition to the House of Lords, Lord Northbrook—whose high authority must be admitted—made some remarks on the subject. But the only practical suggestion which Lord Northbrook made as to the actual diminution of Expenditure in India was—first, that they should keep a very careful eye on the Expenditure for Public Works—an observation in which everybody would agree; and, secondly, that the Home Charges for the Army might with benefit be re-adjusted to the advantage of India. Now, on that he might himself have a little more to say when they came to discuss the Amendment of the hon. Member for Hackney. But what he wanted to invite the attention of the House to was this—that after making those suggestions, Lord Northbrook went on to say— Although he thought something might be done in the way of reduction of expenditure, and he was satisfied that the Government of India were not neglectful of any opportunity that might occur for effecting reductions, he did not think it very likely that the cost of the government of India could be very considerably diminished. Whatever savings might be made in one direction would be met by the increasing demands for improvements of different kinds throughout India. Then the noble Lord added, that although they could not rely on any substantial diminution of Expenditure, they might possibly avert the necessity of imposing fresh taxation; because the Government of India had been for years in the habit of under-estimating its Income. During the last five or six years, with one exception, there had been a sufficient surplus; and, on the whole, the expenditure on the Famines had been met by the ordinary Revenues of the country. But the noble Lord, in his endeavour to show that a sufficient Famine fund had been provided, had forgotten that in his Estimate he had charged some unremunerative public works—such as the military railways— to capital, while it had been a special point in a proper system of finance to charge them, not as capital, but as revenue. Sir John Strachey, summing up his remarks on the proposals of the noble Lord, had said— The figures which I have given show that during the past seven years we should have just managed, after meeting all charges for unremunerative public works, to bring our Expenditure within our Income, if there had been no income tax and no Famine; but we cannot omit Famine from our calculations, and we have now no income tax. It therefore follows, judging by the experience of these seven years, that our ordinary Revenues are just sufficient to meet all ordinary charges, excepting those for the relief of Famine, for which we may consider that no provision is now made. The Government of India, then, had every reason for saying that they could not rely upon an over-estimate of Income, and that if they were to provide for Famine they would have to impose additional taxation. The House was aware of what that consisted. There was the licence tax, and the new taxation upon the land. In Bengal and Northern India the incidence of the new taxation upon trades and agriculturists was about equal; but Madras and Bombay, having suffered from famine very severely, and having had to submit, also, to an increase of the salt tax, were exempt altogether from the land tax. The objection originally urged against the new licence tax would be very considerably lessened by the further explanations received as to the mode in which it was to be enforced. It had been said that it was a tax upon the very poor; but that turned out not to be the case, because it was not to be imposed upon any person earning a net income of less than 100 rupees a-year; and Government had the power of extending the limit of exemption upwards, but not downwards. There were many men in receipt of that income who would escape the tax; and, moreover, anybody who could prove that the amount of the tax was more than 2 per cent of his net annual earnings, might ask either for a reduction or for total exemption. So much for the inferior limit of the tax. As regards its superior limit, there was much more to be said. It had been urged that the tax did not fall upon those who could best afford to pay it, and this was no doubt, to some extent, true. The Government of India had endeavoured partly to meet this objection, and though the maximum fee in Bombay remained at 200 rupees, it was fixed for all Northern India at 500 rupees, and for Madras at 800 rupees. Whether any further steps should be taken to remove an objection to the tax which had been very widely entertained was a matter well deserving the attention of the Government of India. Then, as regarded the tax on land, to which much objection had been taken, it seemed to him that the best answer was that it would have been impossible, and certainly most unjust, to endeavour to raise the amount required without calling for contributions from the agricultural classes. The only result would have been that they would have had to tax them in another form. But when they remembered that Madras and Bombay were excluded wholly from that tax, and the North-Western Provinces partially, because of the recent suffering from drought, they would see that there was nothing in the condition of those classes to justify the statement that they ought to bear no part of the Famine taxation. He had thus endeavoured to dispose of the special taxation imposed for purposes of famine insurance before passing on to describe the other changes which formed part of the financial proposals of the year. The first of these dealt with, perhaps, the greatest object of Indian financiers in modern times— namely, the abolition of the Inland Customs line, and with it of the transit duties upon sugar. It had been so often described that he was almost ashamed to ask the House to bear in mind what it was desired to abolish. In order to prevent the ingress into our territories of salt taxed at lower rates, a line had been maintained of many hundreds of miles in length—at one time 2,400— consisting principally of a hedge of thorny trees and bushes, supplemented by stone walls and ditches, which could not be passed by anyone without examination. This line was kept up at an enormous expense, and guarded by a force of 8,000 men. In the year 1872, the Government of India had called for the opinions of local officers as to the effect of the existing system of taxation upon the people. In reply to that Circular, the officers of the Central Provinces had pointed out that the Customs line to the North and South of these Pro- vinces was one of the measures connected with taxation of which the people most complained; and from Bengal the Lieutenant Governor — now the hon. Member for Kirkcaldy—had written that throughout his tour it had seemed to him that the Customs line had been felt by the people as a greater grievance than all other grievances put together. No one could travel through those districts without being liable to constant search by Custom House officers. Everywhere it was stated that the annoyance to travellers was great, for they were always liable to be stopped and overhauled, and the possession or suspicion of the possession of salt carried with it difficulty and vexation. Besides, though this would apply only to travellers in one direction, the necessity of collecting inland sugar duties caused almost equal annoyance to travellers in the other direction, and the temptation offered to smuggling was so great that the people in some parts were described as becoming demoralized by it. That line had therefore been condemned by successive Governments, and by most of those who had studied the financial affairs of India. The mode in which salt was supplied varied very greatly in different parts of India. Bengal and Assam derived almost their whole supply from Cheshire; Madras and Bombay and a part of the Central Provinces obtained salt made from the sea; and the Punjab had an abundant supply of rock salt. But 47,000,000 of people dwelling in the North-Western Provinces, Oude, and in the Central Provinces depended almost entirely for their salt upon the Native States of Rajpootana and that district. The rate of duty itself, and the mode of levying it, presented almost as much variation. The steps, therefore, necessary for the abolition of the line were—first, to extend railways into the salt-producing districts, and to enter into arrangements with the Native States of those districts, so that all salt might be taxed at the place of production; secondly, to remove the inequalities in the rate of duty in different parts of the country. A great advance in this direction had been made by the extension of railways into Rajpootana; and, during the Administration of Lord Mayo, the lease of the Sambhar Salt Lake had enabled a great reduction to be made in the price of salt. In 1874, the first step towards its actual abolition had been taken, and the Southern Customs line, extending over 800 miles of country, had been dispensed with—the effect of which had been to reduce the price of salt in the Central Provinces and in Orissa, with practically no financial loss at all. In the meantime, the negotiations with the States of Rajpootana had been continued, and had reached such a point that in December last the Government was of opinion that some progress might also be made in the second of the necessary conditions—the equalization of the rates of duty. This was accomplished by a decrease in the rate of duty in Northern India and an increase in Madras and Bombay. This increase, accompanied though it had been by relief from other taxation, and necessary though it was if equalization was to be attained, had been sharply criticized in the House. He did not desire to renew the controversy. The increase which had been made did not amount to more than a tax of 2d. a-year upon each consumer, and while the incidence of the tax at the rate of 2 rupees 8 annas did not exceed ¾d. per lb., the actual cost of salt was gradually being lessened by the spread of the railway system and the diminished cost of transit. But very recently—within the last few weeks—we had learnt that the negotiations with the Native States had come to a satisfactory termination, and the Government of India had come to the conclusion that the result of those Treaties enabled them at once to take steps for carrying out their long-cherished object of abolishing the Customs line. Accordingly, from the 1st of this month, the salt duty in Northern India had been reduced to 2 rupees 8 annas per maund, except in Bengal, where it would be fixed at 2 rupees 14 annas. The result was that with the exception just mentioned, one uniform rate prevailed throughout India. The accomplishment of this object justified, to the fullest extent, the contention of the Indian Government, which was much criticized at the time — that the recent increase in Madras and Bombay was really imposed for financial reform, and not from financial necessities. The effect upon the Revenue caused by this reduction of the duty was expected to be a loss of about the same amount as was gained by the increase in Southern India. The House would bear in mind, when he came to state the Budget Estimates for the present year, that the loss of Revenue just announced—amounting, in the present year, to £150,000, and in future years to something under £300,000 —had not been included. The Government had at present received only the telegraphic announcement of the reduction; and he was, therefore, not yet in a position to make any detailed statement to the House as to the mode in which it was proposed to carry it out. He might, however, at once answer one criticism which had been made. It had been urged that the effect of our obtaining control over the sources of salt manufacture would be to cause hardship to large numbers of the people in the Native States. The Government of India had every reason to believe that the contrary would be the case. Very ample compensation had been made, not only to the Chiefs, but to the people, directly and indirectly. He would not weary the House by entering into any detail, but would merely express the belief of the Government of India that the general result would unquestionably be a great balance of advantage to them. He believed that, when these arrangements were complete, it might be necessary to wait until the stocks of salt which might still be in the hands of traders, and which otherwise might escape taxation, had been disposed of. These, however, were matters of detail, and it might safely be said that no serious obstacle now existed, and that very shortly the Government of Lord Lytton would have the satisfaction of abolishing what had been called the commercial and political scandal of the Inland Customs line. Of course, it would have been very agreeable to have been able to effect that object while fixing a lower uniform rate than 2 rupees 8 annas; and the hon. Member for Kirkcaldy had, he thought, been in favour of endeavouring to approximate to a rate of 2 rupees. But, in the present state of our finances, this would have been impossible. In Madras and Bombay, undoubtedly, the effect of the increase required to be carefully watched, but to a very large part of the population of India much cheaper salt would be available; and he hoped that he was not too sanguine in anticipating from the abolition of the line, and from the other arrangements that would be made, a great stimulus to the internal trade of the country. He was confident that the House would hear with great satisfaction of the accomplishment of this long-desired reform, and would appreciate the perseverance and energy of Lord Lytton and Sir John Strachey, with whose names it would hereafter be honourably associated. Few, in fact, would dispute the advantage of abolishing the Customs line. But the question had been raised in "another place" whether the moment was opportune for doing it, and whether it was desirable to impose fresh taxation upon the people of India for the purpose. His answer to that criticism of Lord Northbrook was that, as a matter of fact, no new taxation had been required for this purpose. The effect of raising the salt tax in one part of India while diminishing it in the other had been, in the opinion of the Government of India, to leave the salt revenue just where it was. In other words, this reform had been effected by a new distribution of the charge, and not by a diminution of Revenue. Treating, therefore, these re-adjustments of the salt duty as a whole, and putting them on one side as not affecting the Revenue one way or the other, we arrived at the conclusion that the new taxation was not wanted for the purpose of Revenue. It was imposed on different grounds and for different objects. Intimately connected with the Customs line was the question of the inland sugar duties, for without that line their maintenance would be impossible. Sugar was one of the most important products of our own people in Northern India; but the effect of the Customs line was to place artificial obstructions upon its export. "So far as competition exists," said Sir John Strachey, "the duty acts as a protective duty in favour of foreign and against our own sugar." Believing that that state of things was intolerable, and also that the duty could in no circumstances be maintained much longer, the Government of India determined to make provision, in the ordinary Budget of the year, for its immediate abolition. Another great object which the Government of India had placed before itself had been the amendment of the Customs tariff. The English tariff had been framed upon the principle of levying a large revenue from a small number of articles of universal consumption; but there being no articles, except cotton manufactures, which were imported into India for universal consumption, the Indian tariff was framed on the opposite principle of drawing a little revenue from a great number of articles. Successive reforms had since so reduced the export tariff that only three duties now remained—on rice, lac, and indigo. But the import tariff, on the contrary, even after the reforms of 1875, contained no less than 62 items, some of them realizing only an insignificant revenue, and hardly justifying the trouble of collection and the necessary interference with trade. It had, therefore, been decided at once to relieve the tariff of 27 of these numbers, of which the most important were fruit and vegetables, so much used for the food of the poorer classes, and materials for railways. But the most important change had been the attempt —small in itself, but as great as financial considerations would allow—to deal with the vexed questions of the import duties upon cotton. Hon. Members would recollect that in the last Session a Resolution of the House, unanimously passed, declared that these duties, being protective in their nature, ought to be abolished as soon as the finances would permit. On the present occasion, it was abundantly clear that any large sacrifice of Income was hardly possible. Rather, however, than leave the matter in its former unsatisfactory condition, the Government of India had endeavoured to eliminate the duties upon the coarser descriptions of cotton goods which were beyond any doubt protective in their nature. These had been exempted from duty, and though Her Majesty's Government felt that a good deal yet remained to be done to carry to a completion the policy which they had expressed, and which the House had accepted, he thought he was entitled to claim some credit for the Government of India for the considerable steps which they had now taken, not only in this particular matter, but in the general reform of the Customs tariff. The House would, therefore, observe that in the Estimate for 1878–9, which he was now about to place before it, the Government had to provide, in the first place, for a Famine insurance fund £1,500,000, for the various reforms which he had indicated; and, lastly, they had to secure that margin between Income and Ex- penditure which was especially necessary in India, and which past experience had shown ought not to be less than. £500,000. The Budget Estimates for 1878–9, inclusive of the Revenue from productive Public Works, were as follows:—Revenue, £63,195,000; Expenditure, £61,039,000; leaving a surplus of £2,156,000. But as the loss by the recent remission of salt duty in Northern India was estimated at £150,000, the expected surplus stood, as nearly as possible, at £2,000,000. Comparing these with the regular Estimates for 1877–8, and including, in both cases, the Famine charges, the result was an improvement of more than £5,500,000. But, in order to make a proper comparison, it was more convenient to eliminate Famine expenditure altogether. Excluding, therefore, all plainly distinguishable expenditure on Famine, the net increase of Revenue on the present year was estimated at £4,500,000; and of Expenditure at £3,750,000. Of these excesses, £2,750,000, more or less, on each side of the account, were due only to the incorporation in the general accounts of provincial Income and Expenditure. The effect of the changes in taxation was as follows: — The new licence taxes were expected' to yield £765,000; but might not, perhaps, be quite so productive the first year. The new rates upon land, £450,000. These rates would not be levied in the North-West Provinces and Oude until September; and were therefore expected, in future years, to yield a further amount of £55,000. The increased salt duty was taken at £247,000, but would now stand at £97,000. On the other hand, the loss by the remission of the sugar duty was £155,000, and by the removal of the import duties on cotton yarns and other items in the tariff, £77,000. But for the abolition of these duties the Revenue from Customs would have shown a rise of £82,000. The principal increase of Income was tinder the head of Land Revenue, of which a full estimate for an ordinary year was now taken, besides the arrears which it was hoped to collect, though their exact amount must be a little uncertain. The amount was taken at £1,968,000 in excess of last year; Excise, for the same reason, was expected to yield an excess of £248,000. Opium, of which the crop was deficient, showed a net fall of £480,000; but the last accounts were satisfactory. The Mint receipts were less by £269,000, and the net receipts from the guaranteed railways were very prudently taken at the large decrease of £869,000. On the Expenditure side of the account, he was glad to record a decrease of £632,000 in Army charges, of which £430,000 was in the cost of stores to be supplied from England. The House would also be glad to hear that the long-pending question as to the proper sum to be paid by the India Office for the Effective Services had been finally settled for all past years, and that there was every probability of a basis being arrived at to regulate these payments, at any rate, for a term of years. The great cause of the increase of Expenditure was one which he had not yet mentioned— namely, the loss by Exchange, which amounted, in the present year, to no less than £3,000,000, as against £1,600,000 for the year 1877–8. It was true that this was to some extent an exaggerated view of the actual loss to India, because these calculations were based on the conventional system of reckoning 10 rupees to the pound; but still, due allowance being made for this fact, no one could deny that the financial difficulty presented by the Indian Exchange was enormous. The rate of exchange during the current year was estimated at 1s 8.4d., and though there had been a temporary depression on the silver market, he was glad to say no further loan would be required from Parliament on the present occasion. No doubt, plausible excuses might have been made out for a loan, the effect of which would have been to relieve the present anxiety of the Government in the matter of exchange; but it was felt that there was no substantial ground for it, and it would only be an aggravation of their difficulties in the future. While upon the subject of Debt, perhaps he might be allowed to say a word as to the proposed conversion of the Five-and-a-Half per Cent Loan which was announced yesterday, and in which two forms of application were proposed. The first form of promissory note was an excessively simple one; but the Government of India was of opinion that some holders might be afraid of a rupee loan because of the fluctuating value of silver. They thought, however, that they might be induced to go into a loan which was practically calculated upon a gold basis, and hence the second form was suggested. The difference amounted to this —applicants under the first form would receive less if the market rate of silver fell, and applicants under the second form would, if the official rate fell, receive a larger number of rupees for their 7s. per cent. Passing from this subject, he had to remark that under the new form of account, for which they were very much indebted to the noble Lord the present Vice President of the Council (Lord George Hamilton), it would be possible, in future, to present to the House what he might call the productive Public Works Budget—that was to say, a statement of the income and expenditure of productive public works. For the first time, these public works were treated as commercial transactions. The accounts now included the whole revenue derived from them, and, on the other side, their annual working expenses, including the guaranteed interest, and the interest upon that part of the Debt of India which was estimated to have been incurred for these works, and which had now been separated from the permanent Debt. The consequence of this would eventually be that the accounts would show clearly the results produced by our capital outlay on public works, which before could only be got out in a very unsatisfactory manner. It was most desirable that these details should be in their possession at the earliest possible moment, so that they might, as it were, take stock of what had already been done before they embarked upon fresh undertakings. No branch of the Public Expenditure required greater watchfulness, and it was only by the test of past experience that they could impose any adequate cheek. It was as yet impossible, however, to give the House definite information in regard to irrigation works. There were some parts of India where they had not yet been able to discriminate between what proportion of Land Revenue was due to irrigation works and what was not; and, therefore, he thought it advisable, rather than give an incomplete statement, to pass over that subject altogether on the present occasion. In saying this, he wished to guard himself from being supposed to depreciate in any way the results of irrigation; it seemed to him the greatest possible absurdity, which seemed to pervade some minds, that it was necessary to depreciate one class of public works in order to enhance the value of the other. In his opinion, India required both. Both, if pushed on with foresight and prudence, would be of the greatest advantage. Coming now to railways, the first thing to be noticed was that since 1853 there had been opened 7,500 miles of line at a cost upon guaranteed railways of £95,500,000, and upon State railways of £17,500,000. The financial results of that expenditure were now to be seen in the accounts. As regarded guaranteed railways, and bearing in mind that the trunk lines were only completed in 1871, it was not, he thought, unsatisfactory to find that, a quarter of a century after the opening of the first line, the net traffic receipts had exceeded the guaranteed interest by the substantial sum of £290,000. To put the result in a different form, the gross earnings of these railways had increased in five years by no less than 70 per cent. He was quite aware that the circumstances of the past year had been somewhat exceptional, the receipts having been swelled enormously by the Famine traffic; but, on the other hand, the necessity of providing for the Famine, and the preference given to consignments of grain, caused a certain amount of traffic of a more profitable kind to be lost. All necessary allowance made, the estimate for 1878–9 was less than that of last year by £750,000. The receipts from these railways, however, judging from the past, might very possibly exceed that moderate estimate. The State railways, he was sorry to say, did not at present show so satisfactory a result; but the House would recollect that they were supplementary to the main lines already referred to. Besides, some of them had been constructed much more for military than financial considerations. These dead-weight obligations were now almost at an end. It was satisfactory to observe, however, that the balance of Income over Expenditure was gradually increasing. It was £263,000 this year, as against £131,000 last year. The time had not yet come for pronouncing any opinion upon these results; but towards the formation of that opinion the labours of the Public Works Committee, now sitting, would afford very material assistance. Apart from financial results, however, it was impossible to deny that the railways had proved very useful. They had enormously strengthened our position as a military Power in India, and they had most materially tended to mitigate the Famine. Lord Lytton spoke of them in the highest terms. He said— It is an unquestionable fact that the railways, and the railways alone, were the salvation of the situation in North Behar during the Famine of 1874, and that they have again been the salvation of the situation in Madras during the Famine of the present year. The sea, no doubt, would have thrown rice into the town of Madras; but with the cattle dying of drought, it would have been impossible to move the grain up country; nor, if every possible mile of navigable canal had been completed throughout the Madras Presidency, would it have greatly helped us to throw grain into those very districts where the Famine has been at its worst, for the broken upland country of Bellary and Kurnool and the Mysore plateau are physically impracticable for big canals; and had there been no railway within reach of these districts, the people where they have now died by hundreds must have assuredly succumbed by thousands. On the same subject, Sir John Strachey said— Having mentioned these railways, I will ask you not to forget that at least four-fifths of the food imported into the Famine country travelled over them, and I believe that the average journey made by each bag of grain was hardly less than 500 miles. When it is remembered that barely one quarter of this food could have reached the Famine districts at all without the railways, some idea may be formed of the millions of lives they have saved and of the priceless boon they have conferred upon the country. Lastly, the Government of Bombay said— It is difficult to measure the value of the railway at such a time as this, or the magnitude of the calamity which, without it, must have supervened. If these events had happened before the construction of the railway, the misfortunes of the people and the responsibilities of Government would have been indefinity increased. There was one more subject on which he thought it right to touch, and that was the trade of India. No doubt, the figures which he had to lay before the House were very satisfactory, and were full of promise for the future of India, as showing, in a year when £6,500,000 had been spent in Famine relief, and almost the whole autumn harvest of Upper India was lost, a general improvement in the condition of the people and the flourishing state of trade. In the figures which he was about to place before the House he purposely excluded treasure, because the movement of silver was influenced by so many considerations, such as the Government policy as to the construction of railways, or as to the Secretary of State's Bills in this country; but, taking merchandize alone, and adding together the gross exports and imports, they had abundant proof of the real and advancing prosperity of the country. The average annual value of the exports and imports in the four quinquennial periods since the Mutiny was as follows: — First five years, £52,000,000; second—which included the cotton famine years—£85,000,000; third, £89,000,000; fourth, £93,000,000; while, in 1877–8, the year next following, the total was no less than £106,600,000. In other words, the trade of India had doubled in 20 years. Comparing this result with previous individual years, they found that the imports of merchandize, which had fallen in the previous year, rose to a point very nearly £2,250,000 in excess of the highest year on record. The exports showed an increase of more than £4,000,000, and had only been exceeded by the three cotton famine years, 1863–6. The imports of treasure showed an increase of £6,000,000 over the previous year, and of £12,000,000 over 1875–6. The low rate of exchange had undoubtedly given an artificial stimulus to some branches of the export trade. But the opening of the Suez Canal, and the reform of the tariff, might be reckoned among causes which were likely to be permanent and to tend to still further development. The growth of the wheat trade was the most remarkable of all. It dated its existence from 1873, when the export duty was taken off, and a rise occurred in European markets. Not being an article of food in Southern India, it had been exported in spite of the Famine, and the diminished rates of transport by railway had largely contributed to its increase. In both of the two previous years the export of wheat doubled that of the year preceding in quantity and value; and yet, in 1877–8, it increased 13 per cent in quantity and 46 per cent in value, the total value of the wheat exported in that year being £2,857,000. Of this export, four-fifths came to England, and India had stood third among the countries supplying wheat to England. In the present year, the abundant harvest in America and elsewhere might very probably have the effect of causing a large diminution in the export of Indian wheat. But, looking to the enormous capacities for production, and the readier means of export likely to be soon afforded by the railway to Kurrachee, it was impossible not to feel sanguine as to its permanence. The export of seeds afforded another remarkable instance of growth. For some years previous to 1875 it made, speaking generally, no advance. The removal of the duty in that year had produced the result that, in the year last past, it was double in quantity, and more than double in value, what it was in 1875. The same proof of the advantages conferred upon the Indian cultivator by the removal of export duties was shown by the satisfactory growth of the trade in jute, and especially in tea, where the progress had been regular over a series of years. Even rice, for which there was an enormous demand in Southern India, while showing a diminution in quantity, exceeded in value the amount recorded in any previous year. The export of cotton, he regretted to say, still continued to decline considerably, and though something might be attributed to the greater amount now worked up in India itself, the prospects of this trade could not be called satisfactory. Happily, other articles of export had been found to take its place. In his opinion, these facts justified him in looking hopefully at the prospects of the trade of India. But, even in the event of hon. Members thinking that he had taken too sanguine a view of this or any other matter connected with the financial future of India, he could assure the House that he had not done so with the idea of under-rating the difficulties which he had to encounter. He did not forget the precarious nature of the opium revenue, although he thought that the probability of a fall in the income from that source had been exaggerated. But of their rocks ahead, of all the circumstances which, at the present time, had threatened the disturbance of their calculations, two stood especially prominent. The first was the depreciation in the value of silver, a problem which at present seemed to be beyond their solution, and the gravity of which it was hardly possible to exaggerate. The other was the recurrence of famine, to meet which, in the future, so far as human foresight could do so, an honest attempt had been made this year. The prospects, too, of the season were not unfavourable. Rain was in a few parts excessive, and in one or two districts of the North-West, reported as still insufficient; but, generally speaking, the prospects were very favourable, and prices slowly falling. And although he was afraid that in all parts and seasons it would be impossible to avoid local scarcity, yet it was to be hoped that after the terrible cycle of years of famine which had been gone through, Providence was now about to bestow the blessings of plenty upon the country, and thus to conduce to the prosperity and happiness of the people of India. He begged to move that the Speaker do leave the Chair.

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

MR. FAWCETT

, in rising to move— That this House regards with apprehension the present position of Indian finance, and in view of the power claimed by the Crown to employ any number of Indian Troops in all parts of Her Majesty's Dominions, except the United Kingdom, is of opinion that there is no sufficient security against the Military expenditure of India being unduly increased; commented upon the fact that there were but few hon. Members in the House to consider the great question of our Imperial responsibilities in India, while the Government would not venture to ask them to consider a Bill relating to Irish public-houses or English turnpikes under such circumstances. Month after month, week after week, and day after day, some hon. Members who sat on his side of the House had been taunted that they only cared for little England, and not for our great Imperial responsibilities. ["Hear, hear!"] He heard someone say "Hear, hear;" but he would wish to ask those Gentlemen how they were now about to discharge those responsibilities they had already taken upon themselves? He thought the common sense of the people of England would say that if the English Parliament and House of Commons were so hard pressed that the many important measures which had been brought in were considered thus with three-fourths of those Members who were left in London away from the House, it would be better to care for those responsibilities we had than to assume others of which very little was known. With regard to the statement of the Under Secretary of State for India, he had nothing to complain of the tone of his speech. On the contrary, he felt he was expressing the feeling of every hon. Member when he said that there were many expressions of opinion in that speech which received the cordial approval of both sides of the House. He was also willing to admit that nothing could be more lucid than the manner in which the accounts were laid before the House. He could not help saying, however, that that statement was based upon a wrong hypothesis, while the figures were calculated to mislead rather than give a correct idea of the present financial position of India. There were three cardinal positions connected with Indian finance to which he wished to draw attention— First, that the real Expenditure of India was steadily increasing in a proportion largely exceeding the growth of the Revenue, and that the deficiency thereby caused had to be made good by constant additions to the taxation of the people; secondly, that India was a poor country, that we had almost entirely exhausted every available source of taxation, and that it was impossible to further increase the amount of taxation without causing such serious discontent as would gravely affect our position in that country; and, thirdly, that quite recently certain circumstances had occurred which were likely in the future to make the Expenditure of India far more largely exceed the Revenue than it did at the present time, or in past years. The Under Secretary of State had represented the Revenue of India in the year 1877 to be £55,000,000; in 1878, £59,000,000; and the present year's Estimates represented it as £62,000,000. Such figures he (Mr. Fawcett) characterized as absolutely fallacious, and he asserted that the real net Revenue of India was certainly not one shilling more than £39,000,000; and in making that assertion he was quoting a high authority—the present Finance Minister of India, who said that the Revenue of India could not be estimated at more than £38,000,000. If that was the case, what was the use of misleading the House—of course, unintentionally — and misleading the country, and. everyone who took any interest in Indian finances, by parading the figures £55,000,000, £59,000,000 and even £62,000,000? The statement which he had made perhaps required some explanation; and he would inquire how the Revenue quoted by the Under Secretary of State was made up? Why, simply by including all sorts of items, which were not in the least items of Revenue, but simply items of Account. As an instance, he would take one of the items for Revenue in the 1877 Accounts. It was—"Military receipts, £1,000,000." What was the use, he asked, of putting that item down as Revenue when, under the same heading on the other side, there was an expenditure of £17,000,000? The Revenue could easily be swelled in that manner. Then there was the item put down of "Gained by Exchange, £500,000," in reference to the depreciation of silver; while, on the other hand, there was a loss by Exchange of £2,000,000. Certain things were put down as items of Revenue, which in England were real items of Revenue, but which in India were items of loss—such as £780,000 for the Post Office, while the expenditure was £860,000, and £150,000 for Telegraphs with the expenditure at£560,000. Those items, therefore, were not actually Revenue, and should not be considered so. There were other instances of the same kind. There were in India, practically, only five items of Revenue. Revenue was derived from land, then there were Customs and Excise, then salt, then opium, and stamps. For 1877 the gross Revenue under those five heads was—from land, £19,800,000; from Customs and Excise, £5,000,000; salt, £6,250,000; opium, £9,000,000; and stamps, £2,750,000; making a total of £43,000,000. But if they took the other side of the question, it would be seen that the cost against that sum for collecting these five items was a little more than £6.000,000. In this way we found the correctness of the Estimate of the present Finance Minister of India, that the net Revenue, instead of being £55,000,000 or £62,000,000, or anything like that, was no more than £37,000,000. Unless they kept that fact in view, they would never obtain a correct view of the position of Indian finance. The yearly Expenditure exceeded the Revenue by something like £4,000,000; and the result was that they were obliged to make up the deficiency by perpetually borrowing and resorting to Exchequer Bills. The yearly expenditure upon railways was £3,000,000, and the return this year from railways was only £290,000. Then as to the irrigation works, the Government could not give the House any return on those works. On the last occasion on which he spoke on India in that House, he said that £9,000,000 had been spent on irrigation works in Bengal, every sixpence of which was put down as extraordinary Expenditure, and the Under Secretary of State had reluctantly to confess that the return on that outlay was not more than ½ per cent per annum. The Debt of India was steadily increasing at the rate of at least £4,000,000 a-year. The result of the system at present pursued by the Government of India had been to cover India with a great network of provincial and local taxation. Those taxes seldom came under the cognizance of the House; but in India he believed they had produced more discontent than Imperial taxation. It was a fact that in a single month of the present year, in February, local taxes were imposed which yielded something like £1,500,000. He complained of the course taken with reference to the salt tax. The course taken was most unjust, as it raised the duty on salt something like 40 per cent in those parts of India which were the poorest and which were just recovering from a most terrible famine. The increase of the duty in Madras and Bombay was 11 annas per maund; but Lord Hobart, who formerly was responsible for the government of Madras, refused to entertain a proposal to increase the salt tax by three annas, even at a time when that Presidency was not stricken down by famine. According to the statements made this evening, nearly 1,500,000 people had been swept away by the most fearful of all visitations. He would next bring under the notice of the House one of the most terrible things in connection with this increase of taxation. It meant taking more from the poor. The salt duty could not be increased 40 per cent without diminishing still further the incomes of the poor ryots of Madras. And what did Lord Salisbury say? And this brought into the full glare of light the inconsistency of associating with famine increased taxation. Lord Salisbury, speaking with the authority of a Secretary of State, said— The mortality and suffering caused by the recent famine were not due to a want of food or to a want of means in bringing that food. There was always sufficient food; but the mortality and suffering were due to the fact that the people had not the means of buying food when it was brought to them. And yet, after such an admission from Lord Salisbury himself, this additional taxation was imposed upon the people. With regard to the increase of the licence tax, the Under Secretary of State alleged that it had been rendered much more just, inasmuch as very small incomes were now exempted. It was not to be imposed on incomes of less than 100 rupees a-year; but this meant that income tax would be levied from people who earned only 4s. a-week. But there was one feature of this licence tax which the Under Secretary of State had omitted to notice, and if that was the only feature in connection with it, it absolutely condemned it. This tax was imposed to meet what was described as a great national emergency; but how was that emergency met? Why, they imposed a licence tax to which every person in the receipt of an official or professional income was most carefully and rigorously exempted from contributing a single sixpence. Hon. Members could easily understand that discontent was caused by this unfortunate system of taxation. In every large town in India indignation meetings were held to protest against this incredibly unjust scheme of taxation; and the people of India, in the last resort, called upon the House of Commons to secure for them justice in this matter. He had thus far confined his remarks to the increase of Imperial taxation. He desired, however, to direct the attention of the House to that branch of the subject which the Under Secretary of State had altogether omitted to notice. Lord Northbrook had stated that in Bengal alone, since 1870, the increase in local taxation had been £1,000,000, and the increase in local taxes throughout India during the last seven years had been no less than £3,000,000 per annum. So that, while the Imperial taxation had been increased, there had been a great rise in local taxes also. He would now consider the second branch of the inquiry to which he wished to direct the attention of the House. What did increased taxation mean in India? India was so poor, that there were scarcely any available sources of taxation beyond those which had been already taken up. India was, at least eight times as populous as England, and yet the whole amount of Customs and Excise duties was only £5,000,000, or about one-tenth of the sum raised in England. It was impossible to adduce a more conclusive proof of the poverty of India. Again, look at the Income Tax. The last time the Income Tax was imposed in India a sum of 2½d. per pound produced £500,000. In England a similar amount produced £5,000,000. Additional Revenue could not be raised without resorting to taxation, which was so burdensome to the people as to produce most serious discontent. Lord Mayo said, the year before he died— The increase of taxation which for years has been going on in India is producing a most serious amount of discontent, and this discontent, if it continues, will be a political danger, the magnitude of which can scarcely be exaggerated. Since these memorable words had been uttered, the increase both of Imperial and local taxation had been going on far faster in India than during Lord Mayo's time. Lord Northbrook had, on going out to India, examined into the soundness of Lord Mayo's opinion, and the result of his investigation had been to confirm every word that had fallen from Lord Mayo. Thus two successive Governors General had declared the increase of taxation to be a grave political danger. Lord Salisbury had also made an equally significant remark, when he said that there was this distinction between India and England—that there could be in England a considerable increase of taxation without in the slightest degree affecting the stability of our institutions; but such was not the case in India. These memorable words of Lord Salisbury ought to be borne in mind by every one connected with the Administration of India. It could not, or ought not to, be forgotten, that a penny wasted in the administration of Indian affairs was equally serious with a sovereign wasted in the management or mismanagement of Home affairs. But to relieve the Famine, what had been done? Why, out of nearly £9,500,000 which were spent in connection with the Famine, the Government had been obliged to borrow every single shilling with the exception of £1,000,000, and in order to obtain that £1,000,000 a licence tax had to be imposed on incomes of £10 a-year, and the salt tax had to be increased. And this £1,500,000 was not to be allowed to accumulate as a reserve for future famines; but every single sixpence of the additional taxation which was being raised was to be invested in public works, the returns of which were so uncertain that it could not be proved that the public works which were being constructed would pay half the interest on the capital which was being employed on them. It was clear that the additional amount of Revenue could not be raised in India without imposing additional taxes upon the people—taxes which would be absolutely intolerable, and which the people would be simply unable to bear, notwithstanding the jugglery which had in late years been attempted in regard to Indian taxation. Nothing could, as far as he knew, be more perilous or suicidal even than an attempt to impose additional taxation of this kind upon India—indeed, he could not but think that any proposal of the kind would prove a source of great political danger to the Indian Empire. He now came to the third position which he wished to establish, and that was that lately certain causes had come into operation which were likely to make the Expenditure of India far more largely exceed its real Revenue in the future than it had done in the past. The two causes which were contributing chiefly to this result were these—the loss by Exchange, and the increase in the Military Charges. The Under Secretary of State had remarked that the loss by Exchange was One of those misfortunes affecting the finance of India which it was impossible for them to control. He (Mr. Fawcett) admitted that they could not control that loss now; but that was all the more reason why they should make up their minds to regulate those items of Indian Expenditure which could be controlled. Even if silver should not become far more depreciated than it had been, they were likely, in future years, to lose more than they had lost in past years; because the loss by Exchange in past years they had, to a considerable extent, averted, owing to the opportunity which they had of borrowing large sums in England, and in that way diminishing the amount which had to be remitted to India. But they had exhausted their borrowing powers in England; and, consequently, every sixpence of the £17,000,000 of Home Charges would have to be remitted from India to England. What made the matter more serious was this—that the amount of the Home Charges was more likely to increase than decrease. There had been an increase during the last three years. That loss could not be met by any currency juggling. It arose from the fact that the Revenue was received in silver, and the Debt was paid in gold, and so a larger proportion of Revenue was wanted to pay the Debt in India. It was a loss that could not be avoided; but it rendered it the more imperative that we should economize the Revenues of India. Then as to the military expenditure in India, he feared that what had been done this year would give a stimulus to an increased expenditure; and it could not now be estimated at less than £l7,000,000, and it even was more than that if they took into calculation the expenditure for military purposes. They were expending £30,000,000 of money at a time when there was the profoundest peace—a peace so profound that the Government could take away from India thousands of troops thousands of miles for employment in Europe. They should remember that India was a poor country—a country in which the great mass of the people earned only 4d. or 5d. a-day, and where there was no wealthy middle class, and that the population was so poor that it could not bear an expenditure of £17,000,000 for military purposes. The cause of much of the increase in that expenditure was due to the amalgamation of the Indian and English Armies, which had been done against the remonstrances and advice of every English, stasesman. The strength of the Armies bad not been increased by this, while the military expenditure had been augmented by £4,000,000. If we had back those £4,000,000, there would be no need for increased burdens; no need for an imposition of an Income Tax on incomes of £10 a-year; and no need for an increase of the salt tax. The military expenditure of India had not yet come to its worst; for, on the authority of Sir John Strachey, the military expenditure had increased in India by £1,000,000 on the Home Charges, over which India had no control and was scarcely consulted, and with regard to which she had no power or remonstrance. In fact, the gravity of that fact could scarcely be over-rated; because, from what had happened that year, the military expenditure was likely to be seriously increased. It might be said that he was, in mentioning these facts, attacking the policy of Her Majesty's Government in bringing Indian troops to Europe. Nothing could be further from his intention. That matter had been disposed of, and he accepted the decision of the House upon it. What he had to advance was consistent with even an enthusiastic approval here of that policy. What he wished to show was, that that policy would injuriously affect the financial position of. India. If Her Majesty's Government were to continue the policy of employing Indian troops anywhere out of the United Kingdom, there were two suppositions arising from it—either that the number would be so small that their places need not be filled up by fresh troops being raised in India, or that their number would be so large that it would not be safe to denude India of them, and that fresh levies must take their place. If India could safely spare the 7,000 men that had recently been brought to the Mediterranean, he thought she might be spared the £1,000,000 or so which they cost. But he did not think Her Majesty's Government meant to confine themselves to 7,000 men. It was said that the policy pursued had made little England a great country, and that it had been so important that Russia had turned back in alarm. But Lord Lawrence stated at the time of the Abyssinian War that India could not spare more than 12,000 troops. Then if 50,000 were required in Europe or elsewhere, they would have to raise 50,000 fresh troops in India to take their places. What would happen when the services of these Indian troops were no longer wanted in Europe? The moment they set foot again on the shores of India that country would become responsible for their support, and she could not disband or pension them without a serious inroad upon her finances. Thus by an exercise of the Prerogative, without deigning to consult those responsible for the finances of India, Her Majesty's Government might saddle India with serious financial burdens. The Indian Army henceforth was not merely to be an Army for the defence and security of India; but an Army ready at a moment's notice to serve as a Reserve for Imperial purposes. This being the case, would there not be a great temptation to maintain in India a larger Army than her own security required? In fact, reductions which had been formerly contemplated in the Indian Army were now rendered impossible. Therefore, he said it was absolutely necessary that some safeguards should be designed, besides those that already existed, in order to prevent India being treated as a mere military Reserve for Imperial purposes. Lord Northbrook had well said that the employment of Indian Troops in Europe placed Indian Charges in an entirely new position; because, Lord North-brook asked, what were they doing? At present, if India had English troops, she had to pay for the cost of recruiting and training; but if England wanted Indian troops, she did not pay a sixpence for the recruiting or training of those troops. Was this just treatment of India? He might be asked to state what he would propose to do under the circumstances which he had described. Well, he would rather reduce the military expenditure in India than run the risk of imposing additional taxation upon India. This should be the key of their policy— this was the policy of Lord Northbrook when he filled the office of Governor General of India; and he believed it could be done without reducing the Army, but by an alteration in the formation of the Army, which would cause reduction of expenditure. If, therefore, the Army could not be reduced in India without danger, unless additional taxation was imposed, he would rather that the Army should be reduced to the smallest number than that additional taxation should be imposed. The same remark applied to public works in India. He would rather that there were more public works going on in India than was the case at present, if there was a surplus that could be so employed; but he objected to their running the risk of incurring additional taxation by bor- rowing money to spend on public works, which experience told them might yield a very inadequate return with which to pay the interest even on the borrowed money. The position of India in regard to public works was, in fact, the position of an embarrassed landlord who could not carry out improvements which would not be directly productive. In the present condition of India, he thought it the height of imprudence to carry out any public works which involved borrowing, and leading to increased taxation. Everyone connected with the Government of India should take this lesson to heart—that hitherto she had been too extravagantly and too expensively governed. India had been governed as if she were the richest, instead of one of the poorest countries in the world. He did not mean that the public servants in India were too well paid; but he did mean to say that India could not bear the costly Administration which she now had; and it was a monstrous injustice that £22,000 should be expended upon a State barge; £155,000 in building a country house for a governor of a Presidency, and £20,000 in furnishing it; and that these sums should come out of the pockets of the poorest people, who had to pay an additional salt duty. These were facts which should be thought of by the people of this country. He believed they would never know how economically India could be governed until they endeavoured to see how far it could be governed through Native agency. Until three years ago, so strong was the prejudice against employing Native labour that no engine-drivers were Natives; but during the last three years 150 had been employed, and the result had been a saving of £1,500 a-year, as each Native driver received only one-tenth of what the Government or company was formerly obliged to pay. The consulting engineer of the Government admitted that the Native drivers worked longer hours than Europeans, gave less trouble, and altogether did their work more satisfactorily. These facts showed that it was possible to effect great economy if we could get rid of race prejudice, and employ Natives in positions for which they were qualified. Every day he lived, and every day he devoted attention to the subject, he became more deeply impressed with the conviction that if they went on with their present policy—increasing the taxation and adding to the Debt—there was only one inevitable result, and that was a financial embarrassment which would be a grave misfortune to India, and which would bring the greatest discredit upon our own country. No one felt more strongly than he did that, in attempting to govern the vast population of our Indian Dependency, we had assumed, perhaps, the greatest responsibility—call it, if they pleased, an Imperial responsibility—which had ever been assumed by any country. If that responsibility was adequately discharged great would be our advantage and great would be our honour; but if that responsibility was neglected, great would be our shame and lasting would be our humiliation. He appealed to the English Parliament and the English people to do all in their power to secure a juster, a wiser, and a more economical administration of the finances of our great Indian Dependency.

MR. DILLWYN

seconded the Amendment. He complained that this question should be brought on within a few days of the Prorogation of Parliament, and that comparatively few Members were present on this occasion. He was aware that a great Naval Review at Spithead might account for the absence of some hon. Gentlemen; but it was unfortunate that the Review and the Indian Budget should have been fixed for the same day. Not only, however, had the Review been fixed for the same day as the Indian Budget, but the Government had offered to place a vessel at the disposal of hon. Gentlemen who wished to witness the proceedings at Spithead, as if there was not very important Business to be attended to within the House itself. He hoped that in future years the question of Indian finance would be brought forward at an earlier stage. If we were to retain India, we should take better care of its government. From the able Statement of the Under Secretary of State, he inferred that the available Revenue of India was from £55,000,000 to £61,000,000 —say £58,000,000; while the hon. Gentleman the Member for Hackney (Mr. Fawcett) did not make it more than £37,000,000 or£38,000,000. He trusted that in the course of the debate it would be cleared up which was the correct figure.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "this House regards with apprehension the present position of Indian finance, and in view of the power claimed by the Crown to employ any number of Indian Troops in all parts of Her Majesty's Dominions, except the United Kingdom, is of opinion that there is no sufficient security against the Military expenditure of India being unduly increased,"—(Mr. Fawcett,) —instead thereof.

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

MR. J. G. HUBBARD

said, he was sure he expressed the general feeling of the House, when he congratulated his hon. Friend the Under Secretary for India (Mr. E. Stanhope) on the exceedingly interesting and able Statement he had made on the finances of India. It had this peculiar merit—it was simple, clear, and not at all diffuse, considering the large field over which he had to range. He must also offer his tribute to the hon. Member for Hackney (Mr. Fawcett) for his able handling of the subject, and the admirable colouring he threw on the picture he sketched of that great country. But he had rather, unintentionally, no doubt, misrepresented in effect the condition of the Revenue of India. He had stated the Revenue at £35,000,000, while the Under Secretary of State had put it at £55,000,000. In truth, the total Revenue was a matter of account; and the accounts were made up in a very unsatisfactory manner. According to accounts stated in a simplified form, the Revenue of India for 1876–7 was £35,700,000, and the Expenditure of the same year £36,700,000. That was the real result of the comparison. Then came what was properly distinguished as the Revenue and Expenditure for reproductive works. He hoped before they had another Indian Budget such a state of accounts would be produced as would simplify the whole aspect of Indian finance, so as no longer to lead the House into the awkward doubt whether the Revenue was £35,000,000 or £55,000,000. In regard to extraordinary Expenditure, he thought the observations of the hon. Member (Mr. Fawcett) perfectly well-founded. There was nothing more dangerous than making entries of extraordinary Expenditure without reference to their nature. Nothing ought to appear under the head of extraordinary Expenditure for productive work except that which had an immediate tendency to have productive results. He was much struck by the remark of the hon. Member, that in India taxation was so contrived as to reach the very lowliest classes, and this, too, when our own Chancellor of the Exchequer only a short time ago had relieved incomes of £150 a-year from payment of the Income Tax.

GENERAL SIR GEORGE BALFOUR

thanked the Under Secretary of State for the very satisfactory manner in which he had given an explanation of the finances of India, with the aid of the muddle into which the transactions had been thrown, by the unwise and confusing changes in the accounts of the present period. He had in former years called attention to the former state of the accounts and the alterations which had been introduced into the present set had increased the great difficulties which previously existed. He complained of the way in which the accounts were furnished, and said it was hardly possible to make them out. The right hon. Gentleman the Member for the City of London (Mr. J. G. Hubbard) very properly pointed out that it would have been very easy to show the results both of Revenue and Charges in a clear and simple form. He was compelled to try and make out for himself the actual net Revenue and Expenditure, and he found that in 1867–8 the whole net Revenue actually available was £35,856,932, and in 1874–5 it was £37,430,934. These figures represented the net results of income, after clearing away all the formal receipts which sprang out of administration—for instance, the Post Office, Mint, Telegraph, Justice, were all sources of receipts; but when the charges were lessened by the income, then the actual net receipts, or net charges, were shown. With such accounts as had been now laid before the House, it was quite impossible for Members to do justice to India; and, for his own part, he was most anxious to do justice to a country in which he had spent so many years of his life. He had nothing but kindly feeling towards Viscount Cranbrook and the Under Secretary of State; but if the hon. Member for Cambridge (Mr. Smollett) were present, he would have used an expression with regard to these new accounts which he himself would not like to use, and which ought not to be used except in very extreme cases. But now that they had the high authority of the right hon. Gentleman the Member for the City of London to the effect that the accounts could be presented in a clear and simple form, he was sure the Under Secretary of State would, on the next occasion, place the figures before the House in a way that Members could understand them. The Under Secretary of State had mentioned that there were two causes of the irregularities and changes in the accounts—one was the railways, and the other the public works. The public works of India were, no doubt, of great importance in respect to causing confusion in representing the transactions; but that evil was caused because we had, within the past few years, divided them into "ordinary" and "extraordinary." But when we added up the expenditure on both kinds of works, hon. Members would be astounded to hear that the total spent on these works 10 years ago was nearly the same as we spent now that we had divided them into "ordinary" and "extraordinary." In 1867–8, we spent on Indian public works of all kinds £6,575,089, of which the sum of £602,462 was for the first time designated extraordinary. In 1875–6, the expenditure on them was £7,393,137, and in 1876–7 the total outlay was £6,747,054, of which one-half nearly was for ordinary, and a little more than one-half for extraordinary, works. He defied anyone to find out now what the public work expenditure was. The accounts were so entirely changed that all the tables of prior years outlay were useless for contrast with the figures in the new accounts. The Under Secretary of State had said that the taxation in India on account of salt had not been increased. He was sorry to hear that statement from the hon. Gentleman; because, while the Government lowered the duty in Bengal, they sent it up in Madras and Bombay. Bengal, where the taxation was lowest, was favoured; while in Madras and Bombay, where taxation was heaviest, the people were made to suffer from an increase of the duty. There was no part of India more heavily taxed than the Madras Presidency, The land revenue there was infinitely heavier in rating than in Bengal, and it had increased since he was in Madras. Anyone who would examine the receipts in Madras from land would find the total collected to be far in excess of that of Bengal, notwithstanding that the Madras population was a little above the half of Bengal, and the area far below that of the favoured Presidency. The stamp duties, Excise, and other taxes, had also been largely increased. He asserted that the surplus Revenue of Madras, which went into the coffers of India, was upwards of £4,000,000. He, of course, excluded from his calculation Military charges, which ought to be spread over the whole of India. Three-quarters of a million, which was spent on troops for the Burmese territory, was charged on the Madras Presidency, as was also the sum required for troops in the Central Provinces of India. Yet Madras was now heavily taxed for salt, the increased impost upon which would throw an additional burden of £300,000 on that Presidency. This salt of Madras was the only article which nature had bestowed on Madras in a bountiful manner; but the English Government had laid hold of it to obtain an income of £1,500,000. Great injustice was inflicted on the people of Madras, who were not subject to a duty on salt before the year 1805. The Mahommedan Government from whom we took the lands of Madras had dealt far more leniently to the people, in regard to leaving this necessary untaxed, than England had done. There was no part of India so heavily taxed on its land as Madras was, having regard to the extent of the area under cultivation; and, in comparison with that Presidency, the Punjab was not much more than half as much taxed, although it had about an equal area under cultivation. The lamentable thing was that moderation in taxing the people would prove far more lucrative. That was proved by the bound which income made when the transit dues were abolished; and again when the late Lord Harris, when Governor of Madras, made important reforms in respect of the land revenue, which he greatly reduced; and it was to be regretted that the good work which that noble Lord did had hardly ever been recognized. It was much to be desired that men in the present day would follow so excellent an example. The accounts showed that the Madras land revenue at once sprang up, and would even now rise if more liberality was shown. The fact was that Madras and her proceedings were ignored by the Central Government and by the Home authorities. The Indian Government and the India Office were overrun by the Bengal officials, and he had never heard of anything but prejudice and injustice towards Madras on the part of those officials. The curse of India was that hatred against the other Presidencies shown by the civilians of Bengal. Turning to the subject of the licence tax, the hon. and gallant Member strongly condemned that impost. Formerly, under it, the smith who used the hammer, the weaver, and even the dancing girls, were taxed, and the greatest wrong and oppression were committed. It was afterwards abolished, and with that abolition came in larger receipts from other sources; but now they had it introduced again, and unhappily, as usual, the poor and needy were the classes on whom the salt and licence taxes fell. He wished to protect the poor; because he felt that if the poor turned against us in India, our rule there was impossible. A small Army could march through the whole of India if we had a contented people. It was the want of food and of supplies, as well as of that security for our communications, and that co-operation which a contented people could give us, that he feared more than anything else in India. Much had been said about what should be the strength of the Army used for the occupation of that country. For himself, he could not state what its strength should be; but he was convinced they would never be able to maintain in India a sufficient Force to put down a discontented people. Lord Canning had told him they should maintain as large and as good an Army as they could for £12,500,000; and they formerly kept at a smaller expenditure a much larger Army than they did now. He said distinctly that their present Military expenditure was capable of being reduced. The hon. Member for Hackney (Mr. Fawcett) had been right in saying that they ought to look carefully at the military charges in India; but, at the same time, there were others that equally demanded attention. It was a fact which the late Finance Minister of India (Sir John. Strachey) entirely ignored. It suited his purpose to raise an outcry for diminution of expenditure, but he omitted to initiate it. The military charges, however, had fallen since the year 1867–8; whereas the cost of civil administration, which in 1868 was £10,372,000, had increased in 1875–6 to £12,577,000, and this notwithstanding the statement of Sir John Strachey that these charges had been reduced by £1,500,000. He trusted that there would be a thorough investigation into both the charges, civil as well as military, and a clear and explicit statement shown of the progress of expenditure since Lord Canning's Administration. No doubt, Military charges had largely increased; but the civil expenses had augmented in a higher ratio. Next he would remark on the very rapid manner in which the Debt had increased of late, as much as £32,000,000, or very nearly that sum, having been added in the last five or six years. It was impossible for any nation to go on borrowing at that rate without getting into serious difficulties. There was, however, some difficulty in understanding the Debt accounts, owing to the changes that had recently been made in their form, and which had made them, in some cases, more or less deceptive. It was worthy of note to know that within the past 35 years great changes had taken place in the mode of accounting. It was thereby rendered impossible for anyone not in possession of the secrets of office to connect the transactions for a continuing period. It was still more remarkable that these changes in the form of entering the figures were made at periods when the finances of India were getting into disorder. The new form of accounting and the new disorder had now again occurred. It was to be hoped that, whatever happened, they would have clearer accounts for the future, and not run blindfold into financial difficulties, than which none other could be more dangerous to our safety.

MR. MAC IVER

regarded the speech of the hon. Member for Hackney (Mr. Fawcett) as a mischievous one, and distorted by Party feeling. It was unworthy of his position as an Indian reformer. In his opinion, there was no ground whatever for the blame which the hon. Member had cast upon the Government as regarded the period of the Session at which the Indian Budget was brought forward. It was true that the House was thin; but that was not their fault. Why were not the prominent Members of the Opposition in their places? At the present moment the front Opposition Bench was, and had been nearly all the evening, wholly unoccupied. That the Indian Budget should be brought forward in a thin House was at all times to be regretted; but it was particularly so on the present occasion, because he did not remember an Indian Budget ever being expounded more clearly than it had been that night. The hon. Member for Hackney seemed to him to have used arguments of a rather clap-trap character, particularly in reference to the taxation of incomes in India. Undoubtedly the licence tax cut too low, but yet the value of money was so different that matters were not really so bad as described. Four shillings a-week, no doubt, appeared to English eyes a ridiculously small income; but in Bombay such an income enabled a native to live in comparatively easy circumstances. He fully concurred in the view which the hon. Member took in condemning exemptions from the licence tax, which was the only weak point in the statement of the Under Secretary of State. The people did not object to that tax. They objected to the exemptions, and could not see why the tax should fall exclusively upon the mercantile community. There was no doubt that at present India was passing through a crisis of depression which affected the mercantile classes; but everybody acquainted with that country was aware that that depression was of a temporary character. He endorsed the remarks of the Under Secretary of State as to the great benefits which railway communication had already conferred on India.

MR. MUNTZ

thought that the speech of his hon. Friend the Member for Hackney (Mr. Fawcett) was one of the ablest to which he had ever listened. There was one thing which had always struck him very forcibly in connection with these debates, and that was that they were all alike. The Indian Financial Statement was made a few days before the close of the Session in a very thin House, and they were invariably told that India was in a flourishing condition; that the public works would be reproductive; and that in the long run all would be brought into good order. During all these years, however, the public Debt and the taxation had gone on increasing; and, at the present moment, the recent Return showed the internal liabilities to be £90,808,000, in addition to the Home Debt, the total amount being about£l54,000,000; while in addition we were just about to make a new Loan of £10,000,000. He agreed that in many respects railways would be of vast advantage in bringing up food in cases of famine; but new public works ought not to be constructed unless there was a reasonable chance of their being reproductive. They had the high authority of Lord Napier of Magdala for saying that it would not be safe to reduce the strength of the Army in India. He (Mr. Muntz) concurred in that opinion; but he had yet to learn why we should give higher pay in India than we gave anywhere else. It was all very well to say that the Indian people were loyal and contented; but no nation could tolerate excessive taxation. A Debt could only be got rid of by increasing taxation or by lowering Expenditure. We had had famines in India, but no wars worth speaking of since we took over the Company's estate, if he might call it so. Yet the Expenditure and also the taxation had nearly doubled. The people ought to feel that the taxation was for their benefit; but as it was levied on the poorer classes, it was not wonderful that they should doubt whether the Government of India was altogether to their advantage. They had forgotten the tyranny of their old Sovereigns; they had forgotten the Mussulman domination; they had forgotten the paltry tyranny of the Rajahs; and they thought the present Government was not so advantageous to them as it might be. They came there to-night in very small numbers—he believed only nine Members were present at Prayers; and at almost any moment it would have been easy to count out the House; yet the subject they had to discuss was a most important one—the Budget of India amounting to some £50,000,000. Was it surprising if discontent existed? Some people talked of danger to India; yet that was the moment when they attacked the Vernacular Press. That was like fastening down the safety valve, and might have led to very serious consequences. They were told of danger to India from Russia; he had no apprehension of external danger to India. The collapse of India, if it ever occurred, would be caused by internal dangers. The people, on the whole, were loyal, but they must be well-governed. If we failed to govern them well, we should lose the only title by which we held our Empire—that the people were more happy than they would be under any other form of government.

MR. WHITWELL

was of opinion, that if the cry of "India in danger" were to be raised, the feeling of Englishmen would be aroused, and nearly every hon. Member would rush to his place; but the exceptional circumstances of that day had no doubt drawn away from that House, prompted probably by a feeling of loyalty, the greater majority of hon. Members. He could not admit that the speech of his hon. Friend the Member for Hackney (Mr. Fawcett) had been, as stated by the hon. Member for Birkenhead (Mr. Mac Iver), a dangerous speech. On the contrary, it was likely to be productive of great good. They had come to a time when it was necessary for Members to speak out their minds. India spent more than she received; hence the difficulty of her position. He was glad, therefore, to hear the Under Secretary of State declare that an equilibrium must be established, and he should not be satisfied till a surplus of £500,000 had been obtained. The hon. Gentleman had shown his usual zeal and ability in the office he had so recently undertaken; and he hoped his Administration would be successful in diminishing expenditure and avoiding increased taxation in India. He (Mr. Whitwell) believed that during the past Session the wrong policy had been adopted, and that it was a mistake to incur such a large expenditure on the military power of India.

THE CHANCELLOR OF THE EXCHEQUER

I do not wish to enter into the questions of Indian Expenditure or Revenue; but I think it necessary, after what has fallen from several hon. Members, to say a word with regard to the circumstances of the discussion of the Indian Budget to-day. It seems to me that if some of the statements made by hon. Members go forth unchallenged it would imply that there has been some lack of interest on Indian financial questions, not only on the part of hon. Members of the House not present to-day, but on the part of the Government in fixing this day for the discussion. In the first place, I would say that this sort of complaint, that the Indian Budget attracts but a small House, is by no means a new one, and it has been made year after year for the last 10 or 15 years, as I can personally attest; so that whenever you fix the date, whether there is a Naval Review or not, it is extremely improbable that there would be a large attendance of hon. Members in the House. However much that may be lamented, I am not at all sure that a large attendance of hon. Members on these nights is necessarily to be desired; though, of course, anyone would always be glad if hon. Members were present when all-important questions are discussed. The discussion of the Indian Budget is always conducted by those who have paid attention to and understand the intricate questions it involves, and is generally, as I am sure it has been to-night, of a very useful character. I do not know that the speech of the hon. Member for Hackney would have been more or less influential if there had been a somewhat larger attendance of hon. Members; but it ought not go forth to the world that there is any indifference at the present time to the condition of the Indian Empire, because what has happened to-night has often happened, even when the Budget has been brought forward at an earlier period by some weeks. The truth is, that upon these occasions, we know quite well that there is nothing to be substantially decided. It is not like the question of the English Budget, when we have to decide whether a particular policy shall or shall not be accepted. But it is an occasion when explanations are given and matters discussed which have their influence upon the public and the Government, and which are extremely useful in India itself. I do not believe that there is an indifference to Indian subjects in this House. No one can deny that England has very high and important interests in India, and upon questions such as these there is some cause for political danger. I think there is the keenest anxiety on the part of the country and the Government to come forward and say and do that which will tend to the security of our Indian Em- pire. Undoubtedly, the real and important matter is the internal administration of that Empire, and the proper administration of its finances. The hon. Member for Hackney, in the speeches he has delivered on previous occasions— and never more markedly than in his speech to-night—has done good service in calling attention to matters which are apt to be put aside as dry and uninteresting, but which really lay at the bottom of our prosperity. I do not wish to enter into any controversy with him, for my hon. Friend the Under Secretary of State for India will answer any questions. But we ought to keep in mind the fact, that if England administers a distant Empire like India, there is no doubt that the duty of England to that Dependency is to do what she can to civilize and develope its resources and administer the country's affairs well. The more attention is directed to Indian affairs in this country, the greater pressure will be brought upon the Government of India to do everything that is possible in the interests of the people. There is, however, an unfortunate circumstance, and that is, that the Government must be expensive. The Government of such a country as Great Britain must be much more expensive in character than a semi-civilized Power. We are called upon to do great things—to develope the resources of India; to improve its communication and its irrigation works; to stave off famine; to improve education; and do many other excellent things, and at the same time to keep a strict eye on its financial system. It is difficult to reconcile these objects; but I believe the Government of India, though it may have made mistakes here and there, has, on the whole, sedulously set itself to try as far as it could to develope the resources of India, and to maintain a fairly economical Administration. It is well to be warned against engaging too largely in public works. I have always had a great jealousy of that; and to a certain extent, when I was connected with the India Office, I took a rather re-actionary course, not liking to spend money without seeing how it was to be made productive. But the difficulties to be encountered are enormous; and though it is well that we should be warned, it is not right that if these difficulties lead us into complications we should be accused of want of interest in India if we do not exactly hit on the best way of solving the problem.

MR. JACOB BRIGHT

said, he did not think the Chancellor of the Exchequer had been successful in showing that there was nothing objectionable in putting the Indian Budget down in the last week of the Session. No doubt, it was the common practice to take the Indian Budget very late in the Session. He remembered that during the last Government the same complaint was made. He thought this complaint had some solid grounds, for everyone must feel that such a course was productive of evil, and evil only. It would not surprise him in the least if the Vernacular Press of India were to bring the charge against the Government of doing all they could to stifle discussion as to Indian affairs. The course they had taken in regard to the Indian Budget would give ground for such a charge. "What was wanted, as he thought the Chancellor of the Exchequer would admit, was a sound and intelligent public opinion in the country and in the House upon Indian affairs, so that the Government might be strengthened in making the great changes which no one could deny were necessary in Indian administration. He thought the Government could do a great deal to increase the interest in the Indian Budget. They had to deal with a large Revenue and a large Expenditure, not far short of the amount which formed the English Budget 30 years ago. The future of India must depend upon the way they dealt with the finances of India more than upon any other thing. He looked upon India as a country with a heavy taxation, and an amount of poverty which was appalling to reflect on. It was a country with a lavish expenditure, and with finances of such a character that an unlooked-for accident might put them into a state of embarrassment. These conditions had been enough to ruin Empires, and if such conditions existed with regard to India, nobody could doubt that that Empire might be threatened with excessive danger. It appeared to him that the spending Departments overpowered the Government. He did not suppose that since 1874 the Expenditure of India had increased in the same ratio as that of England, for since that period its increase had been altogether unlooked-for in England. But previous to 1874, for a number of years, the Expenditure of India had been increasing in a larger ratio than the Expenditure of England. That, if true, was sufficient to create uneasiness. They had a country with a Revenue which grew very slowly. They had famine of the most horrible character. It had been admitted by the Government that in Southern India something like 1,500,000 persons had died from the effects of famine in one year. What was the condition of those left alive? It appeared to him that the Government of India might learn more from the way the finances were administered in this country than appeared to be the case. They had had during the last 10 years two remarkable financial policies before the world, one being a direct contrast to the other. In the year 1868 they had a Government which undertook to check expenditure everywhere, and which in some Departments greatly diminished expenditure. Revenue grew at its ordinary pace, and the Government was enabled to remit taxation, and to do good to the whole country. At the end of its career it left £5,000,000, by which they got rid of the tax on one of the chief articles of food. In 1874, the new policy was inaugurated. They had increased expenditure, no remission of taxation, and no relief of commerce, and they were considerably in debt. It appeared to him that the Indian Government had chosen to follow the last and the worst of these examples. It was for the Indian Government to do what the right hon. Gentleman the Member for Greenwich (Mr. Gladstone) had done, and check and reduce taxation as the Revenue increased. He admitted that the policy recommended by the hon. Member for Hackney (Mr. Fawcett) required a Government of high moral qualities; it required patience and courage. They must be willing to sustain unscrupulous attacks. It was not altogether an attractive policy. It would not collect unreflecting crowds in the City of London, nor would it command the adulation of a servile Press. But it would tend to make a great Empire more secure, and it would relieve human suffering. It appeared to him that the Government had, during the last two years, spent a large part of its time in fostering the delusion that India was in danger from Russia. It was the opinion of many who had spoken that night that there were greater dangers to India than any which could come from the Government of St. Petersburgh. The Government that should do anything in even a moderate degree to remove the causes of famine, to control expenditure, and wisely to direct the finances of India, would do more for the security of India than anything that could come from taking an unprofitable Island in the Mediterranean or entering into an Anglo-Turkish Convention. It was owing to the mismanagement of the finances of India that we had in that country import duties which pressed on the manufacturing industry of England when it was suffering great depression. The Under Secretary of State for India had referred to the fact that the Government had reduced the duties on coarse cotton yarns. But the Government had in this surrendered nothing, for they got nothing in the way of Revenue out of these articles. Nor had they given anything to the English manufacturing districts which had already lost the trade in these articles. What the people of Lancashire wanted was to have the duties removed from goods and yarn in which there was an extensive trade between England and India. The hon. Member for Hackney was persuaded that these duties would not be reduced without the reduction of expenditure. But if that was so, then if the Lancashire Members on the other side of the House never voted for anything that would lead to a reduction of expenditure, it seemed to him that they were taking an irrational course in the matter. The Government had given fair, but utterly deceptive, promises of reducing the duties on cotton goods. For if the Government did not take the slightest care to reduce the Indian Expenditure, these promises could only be regarded as illusory; and the next time a Lancashire deputation waited on the Government with respect to the reduction of the cotton duties, their first inquiry ought to be—When was the Expenditure to be reduced? He did not think that any Government could maintain duties contrary to the principles of Free Trade, and which depressed the manufactures of Lancashire, Yorkshire, and Cheshire, if the finances of India were in a sound condition.

MR. CHARLEY

thought it was ungracious on the part of the hon. Member who had just sat down to address the Government in the manner in which he had done, when they had made a concession, which was certainly a step in the right direction—namely, the abolition of the duties upon imports to India of coarse cotton yarns and coarse cotton goods to the amount of £25,681, which must have a good effect; and he hoped they would go further, and have the duties taken off the finer goods, which were at present over-weighted. On behalf of the constituency which he represented he thanked the Government for what they had done.

SIR GEORGE BOWYER

had heard it said that that House took little interest in the affairs of India; but he must deny the accuracy of that statement. The people of England and the Members of that House took a deep and growing interest in Indian affairs; and with regard to the Indian Financial Statement, no doubt, if they voted the particular items, they would find that there would be just as animated discussions on the Indian Budget as there were on the items of the Budget for England. People in talking of India, spoke of it, not as they might speak of Europe, but as they might speak of Middlesex. They forgot its vastness. It was impossible for more than a few Members of the House to appreciate the details of Indian administration; and it was, therefore, natural that there should appear to be a want of interest in them. Indeed, it would be worse for India if the House attempted to deal with them; but he protested against the conclusion that there was any lack of interest in the affairs of India when the House felt that by attending to them it could do anything to promote the welfare of that Dependency. On the whole, the government of India by a Secretary of State was satisfactory.

MR. HAYTER

referred to the great increase in military expenditure. In India the charge for the Army in 1876–7 was £15,792,000, and for 1878–9 it amounted to £17,000,000—an increase in three years of £1,208,000. For the Home Army the charge which was in 1873–4 £13,203,000, was for 1878–9 £14,963,000—an increase in three years of £1,760,000, making a total increase for both Forces of £2,968,000. He could not help thinking that the military expenditure of India was very large in proportion to its total expenditure; and that the proportions of European to Native soldiers might be reduced, in consequence of the growth of railways, below the proportions laid down immediately after the Mutiny. The Under Secretary for India had stated that the whole of the railway system of that country had grown up since the year 1853; in any future struggle, therefore, the troops would not be conveyed, as in Sir Henry Havelock's advance upon Cawnpore by steamer, or compelled to march, but would be brought by railway to the desired point with much more speed and facility. He would venture to allude also to the inordinate time taken in settling the claims between the Indian and the Home Governments; for the House had only just received an Estimate, or statement of outlay, amounting to £20,000, in connection with the Abyssinian War, which occurred 10 years ago. The Indian authorities must be responsible for this delay, for it was inconceivable that it could rest with officials in England. Hitherto India had borne the cost of the soldiers that were sent out from this country, as well as the cost of the Native Army; and although it might be fair to use Indian troops in the Mauritius or Ceylon, or anywhere within reasonable distance, the distribution of the charges between this country and India ought to be revised if they were going to use Indian troops, as they had lately done, by bringing them to a Mediterranean garrison.

SIR GEORGE CAMPBELL

desired to concur in the compliments that had been paid to the Under Secretary of State for India for the clearness of his Statement, and also for the general fairness of the views he had expressed. Although, no doubt, that Statement was somewhat coloured, both sides of the House must have been extremely gratified to hear it. It was with extreme satisfaction that he had learned that the Government had been induced to abandon the proposed increase of the salt duties. With regard to the Inland Customs salt line, while unable to take the view that it was equally necessary to do away with it in every part of India, he should be glad if this reform, which was not of a financial, but of an administrative character, were carried out. He regretted, however, that such a man as Lord Northbrook should have committed himself to the view that there should be an increase of the salt tax; and was inclined to think that in this matter Lord Northbrook had somewhat fallen under the influence of the upper classes in Bengal, who had been continually raising the cry that if fresh taxation was to be imposed, it should be put on salt, and who did not suffer from the tax themselves, as it did not fall on the rich, but on the poor. Those people of Bengal were an extremely limited class, and their view was a selfish one. They were advocating their own interests, and not the interests of the people of India at large. He was also inclined to think that there was considerable truth in the statements which had been made as to the injustice done to the people of Madras and Bombay in the matter of the incidence of the salt tax, which pressed upon the poor people of those Provinces heavily as compared with the rich people of Bengal, who were the most lightly taxed people in the world. The total taxation had not been increased, nor was it proposed to make any increase, as far as he knew, upon the present expenditure and consequent impost. If we exercised a despotic control, and could substitute for our present civilizing system of government one of a rough-and-ready character, we might, by cutting down the salaries of our officers, and by abolishing our civilizing agencies, materially reduce our expenditure; but as that was a course which Parliament would not sanction, the only way to place the finances of the country upon a satisfactory footing was by raising a larger Revenue. He was glad, however, the Under Secretary of State had not taken that extremely sanguine view which others had done, when we used to be told that if this, that, or the other thing had been excluded, we should have had a surplus. The result, however, was, that we were continually adding to the Debt. He did not see, therefore, that there was any opportunity of reducing taxation, or of abstaining from additional imposts. With respect to public works, some of them had been removed from the ordinary to the extraordinary class, and hence there was a saving; but it was not a real saving, but only an apparent and fallacious one. Here he had to complain of Government having neglected to create a Sinking Fund to pay for the execution of those works. He agreed with the Under Secretary of State that it was necessary to make permanent provision for meeting famines; but regretted that a Special Famine Fund had not been created, and that the Fund had been mixed up with the ordinary public Revenue. It was quite right that there should be an Inquiry as to how famines should be met; but he was not satisfied with the measures taken by the Government for that end. After the Orissa Famine, a Commission, of which he was the head, was appointed to inquire into the subject. They inquired and submitted certain recommendations, which, however, were not acted upon. Subsequently, a Famine occurred in Bengal, with which it became his duty to deal. He visited the scene of the Famine, and laid down the principles on which action was to be taken. They were accepted by the Government of India, and were carried into operation. It was true, before he left India, he expressed an opinion that the Famine might have been met with less expenditure; but whatever error was committed was an error on the side of mercy and the saving of life. The result was that life was saved, and Bengal was now as prosperous as ever it had been. The recent Famine in Madras fell into the hands of those who thought that the principles followed in Bengal were wrong; and, instead of feeding the people at their homes, they required them to go long distances to public works, not only in the beginning, but the end of the Famine. The consequence was, that a great addition had been made to the Debt, and there had been an enormous mortality. He was surprised to hear the figures of the mortality given by the Under Secretary of State, for he thought it impossible to ascertain them. A large part of the duty of the Commission would be to decide which principle of dealing with famines was right and which wrong. There was an universal expression of opinion in the Indian Press that the Commission of Inquiry was audaciously packed; and, with the exception of Mr. Caird, who had not yet gone out, he agreed that that was the case. And not only was the Commission not fairly constituted, but the commencement of their proceedings had been most extraordinary. One would have thought that the first thing would have been to proceed to ascertain the facts in the Famine districts: but, instead of that, the Commission had gone to Simla to enjoy for six months the luxuries of that Indian Capua. As to the Indian Army, he did not think its numbers could be safely diminished; and though some saving might be effected by reducing the pay of the officers, much could not be done in that way. He thought we should look to the North of India as a recruiting ground to supply the deficiency of our Army at home. There was no doubt that the expense of filling our European Army was increasing day by day. Trade was abnormally and extraordinarily bad, and people were driven into the Army. He did not know whether trade would revive in this country; but if ever there should be a great revival, the number of hands in this country was not so great that we could supply that trade and the Army, and there would be extreme difficulty in supplying the wants of our Army. We might look then to the North of India as a recruiting ground. If we found our way to Indian troops relieving our overworked troops in other parts of the world—if Indian troops were employed permanently by this country, no doubt that employment would be charged as our European troops were to England. Some people apprehended that there would be a collision with the Russians on our North-Western frontier. He was very much afraid that there were symptoms of difficulties of that kind which might lead to considerable disturbance and an increase of expense in India. He feared there might be something in the reports which had come from Russia and elsewhere, that Russia was pressing forward in Central Asia; and though this seemed an unlikely time for Russia to make such a movement—for she could not but be more or less exhausted—it would appear that since England had succeeded in checking Russia in one direction, Russia was inclined to worry us in another. It was not only from Russia and Central Asia that those reports were received; but within the last few days, apparently circumstantial accounts had come from India itself. We had the announcement made that not only was a Russian Embassy being sent to Cabul, but that a Lieutenant General of high military distinction, with a large cavalcade, was also going thither as representing England. He hoped that the Under Secretary of State for India would be able to tell the House whether there was really any truth in these reports. His own opinion was that a line not of absolute demarcation, but of political influence, should be drawn between Russia and England, and that it should be an understanding between them such as was so frequently come to by the masters of hounds—that one should hunt in one county and the other hunt in another. He understood the Russian Government were perfectly willing to have made an arrangement that the Oxus should be established as the boundary of Russia, beyond which she would not attempt to go. He regretted that this arrangement had not been adopted; and thought that instead of our going to the Ameer, we should have waited until he asked for our assistance. The same observation applied to the Protectorate of Asia Minor. He approved of the Salisbury-Schouvaloff arrangement, by which the political protection of Asia Minor was to be transferred from Russia to this country; but he thought, as with Afghanistan, that it would have been much better if we had waited until the Sultan applied to us for aid instead of going to him. Believing that it was totally unnecessary that we should bind ourselves to the defence of Turkey in Asia, still on general grounds, and for the sake of humanity, it was most desirable that we should do all in our power to make Turkey in Asia a strong and independent Power. He was very desirous, having had much to do with Mohammedans, that fair play should be given them to civilize themselves and render themselves independent. Returning to the question of Indian finance and taxation, he thought they should of all things avoid all expenditure and taxation that could possibly be avoided; but, on the other hand, they should not go to the other extreme of excessive timidity and fear to raise that amount of taxation which might be necessary for the government of the people. He believed that, on the whole, the people of India were lightly taxed. He believed the taxation lately imposed by the Government of India was really necessary. His only regret was that it had been imposed in an unfair way, the burden being placed on the poor in- stead of the rich, who were the lightest taxed people in the world. Lord Mayo had been unfairly quoted as being wholly on the side of non-taxation. Lord Mayo was one of the justest and soundest Governors General that India had ever had. It was his duty to impose fresh taxation, and he did not shrink from the task; but he imposed it fairly. He was a man who could see both sides of the question; and when afterwards it became a question of imposing other fresh taxes or of reducing expenditure, he did use the words quoted—that an addition to the taxation of India was a great political evil and danger. With regard to the mode of raising money by loan, he thought that the present system of tender in European fashion had not been successful. It led, in fact, to excessive jobbery. He ventured to urge upon the Government whether it would not be better to raise these loans by appealing to the people at large, as was done in France, where there was an immense number of small funded holders, and this operation would give them an interest in the stability of the Government. With regard to this peculiar Loan raised in India in rupees, and paid in England in gold, he did not think the explanation of the Under Secretary of State satisfactory. It was a mere dodge, an evasion of the promise under which it was understood that no fresh loan should be raised. Practically, he should have preferred a more simple, direct, and honest method.

MR. E. STANHOPE

, in reply, thanked the House for the very kind manner in which his statement had been received. He would especially thank the hon. Member who had just sat down for the support he had given to some portions of it, which was especially valuable from his great experience. He was rather surprised at some of the statements of the hon. Member for Hackney, and he hoped his account of matters would not be accepted by the House. In the first place, he did not seem to make any allowance for the actual fact that they had an avowed surplus of £2,000,000, upon which the only substantial criticism had been that of Lord Northbrook, and he represented that they had already a surplus of equal amount. But the hon. Member for Hackney said it was not a real surplus. It was produced only by adding certain items of account. But they were added to the expenditure side also. The real fact was that some 20 years ago the Government of India used to present the net Revenue and the net Expenditure; but it was said the accounts should approximate to the form adopted in England, and the result was, the Indian accounts were now made out to approximate to the form of accounts in England. And when the hon. Member for Swansea asked what was the available Revenue of India, he would ask, in reply, what was the available Revenue of England? The fact was, a very little study of the accounts in either case would enable anyone to find what the available Revenue was. The most important part of the additions to the accounts was that relating to the productive public works, and that, he thought, would be a substantial advantage. The hon. Member for Hackney had discussed the question whether it was advisable to execute public works in India with borrowed money, and he had said that it was decidedly not desirable to do so, and that if such works were undertaken at all, they ought to be executed out of a surplus of Revenue. But that was a matter which he would not discuss in anticipation of the Report of the Committee specially appointed to consider it. But he quite agreed with some of the remarks made by the hon. Gentleman as to the inconvenience of the term "extraordinary public works." A more convenient term had now been adopted, and it was the intention of the Government of India, barring some particular cases to which he had previously referred, to devote the money they applied to such purposes only to works which would really be reproductive; so that when they borrowed money for reproductive works, those works would, in all likelihood, yield such a return as would pay the interest upon the sum borrowed. If that were carried out, the result would not be an unsatisfactory one to the finances of India. A good deal had been said about the increase of the Debt. He agreed with the hon. and gallant Member opposite (General Sir George Balfour), that it was desirable to give the particulars of that Debt with every possible clearness of detail. But it was a little bit hard that one of the Returns which the hon. and gallant Member had criticized that night was one which was produced in consequence of a clause that had been put into the Act of last year at his own instance. He would now give the House one statement about the Indian Debt. About the time of the Mutiny the Debt was £52,000,000. The increase in the next few years, attributable almost entirely to charges arising out of that event, was £46,000,000, and from that time up to the end of last year the increase was only £36,000,000, and £30,000,000 of that had been invested in productive public works, from which they might expect, before long, to have some considerable return. Then the hon. Member for Hackney complained that, besides imposing additional general taxation, they were increasing the burdens of the people by local taxation; and he alluded to the scheme of decentralization as likely to have that effect. Now, the fact was that the scheme of decentralization had produced to the Imperial Revenue, or would in the present year produce, something like £700,000 more than they had before, without any addition whatever to local taxation. He now came to the Military charges. If the hon. and gallant Member opposite (Mr. Hayter) looked at the accounts of military receipts, he would find that the annual net charge for the Army was not much more than £15,000,000. Moreover, as he had already explained in his opening statement, in the present year the Military Expenditure was reduced by £630,000. That was a very substantial result, and one which ought in some degree to disarm criticism. He did not think that anyone, except, perhaps, the hon. Member for Hackney, had suggested in what way the Expenditure for the Army could be much reduced. But the hon. Member had adverted to the policy they had adopted in bringing Indian troops to Europe, and to the question whether the Imperial Exchequer should not contribute to a greater extent than it now did to the expenses of the Indian Army. Well, while that policy was pursued upon a small scale only, the answer was easy. Undoubtedly, the step that had been taken had effected a considerable saving to the Indian Exchequer, and as to saying that what they had done obliged the Indian Government to keep up a larger force than they otherwise would do, that was not at all the fact. It had been admitted over and over again, and by no one more than by the right hon. Member for Greenwich, that in India they must always have a surplus Force of moderate extent available for general service. At the same time, if they were to adopt the system of employing Native troops on a large scale, it might possibly become necessary to give some consideration to the question as to how far the Imperial Exchequer ought to contribute. But when the hon. Gentleman said they required more safeguards, he would like to ask him what safeguards he meant, for the hon. Gentleman had suggested none. Of course, their main object ought to be, and it would be, to reduce expenditure, and, if possible, to reduce the Military charges; and he thought the House had as full a guarantee for that as it could have in the fact that his noble Friend who now presided over the India Office was intimately acquainted with all the details of military organization, and when he came to apply his mind to the subject, he would be able to judge for himself how far that reduction could be wisely carried. But if they could not reduce expenditure, they must endeavour to put the people in a better position for enduring taxation. If they could devise a judicious system of public works which would develop the resources of the country, and only executed such works as were likely to prove remunerative, they would be placing the population of India in a better condition to bear their taxation. The hon. Gentleman who had just sat down had mentioned the subject of the salt duty, and had asked for further information as to the effect of the arrangement in regard to the Native States. Now, speaking on the authority of a telegram which had been received, he could say that the Government of India were firmly persuaded that the arrangement which had been made on that matter was a just and fair one, and one which would entail no hardship on the people of the Native States. With respect to the estimate of the Famine mortality, he could only give the figures he had mentioned in his previous statement, which had been prepared in the India Office, and for which they were solely responsible. He would not longer occupy the attention of the House.

MR. HAYTER

wished to explain that Sir John Strachey was his authority for the alleged increase in the expense of the Indian Army.

Question put.

The House divided:—Ayes 59; Noes 20: Majority 39.—(Div. List, No. 277.)

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

EAST INDIA REVENUE ACCOUNTS—considered in Committee.

(In the Committee.)

Resolved, That it appears by the Accounts laid before this House that the Ordinary Revenue of India for the year ending the 31st day of March 1877 was £50,399,411; the Revenue from Productive Public Works, including the Net Traffic Receipts from Guaranteed Companies, was £5,596,374, making the total Revenue of India for that year £55,995,785; that the Ordinary Expenditure in India and in England, including Charges for the Collection of the Revenue, for Ordinary Public Works, and for Interest on Debt exclusive of that for Productive Public Works,was£51,430,673; the Expenditure on Productive Public Works (Working Expenses and Interest), including the payments to Guaranteed Companies for Interest and Surplus Profits, was £6,747,890, making a total Charge for that year of £58,178,563; that there was an excess of Expenditure over Income in that year amounting to £2,182,778; and that the Capital Expenditure on Productive Public Works in the same year was £3,809,284.

Resolution to be reported To-morrow.