HC Deb 22 August 1881 vol 265 cc628-98

Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."


No one, I am sure, Sir, can regret more than I do that I am under the necessity of making a Statement with regard to the Finances of India at so late a period of the Session, when it will be quite impossible for it to receive so much attention as the subject deserves. The House is aware that, in consequence of the exigencies of the present Session, more exciting topics, although, perhaps, not more interesting, have also had to be postponed to a very late period; and I can assure the House that it is only in consequence of the exceptional circumstances of the present Session, and not in any degree of any desire on my part, that the Statement has been postponed to so unseasonable a moment. Sir, the lateness of the period at which I speak also warns me that I ought to make my Statement as brief as I can. It is, I am afraid, impossible to make my Statement very short, and all I can do is to endeavour to waste no time of the House by any preliminary observations, and to proceed as rapidly as I can to lay the facts and statements before the House. The Statement deals, as usual, with the Accounts and Estimates of three years. In the first place, there are the closed Accounts of 1879–80, which are now no longer a matter of estimate or uncertainty. Then there is the Regular or Revised Estimate, which was framed at the end of the financial year just closed for the year 1880–1; then there is the Budget Estimate for the year 1881–2.

As to the year 1879–80, in the Budget the estimated Revenue was £64,562,000, and the estimated Expenditure £65,917,000, showing a deficit of £1,355,000. This Budget was last year converted into a Regular Estimate, which showed a result of £67,615,205 Revenue, and £67,285,690 Expenditure, or a surplus of £329,515; and in the spring of this year, when this Regular Estimate was converted into a stated account, the result was—Revenue, £68,484,666; Expenditure,£69,667,615; showing a deficit of £1,182,949. Thus the Revenue increased by £3,922,000 over the Budget Estimate presented in 1879, and by £869,000 over the Regular Estimate formed in the spring of last year. But, on the other hand, the Expenditure increased by £3,750,000 over the Budget Estimate, and by £2,382,000 over the Regular Estimate. The general result is that the Regular Estimate showed a net improvement of £1,685,000 over the Budget Estimate; but that improvement, as shown by the Accounts, was converted into a more unfavourable result by £1,513,000 than the Regular Estimate, although the net result was £172,000 better than when the Budget Estimate of 1879 was formed. I stated last year that Opium brought £ 1,900,000 in excess of the Estimate formed when the Budget was framed, and that there was an additional receipt of £1,000,000 under the head of Productive Public Works; while on the side of the Expenditure there was a saving of £500,000 upon Ordinary Public Works. I stated, at the same time, that there was an estimated increase of £2,532,000 on the charge for War and Frontier Railways. As a matter of comparison between the Accounts and the Regular Estimate, there is nothing remarkable on which I need detain the House, except to say that most sources of Revenue showed a slight improvement with the exception of Opium, which failed to reach the Regular Estimate by £148,000, and Salt, which fell short by £53,000. On the Expenditure side, £1,568,000 more than was calculated in the Regular Estimate for War and Frontier Railways came on the charge of the year. But that, as I shall show by-and-bye, was a matter of very little importance, because charges very much in excess of that sum were incurred during that year, and came into the Accounts of the year subsequent.

Before I proceed to state the figures for the years 1880–1 and 1881–2 it might be convenient that I should give some explanation on one point, which, if not borne in mind, might lead to some confusion and misconception—I refer to the Treasury Contribution of £5,000,000 in aid of the War, which has been brought into the Estimate of Revenue. The House is aware of the terms upon which the Contribution was made. The Debt of £2,000,000 incurred to the Home Government by India in 1879 has been remitted; £500,000 was paid to India in the last financial year; £500,000 in the present financial year; another £500,000 will be paid next year, and so on until the whole sum of £5,000,000 is made up. The House must bear in mind that the balance sheet of the Finance Accounts contains two sets of figures; the first, those of the Revenue and Expenditure of the year; the next, those of the Debt, Deposit, and other transactions; the whole making up the account of the receipts and disbursements of the year. If this Contribution, made by this country to India, had been unconnected with any special expenditure, it would only have been right that this sum of £5,000,000 should never come into the Accounts of Revenue at all. It would have simply taken its place in the Accounts of Receipts and Disbursements. But in the special circumstances in which this Contribution had been made, it is, in reality, as clearly a receipt in diminution of the War charge as if derived from the increased proceeds of railways and telegraphs, for which credit has been already taken. As the whole of the War Expenditure has or will be brought into the Accounts and Estimates of the year to which it relates as expenditure, it was necessary to determine how this Contribution in aid of that expenditure should be brought to account as Revenue. It was impossible to bring to account as Revenue of the year in which it was paid the portion received in the former year, of which the Accounts are now closed; and it would be extremely inconvenient to bring to account as Revenue of the years in which it will be received the part which yet remains to be paid. If that course had been adopted, the Accounts of the next four years would have been disturbed by the entry of £500,000 as Revenue really received on account of former years. The course, therefore, agreed upon between the Government of India and the Secretary of State in Council as the most convenient way of bringing this sum to account as Revenue was to show it as Revenue of the years 1880–1 and 1881–2, in such a manner as to neutralize the War Expenditure of the latter year, thus leaving the years that follow unaffected by the War Expenditure. For the purposes of Estimate, therefore, the sum of £5,000,000 has been divided into two parts, £2,000,000, which is put down to Revenue in the Regular Estimate of 1880–1, and £3,000,000, for which credit is taken in the present financial year. It is hoped and expected that before the Accounts of 1880–1 are finally closed, it will be possible to ascertain almost accurately the amount of the War charge that will come in the present year. When this is ascertained, that portion of the £5,000,000 will be entered as Revenue of 1881–2, and the remainder as Revenue of the year just closed. The House will, therefore, bear in mind, in the figures I have to lay before it for 1881–2 and 1881–2, that the account of Revenue has been increased by £2,000,000, owing to the Treasury Contribution in 1880–1, and by £3,000,000 owing to the Treasury Contribution for 1881–2.

I now come to the Regular Estimate of 1880–1. I will state how the Regular Estimate of 1880–1 compares with the closed Account of 1879–80. The Accounts of 1879–80 show, as I have already said, a Revenue of £68,484,666, and an Expenditure of £69,667,615, showing a deficit of £1,182,949. For 1880–1 the Regular Estimate is £70,783,615, while the Expenditure is £77,003,382, showing a deficit of £6,219,767. The Re-venue of 1880–1 is £2,299,000 larger than the Revenue of the preceding year 1879–80, while the Expenditure is £7,336,000 in excess. The whole result is that the year 1880–1 is £5,037,000 worse than 1879–80. I have said that the Revenue of 1880–1 shows an increase of more than £2,000,000 over the preceding year; but if the House bears in mind the explanation I have given it will perceive that that increase is almost entirely due to the Treasury Contribution of £2,000,000. The excess of the Expenditure, £7,336,000, is entirely due to the cost of the War. The Budget Estimate for 1880–1 was framed in February, 1880, while the Regular Estimate was framed in March of the present year. The Budget Estimate of Revenue for 1880–1 was £66,746,000, and the Estimate of Expenditure was £66,329,000, giving a surplus of £417,000. The Regular Estimate of Revenue is £70,783,615, and of Expenditure £77,300,382, which leaves a deficit of £6,219,767. The Revenue, as taken in the Regular Estimate, is £4,037,000 in excess of that estimated in the Budget; but, on the other hand, the Expenditure is £10,674,000 greater than was estimated in February, 1880. The £4,000,000 improvement in the Regular Estimate of Revenue is mainly due to the Treasury Contribution. I stated last year that besides £3,200,000 in respect of the War, as an addition to the Regular Estimate of 1879–80, £3,500,000 must be added to the Budget Estimate of Expenditure in 1880–1 for the same reason. But only £1,568,000 was shown in the Accounts of 1879–80, leaving £5,132,000 to be added to the charge for 1880–1. The actual addition, after including the £2,000,000 paid for by the Treasury Contribution, is £7,166,000, which shows more than accounts for the sum by which the Budget Estimate is worse than the Regular Estimate. Now I will state the principal sources of the difference between the Regular and the Budget Estimates. On the Revenue side the chief source is, in the first place, Opium, which shows a difference of £1,218,000. The Budget Estimate was a high one— £7,250,000—but the Regular Estimate shows that the net Revenue reached £8,468,000, or £1,218,000 more than that high Budget Estimate. The other chief sources of difference are Excise, £300,000, and Customs £351,000. On the other hand, there is a deficiency of £295,000 on the Land Revenue, which is mainly due to the fact that the Census was taken in the spring of this year, and that, the officials being thus fully occupied, considerable arrears had to be postponed to the present year; and there is also a deficiency of £491,000 in respect of Salt, the result of taking the exceptional receipts of the previous year as the basis of the Estimate, which receipts were not fully made good in the year under discussion. On the side of Expenditure, the gain under Interest is £466,000, arising partly from the premium on the3½ per Cent Loan, £156,000; £172,000 more from an alteration in the date of paying Interest, £86,000 from the conversion of Stock, and £52,000 from other sources. There is also a saving of £621,000 under the head of Loss from Exchange, owing to the fact that, in consequence of the pressure by the War on the resources of India, it was impossible to remit the whole sum due from India last year, so that there was a proportionate diminution of loss. On the other side of the Account there is an increased Expenditure to the extent of £7,166,000 in respect of the War and Frontier Railways; on the Army Ordinary Charge, £136,000; on Superannuation, £241,000; on Ordinary Public Works, £279,000; State Railways, £441,000; Productive Public Works, £508,000; and an item of £206,000 in respect of Provincial Surpluses, an apparent increase on which I shall have something to say presently.

I now come to the Budget Estimate for 1881–2, and I find that, as compared with the Regular Estimate for the year 1880–1, the figures stand as follows:— The Regular Estimate for 1880–1 puts the Revenue at £70,783,000, and the Expenditure at £77,003,000. The Budget Estimate of this year gives the Revenue as £70,981,000, and the Expenditure as £70,126,000; showing the Revenue improved by £198,000, and the Expenditure diminished by £6,877,000. The Regular Estimate of 1880–1 showed a deficit of £6,219,000, whereas we expect a surplus in 1881–2 of £855,000. The whole result of the year 1881–2 shows an improvement of £7,075,000 on the Regular Estimate of 1880–1. On comparing the Budget with the Estimate for the previous year, we find a diminution on War Charges proper of £9,886,000, and on Frontier Railway Charges, £1,409,000, or a total diminution of £11,295,000; and after deducting the diminution of the War Charges, the Budget Estimate shows an apparently worse result than the Regular Estimate by £4,221,000.

This is accounted for, in the first place, by the much lower Estimate that has been taken of the Opium Revenue. That had been estimated at £2,000,000 less than the receipts of 1880–1, and I think perhaps I ought to give the House the figures to show the principle on which this great apparent under-Estimate has been made. Now, the net receipts for 1880–1—the highest point ever reached —were £8,468,000; but it is not considered safe or prudent to reckon on the continuance of these large receipts. During the 10 years from 1858–9 to 1867–8, the average net income from Opium was £5,629,000; from 1868–9 to 1877–8, the average was £6,500,000; in 1878–9 the receipts rose to £7,700,000; in 1879–80 to £8,251,000, and they culminated in 1880–1 with £8,468,000. I must mention that the fluctuation of this Opium Revenue has always been very great. Only thrice within the last 19 years has the Estimate been within £500,000 of the gross receipts; three times the actual receipts failed to reach the Estimate by an average of £1,200,000, and in the 15 other years the receipts exceeded the Estimates by an average sum of £1,000,000. It has frequently been inculcated on the Government of India, by various Secretaries of State, that a prudent Estimate of this Revenue is to be taken, and the most recent Despatch sent to them on this subject expresses a doubt as to the wisdom of very high Estimates, and enjoins a more prudent course for the future. Now, this diminution of the Estimate for the Opium Revenue accounts for £2,000,000 out of the £4,000,000 I have already referred to. The next large item is one of £1,450,000 for Famine Insurance; so that we have now accounted for £3,450,000 of this sum, and leave £800,000 to be made up in other ways. I do not think that I need go into many details; but I will state to the House what are the chief sources both of improvement and of diminution, which are expected in this year's Budget, as compared with the Regular Estimates. In the first place, the chief sources of improvement are in the Land Revenue, £687,000, which is partly due to the postponement, in consequence of the Census, of certain collections from the latter months of the past financial year to the early months of the present, and in the Provincial Balances, under which head there is an improvement of £797,000. On the other hand, the chief sources of diminution are—Customs £161,000 (it not being thought prudent to expect the recurrence of the large imports of 1880–1); Telegraphs, £116,000; Interest Charges increased £272,000; Law and Justice, £132,000 more, due to the establishment in Bengal; Marine, £200,000, due to the construction of a troopship for the Indian Marine, and of some small steamers for British Burmah; Loss by Exchange, £510,000; Miscellaneous, £103,000; Ordinary Public Works, £401,000; Army, £179,000; Productive Works, £105,000.

The House will have observed that I have referred to items of Revenue and Expenditure under the head of Provincial Surpluses and Provincial Deficits. It appears to me that some explanation on this subject ought to be given to the House, and I will shortly state what effect these items of Provincial Surpluses and Provincial Deficits have upon the Estimates of the present year. On the Revenue side, the Revenue is stated to be increased by £709,000 under the head of Provincial and Local Deficits; and, on the other hand, the Expenditure is stated to be diminished by £88,000 through the reduction of Provincial and Local Surpluses. There is, therefore, a net gain on these two items of £797,000. I think these items require some explanation. In the year 1870–1 the system of what is called. Provincial Finance was introduced. Certain Revenues, amounting to about £648,000, were made over by the Government of India to the Local Governments. Further allotments were also made to them on the condition of their undertaking to provide for certain Provincial and Local Services. The idea was that by giving to the Provincial and Local Governments an interest in the careful collection of certain sources of Revenue and in the expenditure on certain Services economy would result. They were given a balance of £200,000 to commence with, and they were authorized, within certain limits, to spend any increase over the balance which they were required to keep in the hands of the Government of India. From 1871–2to l875–6the additional Allotments amounted to about £5,000,000 annually. They were shown in the Accounts as "Allotments for Provincial Services," and no explanation whatever of the expenditure by the Provincial Governments was given. But in the year 1876–7 the system was very considerably enlarged and extended. Additional Revenues were placed under the control of the Provincial and Local Governments, and the line "Allotments for Provincial Services" in the Accounts was discontinued; but the receipts and charges were shown in the General Accounts under the various heads to which they belong. The Government of India really act as bankers to the Provincial and Local Governments. The whole of the receipts and expenditure are included in the Accounts and Estimates. If the receipts of a Local Government have exceeded its expenditure, its balance is increased, and the amount by which it is increased, and by which the liability of the Government of India to the Local Government is increased, is shown in the Accounts as a charge. If, on the other hand, the expenditure of the Local Government exceeds its receipts, its balance is diminished, and the liability of the Government of India to the Local Government is decreased, and the amount by which the liability is so decreased is shown on the side of Revenue. The system has now attained very considerable proportions. The Revenue estimated to be received by the Local Governments in 1881–2 on their own account was £10,072,900; for certain specified local purposes, £2,751,600; from allotments by the Central Government, £4,287,200; and from other sources, £269,200; or a total Local Revenue for Provincial and Local Governments of £17,380,900, or about one - fourth of the total gross Revenues of India. I do not think I need trouble the House with the detailed sources of the Revenue; but it may be interesting to the House to know the chief items of Expenditure which have to be provided for out of this Revenue of £17,380,900. The Provincial Governments are expected to provide the following Services:—Collection of Land Revenue, £2,200,000; Law and Justice, £2,765,000; Police, £2,484,000; Education, £1,049,000; Administration, Minor Departments, Marine, Educational, Medical, &c, £1,832,000; Public Works, £4,718,000, and various other charges, about £2,770,000. This system has worked, I believe, on the whole, in an extremely satisfactory manner. It is a step in the much-needed direction of decentralization. No doubt, it is necessary that the richer Provinces of India should pay more than their share for the expenses of the general administration of government, and it may be even necessary that the richer Provinces should assist in the development of the resources of the poorer ones; but the principle is a sound one, that each Local Government should have an interest in the development of its own Revenue, and in the economical expenditure of the Services which it can itself control.

A very glowing account of the results of this was recently given by Sir Ashley Eden, the Lieutenant Governor of Bengal, who said— That the system of decentralization has been thoroughly successful in Bengal is sufficiently clear from the foregoing sketch. The Revenues have rapidly increased, independently of any new taxation; useless Expenditure has been curtailed; and funds have been made available for improvement under all branches of the Administration. All grades of the Service have shown the deepest interest in increasing the resources of Government, under the belief that the surplus Revenue would be available for the good of the Province. The three heads of improvable Revenue made over to the management of the Provincial Government, with an income of 165¼lakhs in 1876–7, will stand with an income of not less than 217¼lakhs in 1881–2. In the meanwhile, the Lieutenant Governor has been able to carry out numerous works of improvement on his own responsibility, many of which, under the previous system, would have been indefinitely postponed. Besides making a special contribution of 20lakhs to the Imperial Treasury in time of need, he has been able, during these five years, to increase the Staff of Executive and Judicial officers; to provide increased facilities for the administration of Justice; to increase the grants for education; to make grants in aid of district communications, and of works of drainage, sanitation, and municipal improvements; to build schools, colleges, and hospitals; to replace the huts, in which the public business was transacted or prisoners were confined by substantial masonry courthouses and gaols; to spend 20lakhs on railways, which will bring in a large return; 5½lakhs on tramways, three-quarters of a lakh on a steamer service, to improve communications with Assam, and two lakhs on a road to develop the trade with Thibet; to spend 11 lakhs on the first portion of a work which will develop the trade of Orissa and protect it from famine; and to spend 38¼lakhs en improving navigation, and providing a supply of pure water for the people. While 77½lakhs have thus been expended on great measures of material improvement, and the expenditure on Ordinary Public Works has been increased from Rs.25,12,000, in 1877–8 to Rs.63,53,000, exclusive of expenditure on preliminary works of railway construction in 1881–2,and while no legitimate outlay has been spared to strengthen every Department of the Administration, the five years' period, which opened with a credit balance of Rs.2,88,000 only, will close with a credit balance of at least Rs.14,46,000. When it is recollected that under the system which prevailed before 1871, every new charge required the sanction of the Imperial Government, that the decision on the demands of each Province took no cognizance of the extent to which it had contributed to the general Exchequer, that nothing was to be gained by economy, because money left unspent by any one Government was practically lost to it and only went to increase the amount to be scrambled for by all, some idea may be gained of the advantages which Bengal has reaped from the control of its own finances. There is no department of the Service which has not felt the benefit of the financial independence conferred on the Government immediately responsible for its administration. Well, Sir, that is Sir Ashley Eden's ac- count of the working of this system in Bengal. I have not before me the results of the system in the other Provinces. No doubt, Bengal, being the most prosperous Province, has profited more by this system than any other; but the same causes have brought about similar results in the other Provinces. Indeed, I believe every Government is satisfied with the working of the system, and would be unwilling to revert to the former practice. I must, add, however, that of course this system must tend to an increase—I believe a necessary increase—of expenditure. A very considerable part of the increase of £800,000 which I had to explain just now is due to expenditure undertaken by the Local Governments; but if the system is to be a reality, and if it is to work as it was intended to work, it is absolutely necessary that when the Provincial and Local Governments have by economy increased their balances, they should be given the advantage of them, and should be allowed to extend them for the benefit of their Province. There can be no doubt, however, that this system of finance introduces confusion in the Accounts. An increase in the Revenue or a decrease in the Expenditure of a Provincial Government is neutralized in the General Account by an apparent increase of Expenditure under the head of Provincial Surpluses. On the other hand, a decrease of Revenue or an increase of Expenditure is balanced by an apparent increase of Revenue under the heading of Provincial Deficits. It is, no doubt, quite right that the position of the Provincial Accounts, as regards their balances with the Government of India, should be clearly and accurately stated; but I have very great doubt whether those headings should find their place in the General Account of estimated Expenditure and Revenue. Those Accounts, in my opinion, should simply give an account of the Revenue and Expenditure of what has been actually received or actually expended, either by the Government of India or by the Local Governments, and the relative position of the Local Governments to the Government of India with respect to balances should be made the subject of a separate Account.

I have now to give to the House the chief figures with respect to the cost of the War in Afghanistan. The amounts which I mentioned last year were as follows:—In 1878–9, £2,976,000; in 1879–80, £6,416,000; in 1880–1, £5,590,000; total for three years, £14,982,000; or, allowing for receipts from Railways and Telegraphs, and including Frontier Railways, £18,184,000. The amount now shown in the Regular Estimates for these three years is—War Charges, less receipts of all kinds, £15,861,000, and Frontier Railways, £4,455,000; or about £20,000,000. This is very nearly twice the amount estimated by Sir John Strachey, in February, 1880, as the probable expenditure on the War. The Estimate of Expenditure at the close of 1880–1 was—War, £5,980,000; Railways, £3,940; or a total of £9,920,000. The actual amount is over £20,000,000. To that amount is to be added for 1881–2 a charge in respect of the War of £2,200,000, and for Railways £880,000; giving altogether a total of £23,412,000. Deducting the amount paid by England the net charge borne by India is £18,412,000. Well, that I believe to be an accurate account of the charge for War.

I think I stated to the House last year that a Committee had been appointed by the India Office to inquire into the cause of the mistake that had been made in the Estimate of Expenditure. That Committee made a very careful inquiry, and has made a very full and careful Report. I cannot enter into a discussion of that Report now. It is enough to say the Committee has recommended the adoption in India of the English system. That system was adopted last year by the Government of India; and under it is believed that the Military Expenditure for 1880–1 was known within a few days of the close of the year. Major Baring, in his Financial Statement, which is before the House, says the result of the change of system to which I have already alluded is that the Regular Estimates for 1880–1 include not only sums outstanding in the year 1879–80, but also sums which, under the old system, would have figured in the Account for the year 1881–2. The old system included in the Account all payments made on vouchers before the 1st of April, and, in order to give time for audit, the final closing of the Account was delayed for six months. But during the progress of the War, as has unfortunately been discovered, these Accounts had fallen very much into arrear; and, therefore, under the old practice—perhaps it would not be correct to say under the old system— the Accounts of the year did not include anything like the whole amount of the issues from the Treasury.

Well, I have stated the War Charge to be £23,000,000. I will endeavour to show to the House how this amount has been dealt with by India. In the first place, if there had been no War Charge and no construction of Frontier Railways, and, at the same time, provision of £1,500,000 had been made in each year for the relief of Famine, there would have been in each of the years of the War the following surpluses:—In 1878–9 a surplus of £1,523,885, in 1879–80 of £3,521,551. in 1880–1 of £3,623,174, and in 1881–2 of £855,000; or a surplus during the four years of £9,523,574. Of course, these surpluses, amounting to £9,500,000, have gone for payment of the War; the balances of the Famine Insurance, amounting to £4,035,309, have been likewise appropriated to that object. There was also the Contribution from the British Treasury, amounting to £5,000,000, and there was taken from Cash Balances for the same purpose a sum of £4,513,470. It appears to me that that is not an unsatisfactory Financial Statement.

The House will remember that in 1878 the Government of India undertook to provide a surplus which would enable it to appropriate annually £ 1,500,000 for Famine Insurance purposes. The cost of the War in Afghanistan, as I have already stated, prevented the intentions of the Government being accomplished; but the present Government fully accept the liability which was undertaken in 1878, and we have resolved that during this year, instead of trusting to surpluses, which are always liable to be diminished, either by an increase of expenditure or by a remission of taxation, an amount shall be provided for Famine purposes. There is, therefore, included in the estimated Expenditure for the present year £1,500,000 for Famine Insurance. In the absence of disturbing causes, that £1,500,000 will be devoted, in the first place, to any charge for actual Famine relief that arises during the year; and if not needed for the relief of Famine, one-half of the amount, or £750,000, will be devoted to what are called Protective Works—that is, those which can- not be classed as works as to which a reasonable confidence can be felt that they will pay interest on the cost of their construction in a very few years; so that they cannot be safely included in the category of Reproductive Public Works, but which will be of use in providing for the relief of Famine. The works that are first selected for commencement under the heading of Protective Public Works comprise a canal in the Deccan, a railway in the Punjab, and other works in Madras and Bombay.

The remainder of the Famine Insurance provision is to devoted to the reduction of Debt, for which purpose a Body of Commissioners have been nominated. It will be the duty of the Commissioners to apply the money which the Government of India pays over to them in the manner which the Government directs, either in the actual reduction of Debt, or, as we borrow annually for Productive Works, it may be advisable to reduce the loans for that purpose, and to make up the deficiency from the Famine Insurance provision. I am quite ready to admit that the functions of the Commissioners, as at present arranged, are more of a formal than of a practical character. But, nevertheless, I think that the appointment of that Body may be the foundation of considerable and, perhaps, salutary changes hereafter. The Commissioners at present are, or will be, entirely official persons. Their functions are almost purely Ministerial; but those conditions are not necessarily permanent. It is possible that it may be found advisable to appoint as Commissioners some one or more persons unconnected with the Government, and their functions may, perhaps, be further developed. I cannot speak positively; but the appointment of this Commission may possibly become the foundation of a system under which some external supervision, if not control, will be introduced into the Administration of the Government, which has been, up to the present time, of a purely bureaucratic character.

I return, however, to the subject of the Famine Insurance Fund. The £1,500,000 for the provision against Famine having, in consequence of the War, failed to be applied to the reduction of Debt or to Protective Works, it was thought advisable to take advantage of the Treasury Contribution of £5,000,000 made last year for effecting a reduction of Debt at home. Notice was therefore given in November last year for the repayment in November of the present year of the India Four per Cent Bonds to the extent of £4,487,000. But, as the whole of the Treasury Contribution will not be paid for four years from now, it will be necessary to raise part of the money by temporary loans. But the arrangements have been so made that the whole of the £5,000,000 of the Treasury Contribution will be devoted to the payment of sterling Debt, whether in the form of Debt to the Treasury, or of the bonds. India has paid, or will pay, out of Revenue so many millions towards the cost of the War. England contributes £5,000,000. These £5,000,000 will not go to reduce the amount which India will have to pay; but they will go to reduce the Debt. The result will be that India will pay £13,000,000 out of Revenue for the cost of the War, and England will pay £5,000,000 for the reduction of Debt.

No sooner had the Famine Insurance policy been announced by Sir John Strachey than it was disturbed by the outbreak of the Afghan War. Sir John Strachey reckoned in 1879 on an annual surplus of £2,000,000: £1,500,000 was to go to Famine Insurance, and £500,000 it was thought prudent to set apart for contingencies. But for the War, the hopes which he then formed would have been more than justified, because, after providing £1,500,000 for Famine Insurance, there would have been a surplus of about £9,000,000 in four years. The surplus, however, went, the Famine Insurance has also gone, the indebtedness of India has increased through a diminution of the balances by about £4,000,000. But, considering the circumstances through which India has passed, it does not appear to me, on the whole, that her financial position is unsatisfactory. That, I think, is the opinion likewise of the financial world and the Money Market.

During the last 15 months it has been necessary to issue three loans for Productive Public Works and other purposes. In June of last year a loan of 313 lakhs was raised in India at the interest of 4½ per cent. The price at which it was raised was 103 3–16. In January of the present year, a loan of £3,500,000 was raised in London at 3½ per cent, and the price at which it was raised was £103 19s. 6d. In July, 1881, again, a loan of 300 lakhs for Public Works was raised in India; and, although it was reduced to 4 per cent interest, the price at which it was raised was 105 3–16, as against 103 3–16 last year.

I will now give the House the figures of the Public Works expenditure. The amounts expended from borrowed money on Productive Public Works have been these—In 1879–80, £3,364,330; in 1880–1, £2,687,695; in 1881–2, the estimated expenditure is £2,608,000. That gives a total of £8,660,025, to which has to be added the expenditure on the East Indian Railway, or £1,646,248; making altogether £10,306,273. I will next state to the House what has been the Revenue account for those Public Works during the same period. In 1879–80, the Revenue was £8,446,704; in 1880–1, it was £9,027,018; in 1881–2, it was £9,380,000; making a total for the three years of £26,853,722. The expenditure was in 1879–80, £8,724,361; in 1880–1, it was £9,221,880; and in 1881–2, £9,680,000; making together a total of £27,626,241. The entire deficit upon those Public Works for the three years is £772,519. Comparing the Expenditure with the Revenue, they have failed by about £255,000 a-year to pay the full interest on the capital outlay. Of course, the House is aware that a very considerable number of these Works have either been only recently constructed, or are not yet fully reproductive, and others are not reproductive at all. It may be stated that the Railways have now reached a turning point, and that they are likely to become a source of revenue to India. The East Indian Railway paid, in 1880–1, 8 per cent on a capital of £31,000,000. Other railways have paid in some years 7, 6, and 5 per cent, and some are not entirely completed.

But notwithstanding this extremely favourable result, as compared with a few years ago, when Productive Public Works involved a charge of between £2,000,000 and £3,000,000, the Government have not seen any reason to relax the limit of the Public Works expenditure on borrowed funds, which was recommended by a Committee of the House and adopted by the late Government. Until a more certain estimate of the prospects of Indian Finance, and also of the results of the Works themselves can be framed, we do not think it would be prudent to burden the Revenues of India with a greater sum than £2,500,000 annually for capital expenditure of this character.

But, at the same time, the House is aware that a capital expenditure of £2,500,000 is not sufficient either to develop the resources of the country, or to furnish the immunity which railways and canals are calculated to give from Famine; and perhaps one of the most hopeful signs for the prosperity of India is that there at least appears to be some prospect of private capital entering the field to occupy some of the ground still vacant for enterprizes of this kind. Hitherto it has been considered impossible to construct Railways in India by private capital, except with the aid of heavy and onerous guarantees. These enterprizes were scarcely private enterprizes, and the Government exercized a strict control over the capital account, in order to prevent the finances of the country being unduly burdened. It is not possible for the Government to do all that is desired.

A Company has been recently formed which, although it has received some State assistance, has received it on terms very different indeed from those under which the old Guaranteed Companies received it. The money was guaranteed for a very limited period—in fact, for four years, or for the time (not exceeding that limit), during which the line would be in course of construction. After the line is made other conditions will come into operation; and at the end of 99 years the whole of the permanent works revert to the State, and the rolling stock will be taken at a valuation. I think these terms contrast favourably with those connected with the old Companies. I admit I have seen, with some regret, the delay which has occurred in closing with some of the most hopeful of these proposals; but it is absolutely necessary that care should be exercised, and that no undertakings that were not sound should be guaranteed. It would be a great misfortune to India if any other policy were pursued.

I think from what I have said it will be seen that the Budget produced by the Government of India is of an eminently prudent character. The prudent course which has been adopted is amply justified by the facts of the case at the time the Budget was made. At that time the troops were still in Afghanistan; the retirement had not been completed for two or three months afterwards. Until the troops had returned behind the Frontier, it was impossible to say what further complications or difficulties might ensue; and it was necessary, I think, to take a prudent view of the financial condition of India. Then there was the uncertainty as to Opium. It is possible that the low Estimate as to Opium will be considerably exceeded; but I do not think it will come up to the exceptional result of the past year. It was, I believe, wise on the part of the Government of India, under these circumstances, to postpone any reduction, or even any adjustment, of taxation.

There is one subject with which, I regret to say, we are unable to deal in the present year. I refer to the Cotton Duties. The total loss in 1879–80 was £170,000, and in 1880–1 it was £120,000. The loss on gray goods, dealt with a few years ago, was in 1879–80 £210,000, and in 1880–1 £320,000; and the estimated income derived from gray goods and yarn does not now exceed £100,000 a-year. I need not point out to the House that very considerable inconvenience is caused to trade by the inspection and examination which are necessary tinder the present system. Often the minute examination which was necessary was somewhat vexatious,; but the interference with trade is very great. The result of the interference is shown by the figures. Before the remission, when all gray goods were equally taxed, the value of the class of goods now taxed was 95 per cent of the whole of the goods. Since the remission the value of the goods which are still liable to duty has fallen to 26 per cent. There can be no doubt as to the effect on Native manufacture. It has, I believe, almost altogether disappeared. The Natives manufactured coarser goods; and, therefore, they are exposed to the whole of the Lancashire manufacture. But the effect is that, while protection has been withdrawn from Native industry, a sort of protection has been given to one class of English goods against another. The coarser goods are now protected or stimulated by free admissions, while finer goods are still taxed. It seems to me absolutely impossible that this condition of things can be permitted to continue. I regret that it should have been thought necessary to continue it even for another year. It is a state of things unfair to the manufacturers and injurious to the Indian consumer. What has happened? The whole case has been changed by our system, and by the peculiarities of the Tariff the Indian consumer is now forced or induced not to take that class of English goods which he prefers, but that class which the English manufacturer is able, owing to the peculiarities of the Tariff system, to supply to him most cheaply. Under this condition of things, I believe many mills in Lancashire are actually standing still, because they are unable to produce, with their existing machinery, that class of goods which is now admitted free. They have been beaten out of the market by the coarser qualities. The loss that is borne by India is heavy, and I regret that another year must elapse before remedying such an anomalous condition of things. I am afraid that the existing Tariff and the changes which have been made were extremely unpopular in India, and that it would have been highly inexpedient even to make this trifling reform—trifling in a pecuniary point of view—unaccompanied by any larger remission of taxation. It would have been supposed that it was done for the interest of England without consideration for the people of India. My opinion is that the state of things is still more unfortunate for the people themselves than for the Lancashire manufacturers. I shall lose no opportunity of urging on the Government, at all events, next year to remedy this grievance.

The not loss for the year 1881–2 on exchange will be about £3,000,000. For the year 1880–1 it was £2,553,000, and for the year 1879–80 about £3,000,000. In the three years the net loss was £8,542,000. To a great extent this loss is over-estimated, because it is taken as though the value of the rupee was 2s., whereas, as the House is aware, the intrinsic value of the rupee was only 1s. 10⅝at the time when the Continental Mints were open to coinage of silver; and compared with that price the estimated loss was put at £2,000,000 a-year, or £6,000,000 for the three years. No doubt, that is a very considerable and heavy loss.

I will now say a very words upon the attitude which the Indian Government have assumed on the question of bi- metallism, and on the Conference recently held at Paris. I have stated what the loss is, and I will not enter upon the scientific or theoretic aspects of the question, upon which there is the greatest divergence of opinion among the highest authorities; but the subject has a practical bearing upon the finances and economic condition of India. Great disturbance has arisen, and considerable loss has been inflicted upon India in consequence of this loss in exchange.

I will also say a word or two upon the general effect produced on the general trade of India. The immediate effect upon a country situated as India is would be that its exports would be stimulated and its imports restricted. It may be supposed, therefore, that in India the purchasing power is diminished and the selling power increased. The balance of these advantages and disadvantages may be nearly equal; and, at all events, it is not necessary to discuss what the effect upon India these different standards of value have. The inconvenience from which India suffers arises from a different cause. It arises from her having to make very heavy remittances to the Home Government, averaging for several years more than £16,000,000 a-year. The losses by exchange since 1875 are not less than £11,000,000. That is a serious matter for a country situated as India is, where any re-adjustment of taxation is a matter of great difficulty. The injury to India does not stop there —at the actual loss incurred. The injury is greatly increased by the uncertainty caused in every financial estimate and transaction. It is absolutely impossible for the Financial Member of Council to make an estimate upon which he can confidently rely as to the Expenditure and Revenue for the next year. His surplus is liable to be converted by causes over which he has absolutely no control into a deficit. Every financial operation, every project which the Government may form, either for a reduction of Debt or for any change in the mode of making remittances home, is liable to be disturbed. Questions continually arise for consideration by the Government. Shall loans be raised in England or in India? Shall Debt incurred in India or in England be discharged? Shall money be remitted at home? Shall Home remittances be made by the sale of bills in England, or shall debts be incurrred in England, to be repaid hereafter when there is a better rate of exchange? All these questions are unsettled, and it is impossible that any Government can take a certain view with regard to any of them. It has always been the aim of every financier to endeavour to secure a more stable exchange. There appears, how-over, no possibility of establishing a common mono-metallic standard between England and India, and there seems to be no greater probability of a common bi-metallic standard. We can only hope that some agreement may be come to between other countries interested in the same manner that this country and India are in the maintenance of silver. It is no wonder, therefore, that the Government of India feel a warm interest and a deep sympathy with all efforts to arrive at some common agreement, and with all attempts in the direction of fixing a settled ratio between the values of the two metals. Everything done to attain that result is a benefit to India. Holding these views, the Government of India think it their duty to do what they can to assist in the attainment of some agreement between the nations of Europe, and they sent Delegates to the recent Paris Conference with that object. The House is aware that the Conference has adjourned; but it is hoped that on their re-assembling some result may be arrived at.

There are one or two other matters with which I should like to trouble the House, although they are not connected with finance. I said last year that the Commission appointed to inquire into the organization of the Indian Army with a view to its reduction had reported. The Government of India have applied themselves vigorously to the task, and have already sent home some of their proposals. I regret to say it has been found impossible as yet to give any sanction to those proposals. Some of these proposals would require Parliamentary sanction, and I need hardly remind the House that we have not this Session had time to enter into that subject. Others of their proposals are intimately connected with the organization of the Army at home. They cannot be adopted without full communication with the military authorities at home and with my right hon. Friend the Secretary of State for War. These pro- posals, which affect only the Indian Army, might, no doubt, be dealt with without much difficulty. But we should do well not to adopt any changes in the organization of the Indian Army without full and careful consideration. There are other important subjects with regard to which recommendations have been made. I cannot give to the House any hope that the adoption of any of these recommendations will, as I trust may be the case as regards the Army, lead to any immediate or probable reduction in expenditure. On the contrary, they are more likely to lead to an immediate, if not to a permanent, increase.

There is the Famine Commission. The obligation of keeping the people of India alive has been accepted by the Government of India and the people of this country. Immense sums of money have already been spent with that object, and it is almost inevitable that in future years immense sums will have to be spent. Unorganized spending of money is sure to be wasteful; and it is, therefore, absolutely necessary that we should have a carefully considered system. With this object the Commission have framed certain recommendations. First, that those districts which are most liable to famine should have introduced into them either improvements in the agricultural system, or improvements in the means of communication. Secondly, the great object of the Famine Commission is to devise measures under which the relief of Famine, when it actually occurs, may be effected. With regard to the second of these objects, something has already been done. The Commission have recommended several principles upon which Famine relief shall be conducted, and the Secretary has prepared a Code of Instructions for the Local Governments. These instructions have been circulated to the Local Governments, and if Famine were unfortunately to occur again, this Code, although, no doubt, subject to considerable modification, will form a basis upon which the Indian Government and the Local Governments will be able to deal more satisfactorily with an outbreak of that kind than at any former time.

The Government has also proposed, and the proposal has been sanctioned by the Secretary of State in Council, to re-constitute the Department which was, as I think, unfortunately given up a few years ago—I mean the Agricultural Department. But we have recommended that the new Department should be manned as far as possible by officials drafted from existing offices, and have said that it must not be definitely established until we are fully informed as to its duties.

Now, without making any attempt to forecast the future, I think we may say that the Revenue of the last three years has been more than sufficient to meet the ordinary expenses of the Administration. It has, in fact, been large enough to provide a necessary insurance against Famine. The Opium Revenue is, of course, a source of uncertainty and anxiety to the Government. The remaining sources of Revenue, notwithstanding re-adjustments, have shown a sure, if slow, increase. I trust that that there will be some room for a reduction in Military Expenditure. The growing administrative, educational, sanitary, and other similar wants of the Government may be met, I believe, from the increasing resources of those branches of the Revenue to which I have referred under the head of Provincial Finance. My Statement, I fear, has been an unusually dry one. I have had no large reduction of Expenditure to announce, and no reduction, or even re-adjustment, of taxation. I am decidedly disposed to take an extremely conservative view of Indian Finance. As I have said, there may be some room for reduction in Military Expenditure; but the framework of the Civil Administration of India is of such a character that, if it is not to be weak, it is essential that it should be composed of the very best materials; and if it is to be composed of the best materials, they must, of course, be adequately paid for. There is much room for a further development of the resources of India; but, in the meantime, any increase or even readjustment of the taxes or burdens that rest upon the people must affect such vast masses of men, and so largely influence public feeling and opinion, that I cannot but think that any alteration of taxation, certainly that any increase of it, is only a work to be entered upon with great reserve and caution. In conclusion, I have to say that if am content to lay before the House a Budget which is simple and unambitious, I hope that it is not altogether an unsatisfactory one.


Sir, I listened with great attention to, and I am sure the House took great interest in, the elaborate Statement of the noble Marquess, which I am bound to admit was characterized by great moderation and fairness. That Statement has, indeed, been made at a very late period of the Session; but the noble Marquess has almost disarmed criticism on that point by so frankly admitting that the only circumstance which would justify the delay in bringing forward the Indian Budget was the exceptional character of the present year. Two years ago, in consequence of representations made to the late Government, they acceded to the desire that the Budget Statement should be made at an earlier period of the Session; and, accordingly, two Government days were given up to the discussion in the month of May. Last year, however, the Budget was postponed on account of legislation which was not of first importance; and, in the present year, exceptional circumstances, as the noble Marquess has said, have led to its being again postponed. I only wish, however, to express an earnest hope that this may be the last occasion on which we shall hear an Indian Budget Statement on one of the last days of the Session. It is the more necessary to insist upon that, because a very false impression has been created in India, by what its inhabitants consider to be the small amount of interest taken by hon. Members in the discussion of the financial affairs of India. I think it well, therefore, that some of us should point out that the small amount of interest shown in this subject is due to the fact that it is only brought before us in the last few days of the Session. And now to the Statement itself, the observations which it is my intention to make will not be of any great length, and they will be chiefly directed to the Estimates for the current year. The noble Marquess has mentioned one point with regard to which he thinks an improvement can be made in the form of the existing Accounts; and, so far as I could understand the observations which he made upon a somewhat intricate subject, I heard with the greatest satisfaction what he said with regard to adjusting heads of account, which form, perhaps, the most incomprehensible part of the whole Indian Budget. Any change which will lead to its being better understood by the public will be a great advantage. The first point of Revenue which I will dwell upon is that of Opium. Regarding this, the noble Marquess has told us that the Estimate of £6,500,000 was made under orders from the India Office at home. There is no one more anxious than I am to adopt any course which will prevent the Government of India depending too much upon that source of income; but it appears to me that that mode of estimating is not only novel, but absolutely wrong in principle— namely, to give an Estimate which the Government think is almost certain to be exceeded. I do not think anyone who listened to the speech of the noble Marquess can have failed to see what great difficulty there is in comparing Estimates both of Expenditure and Income as between one year and another. Therefore, in the observations which I shall make to-day I shall refer to another Paper which is before the House, which shows the net Expenditure and the net Revenue of India during the last 10 years, and which enables anybody to see at a glance the comparative Income and Expenditure of those years. Now, with reference to the manner in which the Contribution by England is proposed to be included in the Estimates of 1881–2, I must say that it is, undoubtedly, very convenient from some points of view to hon. Members, because they will be able, in looking at the finances of the present year, to eliminate all the disturbing effects produced by the War Expenditure; but I have some objection to it, on the ground that it is inconsistent with the mode in which the Contribution itself is going to be made. It is possible that in the next four years, during which the House is going to be asked to vote £500,000 a-year towards the Indian Exchequer, the House might refuse in some one year to make that grant. If such an event occurred, you would find that the Indian Government had included the whole amount in its Budget receipts for this year, and that you could not alter that state of things, even though Parliament had refused to vote the money. As regards the Estimates of Expenditure, there is one general observation which I think it my duty to make. The House will recollect what took place in 1879–80. The right hon. Gentleman the present Postmaster General then put upon the Paper a Resolution enforcing economy, and pressing in the most earnest manner on the Government the desirability of reducing its Expenditure. When, however, the time arrived for the discussion it was my duty to announce on the part of the Government of India and of the Home Government that the suggestion of the right hon. Gentleman had been anticipated, and that as soon as it was found that the Expenditure of the year exceeded the Income to a considerable extent, steps had been taken to reduce the Expenditure of India. The present Prime Minister, however, in speaking on the subject, referred to the statement I had made as one not entirely adequate for the object, and went on to refer with approval to a suggestion made by my right hon. Friend (Mr. Grant Duff) that the Expenditure might be reduced by something like £4,000,000 a-year. In this decision to reduce expenditure the House of Commons, as at that time constituted, cordially acquiesced. After that Motion had been accepted by Parliament, the greatest efforts were made to carry out the policy it was based upon, and steps were immediately taken for reducing the Expenditure in India; although, of course, the most immediate opportunity of retrenchment was in the Department of Public Works. The result of those steps has been that the Expenditure has been already greatly reduced, and there is no doubt that they will lead to a considerable reduction in the charges under that head in the future. But, as far as I can understand the Statement of the noble Lord to-day, he has not said a single word in reference to a reduction of the Civil Expenditure of India. The Liberal Party, a few years ago, was in the habit of coming down to this House in great force, and of attacking the then Government, on the ground that they countenanced lavish expenditure in India; but now we find that not one word is said upon the subject, and that nothing is done in the direction of the reduction of the Civil Expenditure. It may, perhaps, be said that times have changed, and that now the Indian Government has more money in its coffers it can afford to spend more. That, however, is no answer to the charge which I have to make against the present Government of India—this House having expressed its deliberate view that some considerable attempt should be made to reduce both the Civil and Military Expenditure of India. As regards the subject of the expenditure upon the Army of India, we have certainly heard something from the noble Marquess; but the House will recollect that it has been stated that the result of the labours of the Commission at Simla, which was appointed to consider the subject last year, ought to be to effect a saving in the Military Expenditure of India of £1,500,000 per annum. I can quite understand that there may be very good grounds for delay in carrying into effect the recommendations of the Commission, owing to the change of Government both at Home and in India; and I fully admit that the Government is entitled to ample time to consider the recommendations of the Commission. But, at any rate, a year has now elapsed without anything whatever being done in the matter; and the noble Marquess does not hold out even a hope to us that anything will be done to carry into effect the recommendations of the Commission. [General Sir GEORGE BALFOUR: Hear, hear!] The hon. and gallant Gentleman opposite seems to think that that is so much the better; and, doubtless, that may be the view of the Madras Army. It must, however, be recollected that that Commission was largely composed of military men, and that they arrived at the conclusion that it was possible to cut down the Military Expenditure of India without in any degree impairing the efficiency of her Army, and without reducing the English Force in that country. I think that it is highly desirable that the Government should publish some portions of the Report of that Commission, though I am perfectly aware that, for political reasons, the whole of it could not be made public. If the portions of that Report to which I refer were published, I am satisfied that they would create a public opinion on this subject in England which at present does not exist, and the consequence would be that the desired reforms would have a better chance of being carried out by their becoming more generally known, and by the feeling of the public being enlisted in their favour. Passing from the subject of the reduction of Expenditure in India, all I can say is that any steps taken with the view of securing that object, so far as is consistent with the efficiency of the Services, will meet with my cordial support. Turning to the subject of the Debt Commission in India, I must say that I think that the remarks of Major Baring on the subject in the Budget Statement are very difficult to understand; and, indeed, the noble Marquess himself informs us that the duties of the Commission have not yet been settled. The question, however, that we wish to have answered is, How is that Commission going to act? I can quite understand that the noble Marquess is not prepared at this moment to tell us exactly what the duties of that Commission are; but he might surely inform us, generally, what the Commission are to do. They will receive £750,000 annually for the purposes which they are appointed to carry out. I understand that, if the state of the Money Market admits, this £760,000 is to be transmitted to England for the purpose of reducing the Debt. But if it should happen, as I am afraid it frequently will, that the state of the Money Market will not justify that sum being remitted to this country, what course will the Commission take? Because it seems very absurd to invest that sum in India while, at the same time, you are borrowing money there. I hope that, when the noble Marquess comes to sum up, he will give us some information on this point. Of course, I approve of the general object of the Commission, and I have heard with satisfaction that the Government propose to apply this grant of £5,000,000 towards the reduction of the Gold Debt. That is a point of the highest importance, which, fortunately, is materially assisted by the popularity of the Rupee Loans in this and in other countries. I would, however, suggest that that popularity might be considerably augmented by a consolidation of the present Rupee Loans. The main reason for desiring to reduce the Gold Debt is to enable the drawings of India upon England to be reduced. These drawings have reached, and sometimes even exceeded, the maximum, and this state of things cannot continue without great disadvantage, at any rate, until the trade and the resources of India have been largely developed. It was with some regret that, at the beginning of the Session, I heard the noble Marquess, while not refusing his assent to the appoint- ment of a Commission to consider the question of remittances from India to England, couple his consent with conditions that totally changed the character of the Commission. It will be a great advantage next year if the noble Marquess would consent to the appointment of a Commission to inquire into this very limited matter, as the result of their labour will be to get rid of a great deal of misapprehension which prevails in commercial circles in this country—even among persons who might be expected to understand more clearly the nature of those transactions, and which is reflected even in the Money Articles in the newspapers which one sees every day. With regard to the Silver Conference in Paris, I do not in any way regret that the Indian Government thought fit to send a Representative, nor do I disapprove the two concessions offered by this country that the Bank of England would consent to hold a portion of its reserve in silver, and that India would undertake, under certain conditions, not to close its Mints against silver for a fixed period of years. But I did regret the action of the Representative of India; and while I recognize the services, and fully appreciate the ability and the knowledge displayed by Sir Louis Mallet, the Indian Delegate at that Conference, it was, in my opinion, most unfortunate that he should have thought fit to express, in addition to the official views which he was bound to put forward, his own private opinions on the subject of bimetallism. The general impression that may be derived from the speech of the noble Marquess is one of satisfaction at the generally prosperous state and financial prospects of India; but if he will permit me to ask a question of him, it would be as to the prospects of the season in Mysore, a part of the country which has suffered very seriously in recent years from famine. It would be, indeed, most unfortunate that the year which has witnessed the restoration of Mysore to Native rule should be marked by a famine. God forbid that that should be so. I hope the noble Marquess will be able to dispel the fear which exists in many minds as to the probable results of the season in that district. As I have said, the general result of the Statement made by the noble Marquess is to show that the finances of India are, on the whole, in a prosperous condition; and I am bound to say that he in all fairness explained and also acknowledged what was due to the policy of Sir John Strachey in this matter. There can be no doubt that that policy, supported and encouraged as it was by Lord Lytton, has been very considerably obscured by the very unfortunate mistake made in reference to the estimated cost of the War in Afghanistan. That mistake I have never attempted to deny or to justify; but I am very glad the noble Marquess has not allowed the fact to obscure his own view of the services which Sir John Strachey has rendered. As far as the War Estimates are concerned I shall say nothing, except that it occurred to me, in the course of the speech of the noble Marquess, that he was putting on large sums in one place in order to take them off in another; and that the extra receipts from railways and telegraphs are not credited to the War, as in strict justice they ought to have been. Then he has included in the total the cost of the Frontier Rail-ways, which, when completed, will in a few years become of the greatest possible service to the Government of India, and will also prove a fruitful source of Revenue; and I would ask, therefore, whether these railways ought not to be taken from the War Expenditure and added to the ordinary Account? There was another point in regard to the policy of Sir John Strachey, the references to which in the speech of the noble Marquess I heard with great satisfaction—I refer to the Cotton Duties. The policy of the late Government on this point was, I think, somewhat hardly treated at the time of its enunciation; but I am glad to find that the noble Marquess not only accepts that policy, but thinks it capable of still further development. I cannot help thinking, in view of what the noble Marquess has said, that he is, perhaps, going a little too fast rather than too slowly, for I think it has been shown that the urgency of the case for getting rid of the whole remaining duties has very considerably diminished, now that they have ceased to be protective. As far as the Income Tax is concerned, one charge that was often made against the policy of Sir John Strachey was the high taxation it imposed on the poorer classes in India. It was said that that taxation, in the form of licence duty, went so far as to apply to persons having an income of only 4s. a-week. It was perfectly true that power was taken to charge down to that point; but, as a matter of fact, in consequence of the exceptions provided, no one was taxed who had an income of less than 8s. a-week, and within the last two years alterations had been made by which no one had to pay the tax unless his income came up to £1 a-week. Those alterations, which were made by Sir John Strachey, seem to me to have worked well for those of the taxpayers whose incomes are very small. The speech of the noble Lord has also made it quite clear that but for the disturbing influences of war the net result would have been a surplus of nearly £13,000,000 sterling on the three years ending on the 1st of April last, or £4,400,000 a-year. In the present financial year the result, as estimated by Major Baring, will be a surplus of £855,000. I hope there will be a general desire to do full justice to the financial policy of Major Baring; that it will not be regarded as a question of Party politics—it certainly is not our intention so to regard it—but that politicians of every Party will look upon it in the point of view of Englishmen determined to promote the welfare and prosperity of the people of our Indian Empire.


, in rising to move— That a Select Committee be appointed to inquire into the financial and general administration of the affairs of India, referred to former inquiries as to the question, particularly to the Committee which was appointed at the instance of his right hon. Friend the Postmaster General (Mr. Fawcett), and said that three principal items of Revenue in India were Land Revenue, the Opium Revenue, and the Salt Tax. Upon each of these points he wished to say a few words. With regard to the first, it seemed to him a very sad thing that so heavy an amount of taxation weighed upon the ryots of India; and, though at present he feared it was impossible to lighten it, yet he looked forward to a day not very far distant when the condition of the finances of India would enable the Government to take the subject into their serious consideration. He particularly referred to the Madras Presidency, where the ryotuary system pressed on the peasants; whereas, in Bengal, the permanent settlement prevented any increase of revenue. Then, as regarded the Salt Tax, he regretted that the same consideration did not enable the Government, not only to lower the tax, but to do away with it altogether; because it was a sound axiom that no tax ought to be put upon a necessary of life, as salt beyond doubt was. He had been already, during the present Session, able to repeat his views on the subject of the Opium Traffic in its worst aspect; but since that time important information had been received from China on the question, the truth of which was admitted by the hon. Baronet the Under Secretary of State for Foreign Affairs, which showed that the prospect of the growth of opium in China was increasing, and on that ground we must look to the continuation of the Indian Opium Revenue as very precarious. He therefore considered the noble Marquess had acted with great prudence in the careful estimate he had made of the Opium Revenue for the present year. He thought the time had come when a full investigation ought to be made into the whole subject of the finances of India. An hon. Friend of his on the other side of the House (Sir David Wedderburn) had given Notice of a Motion for the appointment of a Commission; but, for his part, he (Mr. Fowler) thought the appointment of a Committee would be preferable, though he would gladly see a Commission appointed if a Committee was refused. Had a Committee sat on the subject that Session, consisting of hon. Members who did not take any part in the Irish debates, an exhaustive inquiry might have been made. Other subjects than that of Indian Finance might have been investigated. He had received a letter from a distinguished Native gentleman, the editor of a Calcutta newspaper, dated Calcutta, July 30, 1881, in which he said— Considerable interest in our goal administration has been excited by the question put to the Secretary of State by Mr. O'Donnell on the subject of gaol mortality and Hogging. The terrible increase in the rate of mortality was due to the low diet scale recommended by the prison conference appointed by the Government of India. The conference apparently carried out Sir John Strachey's theory of rations for prisoners. The result was that the poor prisoners wore half-starved, and they could not stand the hard and heavy labour prescribed in our gaols. Happily the error was discovered by Sir Ashley Eden, and not only has the old scale been re- stored, but it has also been improved. The increase of drunkenness, owing to the introduction of the out-still system, is another local question which is agitating the public mind. There has been a considerable increase of drunkenness in Bengal. I am told that not only poor Chasas (field labourers) hut even schoolboys in the villages have taken to drinking in consequence of the cheapening of country spirits through the out-still system. The two subjects referred to in that letter were well worthy of inquiry, as was also the question of the keeping up of separate Native Armies in Bombay and Madras, and, indeed, the whole question of the Indian Native Army. They could not, circumstanced as they were, reduce the European Army in India; but it might well be considered whether the Native Army might not be reduced. Then, as regarded appointments in the Indian Civil Service, there was a question for inquiry whether the present system of competitive examination was the best that could be adopted. When the East India Company was in existence, a distinguished Indian civil servant or military officer who returned to this country either himself became a Director, or had friends who became Directors of the East India Company, and expected to get, and as a rule obtained, for his son an appointment in India; and that system, though it was liable to be occasionally "jobbed," was, on the whole, honestly carried out, and worked well. That was all at an end. His hon. and gallant Friend opposite (Sir George Balfour), or any other distinguished Indian officer, had no more chance than he (Mr. Fowler) had himself of getting his son into the Indian Service. That was a public loss, because a young man born in India would in his childhood have learnt something of Hindostani, Tamil, or some other Indian language, and would have heard subjects discussed at his father's table which would give him a knowledge which could only be acquired by another after years of service. Would it not be possible, therefore, to reserve half the appointments for the sons of soldiers or civilians who had served 20 years in India, while still retaining the system of competition? Reference had been made to the course taken by the late Government with regard to the duty on cotton goods. He exceedingly regretted that course, for it seemed to him that India was so heavily taxed that it was unwise to reduce any source of revenue in deference to the cry raised in this country. He thought the time had arrived when a Select Committee of that House, consisting of the present Secretary of State for India and ex-Indian Secretaries or Under Secretaries and hon. Members who had been connected with India, might with advantage go into those matters. Whether a Commission or Committee was appointed he did not mind; but he was anxious to show the people of India that the House of Commons was deeply impressed with a sense of responsibility towards them. He had heard the right hon. Gentleman the Postmaster General say that he felt no responsibility as a Member of Parliament so great as that which he owed to the people of India. He shared in that feeling of his right hon. Friend; and, therefore, he wished that something should be done to bring that House into closer connection with the administration of affairs in India, and to show the people of India that we took an interest in their welfare. He begged to move the Amendment of which he had given Notice.


, in seconding the Amendment of the hon. Alderman the Member for the City of London (Mr. E. N. Fowler) for the re-appointment of the Indian Finance Committee, said, that he had great pleasure in doing so, and, in justification of the proposal, would remind hon. Members that a similar Motion had been made in previous Sessions on the broad ground that the Committee which had sat for several years, and been ably presided over by a former distinguished Member of that House (Mr. Ayrton), had brought out, from evidence given by witnesses sent from India and obtained at home, most important and useful information connected with their great Indian Empire; and, no doubt, if Mr. Ayrton had been now in Parliament he would have most warmly supported the Motion of his hon. Friend the Member for the City of London. Not only that, but he (Sir George Balfour), after the experience of the Committee which formerly sat upon the subject, could bear testimony to the great advantage which that Committee had rendered to India. Unhappily, just as the inquiry had been nearly finished, and the whole of the matters laid before the Committee during several years had been indexed and summarized so as to be useful, the late Government, on coming into power in 1874, thought fit to decide on closing the investigation just as it might have been made useful. The noble Marquess the Secretary of State for India had made some remarks on the complication of the Accounts of India, and avowed his intention to simplify them. This was, indeed, a most necessary improvement, and he thoroughly approved of the intention to simplify the Indian Accounts, and avoid the confusion therein which now existed; for when they got to an expenditure of £77,000,000—a sum beyond the power of the human mind to grasp considering that it was made up of Imperial charges with Local and Provincial outlays blended—the importance of taking such a step must be manifest. In the course of a very few years he counted 10 different new heads introduced into the Accounts. These new heads puzzled one extremely, even in the mode of setting them out in the Accounts; but the more so because they did not appear in Accounts of prior years, and thereby destroyed all possibility as to making any comparison of the transactions of one year of former years with those of another year and later years; the result being that no human being could enforce the practice of economy on the system pursued by urging the increases in the items as a reason for curtailing expenditure. He had examined the Accounts of India for the last 50 years, and such great changes had been made at intervals of a few years, so that it was impossible to make the Accounts within the several periods to dovetail into one another. There had been about 13 changes in the last 50 years in the mode of preparing the Public Accounts of Indian Receipts and Expenditure, so that no one could contrast the items of the past with those of the present period. The noble Marquess the Secretary of State for India had pointed out the differences between the Budget Estimate and the Regular Estimate; but everyone would be surprised to find that in one case there was a difference of more than £10,000,000 between the one and the other. In the year 1877–8, under the financial sway of Sir John Strachey, the Budget Estimate was £56,000,000, the Regular Estimate £67,000,000 nearly, and the actual charge upwards of £67⅓ millions. That showed the loose or changeable way in which the Accounts were kept. With regard to the present Afghan War Expenditure, the statement made by the noble Marquess was the only part where clearness in figures did not exist. As far as it was understood, he (Sir George Balfour) would assert that instead of its being only £20,000,000, as the noble Marquess was assumed to have stated, he (Sir George Balfour) believed it amounted to nearer £30,000,000. He did not say that the noble Marquess had concealed anything—he would be incapable of that—but the fact was, as the noble Marquess had virtually stated, the Accounts were so prepared that it was not possible for anyone but those acquainted with them in minute detail to know what the War expenses really were. One cause of confusion was the new practice of dividing the military charges into ordinary and extraordinary, which left the allotment of sums either to the war or peace charges at the discretion of individuals. In no previous years' Accounts, till this war, had this course been followed. But, taking the gross military charges and contrasting the amount for each of the years, and for a period of six years ending in 1881–2, with the expenditure for a six years' period prior thereto, then the excess for the latest period was between £29,000,000 and £30,000,000. With respect to trade, it would have been satisfactory to have heard even a brief view as to the effect produced by the important change in the Tariff, on freeing both imports and exports of a number of duties. No doubt, the imports and exports had been kept up; the exports had considerably increased, the increase being chiefly in opium. He could not, however, place much reliance on the hopes expressed by the noble Marquess as to the condition of Indian finance generally. Those hopes were always being raised, but were never satisfied, for it was a fact that ever since Lord Northbrook's departure the ordinary expenses of the Army in India had been going on increasing. If these increases could be prevented, and the Civil Expenditure kept down, and if wars could be kept off, then he saw no reason why the finances of India should be fettered in the future, because, had it not been for the Mutiny and the two Afghan Wars, the surpluses of India would have amounted to something like £ 90,000,000, unhappily spent for these operations. If it had not been for the outlay, however, which had unfortunately been incurred, the finances of India, since 1856–7—the year before the Mutiny—might have been in a high state of order. Including the sums spent on the Mutiny, on the war in Afghanistan, and on Extraordinary Public Works, the total gross expenditure has been in excess of gross income to the extent of £105,000,000; and of this sum £29,000,000 had been unnecessarily paid out of current revenue as interest, guaranteed to the Railways by the State, and that was a heavy charge against the current year's expenditure, although it was now in course of repayment. The sum of about £37,000,000 might be roughly stated as the expenditure caused by the Mutiny; £38,000,000 for Extraordinary Public Works, and the war in Afghanistan might be put at from £29,000,000 to £30,000,000; so that these extraordinary outlays considerably exceeded the excess of expenditure over all income. They had not, however, been able to prevent this kind of excessive expenditure in the past, and must, therefore, not make their calculations for the future upon the hypothesis that they would have no extraordinary demands to meet. He protested against the unjust incidence of taxation as between the different Presidencies in ratio to the areas and to the population. The total area of British India, excluding the Native States, might be assumed to be about 870,000 square miles, of which 607,000 square miles might be said to be included in other parts of India, exclusive of Madras and Bombay, whilst the area of these two divisions might be about 263,000 square miles, the populations respectively of these two great divisions being 137,000,000 against 47,000,000, the total population of all British India being about 184,000,000, the proportion of the respective populations being nearly as three to one, and the areas not quite so disproportioned. But since the year 1867–8, up to 1879–80, a period of 13 years, the Presidencies of Madras and Bombay had collected from these populations the sum of £233,000,000; whereas the much larger populations of the other parts of India had only paid £464,000,000, or exactly double, instead of, in due proportion, nearly treble. Then, as regarded the net excess of Revenue of the two Presidencies, there had been in 13 years a surplus of £39,000,000, whereas in the other parts of India only £69,000,000. Now, Madras, especially, was more unjustly treated, by reason of the mode of debiting all the military charges for Burmah, Central Provinces, and other parts, to the Madras finances, instead of showing them against the Governments in which the Madras troops were serving. He must, then, strongly put forward the financial bad treatment suffered by these two Presidencies, and this one point the more strongly he was anxious to bring forward, because there was no one in the Council of India at home who had the power to influence the Secretary of State for India to oppose the unjust treatment of Madras and Bombay as regarded taxation, in which great injustice, great wrong, and great oppression had been done. If they looked at the income raised in Madras and Bombay, and compared that with the total Revenue India received from all parts, they would find that Madras and Bombay provided one-third of the income of all India, and yet the population of Madras and Bombay was not a quarter of the whole population of India. Therefore, he maintained that the Revenue of these Presidencies was laid on unjustly in comparison with other parts of India. It might be proper that the richer parts of India should contribute funds to aid the poorer parts; but he objected to the mode of paying it. If contributions were provided by one part of India as a direct contribution from the one division to the other, then the money so applied ought to appear distinctly in the Accounts. At present, Madras alone provided a direct surplus, after paying all military charges, including those of Burmah and Central Provinces, of upwards of £2,000,000; and yet when new taxes were to be raised even then Madras was burdened therewith. There was one general fund which was most unfairly apportioned, and that was the outlay for Extraordinary Public Works. The system began in 1867–8, and for the 13 years down to 1879–80,out of £30,000,000 spent in India on Extraordinary Public Works, Madras and Bombay received only £4,000,000 of that amount, and the rest of India £26,000,000; whereas these two Provinces, in proportion to the population, ought to have received £7,500,000, or if they took the revenue supplied to India, then the expenditure on account of Extraordinary Public Works ought to have been equal to £10,000,000. Then the treatment lately served out to these two Indian divisions in having their Salt Tax raised nearly 40 per cent was another act of unfair treatment. The object of this increase was declared to be an equalization of the Salt Tax by diminishing the rates in other parts of India. The Government of India publicly avowed that an increased total revenue from salt was not the object; but that increase had actually resulted now, and was increasing. The promise of the noble Lord the Member for Middlesex (Lord George Hamilton), made in his place in Parliament, as regarded this matter had not, in any sense, been fulfilled; for he (Sir George Balfour) found that Madras and Bombay had supplied nearly the whole of the increase in this tax, and had, therefore, suffered to the extent of £1,100,000. He appealed to the noble Marquess to consider that point, and see whether he could not take off the increase of the salt taxation. The fact was—and he was sorry to have to state the fact—that funds were distributed under influences all powerful with the Government of India especially for the promotion of Public Works, in favour of certain favoured localities; so, also, were taxes raised, as lately placed on Madras and Bombay, on their cheap salt to favour other parts of India, making the burden fall unequally on the less favoured. The Salt Tax, which had, in 1879–80, risen to £7,266,413, pressed especially heavy on the Presidency of Madras, which contributed over £2,000,000 to the Surplus Fund, which India must provide for the Home expenditure. The two Presidencies, Madras and Bombay, actually paid £3,056,270 as their Salt Tax, against £4,210,143 paid by the rest of India—that was, 47,000,000 people paid the one sum, and 137,000,000 paid the latter. It was particularly unjust to Madras, seeing that until 1805 the salt of Madras was free. The hateful salt monopoly of Bengal was then ordered to be introduced, although the Land Tax of Madras was then much higher than that of Bengal. The inequality of taxation was even now great. Out of £22,463,548 collected from all the land of India in 1879–80, the two disfavoured Presidencies paid £8,874,280, and the rest of India only £13,589,268, being an amount far less and out of proportion to the respective areas end population. If it were financially possible, it would be most desirable wholly to remove the Indian Salt Tax, for free salt in India would be the greatest been that could be given to the people. The trade in salt, if made free, would be enormous. The sources of salt supplies in India were well suited for trade to and fro. The hearts of the people would be turned in their favour, and the poorest of the poor would bless the English rule. He trusted also that it would be found possible, in course of time, to abolish all the import duties now—the duties on cotton manufactures imported being doomed. And as these amounted to about one-half of all the duties derived from the imports, it was only wise also to withdraw them, especially as the remaining half of the import duties was derived from metals, leather, woollens, spirits, and wines. It would be advisable, for the further encouragement of the trade, to remove them, and thus leave India a free port. The only export duty now levied was on paddy and on rice, and Burmah bore more than one-half of the tax collected. Madras was unfairly burdened by having to pay an export duty on the grain there produced, because the Land Tax was already higher in that part than in any other division of India. The grain so heavily taxed came in contact with the foreign market with the grain raised from the far lighter assessed lands of Bengal and Burmah, so that the dearly raised grain of Madras only obtained the same price as their cheaply produced grain. There was no country on the globe so well fitted for being made a free port as India was at present. The free goods would be carried far into Central Asia, and prove far more useful in creating friendly feelings than was possible by armies. Another very important reform, at which Indian statesmen ought to aim, was the reduction of Indian Military Expenditure, which had been steadily increasing of late years, and in a ratio far higher than that of its increase in England. In particular, the increase in store charges alone was very considerable; but that was one item only, and there were others equally noticeable. Then the changes lately advocated ought to be made public in the Indian Armies. The same fatal concealment, practised in 1860, when the unhappy changes which had produced so much evil were hurried on, was still continued, and probably with the like fatal consequences. But whilst he trusted that great efforts might in future be made to keep the Military Expenditure of India within reasonable limits yet he would warn the noble Marquess that it would require the exercise of a very strong hand to effect that purpose. At the same time, though favourable to the diminution of Military Expenditure, consistent with that efficiency which was so essential, yet he (Sir George Balfour) most earnestly protested against the one-sided action of the Government of India in the way they had dealt with the Civil Expenditure. Not a year had of late passed without the Financial Statements of India crying out about the Military Expenditure; but not a word had been uttered as to the large increase of civil charges. Year by year, during the years from 1867–8 down to 1879–80, these civil charges had augmented, and in a far higher ratio than the Military Expenditure. But, both at home and in India, this excess, amounting to several millions, had been allowed to grow up without one deprecatory remark against the extravagance.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "a Select Committee be appointed to inquire into the financial and general administration of the affairs of India,"—(Mr. Robert Fowler,) —instead thereof.

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


said, he also had great pleasure in supporting the Amendment of the hon. Member for the City of London (Mr. B. N. Fowler). He (Sir David Wedderburn) had sat for several Sessions upon the Committee which had been referred to by his hon. and gallant Friend (Sir George Balfour), and he must say that it had taken a great deal of evidence, especially of an official character; but many questions remained unsettled which might well form the subject of another inquiry, though there were some points that could not be determined unless the Commission went to India. He had listened with great interest to the comprehensive Statement of the noble Marquess the Secretary of State for India, and thought that he had satisfactorily proved to the House that India, like most civilized countries, could pay her way, if only she were allowed to remain at peace. So far there was ground for confidence as to the future; but he could not help saying that he shared the regret of the hon. Gentleman the late Under Secretary of State for India (Mr. E. Stanhope) that no schemes of retrenchment and reform had been suggested in the speech of the noble Marquess. It appeared to him (Sir David Wedderburn) that there were several directions in which reform was possible. For example, a large saving might be effected on the Civil Service of India if the present extravagant system were abandoned of invariably appointing Europeans to the most important and well-paid offices, and if Natives or Eurasians were sometimes employed in their stead. He would point out that there were two schools of politicians in India—those in favour of repression, of keeping down the Natives, and those who were in favour of conciliation and who had confidence in the Natives. It was to the latter of these schools that he accorded his support. A Return that was laid on the Table of that House a short time ago on the Motion of his right hon. Friend (Mr. Bright) showed all the money paid out of the Revenue of India to persons in the Civil Service, and showed, in separate classes, all receiving salaries above £100 a-year. It was a striking fact that, while comparatively few of the Natives received even the minimum salary of £100, as the salaries rose the Natives entirely disappeared; and in the well-paid, lucrative offices, none but Europeans were employed. He thought that fact showed the unfair treatment of the Natives of. India, when it was evident that they could be satisfactorily employed at much cheaper rates than Europeans. There was another point on which he knew that the people of India felt that their views should be clearly placed before the Government, and that was the question of a permanent Land Settlement. The Government were accused of being in the position of an absentee landlord, who raised his rents and discouraged improvements by his tenants, and evicted his tenants for non-payment of rent. Into that question it was most important that a careful inquiry should be made; and if there were no other subject than this, although there were at least 28 requiring attention, it would be desirable that a special and independent Commission should be appointed to proceed to India and inquire into the matter. The noble Marquess had declined to appoint a Commission this Session; but he hoped one would be nominated at no distant date.


said, that, in his opinion, the course that had been taken by the supporters of the Amendment in making it was both ill-timed and unfortunate at that moment. It had been submitted at a time while the House was still under the influence of the admirable and very satisfactory Statement made by the noble Marquess the Secretary of State for India. The most striking merit of that Statement was one on which the noble Marquess did not debate at any great length, probably because he did not wish to take undue credit for the Government of which he was a conspicuous Member by glorifying its policy. He (Mr. Arnold) referred to the fact that this Financial Statement was free from all charges in regard to War. As one who was entirely free from Party ties, he could not avoid expressing his deep gratification at the settled policy of Her Majesty's Government which had rendered such a Budget possible. Let it be always remembered regarding the last Government that, for the sake of placing British Agents in the towns of Afghanistan —a policy which was afterwards repudiated by themselves—the taxpayers of Great Britain, Ireland, and India, had been made to pay a sum which, at the lowest estimate, amounted to£ 15,860,000. He must express his cordial approval of the arrangements by which the Contribution of England towards the expenses of the War was at once brought into the Account; and would point out that the Famine Insurance Fund had now been ratified by both the great Parties in the State, and henceforth it would be a settled maxim of Indian policy that there should be this charge of £1,500,000 on the Indian Budget. He did not propose to refer to the statements of the noble Marquess with reference to the currency of India; but he must say that while the statement of Major Baring appeared to him to be clear and satisfactory, it could not but be a matter of concern to the House that the loss to the Indian Exchequer by exchange was so great, amounting as it did to no less than £2,000,000 sterling for 1881–2. There could be no doubt that there were many circumstances—one in connection with the Opium Revenue—which tended to reduce the real pressure of that loss; but there could also be no doubt that that loss could be operated upon by making the Indian Debt as far as possible payable in silver. He would not presume to question the policy of underestimating the Opium Revenue of India. He agreed very much in that matter with what was stated by the hon. Member for Mid Lincolnshire (Mr. E. Stanhope); but he could not wholly agree, though he did in great part, with the objections which were raised to what was called the Opium Traffic. So far as that Opium Traffic was a legitimate business, he could not see how it could be interfered with. He had seen the manufacture extensively going on at Ispahan, and the supply of Persian opium was increasing, for its manufacture was encouraged to a considerable extent, and it was expected that, at no distant date, there would be a very large importation of that opium to India. Certainly, if the Government desired to protect the Revenue they derived from opium, they would have to consider whether Persian opium entering at the port of Hong Kong should enter into under its present conditions. At the present time it was shipped in the Persian Gulf in vessels for the port of Aden, and was there transferred to British vessels trading with China to escape the heavy duty which would be payable in the ports of India. In passing from that to the great question of the reform of the Expenditure in India, he must congratulate the Indian Government upon the encouraging Statement the noble Marquess had been able to lay before the House. He believed that India could not only pay her way, but provide a large surplus of receipts over expenditure. The two subjects which were most deserving of the attention of the Indian Government were the improvement of Agriculture and the re- duction of Expenditure. The improvement of Agriculture indirectly affected and was connected with the latter; and nothing could be more certain than that if they increased the productive power of the soil in India, they would lessen the heavy burden of taxation and expenditure which now pressed so heavily upon that country. Another matter, which certainly deserved the attention of the Government connected with the improvement of Agriculture, was the condition of land tenure in India. There was probably nothing the Government of India could do that would be likely to produce more satisfactory results than to give greater security of land tenure. The pressure of population in various parts of India was really appalling in its significance. We had no experience in Europe of such pressure; but if we took the densest population we had— namely, that of Belgium, and considered it doubled, there was even then not a pressure equal to that which prevailed in Oudh and parts of Bengal. India was not like Belgium in respect of manufacturing industries. Although the population was very great in the overcrowded centres, Hindostan was not, on the whole, over-populated, but a rather sparsely populated country; and if the Government would use every effort to enlarge the area of cultivated land in India, they would do what was most likely to remedy the seriously overcrowded districts. We had done something to improve the comfort of the people of India; even in the Deccan the wages had increased since the Eastern Bengal Railway was established from 1¾ or two annas a-day to three and four annas; but no fact was more striking in connection with what might be done to increase the productive wealth of India than that the average produce of the cultivated land in India was only 10 bushels per acre, whereas in this country it was fast approaching 30 bushels; and the produce of all other crops in India was proportionately below that which would reward better agriculture. There was no reason why that average produce should not be made greater, and, as Mr. Kerr said that— Each additional bushel to the acre of the present cultivated area of India is equal to the yearly maintenance of 22,000,000 people. And there is as great a dormant fund of power for the attainment of this object in the insufficiently employed labour of India as in its imperfectly cultivated soil. He hoped the Government, which had this year, with infinite difficulty, passed a Land Law for Ireland, would turn its attention to the same subject in India. Land legislation was one of the crying needs for a large part of India. It must be evident to all that if we had one country in which the average produce was less than one-third per acre of that of another country, no work could be so beneficial, or so immediately tend to raise the wealth and prosperity of the former country and its ability to bear taxation, as that of increasing its agricultural productiveness. He, therefore, believed the true policy of the Government in that respect would be to give the occupying farmers of India firmer security in their holdings than they now possessed; and what had been done for Ireland, that Session could be done with less time and difficulty for our great Indian Dependency, under the beneficent despotism of the Indian Government. It was a matter of common observation in India that where a man had two holdings, one of which was held at a low unchangeable quit rent, he spent all his money in improving that holding, and sinking wells on it, while he would make no expenditure on the other holding of which the rent was liable to be raised. There was nothing, perhaps, that would tend more to the development of agriculture in India, to its enrichment, and to the avoidance of famine, than the encouraging of well-sinking. Water for irrigation would rarely be profitable when it had to be lifted more than 30 feet. But there were many large districts in India now menaced with famine and ill-supplied with water, in which water could be obtained at a much less depth than that minimum of profitable irrigation. There was an Indian proverb which said —"A good man is he who digs a well, who plants a tree, and who has a son;" and these three matters pointed to the essential necessities of life in an agricultural country such as India. With regard to the development of railway enter-prize, he had been gratified to hear of the encouragement which Government gave to private Companies, and heartily congratulated them upon the steps they had taken in the matter. Some people thought the Indian Government had gone mad in the direction of railways. He was, however, convinced that the State could do no better work in India than by the judicious encouragement of railways. The railway system of India was of enormous value to that country and to the Government of India. It might be well to remember that the whole of the railway mileage of India did not exceed the average increase of a single year of the railways of the United States. He believed that by the judicious construction of railways the exports of India might be largely increased. He looked forward with hopefulness to the day when the export of wheat would be doubled, and more than doubled. That might be easily accomplished. India, which had great advantages for the export of wheat, sent to us only 1–18th of the produce which came to this country, while Australia sent a much larger proportion—no less than l–13th. India had advantages in that competition which were increasing every day, and which ought to increase as the country was developed by railways. He could not help thinking that in a country so populous and so properous as he hoped India was going to be there would be a great opening for the increase of private enterprize. To that policy it was in the power of an enlightened Government like that of India to render valuable assistance. He hoped and believed that British capital would find its way to India for investment in railways, if the Indian Government were prepared to give a limited guarantee, say, of 3J per cent upon a well-defined capital, and perhaps the guarantee might be limited for a certain period, in circumstances and under conditions which would afford encouragement to vigorous enterprize on the part of the shareholders, and which would give sure promise of ultimate benefit to the Government. He was anxious to see India increasing in wealth. As the Representative of nearly 200,000 people who were largely concerned in the trade with India, he desired to promote, for the welfare of all, the free exchange of the productions of both countries. He was therefore greatly pleased to hear of the private railway to Mysore which the noble Marquess had described; and the constituency he represented would also hear, he was certain, with great gratification and much hope, the statement the noble Marquess had just made as to the duties upon cotton imports. He should like to have heard from the noble Marquess what had taken place with regard to the Factory Act which he understood had been introduced and carried in the Legislative Council of India. Some five years ago, when he (Mr. Arthur Arnold) visited the cotton factories of Bombay, he had been very much distressed with what he saw, for he found a cruel want of such regulations as were enforced here. There were very insufficient means taken to guard against the dangers of accidents from machinery; and he saw Indian children of seven years of age, who worked from 7 in the morning till 5 in the evening, with only one half-hour's interval for refreshment. The children whom he saw in one large factory had worked these hours continuously for 46 days out of the 49 days preceding the day of his visit. He desired to ask the noble Marquess what had been done in the matter of establishing humane regulations regarding the employment of labour in the factories of India. The competition of Lancashire with the Indian factories was about to be placed on a more fair and reasonable footing. He did not wish to conceal from the House that freedom of trade in regard to the imports of cotton goods would be of advantage to his friends in Lancashire; but he was confident that it would be a much greater advantage to the people of India, because nothing could be more desirable than that the people in a country like India, which was eminently an agricultural country, should be able to obtain those articles of manufacture which were of primary and universal demand at the cheapest possible rate. So far as the competition of Lancashire with the Native factories was concerned, all they desired was the freedom of imports, which was so beneficial to all, but especially between a manufacturing and a cotton producing community. He had read with much pleasure and satisfaction the statement issued by the Indian Department as to the increase which had taken place in the imports of cotton manufactures into India during the 11 months ending 28th February, 1881. The accounts confirmed the statement which the noble Marquess had made, showing that the imports to India of cotton twist and yarn had this year exceeded by more than 12,000,000 lbs. those for the year 1879–80; while the value of cotton goods had increased by £7,500,000 above the imports of 1879–80. The finances of India were now in a condition, or were evidently approaching a condition, when they would allow not merely of a further reduction, but the entire removal of the duties on cotton imports to India, when they would encourage and reward the establishment of a policy of free imports, which would be a great advantage to the populations of Great Britain and of India. It was essential to the welfare of India that the import of goods should be free, for nothing would more surely, together with the improvement of agriculture, tend to extend the area and production of the cultivated soil of India, and enable the vast populations to buy material for clothing at as cheap a price as possible. This would tend, also, to reduce the great pressure of population, and at the same time to reduce the rate at which the population tended to increase. He (Mr. Arnold) looked forward with much hope to the future of India under a settled and pacific policy such as that of the present Government. He believed that many persons had no idea of the disturbance of trade which was caused by the recent war through the destruction of the animals which, in a great part of India and throughout the adjoining countries, furnished the only means of transport. Hundreds of thousands of camels and mules had been destroyed by the English and the Russians in warlike operations in Asia in the last five years, and the consequences of that destruction were almost incalculable. In this way the Afghan War spread ruin and famine in Persia and in parts of India. The charge for mules rose by more than 100 per cent, and had not yet by a long way returned to the prices of five years ago. Russian trade benefited by the Afghan War, because the drain of mules and camels was far more severe upon the borders of India than upon the Caspian Sea, and so Russia was able to supply markets which had been almost exclusively our own. He knew a merchant who, three months ago, had £20,000 of Manchester goods which had lain for a long time in his storehouses because of the prohibitory price of mule carriage upon the shores of the Persian Gulf. He was pleased to hear the remarks upon, and looked forward with great hope to the progress and success of, the new Department of Agriculture which the noble Marquess had lately re-organized, under the skilful superintendence of Mr. Buck, in the most desirable work of increasing the productiveness of Indian soil; and he ventured to say that the Governor General who caused 12 bushels of wheat to grow where 10 grew before should be accounted greater than he who had annexed a province. He would now only touch upon the reduction of expenditure. He heard with regret last year the statement of the noble Marquess that "he was not sanguine that it would be possible to make any great reduction in the normal expenditure for the civil administration of India." He hoped that was not a final statement. The progress of education had brought forward, and was daily bringing forward in this country a large number of young men who would be willing to take employment in India, where they would do good service, at lower rates than those which prevailed. A comparison of English salaries in India with French salaries in Algeria, or with Dutch salaries in Java, would be instructive and suggestive to an Indian Secretary of State. There were higher questions of the re-organization of the Government of India, which needed attention. He was very much struck, some three or four years ago, by the approval with which so experienced an Indian official as Sir Bartle Frere wrote of the scheme which the right hon. Gentleman the Member for Birmingham (Mr. Bright) was, in former days, wont to advocate from that part of the House. Last year the right hon. Gentleman the Postmaster General suggested the appointment of a Select Committee. He (Mr. Arnold), however, should think that some reforms which were needed might be matured within the limits of the Anglo-Indian Departments. The employment of Natives was a great matter, both of justice and economy. Not only were the salaries of British employés high; but it should be remembered that on an average 12 per cent of them were at all times absent on leave or furlough, and that their pensions swelled the amount of the Home Charges of India. On the other hand, it should not be forgotten that already 10,000 Na- tives were employed in the Indian Civil Service, and that in accordance with, existing rules one-sixth of the higher appointments in the Covenanted Civil Service would be gradually filled by Natives of India. The government of India by this country formed one of the most interesting chapters in the history of the world. Posterity would take larger note of our success or failure in this than in some of the foremost matters of home concern. He expressed his own opinion, in common with that of others, that while the Government of India had conferred honour and advantage upon this country, it had been not less beneficial to the people of India, and had done much for the civilization of the Continent of Asia. The difficulties of that Government would increase with the advance in knowledge of the Native population, but our strength was also augmented; because we were all, he believed, fully aware of the importance of that circumstance, and convinced that those difficulties could only be successfully encountered by meeting them with justice, with forbearance, and with a wise economy.


said, he rose to offer a few remarks on the clear Statement of the noble Marquess the Secretary of State for India, and in doing so he must say that the House was a typical Indian one. He had observed that the noble Marquess had refrained from striking out on an original path, and that in his Statement that evening, as in his answers to Questions, he was content with much grace and dignity to speak from the notes supplied by Indian officials. There was one point in dealing with which, though it did not now appear for the first time, the noble Marquess never failed to obtain a certain success. He (Mr. O'Donnell) had observed that every reference to the Famine Insurance Fund was as certain of an approving cheer as a virtuous sentiment on the stage of the Victoria Theatre was certain to elicit the applause of the gods of that place, and the fact that it had never come into existence did not detract from it. For his part, he did not believe in the Famine Insurance Fund. He believed it was one of those playthings with which Indian officials amused themselves and dropped after a while. In his opinion, there would be no pretext for the estab- lishment of the Famine Fund, if the Indian people were allowed to establish a Famine Insurance Fund for themselves. The reason why the Indian people were exposed to famine was the same reason why the Irish people were exposed to famine. The agricultural condition of India was kept so low that it was always on the verge of famine; and, as they had been reminded by the hon. Baronet the Member for the Haddington Burghs (Sir David Wedderburn), the Government of India stood in the same relation to India that a bad Irish landlord stood with regard to his rack-rented estate. Unfortunately, they had no Fixity of Tenure Bill as yet with regard to India; and with the exception of Bengal, the cultivators of that country were liable to have their rents raised according to the amount of prosperity which blest their efforts. These continual re-assessments had been condemned by many eminent authorities. Good counsels on the subject only prevailed, unfortunately, from 1862 to 1870. Since then those periodical un-settlements had gone on. But they did not bring any advantage either to the Government or to the country. It was remarkable how little the Land Revenue increased, the increase being between 1870 and 1880 only about Rs. l,500,000. The Land Revenue in 1870–1 was £18,222,000. Next year the reign of re-assessment set in, and from 1871 to 1880 the amount varied from £17,804,000 to £19,311,000, and it was now about a net average of £19,000,000. The inevitable tendency of the periodical rack-renting or re-assessment of the land of India was the impoverishment of the cultivator, just as similar rack-renting had led to the impoverishment of the tenantry of Ireland, the result being as injurious to the Government of India in the one case as it was to the Irish landlords in the other. In fact, the general administration of land in India was conducted in the same way, although on a far larger scale, as the Irish landlords managed their miserable estates; and it tended to a feeling of insecurity, extending in some cases over many years, and bitter feelings between landlord and tenant. Nothing, too, could be more cruel than the way in which the revenue was extracted and the arrears enforced. The noble Marquess had said that many arrears had to be collected, because so many officials had been engaged in the Census. That collection of arrears was one of the most cruel features of the tax. In fact, the parallel between the English Government in India and Irish landlords was complete. The rack-renting landlords discouraged enterprize and entailed poverty on the tenant, and the land taxation of the British Government produced the same effects in India. He looked upon the Famine Insurance Fund and visionary remedies of that kind as only something designed to have the effect of satisfying non-attentive English Members and the non-attentive English public. That Fund was only an excuse for putting off the consideration of the real grievance in India, the reform of an evil system. The only effectual way of preventing famine in future was to give the cultivators security. If a Famine Insurance Fund had been established in Ireland, in all probability there would have been no Land Bill. A permanent settlement ought to be made. The testimony of eminent English officials was conclusive on the subject. The only cultivator who could at all contrive to get on under the present system was the Bengal ryot; in all other parts of India the burden was intolerable. With respect to the Opium Traffic, the noble Marquess had calculcated on a reduction from £8,400,000 to £6,000,000. He (Mr. O'Donnell) heartily hoped that expectation would be realized; that China would altogether refuse to receive the drug which demoralized and brutalized the people; and that the revenue would gradually become a minus quantity. He was sure the British public would not allow another war to be undertaken on behalf of opium; and that if they did, China would not be without powerful allies, both in this country and on the Continent. On the Salt Tax he would say nothing more than that it was an odious impost, and ought to be done away with as soon as possible. the hon. Member for the City of London. (Mr. E. N. Fowler) read an extract from a letter received, as he (Mr. O'Donnell) knew, from some of the most influential, moderate, and intelligent representatives of Native opinion, referring to the profound uneasiness with which all Indians who loved their race and country regarded the scandalous efforts made by the Government of India to introduce drinking habits among the Indian people. Every effort was made to bring the drink shops into the village communities, and even boys at school were now being debauched in order that the Excise Revenue might be increased. Some time ago, he (Mr. O'Donnell) asked the Secretary of State for India, whether instructions had been given by the Government of Bengal to the sub-divisional officers throughout the country to promote the consumption of intoxicating drinks for Revenue purposes, and the noble Marquess replied that he was aware of no such instructions. He (Mr. O'Donnell) had more than once expressed his regret at the way in which officials left the noble Marquess in ignorance, or gave him answers which were nothing less than misstatements. On no point had the noble Marquess been more shamefully misled than with regard to the instructions he had referred to. He (Mr. O'Donnell) found that for the year 1879–80 very clear and distinct instructions had been issued by the Lieutenant Governor of Bengal as to the duty of the district officers to promote the spread of the out-still system for Revenue purposes, "by stimulating a healthy competition among bidders for licences," and that official further complained that the Revenue from this source might be made much more remunerative. The result was the Report of the Excise Department for that year showed an increase of 1,000 dram-shops throughout Bengal, from 3,911 to 4,981. In fact, the Lieutenant Governor and the district officers throughout Bengal were exercising a fostering care in the establishment of dram-shops in the centres of population. The Pioneer, the most influential of the central organs of Indian opinion, said that the Excise Revenue of the Central Provinces also showed a considerable buoyancy, for in 1880 and 1881 it had reached the respectable figure of over 18 lakhs—an increase of more than 12 per cent as compared with the preceding year, the chief increase being in the excise on spirits. That was effected chiefly by substituting out-stills for central distilleries. The Pioneer quoted the Reports of Deputy Commissioners, all of whom, whether they approved or condemned the new system, testified to the increase of the evil. One Deputy Commissioner said that the result had been, as was anticipated, a handsome increase in drunkenness and crime, indebtedness and poverty. Perhaps this resort to the spread of drinking-shops was intended by administrators of unusual foresight as a step in advance to meet the apprehended diminution of the Opium Revenue, so that the Indian administrator would not find it necessary any longer to rest upon the drug-sodden Chinaman, but might safely rely upon the Native Indian drunkards it had made at home. An important Native paper asked—Was it not a ridiculous spectacle which the Christian presented in India, having a copy of the Bible in one hand and a bottle of rum in the other? He wished next to draw attention to the wholesale destruction of life by starvation in the Bengal gaols during the larger portion of the year 1879–80, and to the horrible floggings inflicted in these gaols upon the emaciated prisoners—flogging which lasted for 18 months, so that there were 8,000 floggings administered upon about 16,000 convicts during the year 1879–80, whilst nearly 4,000 floggings had taken place during the first six months of the following year. The average mortality in these prisons in those years was 180 per 1,000 among the male convicts, and 261 per 1,000 among the women. That high rate of mortality was the result of the starvation and ill-usage which the unhappy convicts suffered. The noble Marquess opposite, on a former occasion, in reply to a Question which he (Mr. O'Donnell) had put, was compelled virtually to acknowledge the fearful mortality in the gaols, and he had stated as a reason that it was owing to the fact that large numbers of invalid prisoners were consigned to them. He (Mr. O'Donnell) could not, however, accept that explanation, for he had been informed that it was incorrect. The horror of the state of things of which he complained was increased by the fact that, while the poor creatures were dying for want of food, they were kept at work on penal tasks by the scourges of their gaolers. He hoped the noble Marquess would assist him and the House in thoroughly investigating the matter. After hundreds of wretched convicts had been starved to death, was the House to be satisfied with the assurance that that starvation had ceased? Were the men who were guilty of these wholesale murders to be retained in office, and to be let off by their adminis trative superiors with a compliment of "Well done, thou good and faithful servant?" Then as to corporal punishment. He held in his hand a Return of the number of punishments inflicted from 1875 to 1880 inclusive. In 1875 they amounted to 2,900; in 1876, to 2,800; in 1877, to 3,000; in 1878, to 4,789; in 1879, to 8,232; but in 1880 on only 4,654, because the command had gone forth that such cruelty was not to be so much resorted to; and of these 4,654, no less than 3,386 were flogged in the first six months before that edict was issued. He could not be satisfied with being told that the claims of humanity and justice had been satisfied by the cessation of these punishments, and the men who had carried this bloody code into effect had been allowed to go scot free. No statement that this or that had put an end to flogging and starvation would, in his view, absolve either the Parliament or the noble Marquess the Secretary of State from the duty of investigating as to the men who were really responsible for the offences against humanity which had been committed. If these crimes had been committed in Turkey or Bulgaria, the Chancellor of the Duchy of Lancaster, the Prime Minister, and even the noble Marquess himself would have been among the first to hold the persons who had committed them up to the execration of the civilized world; but they took no steps when the offences were committed under the ægis of British rule in our prisons in Bengal. Another question of great importance to which he wished to call the attention of the noble Marquess was the excessive mortality among the indentured coolies in the Assam tea districts. These coolies were immigrants from the healthy climate of their Native hills, and, with the permission of the Government, were induced by the planters to go to the tea districts, in which the climate was far from being healthy. They were indentured for three years, having been induced to leave their homes under this false pretence; and he feared that the Legislative Council of Bengal was not unlikely, at no distant date, to give to the planters a power of compulsorily indenturing the coolies for five years instead of three, notwithstanding the fact that, in the present circumstances, a large number died on their way down, and, when the remainder at last reached their destination, the hard work on which they were employed in an unhealthy climate caused them to die at the rate of 10 per cent annually, so that at the end of the three years 30 out of every 100 were dead, and there were only 70 to return to their Native villages. Another matter which ought to be considered was that Indian officials not infrequently invested their savings in the Assam tea plantations; and it might be that Members of the Bengal Legislative Assembly, and who would be called upon to vote for the Planters' Bill, were receiving their 10 per cent profit out of the plantations. Surely that was a state of things which ought not to be allowed to continue. If officials were underpaid it would be far better to quadruple their salaries rather than to allow them to engage in such suspicious transactions. Then, again, there was the subject of the tax originally imposed upon the Natives, known as the Licence Tax, which was condemned by the great bulk of the Liberal Party. Something had been done to remove the worst features of that tax; but it still continued to be a subject of suffering and irritation to many of the poorer classes. The conditions under which the assessment for its imposition was made put a weapon of extortion into the hands of, perhaps, the most corrupt class in the world—the Native police, who allowed those who were able to bribe them handsomely to escape its purview; and although the Bengal Government provided European supervision to check the assessments made, the Re-ports in his (Mr. O'Donnell's) hand showed in one district containing 1,307 villages, only 68 had been supervised; while, in another containing 9,072 villages only two had been visited by the European supervisors. Owing to poverty and terrorism, very few assessments were appealed against; but the Reports showed that of the entire number of appeals no less than two-thirds were successful—a proportion which showed the injustice of the system and the widespread misery it was calculated to produce. The tax brought but little to the Revenue, and it was a constant temptation to the Native assessors to commit acts of disparity, and a source of irritation to the people. To turn to the sanitary condition of the Native Army, he asked whether it would not be worth while to take even ordinary precautions to preserve their health? The noble Marquess had not long since admitted that of the Native Army of Bengal 922 per 1,000 were compelled in one year to go into hospital suffering from fever. No doubt, that number represented many who were obliged to go into hospital two or even three times; but, allowing for that, the proportion was enormously high. The details were the same in reference to the Madras and Bengal Native Armies; and he had been informed that, according to the medical authorities, the cause of this great fever waste was that within the Native Lines the barracks and other habitations of the soldiers were disgraces to sanitation. Was the present condition of things to continue; when would it be stopped; and what would things come to if interference were indefinitely postponed? He urged the noble Marquess to form a firm resolution as to the carrying out of measures of sanitation among the lines of Native regiments throughout India. Again, they could not look for much economy in civil expenditure as long as Cooper's Hill was permitted to flood India with English engineers, when Native engineers of equal ability could be had. The distribution of prizes at Cooper's Hill doubtless afforded an annual opportunity for the glorification of rule in India; but the regulation eulogium might be had at a cheaper rate. He believed an enormous step would be taken towards the establishment of reforms in India if the Government allowed the Civil Servants somewhat more freedom to bring their conscientious observation of the facts with which they had to deal before the notice of the Government, instead of being gagged in various ways and punished by loss of promotion if they dared to state unpleasant truths. A case had occurred in which a man who had been prominent in exposing abuses had been passed over, when a good opening occurred; and not only that, but two inferior appointments were successively annulled in order that he might be finally got rid of by being sent to penal servitude in one of the most malarious swamps in India. He supported the plea of the hon. Member for the City of London (Mr. R. N. Fowler) for an inquiry into Indian affairs; but if the Government refused to grant a Select Committee, and he could get 30 Irish Members next year to examine into the affairs of India and expose the abuses in the system of government, he would be able to obtain the result which he desired. By their aid, he would institute an inquiry which would let light into many dark places hitherto kept secret.


said, that one thing that struck him, in listening to the interesting speech of the noble Marquess the Secretary of State for India, was that the Afghan War had spoilt the Budget, and there would not have been a surplus, if it had not been for the £3,000,000 taken from the English Government. The surplus was made up by taking six times £500,000, and putting them into one lump sum. Having regard, however, to what India had had to pass through, and the enormous expenditure India had to bear, the Budget was, on the whole, satisfactory. But the details they had heard from the hon. Member opposite (Mr. O'Donnell) as to the mortality in the prisons and other subjects were far from satisfactory. They showed how much there was in the government of India that did not meet the eye, and that needed inquiring into, and afforded a proof that the hon. Member was justified in calling attention to the matter. The figures of the Budget, also, were far from telling all they ought to know. He sympathized with the hon. Member in the view that more inquiry was still wanting; but more good would, perhaps, result from special inquiries into particular subjects than from an inquiry of a mere general character. There was still great room for improvement in the administration of Public Works. It was stated by Mr. Sowerby, before the Committee of 1879, that the staff was sufficient to carry on an expenditure of £30,000,000. If that were so, surely there was a great amount of waste in the management of the Department. In a pamphlet published by a former official, Mr. Burney, he spoke of having spent a portion of his time in superintending works, the whole cost of which would not be more than his salary. He stated that the cost of engineering public works in India was from 25 to 30 per cent, whereas in England it was from 5 to 7 per cent. In so large and important a Department, this was a matter that required to be looked into. He (Mr. W. Fowler) found that almost the whole cost of the Courts of Justice was covered by the fees charged to litigants; and it was worth considering whether the charges could not be reduced so as to make the Courts of Justice still more accessible to the people. He was extremely glad to hear the noble Marquess say, or at least imply, that before long, whether he could afford it or not, he would abolish the duty on gray goods. It must appear an extraordinary thing to the people of India that such heavy taxes should be placed upon the things they produced, such as their tea and tobacco, and yet that there was to be no taxation upon the import of cotton goods from this country. As to the question of loans, he did not see why they should not have a Silver Loan in this country. If they raised the money here, it would be ready when it was wanted; the consequence would be they would get a better exchange, whereas now they got a worse exchange. If they raised it in London, they would raise it where there was the greatest demand. He had heard that the Rupee Loan had gone above 105 in India. He did not see why they should not avail themselves of the great demand for that sort of loan. He met an Indian official before the Three per Cent Loan came out, and he told him that they would get 98; but the Government did get 103. Why they should lose the benefit of that great demand by issuing the loan in India he did not understand. There was no difficulty that he saw in issuing the loan in London, because the money would be paid at the rate of the day. If that were done it would be a great saving to the Indian Government, and would give no trouble to the officials. As to raising money by sending drafts, it would be well to have inquiry into that question. Almost every intelligent person thought that the whole business would be better done by continual selling from day to day, instead of the Government telling on what day they would sell a large amount. The noble Marquess said a good deal as to the effect of the Silver Question on the Revenue of India. The matter was one of the greatest difficulty and importance. The signs of the times, however, were very strong, showing that they must soon come to a conclusion on this great question. It might settle itself, no doubt, but it might be in a very awkward way. He was sometimes afraid that, owing to the enormous demand for gold on the part of Italy, America, and all parts of the world, we might be approaching a time of a great deficiency in that metal, and then the question might be how far we might be able to keep up our present system. A short time ago we were told that gold was to be so plentiful that everything was to go up in price; but now we seemed to be going in another direction, and the amount of gold was not sufficient for the demand. We seemed now to be approaching something like a dearth of gold. We were as much interested in the supply of silver as of gold; and, therefore, we were also interested in maintaining the relations between gold and silver to which the noble Marquess had referred. If they had an inquiry on this point, it would form a very interesting supplement to the inquiry of the Committee of 187 6. Persons who then looked upon anything approaching bimetallism as a heresy were now of opinion that the question was one which required grave consideration. He hoped that every year that passed would make us feel more and more our responsibility for the Government of India; and he hoped that this would be the last occasion on which they should have a miserable remnant of Parliament to discuss so great and important a question.


referred to the question put by him earlier in the Session to the noble Marquess on the subject of the Contagious Diseases Act having been applied to Bombay, in spite of the objections of many Natives and Europeans; and now inquired whether the Government, on further consideration, approved of the policy of forcing legislation of that peculiar character on an unwilling population? He should also like to know whether the Municipal Council had not declined to vote money towards the expenses of putting the Act in force?


said, that, in spite of the lateness of the Session, every crotchet had been aired and every topic connected with India had been more or less elaborately discussed in one or another of the speeches to which the House had listened. He, however, did not desire to survey the whole field of Indian Finance; but rose merely to comment on a single point. It would be remembered that no part of Sir John Strachey's conduct had been more bitterly assailed than his employment of the Famine Fund to meet the strain thrown on the finances of India in consequence of the War in Afghanistan; and it had even been said that in doing so he had broken his pledge expressly given. Now that, he (Mr. Balfour) thought, was altogether an absurd contention; for it would be a mistake to spend money and taxation in reducing Debt, as long as it was necessary to go into the open market for money to carry on a war; and all that Sir John Strachey had done was not to extinguish Debt at a time when the expenses of the Afghan War had to be met. As he (Mr. Balfour) understood the proposition of the Government, they hoped to guard against the danger in future by an alteration in the form of the Accounts. The Secretary of State for India proposed to put down in every year's Budget £1,500,000 as if it were necessary expenditure, and by that means to compel every future Finance Minister of India to set aside that particular sum as Famine Insurance. And, moreover, that£l,500,000was to be divided into two equal sums—one of which was to be applied to the reduction of Debt, and the other to the promotion of relief works in case of Famine. Now, it appeared to him (Mr. Balfour) that a hard-and-fast system of that sort was not financially sound. In some years it might be proper to devote a much larger sum than £750,000 to a particular relief work, and in other years, owing either to the state of the Exchange, or some other financial reason, it might be convenient to devote a smaller sum to the extinction of Debt; and yet by the system they were going to stereotype the Finance Minister would have no option, and would be precluded to all time from using his discretion in the matter. He wished to put it to the noble Marquess whether, in order to perpetuate the system of reserving a certain yearly sum for Famine relief, he was not sacrificing too much, and unnecessarily hampering future Financial Ministers of India?


Sir, so many questions have been put to me, and so many subjects have been raised in the course of this discussion, that the House will admit that within the reasonable limits of a reply I cannot deal with them all. Many of the topics have had no immediate connection with Indian Finance, but have ranged over the whole subject of Indian Administration. I do not deny that this may be a good opportunity for bringing forward such matters; but it is evident that if one night's debate is inadequate for the discussion of Indian Finance, it is still more impossible, within the same compass, to deal also with a much wider subject. The hon. Member for Mid Lincolnshire (Mr. E. Stanhope) did, I must admit, confine himself almost exclusively to the subject of Indian Finance; and the first point with which he dealt was, I think, the possible reduction of expenditure.

I must here point out that, as far as I have been able to observe, the late Government of India, with the most sincere desire to effect further reductions of Expenditure, succeeded in not much more than the postponement of certain items of expense. I do not deny that some little reductions were effected; but a careful examination of the Accounts will show that the reductions made after the unsatisfactory state of the Indian Finances was discovered were chiefly in those branches of expenditure that admitted of immediate reduction, such as Public Works, and were rather a postponement than a reduction of expenditure. I admitted that there was an increase in the Expenditure of the present year of something like £800,000. Some of that increase results from such items as Interest, Loss on Exchange, and other causes that are wholly beyond the control of the Government of India; but the great bulk of the increased expenditure is due to the larger expenditure of the Provincial Governments.

What has happened is this:—When the Indian Government was in considerable straits in consequence of the heavy War expenditure, strong pressure was put on the Provincial Governments to economize their resources in every possible way; and the way in which they did so was chiefly by restricting their expenditure on Public Works, with the result that as soon as the pressure was relaxed it was necessary not only to return to the former scale of expenditure, but also, to some extent, to make up for the restriction by spending still more.

I think the hon. Member will be ready to admit that as long as the recommendations of the Army Commission are under consideration by the Government of India and by the Government at home, it will not be desirable that they should be made public; but I hope that before Parliament meets next year sufficient progress will have been made to render it possible for us to lay, at least, some of the recommendations of the Commission before the House.

The hon. Member also asked what are to be the duties of the Debt Commissioners, and this is connected with the question of the hon. Member for Hertford (Mr. A. J. Balfour)? I have already stated that the duties at present assigned to the Commissioners will be of an almost formal or Ministerial character. The Government of India are to pay over to them annually, out of the Famine Insurance provision, certain sums to be applied to the reduction of the Debt, and the duty of the Commissioners will be simply to certify that the money has been applied in the manner directed, unless the Government of India should publish their reasons to the contrary.

In reply to the hon. Member for Hertford, I have to say that, no doubt, the present intention of the Government is that £1,500,000 should be equally devoted between the reduction of the Debt and making provision against famine. That was also generally the plan of Sir John Strachey when he first initiated this policy; but nothing has been done which will bind the present Government to consider the proposed appropriation of the Famine Insurance provision as absolutely fixed and immutable.

The hon. Member for Mid Lincolnshire asks a question as to the change which has been made in respect to the Council, announcing the minimum price in the sale of their Bills? This practice has been so short a time in operation that it is impossible at present to say how far it may be successful; but, as far as it has hitherto proceeded, we have no reason to be dissatisfied with the success of the experiment.

The hon. Member adverted to a Motion, of which he had given Notice, of an inquiry by a Parliamentary Committee into the mode of making the remittances from India. That, no doubt, is a subject as to which there might be some advantage in a Parliamentary inquiry; but it is one of an extremely limited scope, and I thought that if it were considered worth while to appoint a Committee to inquire into the subject, it might be desirable to extend the sphere of the inquiry to the system which ought to be adopted for raising money for Productive Works and for other purposes for the Government of India. The mode of making remittances has been fully discussed in monetary and commercial circles in the City, and I believe every suggestion on the subject has been brought to the knowledge of the Council of India as efficiently as it could be done by a Parliamentary inquiry.

The hon. Member further inquired whether I could give any assurance as to the condition of Mysore? On seeing the somewhat alarming telegram in The Times 10 days or a fortnight ago, I at once telegraphed to India, inquiring whether there was any reason for alarm as to the harvest prospects in Mysore. I was told that there was no danger at present, and that if the rains continued as they have done there was no fear whatever of scarcity.

The hon. Member also made some inquiries as to the mode in which the statement of the War Expenditure has been compiled; and he asked why one item which I gave, as to the Punjab Northern Railway, has been excluded from the Account, whereas it was included in the first Accounts. An expense of about £1,000,000 would, no doubt, have to be incurred under any circumstances; but the works were hurried forward more rapidly than was originally intended on account of the War. Consequently, in the first statement, that item was included; but it will not be brought to the charge of the War in the final accounts. As regards the receipts from the railways and telegraphs, they were so vague and uncertain that it was not deemed desirable to include them in the Accounts presented to Parliament.

The hon. Member for the City of London (Mr. R. N. Fowler) urged reasons why, in his opinion, a Parliamentary Committee should be re-appointed to inquire into Indian administration and Indian affairs. I think the hon. Member asked me whether I believed that a former Committee, which had been appointed at the instance of my right hon. Friend the Postmaster General, had been a useless inquiry? Now, I am very far indeed from saying that that inquiry was a useless one. I believe, on the contrary, that a grea amount of information was brought together by the inquiry of that Committee, and that it has been the source from which hon. Members desirous of informing themselves on Indian affairs have been able to obtain a very great deal of very good information upon various points. But bringing as witnesses so many gentlemen from India withdraws them for a considerable time from the discharge of their duties; and though I am quite willing to admit that the inquiry was a useful one, it does not follow that such inquiries could be profitably proceeded with at very short intervals. I do not think it is good for any Government, and I do not know why it is better for the Government of India than any other Government, that it should be constantly undergoing examination, and incur a very considerable amount of expense, and prevent the discharge of some of the ordinary duties of Government, by bringing over so many high officials from India for the purpose of giving information to a Committee. When the hon. Member went through the list of subjects on which he thought inquiry might be profitably instituted, I doubted very much whether a Parliamentary inquiry would be the most efficient mode of obtaining information. He instanced the public gaols, on which I shall have to say a word in reply to the hon. Member for Dungarvan (Mr. O'Donnell). He also instanced the increase of drinking which had taken place in some parts of India. That was a matter also referred to by the hon. Member for Dungarvan. I am sorry I was not informed that that subject would be brought before the House tonight. I have not before me the Report which contains information which would enable me to enter fully into that subject, and I do not recollect what has been the change in regard to licences. But certainly the change which has been made was made, not solely or mainly with a desire to increase the Revenue, but to check illicit distillation, and illicit sales of spirits. The hon. Member for Dungarvan read some extracts from the Report as to the instructions of the Government; but he was obliged to admit that those instructions were quite capable of a different and laudable construction. In the absence of the Report, I do not think the House will expect me to go more fully into this question; but I can assure the House that I believe the object of the Indian Government has been simply—not to increase drinking, far from it, but—to prevent the illicit distillation which prevails, and to introduce a system of legal licensed drinking, instead of unlicensed drinking.

The hon. Member suggested that a Committee of the House of Commons would inquire into the question of Army Organization in India. Well, that subject has been very recently under the consideration of a Commission composed of military authorities. Surely the hon. Member may wait, at all events, until the Government of India consider the proposals of that Commission, and until we have information, before he asks for the appointment of a Committee to go into that question, into which I can scarcely believe a Committee of this House is a body the best adapted to inquire.

With reference to the system of appointing public servants, I have no doubt the introduction of the system of competition has been very advantageous to this country and to India, though some hardships may have accrued to servants of the Indian Government by reason of their being no longer able to obtain an appointment for their sons or other relations by means of nominations.

The hon. and gallant Member for Kincardineshire (Sir George Balfour) referred to the changes which have taken place in the Salt Duty. The reason of the changes was not so much an increase of duty as an equalization of duties. He showed, as, no doubt, has been the case, that the changes have been accompanied by a very considerable increase in the revenue from Salt. But I must point out that the changes have, to a certain extent, diminished the revenue. Nevertheless, upon the whole, there has been a considerable increase of revenue, not so much on account of an increase of duty as of an increased consumption of salt. In Madras there has been a slight diminution of revenue. I agree that, whenever the time arrives for the Government of India to take into consideration the re-adjustment of taxation, the Salt Duty is one of the earliest subjects that ought to claim their attention.

The hon. Baronet the Member for Haddington Burghs (Sir David Wedderburn) referred to some instances in which he said the people of India considered that the pledges of the Party now in Office have not been fully carried out; and I think he mentioned as one of them the repeal of the Vernacular Press Act. He appeared to be under the impression that the Government of India have only undertaken to consider the representations of the Secretary of State in regard to that Act. On the contrary, the assurances of the Government of India are most explicit that they will propose and carry out the repeal of that Act. They have indicated that some revision of the law with regard to prosecutions for libel generally may be necessary; but they have distinctly informed us that they intend to repeal the Vernacular Press Act, and thereby, at all events, to get rid of that invidious distinction between the English and the Native Press in India which constituted one of the greatest objections to that Act.

The hon. Member also thought that the instructions of the Secretary of State were not carried out in respect to the appointment of Natives. I should be most happy if my hon. Friend would bring to my notice any case that he knows of in which those instructions have failed to be carried out. All I can say is that the rule is that no European, except Covenanted Civil Servants or military officers, should be appointed to any office of over 200 rupees a-month without distinct sanction from home, and stating the grounds on which that appointment is made. The object is that, in all appointments of this kind, either Covenanted Civil Servants of the Government of India or officers of the Army, or Natives, should be appointed, and that no appointments should be made of uncovenanted Europeans without the strict sanction of the Government at home.

My hon. Friend also alluded to a Motion of which he had given Notice for the appointment of a Commission to make inquiry within a limited area and into certain subjects. That is certainly a proposition of a somewhat different character from a general inquiry by a Select Committee of this House. But it seems to me that there are a great many difficulties in the way of such an inquiry as was suggested by my hon. Friend. Of whom is this local Commission to inquire locally to consist? Is it to consist of officials, or of non-officials? If of officials, I fear it is only too certain that it would be represented to be a one-sided and useless inquiry. If, on the other hand, it is to consist of non-official persons, where are those persons to be found possessing sufficient knowledge of India to make them competent to inquire into such subjects? Are they to be experts or inexperienced persons? If they are to be experts, I fear that experts are in general persons who are very strongly imbued with preconceived ideas; and that an inquiry by non-official experts would be as one-sided an inquiry even as one made by officials of the Government. And if it is to be an inquiry by inexperienced persons, I fear that it could not be satisfactory. But there appears to be even a greater and wider objection than these. It is difficult to conceive how the responsible Government of India is to be maintained if an irresponsible body is to be appointed practically to inquire into their administration. It is a very different thing to have an inquiry into the con-duct of the Government here by a Parliamentary Committee. The work of governing this country is shared between the Executive Government and Parliament; and it is perfectly in the power of Parliament to inquire into the conduct of the Executive Government as often and in whatever way it likes. But the government of India is wholly vested in the Governor General and his Council and the Executive officers; and it is difficult to see how their responsibility could be maintained if an irresponsible body were appointed which would really be a higher authority than they.

The hon. Member for the Haddington Burghs and the hon. Member for Dungarvan adverted to the desire entertained in various parts of India for an extension of the Permanent Settlement. That is so large and wide a subject for inquiry, that it is absolutely impossible to go into it at this hour of the night. It would be impossible, in a few sentences, to give anything like an adequate explanation of the views of the Government of India upon that question; and I think that, although it is well worthy of consideration, I could not enter into it at all satisfactorily now.

The hon. Member for Salford (Mr. Arthur Arnold) has inquired also as to the Factory Act. That Act has been passed, and the Government of Bombay has asked for the services of an Inspector of Factories to assist in putting it into operation.

The hon. Member for Dungarvan has referred to a great variety of other matters, among others, to the subject on which he recently asked some questions of me as to the management of the gaols in Bengal; but I entirely agree with what was said by the hon. Member for the borough of Cambridge (Mr. W. Fowler), that the hon. Member for Dungarvan was perfectly justified in calling attention to the subject, and that the thanks of the House are due to him for doing so. But I somewhat regret that he should have singled out for attack the management of the gaols in Bengal. I have very little doubt that there is room for improvement in the management of the gaols in Bengal. Still, the management of those gaols, both in respect to mortality and corporal punishment— the two subjects specially referred to by him—do not compare unfavourably, on the whole, with the management of the gaols in the other Provinces; and if the object of the hon. Member be to improve the gaol administration in India, I cannot understand why he singled out Bengal from the other Provinces, when I think I have shown by the answers I gave to his questions that the authorities in Bengal have devoted a considerable and even an exceptional attention to the subject, and when the result of their administration, as I have said, does not compare unfavourably with that of the other Provinces. The course adopted by the hon. Member is hardly calculated to stimulate increased activity and the desire to remedy the defects of administration in those who thus find themselves marked out in this House for special animadversion and attack. The hon. Member threw some doubt as to the accuracy of the answers which I have given him on this subject; but I must remind him that every charge which he has brought against the prison authorities in Bengal has been founded upon the information which has been very carefully compiled and honestly published by the very officials against whom those charges are brought. Those authorities have neither concealed nor passed over any of the unfortunate circumstances connected with the mortality in the Bengal prisons to which he refers, and they have set forth clearly the remedies which they adopted to put an end to it. It is not possible for me at this hour of the evening to go at any length into this subject; but I may state that the Governor of the gaol at Bengal attributes the exceptional mortality in that prison in 1878 and 1879, first to the fact that cholera was prevalent at the time, and second, that the prisoners had been reduced in condition by privation before they entered the gaol. The scale of diet had been drawn up by persons experienced in the management of gaols, and it was not until inquiry was made into the causes of the mortality that it was deemed necessary to alter it. With regard to the alleged excessive corporal punishment inflicted in the gaols, the amount of such punishment has been greatly reduced of late. I must remind the hon. Member, however, that the prison authorities had no power of themselves to remit corporal punishment, and it was only when the matter was brought under the notice of the higher authorities that the amount of such punishment could be reduced.

With regard to the question of the hon. and learned Member for Stock-port (Mr. Hopwood) as to the working of the Contagious Diseases Acts in India, an inquiry into the subject is now being held, and until the result of that inquiry is before me I cannot express either approval or disapproval of the action of the Government of Bombay in the matter. I am aware that I have not replied to many of the questions that have been put to me; but at this hour of the night it is impossible that I can go into the subjects they touch upon. I therefore trust that the House will now go into Committee, and will pass the necessary Resolutions.

Amendment, by leave, withdrawn.

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