THE DUKE OF ARGYLLrose, in pursuance of Notice, to lay on the Table of the House despatches relative to Finance in India, and to make a statement on the subject. He said, he was very sorry to be obliged to address the House that evening; but he was sure the noble Marquess opposite (the Marquess of Salisbury) and other noble Lords present agreed with him in thinking that there were at this time questions of great moment connected with the finances of India, to the solution of which the people of India were looking with very considerable anxiety. He therefore felt that, whatever the state of the House, it would be scarcely decent to again postpone the statement of which he had given Notice, especially as it was not at all certain that he should have an opportunity of making it to a larger House; but one promise he would give their Lordships—that his speech should not be a long one. His opinion was that the expositions of Indian finance were often loaded with an unnecessary amount of detail, with masses of figures which such of their Lordships as were not well acquainted with financial accounts would not be able to understand and digest. In figures he should confine himself to general results; but he should also direct their Lordships' attention to some of those points of policy and principle which now required consideration in connection with the government of India. The general result of the finances of the last year 1072 was this — When the Budget was produced Sir Richard Temple estimated that there would be a surplus of about £52,000; but in the course of September — when Sir Richard Temple was absent on leave in England—it became evident to the Indian Government that there were material errors in the Estimate. A telegram was sent to the Government at home, stating that on a reconsideration of the figures, and looking to the new liabilities which had come upon them, the Indian Government had every reason to believe that at the end of the financial year there would be a deficit of upwards of £1,500,000, and in the face of such circumstances they had determined to take immediate steps for the retrenchment of their expenditure, and to obtain an increase of the Revenue of the country. During the remaining months of the year much doubt was felt as to the practical effect of those measures, for up to a late period of the year it was doubtful whether there could be any retrenchment, and whether there would be such an increase of the Revenue as would extinguish the anticipated deficit. In March, when the regular Statement was framed on 10 months of actual expenditure and an Estimate for the next two months, the Government of India were hopeful enough to think that the deficit would be little more than £500,000. A few days ago he received a telegram from Lord Mayo, saying that before the Financial Statement was made to this House, he would be able to telegraph, if not the actual figures, at all events some approximation to the result of the last financial year, and last week he received another telegram from the noble Lord, which justified the belief that there would not be a deficit, but probably a surplus of between £100,000 and £200,000. Much undeserved blame had been cast on Sir Richard Temple for the errors which were contained in his Financial Statement; but it should be remembered that during the last 10 or 12 years there were very few instances in which the actual outcome of the accounts was not wholly different from the figures presented in the Budget. This remark was equally applicable to the Budgets of Mr. Wilson, Mr. Laing, and every other Finance Minister. The truth was that there were some elements of uncertainty in the finances of India which 1073 removed them altogether from the position of our finances at home as regarded the possibility of estimating the Budget at the beginning of the year. In the first place, the Opium revenue was proverbially uncertain; secondly, there were great droughts in India which affected the expenditure on public works; thirdly, about £1,300,000 of the Revenue of India was spent in England for stores the price of which fluctuated; fourthly, there was a varying amount of loss on the enormous sums dealt with in exchange between England and India; and, lastly, there had been some obvious mistakes, owing to the omission of items of Revenue and Expenditure which ought to have been taken into account. Whatever fault might be charged upon Sir Richard Temple, he was bound to confess that in the Estimate for last year the India Office at home was responsible for a mistake of between £200,000 and £300,000; but he hoped that in future the accounts would be prepared with greater accuracy, and he believed that steps were being taken by Lord Mayo to effect that result. Although the change which had been effected in the result of the financial year was mainly due to the measures that Lord Mayo and his Government had taken, it would not be true to suppose that the difficulties of Indian finance had been solved by the fact of there now being a surplus instead of a deficit. Looking to the great increase in the Revenue of that country during the past few years he always returned to the accounts with the thought—"How is it possible we can have any difficulty with this magnificent, this Imperial Revenue of £48,000,000 or £50,000,000?" On looking at the accounts for the year ending last April he found that £1,500,000 was due to extraordinary causes; but ordinarily the Revenue was not less than £48,500,000. How was it possible, then, that there could be any difficulty in disposing of that Revenue? In order to bring that question home to the House he would analyze the expenditure, which would be found classified under six or seven heads. In the first place, £1,892,000 was paid to the Native Princes under various treaties and obligations. Then there was the interest of the debt, amounting to £5,700,000. The Government guarantee for railways amounted to £1,500,000. These sums together made a total charge of £9,090,000, leaving for 1074 other purposes £39,400,000. And how was that disposed of? The cost of collection was £7,399,000; the cost of the Civil Service, £12,649,000; the cost for the Army £16,500,000; leaving a surplus of £2,850,000, which was entirely swallowed up in ordinary public works. Was it possible to effect a reduction in any of those items of expenditure? There was no prospect of any diminution in the sum to be paid to the Native Princes; but as regarded the interest on the debt there would be, during the next 10 or 15 years, operations in that debt which would afford opportunities, if their credit remained good, of reducing the interest to be paid. Three weeks ago he should have spoken with a confident hope of being able to save a considerable sum within a short period, for much of the debt was borrowed at 5 per cent; while lately the Government had been borrowing at 4 and 4½ per cent, and when the time came for their paying off existing loans and contracting fresh ones, he hoped they might have been able to save a considerable sum. Unfortunately, the war which had broken out in Europe was already affecting the monetary securities of all nations, and among others those of the Indian Empire, and there was not now the prospect of raising money on favourable terms. He earnestly trusted that the war would be a short one, and that India would obtain that benefit to which it was fairly entitled from the high condition of its credit. As regarded the public debt, in 1874 the old capital of the East India Company would be paid off, on which there would be a gain of £450,000; but they could not count on any other great saving being made for some years at all events. As to the guaranteed railways the loss in the year just ended was £1,500,000, and the Estimate for the current year was £1,200,000; but, as during the past three or four months there had been a remarkable increase in the traffic — the increase being £250,000—there was a prospect of there being a reduction of the charge accruing on account of existing railways, though against that must be set the amount that would have to be paid on lines that were now being constructed. On the whole, the result of the working of the Indian railways was by no means unsatisfactory, for the total capital was upwards of £82,000,000, and the total loss, even in a comparatively bad year, was £1,500,000.
1075 The next item related to the cost of collection, which stood at £7,399,000, and there was no prospect of any considerable diminution in it. Indeed, he doubted whether there would be any diminution at all. It should be remembered, however, that under this head were comprised not only charges corresponding with those that arose in the collection of the Revenue in this country, but such as were peculiar to India—namely, advances made to the opium cultivators and expenses incurred by the Government in the manufacture of salt. These advances and expenses amounted together to £2,200,000, out of the total sum of £7,400,000; and the cost of collection during the present year showed an increase of £500,000, due partly to the extended cultivation of opium. In the Estimates of the current year Lord Mayo had made a sensible diminution in the charges for civil government from £12,649,000 to £12,352,000, showing a reduction of £297,000. Under the head of civil government came the cost of education. The attention of Lord Mayo and the Government had been directed to the fact that the intention of various Secretaries of State, and especially of his noble Friend (Viscount Halifax), had been to a considerable extent departed from, and that the charges for education had been growing very rapidly for the benefit of those classes who could afford to pay for their own education; whereas, the charges incurred for the benefit of the poorer classes and for vernacular education had not increased in the same proportion. Lord Mayo had instituted a review of the whole system, for the purpose of saving the Revenue in regard to the higher class schools and Colleges, without unduly interfering with existing interests and long standing arrangements. He could not state what the reduction would be; but the principle of it had been sanctioned by Her Majesty's Government, nothing being proposed at all at variance with the despatches of 1854 and 1859 from Lord Stanley and the noble Marquess (the Marquess of Salisbury). The total saving on the cost of the civil government was £297,000. Of course, the great item of expenditure was the Indian Army, which had absorbed £16,481,000. The Government of India proposed certain reductions in the European Force of India, which had received the sanction of the 1076 Imperial Government. They were reductions mainly in the Staff of the Army, and in the number of regiments; but were not reductions in the number of bayonets. Sir William Mansfield, and other authorities, were of opinion that the military force in India was not greater than was necessary for the safety of the country; but they thought an important saving might be effected in the Staff and organization of the Army, the regiments serving in India being brought more nearly up to a war footing. This change having been sanctioned by the Government, some regiments had been brought home, and now in India there were 50 regiments of Infantry, with 41,000 bayonets, instead of 52 regiments, and nine Cavalry regiments instead of 11. The saving thus made amounted to £500,000, and would be an important relief to the finances of India during the current year. It was right to add that Lord Mayo proposed some further saving through a reduction in the Native Army; but certain differences of opinion, into which it would be inexpedient to enter, had arisen between Lord Mayo and the Goverment at home as not the mode merely in which this saving should be made. He hoped, however, that some arrangement would be entered into for reducing the cost of the Native Army. The Indian finances were, more or less, suffering from the necessary magnitude of charges connected with our regimental system at home; discussions might arise upon the particular items, but the principle adopted had been that India should be charged with the full cost of the whole force employed there, including its fair proportion of the effective and non-effective services. There could be no doubt that, under the old system, the Company recruited its European force at a much smaller cost than was possible under the existing system; and if there were not important political considerations adverse to the old system, the Indian Government might recruit its force at a much less cost. He was one of those who advocated the amalgamation of the two armies, and still believed it would be a serious political danger to India to have a large European Army there, separated in spirit and in feeling from the Imperial Army of the Crown; but he was bound to admit that the increase of expenditure thrown upon the Government of India by the results of amalgamation and the 1077 exclusive employment of European troops had been greater than he or anyone could have anticipated. It would be the duty of the Government to see that the expenditure was reduced to a minimum consistent with the efficiency of the force, and not interfering with the organization of the Imperial Army, which must depend on Imperial considerations. But the expenditure must not be rudely increased as against the people of India. It would be an awkward circumstance if, under the pressure of high taxation, the people of India had any reason to suppose that we were exacting tribute from them through, the medium of expenses which were not strictly due to the defence of India, or exclusively for Indian purposes. He might remind the House that the Act of Parliament specially provided that the Indian Revenue should be expended for the purposes of India alone, and any expenditure on the British Army not strictly connected with Indian purposes would be at variance with the Act, adverse to the policy of Parliament, and at variance, also, with their duty to the people of India. As far as it was recommended by the Government of India, the reduction he had indicated had been carried into effect, and a further reduction of Native troops was now under consideration.
He now came to the question of public works, apart from which we had a large surplus of Indian Revenue. It was very important that the House and the country, as well as the people of India, should observe this fact. They were perpetually talking of the deficits in Indian Revenue, and it was perfectly true that, as a mere matter of account, there had been a chronic deficit. But, taking the Revenue at £48,500,000, and defraying out of it the enormous military expenditure of £16,500,000, with all the cost of collection and the charges of civil government, there was still left a surplus of £2,800,000. In short, the deficits which had arisen in Indian finance had been due entirely to the expenditure on public works. In the year 1869–70, an expenditure of between £5,000,000 and £6,000,000 sterling was incurred on ordinary public works. This being so, it was very important that some attention should be paid to what were called ordinary public works. During the last two years the expenditure had been augmented considerably by the cost of 1078 barracks, though general improvements all over the country, apart from the barracks, had largely contributed to the expenditure. Last year, with regard to barracks, he stated that those which were projected would cost £10,000,000 sterling, and he concurred with the noble Marquess that while it was all very well to talk of defraying the cost of those works out of Revenue, if at the end of the year a loan was found necessary, it came to the same thing as if you borrowed from the beginning. But the system of borrowing for public works had an injurious effect upon the plans for those works, and Lord Mayo had expressed a strong opinion to the Government of India to the effect that, if from the first it had been contemplated that the barracks should be paid for out of Revenue, they would never have been devised on so extravagant a plan. Information had reached him which threw a melancholy light upon the construction of great public works, planned under the expectation that the cost would be defrayed by loans. Their Lordships would, no doubt, have seen in the newspapers many letters complaining of the construction of these barracks. They were said to have failed in their purpose—to be more uncomfortable, if not more unhealthy, than the old barracks had been. At the request of Lord Mayo, he had recently seen Dr. Cunningham, who was at the head of the sanitary department of the Army of India, and possessed of Lord Mayo's views upon the subject of the barracks. He said that in Bengal, where the climate was less dryly hot than in the Upper Provinces, there was no very great complaint with regard to them; but, in the Upper Provinces, they were really intolerable. As Lord Napier had had much to do with the building of these barracks, and was about to return to India, a meeting was arranged in the India Office between him and Dr. Cunningham, who was very severely cross-examined on the subject by Lord Napier to show that if the barracks had been completed by the addition of all those appliances rendered necessary by the climate, in accordance with the original design, there would be no room for complaint. The impression left upon his mind from this conversation was that, although it might be true that the addition of verandahs and a constant application 1079 of water in the upper stories would make a great change for the better, the improvement would involve great expense, and yet not be perfectly satisfactory. Sir William Mansfield had called his attention to the habits of the soldiers, which bore upon this question. The barracks were constructed under the impression that the men would use the upper storey for sleeping purposes and the ground floor for recreation; but it seemed that the soldier when not on duty, or engaged in out-door recreation, was generally found by his bedside at work upon his accoutrements, perhaps, or else taking rest upon it; and, considering the upper storey was little better than a great sun-trap, which did not cool even by the morning, the soldier suffered from the heat. Altogether, he had come to the conclusion that it would be better not to finish the barracks, and that, at least as regarded the Upper Provinces, barracks of one storey only should be built with thicker walls and fuller accommodation for the men, so that their place of recreation should be in close proximity to their sleeping apartments, and that they should not be obliged to go upstairs to an even when they wished to rest or amuse themselves with their own affairs. The cost of these barracks was a necessary consequence of a standing Army, and should form an annual charge upon the Revenue just as they would in this country; but it would be more economical if they were treated as extraordinary works.
The total expenditure for the current year had been framed in the Budget to show a saving of £1,500,000, so that Lord Mayo had not only succeeded in obtaining a small surplus in 1809–70, but proposed a saving in addition for 1870–1. Last September, the Government was alarmed to find a considerable deficit, and recommended a considerable increase in the salt duties in Madras and Bombay, and to raise the income tax from 1 to 2 per cent for the remainder of the year. He had sanctioned these measures without hesitation, and it was owing to the adoption of this policy, accompanied by a reduction of expenditure, that an equilibrium had been maintained. He had consented to the increase in the salt tax with very great reluctance, because, as he had stated in the despatch to India, although the evidence was rather in favour 1080 of the salt tax not being oppressive in Lower Bengal, it could be almost positively stated that it bore heavily on the poor inhabitants in the Central and North-West Provinces of India; and as salt could be manufactured in a rough way in India, a very heavy tax would load to evasion of the duty. Five annas a maun, however, was not much, and the Government got £300,000 a year by the increase; but if that addition to the Revenue were purchased by a very considerable diminution in the consumption, the tax could not be justified.
He next dealt with the income tax. Seeing that opium could not be expected to yield more than £6,900,000—full £1,000,000 less than last year, the Government of India felt they could not secure a surplus without increasing the income tax; and he consented to an increase to 3⅛ per cent. Public meetings had been held on the subject, and memorials had been presented to the Government alleging the total unsuitableness of the income tax to India, a view which would naturally be taken by those who were subject to the tax. In the licence tax of 1867 and the certificate tax of 1868 there was an element of injustice. Those taxes were applicable to trades and professions; and thus, while the Government's own officers, and all Native traders were subject to the tax, proprietors of land were exempt. Sir Stafford Northcote had pointed out the injustice in a despatch, and he had expressed the same view. This injustice had been remedied in the Income Tax Acts of 1869 and 1870. The income tax would be borne as long as it was kept low, and it was not high this year as compared with our own. We were spending upon that country immense sums for public works, which were fully as important for India as any of the reforms introduced by Lord Napier. For his own part, he could not see why the income tax should not be a permanent instrument of Indian finance, provided it could be kept within reasonable limits. The present rate was 7½d. in the pound. Now, in four years during which there had been profound peace in this county, our income tax had stood at 9d. or 10d. in the pound, that rate being borne, he would not say with great pleasure, but with comparative contentment by the people of this country, because they were convinced that the Revenue thus raised 1081 was expended in a manner calculated to benefit them. If, then, the people of India could be persuaded that the amount yielded by the income tax was expended for their benefit, and not extravagantly wasted, they would see the necessity of bearing, even in the time of peace, those imposts which were necessary for the financial security of the country. At the same time, he had no hesitation in expressing his regret that the Government had found it necessary, during a time of profound peace in India, to raise the tax to the comparatively high figure of 7½d. in the pound. Indeed, he should be very glad if the Government could reduce that tax to a point at which it might more permanently remain as a steady instrument of Indian finance.
He would next direct the attention of the House to another subject, second to none in importance as regarded the expenditure of the Indian Empire—namely, imposing on local cesses or assessments no inconsiderable part of those public works which had hitherto been provided exclusively out of the Indian Revenue. His noble Friend and Kinsman Lord Dalhousie had remarked that the people of India would do nothing for themselves; that they trusted to the Government to do everything in the nature of public works; that even the repairing of tanks and the embanking of small irrigation courses were left to the Government to execute; and that in matters of this kind it would be most important to encourage private enterprize in India. He should be sorry to say that the course taken in giving guarantees to public companies had had the ultimate effect of stopping private enterprize in India, except when the Government came forward with a guarantee; but the truth was that when once the example of guarantees had been set it was almost impossible to get rid of them. In his opinion, however, this was not properly private enterprize at all. It was nothing more than the enterprize of the Government acting in a most inconvenient form and at a great loss to the Revenue of India. His noble Friend thought that the expenditure for the education of the people, the making of roads and embankments, and other improvements of that kind ought to be provided out of local cesses or assessments; but he was met by an unexpected difficulty, for Sir William Grey, Lieutenant Governor of Bengal, although he at one 1082 time appeared favourable to the project, afterwards took a wholly different view of the subject, and said it would be a breach of faith on the part of the Government if they increased, in any way whatever, the demands made upon the agricultural classes. A correspondence was carried on for two years in reference to this question, and was resumed when Lord Mayo went out. The Lieutenant Governor of Bengal, however, continued his resistance to the proposal, and finally the Government of India appealed to Her Majesty's Government to set the question at rest. During the time he had held his present Office he had never been called upon to deal with a more important and, in some points, a more difficult subject; but he at last arrived at a very clear and thorough conviction as to the course the Government ought to take. He would now lay upon the Table a copy of the despatch which would settle the question as far as regarded the opinion of Her Majesty's Government. It was to the effect that there was nothing whatever in the permanent settlement and the promises given to the Zemindars of Lower Bengal by Lord Cornwallis which disentitled the Government of India from throwing upon local resources the expenditure which was necessary for local purposes. In this matter he was sorry to say he had met with the opposition of some of the oldest members of the Council, and it was only by a narrow majority that he secured the assent of the Council to the despatch which he now had the honour to lay upon the Table. That despatch was accompanied by the protest made by the minority, and he earnestly recommended the Papers to the attention of their Lordships, because they dealt with a question second to none in importance as regarded the Revenues of India. He might here point out that the argument based on the permanent settlement of Bengal was equally applicable for a certain time to all the other settlements in India; for if, in consequence of the permanent lease given to the Zemindars of Bengal, we were precluded from raising local cesses for local purposes, the same argument would disentitle us from raising a single sixpence in the other parts of India during the continuance of the existing settlements, which were for 20, 30, or 50 years. The despatch to which he had just referred had been received in India, and the 1083 Lieutenant Governor proposed to bring in a Bill, in the course of the present year, for raising £500,000 for constructing roads, and from £200,000 to £300,000 for the purposes of vernacular education. It was intended that these local cesses should be made as far as possible with the co-operation and concurrence of the Natives of India themselves, in order that they might be convinced that the works proposed to be executed would be for their benefit.
Their Lordships had, perhaps, noticed in The Times of that morning a short report of a long address delivered by Sir Charles Trevelyan, who had had great experience in Indian affairs, and who was in favour of the decentralization of finance in India. The same opinion was held by his right hon. Friend the President of the Board of Trade (Mr. Bright); but he could not help thinking that those who went in for a rapid decentralization of finance in India did not fully perceive the difficulties of the case. Indeed, the natural tendency of events was at present in favour of the centralization of the management of finance in Calcutta; but this project of local cesses had a most important bearing in the direction of decentralization. He might remark that the great expenditure which caused all our deficits was on account of ordinary and extraordinary public works. Soon after he came into Office he had his attention directed to the remarkable fact, in reference to the immense sums we were annually spending on public works, that we really had no security for the adequate education of the officers through whose hands they passed. It was true there was one College in India for the education of civil engineers; but the great supply of civil engineers came from England, and there was no security with regard to their education and scientific attainments. He was not, of course, speaking of the great civil engineers from this country, who might be employed by the railway companies, but of the rank and file of civil engineers in India who were sent out by the Government, and in whose case, he must repeat, there was no adequate security that they had obtained an adequate scientific education. Under those circumstances, he could not help inquiring whether it would not be of great value that we should provide a College for the education 1084 of those civil engineers, and erect them into the character of a service imbued with something of the old spirit of the servants of the Indian Government—some of the esprit de corps which was so valuable in the old servants of the East India Company, something which would make them serve the Government, from the feeling that they belonged specially to its service, while they should go out from this country with something like an adequate scientific education. That matter had been for some time under the consideration of the Government, and they had arrived at the conclusion that it was desirable to take measures for the education of civil engineers, looking to the long time which the construction of great public works must occupy in India. It was proposed that the entrance to the College which it was intended to establish should be by open competition, and that the young men admitted to it should be educated in the scientific requirements which were connected with their profession. A very distinguished officer who had returned from India—Colonel Chesney—had his heart in the work, and he looked forward to the experiment with great hopes of success. It would afford an opening to young men in this country which they would, he thought, be anxious to seize, because it would enable them to secure a very considerable position almost immediately on their arrival in India, when they would start with a salary of about £400 a year, and rise in their profession by selection and ability. They would be entirely at the disposal of the Governor General of India, and they would have the prospect of retiring with a pension larger than in former times.
He was sorry to have troubled their Lordships so long; but the Statement was one which was looked forward to by the people of India with great interest, in respect of whose affairs great questions of principle had lately been debated. He hoped he had made clear to the House what were the views of the Government on those questions of principle, and if any doubts existed on the subject in the mind of any noble Lord, they would be removed by the Papers which he was about to lay on the Table.
Before he sat down he wished to say a word or two with regard to his noble Friend Lord Mayo, the Governor General of India. A sufficient opportunity 1085 had now been afforded for judging of the manner in which his noble Friend worked his great Office, and he could not allow the present occasion to pass without expressing his sincere admiration of the devotion with which he attended to its duties. Lord Mayo was earnestly and anxiously desirous to secure the benefits of British government to the people of India, and was unsparing in the use which he made of his time and ability in dealing with the minutest details of the finances and public works of that country. He had even taken the unusual step for a Governor General—a step which even perhaps was open to some objection, while it showed his willingness to shrink from no labour—of charging himself departmentally with the conduct of public works in India, and he took an eager and energetic part in the discussion in the Council with respect to them. Having made those few remarks, which he felt to be due to the services of his noble Friend, it only remained for him to thank their Lordships for the attention with which they had listened to his statement.
The noble Duke then presented (by command) a Statement on East India (Finance): And also, Papers relating to the levy of a Road and Educational Cess in Bengal.
§ THE MARQUESS OF SALISBURYsaid, he had to thank the noble Duke for the able statement he had made, and which was both of an interesting and satisfactory character. The finances of India unhappily presented more than one point of contrast with those of this country. The efforts of an English financier were generally directed to the question of dividing the surplus which he expected to have, while the Indian financier was chiefly concerned with the duty of providing for an impending deficit. He regretted, he might add, that an outcry had been raised on the subject of the income tax. The obstacles in the path of the Indian financier were enormous. If he wished to impose a duty on exports or imports, he had to consult the interests and convenience of 200,000,000 of people. If he turned to the land, he was met by the agreements with Zemindars and charged with a breach of faith; while the consumption of the inhabitants of India was so restricted that any attempt to raise money on the article 1086 of salt was almost impossible. When the last remedy was tried and the income tax was resorted to, outcry was raised by all those who formed public opinion in that country, owing to the heavy nature of the tax upon them. For his own part, he must confess that, although he looked, on the tax as inevitable and right, he could not help sympathizing with those who endeavoured to induce the Secretary of State for India to reverse his decision on the point. It was true that our outlay in India had tended largely to increase the prosperity and civilization of that country; but to the people with fixed incomes it had brought no benefit whatever. Many of the points which the noble Duke had alluded to had been under the consideration of the Government and Council of India for many years past, and he was glad to find they had been decided in a way that seemed to promise best for the future of India. He was glad to hear the statement of his noble Friend with respect to those unhappy barracks which had been hanging like a millstone for so many years round the neck of Indian financiers. India had in that respect suffered greatly from what might be called the weight of public opinion in England. Those works were the result of the Crimean War. They originated in a feeling which was most estimable and admirable; but which, like many other good feelings, was pushed to too great an extent. The barracks, however, had been stopped, and he earnestly hoped a more sober view as to military objects would prevail in connection with the public works in India. With respect to the question of loans for military works, his noble Friend, it seemed to him, did not lay so much stress as he ought to have done on one or two considerations. It was better boldly and honestly to have recourse to a loan than, by relying upon overstrained estimates of future income, to run the risk of adding to a long list of deficits. It had been said that by resorting to loans public credit would be injured; but nothing had so deleterious an effect upon public credit as repeated heavy deficits. He should greatly prefer that the funds for defraying the I charge of erecting the new military buildings should be raised by a loan rather than that they should be provided out of income at the risk of causing another of those deficits which 1087 had for so long been a scandal to Indian finance. There was no valid objection to a loan being raised for such objects, because the public debt of India was very small compared with the Revenue of that country. What weighed upon their credit was the general impression that their resources were very near an end. Considering how large a portion of their Revenue came from a precarious source, he could not help renewing the entreaty which he made of his noble Friend last year, that he would press upon the Government of India the necessity of assuming all their income at the lowest possible figure and their expenses at the largest, and rather to make up the difference by resorting to the public creditor than to add one more to the disgraceful series of balance sheets.
§ LORD LYVEDENsaid, he regretted that the noble Duke had not made his statement upon the finances of India at an earlier period of the Session, when a graver and more useful discussion might have been held upon the subject than was possible on the present occasion. His noble Friend spoke of the great difficulty of evoking public opinion in India in respect to economy. The civil servants there, as a rule, did not wish for a reduction of expenditure, and there was no public opinion to back up any attempt at such reduction. It had been stated, at a public meeting recently held in Bombay, that between 1856 and 1870 an increase in the Revenue of £19,500,000 had all been eaten up by the increase in the Expenditure, and that whereas in 1863 the military expenditure was £14,000,000, in 1870 it had increased to £16,000,000, although the number of troops had been reduced by 6,000. These were matters which ought to receive the grave attention of the Indian Government. He should not advise that the European Force should be reduced by a single man; but the Native Force might well be reduced, especially in the tranquil Presidency of Madras. He hoped his noble Friend would turn his attention to the necessity of effecting economy in India. A great outcry had been raised in India against the income tax; but he did not see how it was possible to do without it. The new barracks in India, he believed, were universally condemned. Everything ought to be done for the health and comfort of the soldiers; but it was unwarrantable 1088 extravagance to build superb houses for their residences. He agreed with the declaration in the despatch of the noble Duke of last September that the military expenditure might be reduced by £1,500,000, without reducing the force of a single regiment. He wished to know whether any proposal for dealing with the subject of recruiting had emanated from the joint Committee of the War Office and of the India Office which had been appointed to inquire into the matter? India was under one very great difficulty—it was not allowed to make its own regulations with respect to cotton or customs. The moment they attempted to do so the manufacturers of Manchester raised an outcry of an interference with the principles of free trade. During the American War there was a great demand for Indian cotton; but since that war had terminated the demand, in a great measure, had ceased, and it was not surprising that the cultivation of cotton was not carried on for an uncertain market. With a view to secure economy, he would suggest to his noble Friend to consider the propriety of sending out some competent person from this country, as Mr. Wilson and Mr. Laing had been sent out, as it was quite certain that those having the management of Indian financial affairs would never take the necessary steps for bringing about such a result themselves. Indeed, he thought the Government contemplated such a step, as he had read in the papers that the First Commissioner of Works had been selected for the purpose.
§ LORD LAWRENCEsaid, he rejoiced to hear what his noble Friend had stated with respect to Sir Richard Temple. He must say that that gentleman had fallen upon evil times. Amongst the many excellent officers he had known during his career in India, he did not know one whose zeal, ability, or earnest desire to do his duty, both to India and the Home Government, surpassed that gentleman's. With respect to the barracks, he could not say that he was altogether enamoured of them; but he thought that they had been somewhat harshly criticized, as they had certainly proved successful in the North-Western Provinces. But in other parts of India, more particularly in Lower Bengal and the Central Provinces, he thought that double-storied barracks were suitable to the country. Everybody there who could 1089 get a double-storied house did so, and that showed that such buildings were useful. No doubt there was a great deal in what Sir William Mansfield said about habit; but still he should have thought that the English soldiers, when they found the upper rooms too hot for them, could carry their beds down below. The plans of these barracks had been approved by all the authorities in India after full consideration, and subsequently they were sent to England and were approved by the authorities here. If these barracks had proved failures, of course, the Government ought not to build any more of them. In reference to the remarks which had been made touching the increase of Revenue and Expenditure, he thought that a careful scrutiny of the figures which were published from time to time would account for what at first sight seemed so strange. The greater part of the Revenue of India was raised from some six or seven items, and a considerable portion of the increase of Revenue arose from increased taxation, or from a precarious increase in the customs. Among the items of expenditure given in the Budget was one for the telegraphs. Some years ago it would not have appeared in the Budget. The expenditure on telegraphs was at present larger than the receipts from that source. Then, again, there was a very much larger expenditure than formerly upon the post office, and there was also the increase of interest in consequence of the increase of the debt. He could not but think it was a great mistake to have allowed the income tax to expire in 1865. Mr. Wilson, who, no doubt, did a great deal to reduce the expenditure and put the finances of India in order, to facilitate the arrangement of that tax, which was a matter of some delicacy, limited it to five years. The consequence had been that when the five years expired everyone cried out against the income tax, and the authorities in India had not the courage to re-impose it. If the income tax had been retained, even at 1 per cent, it would have given some considerable resources without inflicting any considerable burden. But it was objected to by the English in India, and to please them it was allowed to expire. He must say that, in his opinion, the English in India ought not to object to pay for the advantages which they enjoyed 1090 in pecuniary respects, and also in respect of position. Very many of them occupied higher positions there than they could have hoped to fill in this country. As regarded the Natives, the income tax only affected a small portion of them. There were only about 200,000 persons who paid the tax; and, of course, they said how unjust and abominable it was that the tax should be placed upon a few only and should leave the mass free from it. In many instances it touched the pockets of those who had hitherto paid scarcely any taxation; and hence the grievance. He thought that it was a most serious matter that we should do anything in India which had a tendency to increase our debt. We were a small number of people there, managing and controlling many millions; and when war, convulsion, and disturbance arose we could not expect to raise any material additional amount by taxation, but must borrow money in order to bring the disturbance to an end as quickly as possible. He held most strongly this—that the sound policy in India was that we should borrow for only thoroughly productive works, and that for all other works we should, as far as possible, make the year's income pay the year's expenditure. He thought that if this principle were acted upon, not in any narrow spirit, we should not only be able in the long run to do all that was really necessary for the welfare of the country, but should be able to pay our way with the income of the year. He did not deny that it was a wise policy to keep the income tax down as low as possible whilst the people of India protested against it. He thought that they very naturally protested against the administration of the Government at home and in India. It was felt that there were some items which were unfairly charged against the Revenue of India. Last year he protested against the charge made upon India in reference to the Abyssinian War; and now he would mention two or three other items. Some years ago there was established a telegraphic line of communication between England and India, and the whole expense of that line — upwards of £1,000,000—had been charged against the Revenue of India. That seemed to him to be very unjust. The advantage had been very great to England, and each country should have paid half the 1091 expense. In the nature of things, the line was one that would never pay. He thought also that the charge for supplying India with troops should not be higher than was absolutely necessary—that was, that the charge should be upon the lowest scale. Further, he did not see why India should pay anything on account of our establishment charges in China. All these items made up a large sum; but the question was not so much the amount of money as the feeling that the charges engendered in India. Whilst the Englishmen exiled in that country complained of the income tax, the whole people of India complained that novel taxes were levied upon them, and that in certain instances they were paying more than they should pay for charges in England; and these things caused great dissatisfaction.
Then the Statement respecting East India (Finance): And also, Papers relating to the levy of a Road and Educational Cess in Bengal: Severally presented (by command), and ordered to lie on the Table:
§ House adjourned at a quarter before Ten o'clock, till To-morrow, Three o'clock.