HL Deb 05 August 1878 vol 242 cc1139-63

rose to present a Petition from the Inhabitants of Calcutta and its vicinity, on the subject of the recent increase of Taxation and of the Military and Public Works Expenditure in India. The Petition was signed by 2,000 persons, and from his personal knowledge he could state that among the Petitioners were some Native gentlemen who occupied the highest positions in the Province of Bengal. Among them were Maharajah Joteendro Mohun Tagore, one of the Members of the Legislative Council of India; Maharajah Narendra Krishna, lately a Member of the Legislative Council of India; Members of the Legislative Council of Bengal, both Mussulman and Hindoo, one of the latter being Kristodas Pal, the editor of The Hindoo Patriot, a journal written entirely in English by Natives of Bengal, which, though freely criticizing the acts of the authorities in India, was in its whole tone and spirit thoroughly loyal to the British Government. The Petition commenced by stating that— The Petitioners had observed with a deep feeling of gratitude the awakened interest of the people of the United Kingdom in the welfare of the subjects of the British Crown in India, as evidenced by their contributions for the relief of the sufferers by Famine. They went on to say that— When the intelligence of the heavy strain upon the Indian Revenue, in consequence of the recent Famine, reached the United Kingdom, proposals wore made at several influential public meetings held at great centres of national life, for giving a substantial grant of millions of pounds sterling from the Imperial Exchequer to supplement the means of the Government of India for the alleviation of sufferings from the Famine; that the Petitioners could not in adequate terms express their gratitude for the benevolent feeling which prompted these proposals, but happily the Government of India had been able to fulfil its mission of mercy without the suggested contribution from the Imperial Government. The Famine Expenditure had, however, necessitated heavy taxation, amounting to £1,500,000 per annum, and while the Petitioners, as indeed the people of India generally, considered it their loyal duty to submit to all such additional taxation as might be necessary for the well-being of their country, they could not conceal their earnest conviction that the new burdens imposed would press severely upon the poorer classes, who constitute the mass of the population, and that if they were made permanent, as they had been made by the recent fiscal measures, the taxpayers had a good reason for complaint when no attempt had been made to afford them relief by reduction of expenditure, for which the Petitioners considered there was legitimate and ample room. The Petitioners then proceeded to refer at some length to several heads of expenditure, in which they submitted that reductions could be made. As the Petition was dated from Calcutta as far back as March in the present year, he thought it right to explain why it had not been presented before. The fact was that in forwarding the Petition, the Secretary to the Petition Committee wrote to him a letter, in which there was this statement— I have the honour to forward by this mail the Petition to the House of Lords regarding Indian Expenditure and Taxation, signed by 2,000 persons. The Committee regret that, since the adoption of the Petition at the public meeting held in this city on the 2nd of March last, events in Europe have taken a gloomy turn, which may compel England to have recourse to arms for the protection of British interests. At a time like this, it may be inopportune to urge upon Parliament the question of the adjustment of the military charges of England in relation to India on a fair and equitable basis, which will necessarily lead to further burdens upon the Imperial Exchequer. He thought the sentiments expressed in that letter were such as to do credit to the Petitioners. The fact that they did not wish the Petition to be presented at a time when the state of affairs on the Continent of Europe was in so uncertain a condition showed a very loyal feeling on their part, which would doubtless be appreciated by their Lordships.

As regards his (the Earl of North-brook's) position with respect to the Petition—knowing the worth and character of the Petitioners—seeing that the Petition was written in the most loyal and proper spirit—and that, while he could not entirely agree with its contents, there was very much with which he concurred; he thought that there was no reason, notwithstanding the high position he had recently filled in India, to prevent him from presenting the Petition.

Turning to the contents of the Petition, the first head of Expenditure to which the Petitioners drew attention was the military. They wished for a re-adjustment of the principle on which the English and the Indian shares of the Home Expenditure for Her Majesty's Forces serving in India were now apportioned.

The Petitioners went into considerable detail on this subject, showing that there had been an increase of something like £l,000,000 sterling in the Home Charges of the British Army in India. In asking that these charges should be revised, the Petitioners had only done the same thing that had been done by successive Secretaries of State for India. The noble Marquess opposite (the Marquess of Salisbury) had urged the claims of India in terms nearly as strong as those which were used by the Duke of Argyll. Successive Governments of India had expressed similar opinions. When he (the Earl of Northbrook) was in India, he had addressed several despatches to the Secretary of State, urging that those charges should be revised, to the relief of the Indian finances. The same views were entertained by his successor (Lord Lytton). Sir John Strachey, the Financial Member of the Council of the Viceroy, in a speech delivered by him in the Legislative Council on the 27th December last, said— Turning to the Military Expenditure, I examined in some detail in my Minute laid before the Council on the 15th of March, the accounts of the Army. I showed that it now costs upwards of £17,000,000 a-year; that its cost has increased by upwards of £1,000,000 since 1875–6; and that a large share of this increase is in the Expenditure recorded in the Home accounts. I need not recapitulate the details thus reviewed, but I will repeat the conclusion, which I then stated as follows:— The Government of India must certainly endeavour to find the means of meeting the increased Military Charges, some of which are apparently inevitable, by economies in other Departments of the Military Service; this endeavour must be largely dependent for success upon the support of Her Majesty's Government. I do not assert that the whole of the additional Expenditure on the Army has not been incurred for excellent objects, or that it could have been avoided; but that the Indian Revenues are liable to have great charges thrown upon them without the Government of India being eon-suited, and almost without any power of remonstrance, is a fact the gravity of which can hardly be exaggerated.' We have not neglected this matter during the year; it has been the subject of elaborate inquiry, the results of which have still to be considered. "Whether we shall not be able to carry out reductions which some high authorities have advocated depends upon considerations, the effect of which on the ultimate conclusions of the Government I cannot now foresee. Judging from the past, we may esteem ourselves fortunate if further additions to the Homo Military Charges are not thrown upon us; but what is possible on our part to prevent such a result shall certainly be done. We know that we may rely upon the support of the Secretary of State in securing this object, and we may hope that some re-consideration of the burden thrown upon us, on account of this branch of charge, may be found possible, which shall lead to an arrangement more consistent with our own views of what is equitable to India. The Petitioners showed that many Committees had considered this ques- tion, the last being a Committee presided over by his right hon. Friend (Mr. Bouverie), in June, 1875; but that, hitherto, there had been no satisfactory result. Neither the Petitioners nor he (the Earl of Northbrook) supposed that there was any desire on the part of the Secretaries of State for War to act unjustly to India. He was certain that it was the desire of his noble Friend behind him (Viscount Cardwell) to act in this, as in all other matters, with perfect fairness and justice, and he had full confidence that Her Majesty's present Government wished to do what was right in the matter. He would not dwell further on this part of the subject, more especially as he understood that the noble Viscount opposite (Viscount Cranbrook) had some information to convey to their Lordships, which he trusted might prove satisfactory.

Besides the increase in the Home Charges of the British troops serving in India, the Petitioners alluded to many occasions in which the Army of India had been engaged out of India upon Imperial service, when, in their opinion, an undue portion of the expense was charged upon India. He (the Earl of Northbrook) was of opinion that India was charged with more than was equitable in the case of the Abyssinian War; and in the case of a small Force sent to Perak, in the neighbourhood of Singapore, a few years ago, he entertained, and had expressed, the same opinion. Moreover, he considered that Indian Revenues had been charged in that case contrary to law, and he had last year asked the Secretary of State (the Marquess of Salisbury) to explain why an Address was not moved to the Crown, which, under the Government of India Act, ought to have been done before such a charge was imposed upon India. The noble Marquess was unable to afford their Lordships any explanation of that omission. It was a small affair; but still it was important that the law should be observed. He would not allude further to it, more especially as he was glad to perceive that in the case of the Native Indian troops recently brought for service to Malta, a right principle had been adopted for the first time. The whole of the expense of the transport and the pay of those troops was to be charged on the Imperial Revenue.

He would add that the recent despatch of Native troops to Malta had placed the question of the Home Charges of the Army employed in India on a different footing from that which it occupied before. When any portion of Her Majesty's Forces were sent out from this country to India, India paid for the whole cost of recruiting and training every man sent out—so much for an infantry soldier, so much for a gunner, and so on, besides their pay and maintenance from the moment they left England; while, on the other hand, if Indian forces were sent out of India on Imperial service, this country did not pay anything for the cost of recruiting or training them, and very seldom for the whole of their pay. A considerable portion of the charge for them fell upon India herself. As it was now recognized that Native Indian troops might be made available for service with the other troops of Her Majesty in portions of Her Majesty's Dominions other than India— he thought that constituted a good reason for placing the Home Charges for troops serving in India on a basis more equitable to India.

The Petitioners considered that some reduction might be made in the strength of the Native Army of India. He (the Earl of Northbrook) had considered this subject most carefully while in India, and could not agree with the Petitioners that it would be desirable to reduce the Native Army; but of the two alternatives, he would prefer a smaller Army to an increased taxation. He remembered the opinion given by Lord Canning, that it was a question between imposing new and irritating taxes in India, and reducing the British Forces in India. "Danger for danger"—he believed those were Lord Canning's words—" I should prefer to reduce the Army; " and he (the Earl of Northbrook) very much sympathized with Lord Canning's views.

The feelings expressed by the Petitioners on the subject of Military Expenditure was undoubtedly genuine and sincere; this was shown by the speech of Sir Ashley Eden, the present Lieutenant Governor of Bengal, in the Legislative Council of India, in December last, when the new taxes were proposed. Sir Ashley Eden said, that while the Natives of Bengal were prepared to bear loyally the additional taxation necessary to provide for the Famine Expenditure, it was his duty to inform the Government that a strong feeling was entertained by them that the Military Expenditure was susceptible of reduction, and that it should be reduced.

The next head of Expenditure to which the Petitioners referred was "Public Works." They said— "The Public Works Department constitutes another fruitful source of expenditure." They considered that however valuable railways or irrigation works might be, the expenditure upon them was not always judicious, and ought to be carefully checked. It was remarkable that whenever the opinions of intelligent, educated, and thoughtful Natives of India were expressed, they were altogether at variance with the views advocated by Mr. Bright at certain public meetings last year— that the best thing for India would be that some £30,000,000 should be laid out at once upon irrigation. The Petitioners thought—and he (the Earl of Northbrook) entirely agreed with them— that public works were too dearly purchased, if they involved the imposition of increased burdens on the people.

He (the Earl of Northbrook) was somewhat apprehensive, from the recent accounts published in India, that the Expenditure upon Public Works constructed with borrowed money was increasing more rapidly than was consistent with the condition of the finances. In 1876–7, the Expenditure upon such works was £3,809,284, and Sir William Muir, the Financial Member of the Council of the Viceroy, said, in his Budget Statement, that the Government intended, in consequence of the increased charge on the finances which resulted from the depreciation in the value of silver, still further to contract that Expenditure. But in 1877–8, the Expenditure was £4,877,000, and for 1878–9, it was estimated at £4,555,000. It was probable that this increase had been occasioned by the necessity of providing employment for the people during the Famine in the South of India; but he (the Earl of Northbrook) felt somewhat apprehensive of the intentions of the Government of India in that respect, more especially as he had read some speeches made in India, which indicated that some scheme for the construction of local works from borrowed money, the interest of which must come in one way or another out of taxes, had been under consideration.

The Petitioners also quoted the opinion, which it seemed had been published in India, of Sir Andrew Clarke, an Engineer officer of distinction, who was selected by the noble Marquess opposite (the Marquess of Salisbury) to superintend the Public Works in India, that there was a great redundancy in the Staff of Engineers in India. Sir Andrew Clarke was reported to have written—"Some special means should be adopted to induce or to force the retirement of at least 100 Engineers," and to have expressed an opinion against the Cooper's Hill College, which apparently had the effect of sending to India an excessive supply of young Civil Engineers, at an unnecessary cost to Indian Revenues. He (the Earl of Northbrook) had no recollection of having received any representations of that nature when he was in India; but he trusted that, considering the high authority of Sir Andrew Clarke, the Secretary of State would lay upon the Table any communications that might have been received from India upon the subject.

While on the subject of Public Works, he wished to ask if there was any intention on the part of the Government to guarantee a railway across Asia Minor, either wholly or in part, from the Re-venues of India? That was a matter which had been very fully considered by the Government of India when the late Lord Mayo was Viceroy, and on the 2nd of June, 1871, the following opinion was expressed:— Upon the whole, we desire to offer such, encouragement as may be possible to the project for the construction of a railway from either the Bosphorus or the Mediterranean to the Persian Gulf; but we are decidedly averse to any promise of pecuniary assistance being made. "We cannot consider the project of such vital or paramount importance to the interests of India as would justify us in placing a charge upon the resources of the Empire for its construction or maintenance. That opinion was given by very high authorities: besides Lord Mayo, there was his (the Earl of Northbrook's) noble and gallant Friend on the cross Benches (Lord Napier of Magdala); Sir John Strachey, the present Finance Minister of India; Sir Richard Temple, the present Governor of Bombay; Sir James FitzJames Stephen; Sir Barrow Ellis, one of the Members of the Council of the Secretary of State for India; and Major General Sir Henry Norman, also a Mem- ber of that Council. He (the Earl of Northbrook) trusted that no step would be taken to saddle the Revenues of India with a guarantee of this description, with so strong an expression of opinion against it, without an opportunity being given for a discussion in Parliament.

The Petitioners proceeded to express their opinion that some reductions might be made in the cost of the general Administration of India, and particularly by the increased employment of Natives of India. He (the Earl of Northbrook) could answer for it, that the desire of the Government of India for many years had been to employ Natives of India wherever their services could be made available to the advantage of the Public Service; and he was aware, from communications which he had received from Lord Lytton, that this was an object which he had much at heart, and that he hoped to be able to make arrangements for the employment of an additional number of Natives of India, which might also have the effect of producing some saving of Expenditure.

The Petitioners made, in connection with this subject, some observations which were well deserving of consideration. They said— The Government of India has taken an important step by the new system of Provincial finance. It has, it is true, given considerable latitude to the local Governments in the administration of their own affairs; but its direct result to the people has been an immense increase of local burdens. Within the last seven years, in Bengal alone, there has been an increase of about £1,000,000, and for the whole of India more than £3,000,000 per annum by Provincial taxation. Whether the tax is imposed by the local Government or by the Supreme Government, the effect upon the taxpayers is the same; they are burdened with so much additional taxation. If the responsibilities of the local Governments are to be increased, it is but fair that the people subject to those Governments should be allowed some voice in the administration of the Provincial revenues, either in the shape of a Consultative Council or by the extension of the powers of the local Legislative Councils in financial matters, and by a larger admission of non-official Members, so as not to leave them in a standing minority. He (the Earl of Northbrook) knew that it was the opinion of many high authorities, and among them of his friend Sir William Muir, who was for many years Lieutenant Governor of the North-Western Provinces, that now that the responsibilities of the Lieutenant Governors of Provinces had been much increased, especially in regard to the disposal of the Provincial Revenues, it was very desirable to establish some kind of Council to assist them in their duties, and moreover to supply an element of stability to the policy of those Provinces, which was, under the present system, almost entirely under the control of the Lieutenant Governor for the time being. He (the Earl of Northbrook) was inclined to think that it might be well to strengthen the Provincial Governments by the establishment of some description of Councils; and he thought that if that were done, it would be desirable to appoint to such Councils Natives of India of high character—such, for example, as had filled the office of Members of the different Legislative Councils. Another suggestion had been made of a similar kind, that Native gentlemen who had filled high office under the Government should be formed into a kind of Privy Council, and should have the function, which they would consider as a high honour, of advising the Government, in some recognized capacity, upon matters of importance. He (the Earl of Northbrook) entertained a strong opinion of the advantage which was derived by the Government of India from taking into their counsels such Natives of India—and more especially in regard to taxation—when it was of the greatest importance to know the real feelings of the people.

The Petition concluded in terms to which he asked the attention of their Lordships— Your Lordships' Petitioners have been led to make this appeal to your Lordships, because heavy burdens have been lately imposed upon the people of India. The object which has led to the imposition of these burdens is, undoubtedly, humane, for it is intended to apply the additional funds to the relief and prevention of famine; but practically the object is to increase the general revenues of the country, particularly in view of extension of public "works. Your Lordships' Petitioners and the rest of their countrymen gratefully acknowledge the solicitude of the Government of India to save the lives of poor sufferers from the Famine, and are willing to bear what additional burdens they can for that benevolent purpose. But at the same time they cannot disguise the feeling, which is widely prevalent throughout India, that by making necessary, judicious, and vigorous retrenchments, without diminishing the strength or efficiency of the Administration, and by a fair and equitable adjustment of military charges payable by England and India respectively, a considerable saving may he effected—indeed, much more than the sums calculated from the new measures of taxation. And when this is made patent, your Lordships' Petitioners feel confident that your Lordships will not sanction the permanent imposition of the recent heavy taxation in India without first trying the much-needed and just alternative of retrenchment. This, your Lordships' Petitioners respectfully submit, is an essential point in providing for Famine Expenditure; for if £3,000,000 sterling a-year additional taxation beyond the amount in 1870–71 be taken from the people, not to mention the periodic increase of the land assessment and of other taxation, such as the proposed enhancement of the stamp duties, and municipal taxation, which also presses upon them severely, they must thereby be so impoverished that, in the event of future famines, there being less margin for private savings, there will necessarily be more strain upon public expenditure to meet the pressure of famine, though the general capacity of the people to cope with that strain will be reduced pro tanto. Your Lordships' Petitioners, therefore, pray that your Lordships' House, which has always been distinguished for its generous solicitude for the welfare of the people of India, will be pleased to inquire and consider as to how far the new requirements of India for famine relief may be met by the enforcement of economy, without recourse to additional taxation. The noble Marquess opposite (the Marquess of Salisbury), when Secretary of State for India, pointed out in one of his speeches that the distress and mortality caused by the recent famine arose, not from the want of a sufficient supply of food in India, nor from the want of means of communication—for food enough seems always to have been conveyed by means of the railways to the most distressed districts—but because the people were not well enough off to bear the strain of two successive bad years, and had nothing to depend on but the public works provided for them by the Government, and the charitable assistance which was contributed for their relief. The noble Marquess looked forward to the improvement of the condition of the people as the best security against the recurrence of such calamities. The Petitioners said that of the various suggestions made for the mitigation of famine sufferings, that made by the noble Marquess—namely, the observance of frugality by the people, was both sound and practical. But (they added with truth) the people of India arc noted for thrifty and frugal habits, and for patience under suffering, and that if the poorer classes fall an easy prey to a widespread disaster like the famine, it is not because they are extravagant in times of prosperity, but because their means are very limited, and that the multiplication of burdens upon them must diminish the little room they have for the practice of that frugality upon which the Secretary of State justly lays stress. With regard to the anticipation of the Petitioners, that by a re-adjustment of the Military Charges, or by some other such economies as they had indicated, enough would be saved to equal the £1,500,000 which it was proposed to raise by additional taxation, he could not himself think it right to hold out any such expectation. Although he thought something might be done in the way of reduction of Expenditure—and he was satisfied that the Government of India were not neglectful of any opportunity that might occur for effecting reductions—he did not think it likely that the cost of the Government of India could be very considerably diminished. Whatever savings might be made in one direction would be met by the increasing demands for improvements of different kinds throughout India.

But there was an aspect of the question which appeared to him to afford a more favourable prospect of the remission of taxation than the reductions of Expenditure recommended by the Petitioners. It appeared to him that some, at least, of the new taxes were not necessary, and ought not to be imposed.

From the accounts of the Revenue and Expenditure of India for the last four or five years, they found that, exclusive of the money spent on Public Works Extraordinary, and that spent on account of Famine relief, there were surpluses of between £2,000,000 and £3,000,000 sterling in each of the years from 1873–4 up to 1876–7, when the surplus fell to about £1,000,000 sterling; and, according to the statement published by the Government of India, if there had been no Famine, there would have been a surplus of £2,750,000 for the year 1877–8. Accordingly, it would appear at first sight that there was no necessity for putting on additional taxation in order to obtain the surplus of £1,500,000 which the Government of India considered should be provided as an insurance against Expenditure on account of Famines, and £500,000 as an ordinary balance, or £2,000,000 in all. With the exception of 1876–7 more than the surplus required had been obtained in each of the last five years. The insurance against famine had been kept up. The whole cost, £6,500,000, of the Bengal Famine tad been paid out of surplus income in a few years. Unfortunately, however, that impression would not be correct. The depreciation in the value of silver made the cost of the remittances to England from India £1,500,000 more than it was a few years ago. Although, on the other hand, the guaranteed railways were paying so well that the sum which the Government had to pay on account of these undertakings had been very inconsiderable of late, having regard to all the circumstances of the case, he admitted that a certain amount of increased taxation was necessary; and about a year ago new taxes were imposed, and certain other arrangements made, which improved the financial position by about £700,000.

But in February of this year a licence tax was imposed, and a cess imposed upon land. There was additional taxation to the amount of £1,100,000 imposed in that month. The speeches made by the Viceroy, and by Members of the Government of India, in December last, had led him (the Earl of Northbrook) to believe at first that it was necessary to impose this additional taxation. But the discussion in December last took place before full information could have been in the possession of the Government of the financial results of the year 1877–8, or of the prospects of the coming year. The new taxes were voted before the Budget for the year was, or could have been, prepared; and when in March the usual Budget was produced, and the Estimates and Accounts were published, he was unable to find in them a justification for the imposition of £1,100,000 of additional taxation. The Budget of March provided for an estimated surplus for 1878–9 of £2,156,000. He was happy to say that the Indian Estimates had been framed with such care of late years, that any Government was perfectly safe in concluding that the Receipts would be in excess of the amounts at which they were estimated. This was shown by comparing the Estimates and Accounts of each year, from 1873–4 to 1877–8, inclusive. In 1873–4, the estimated surplus was £220,000, the actual surplus was more than £2,000,000. In 1874–5, the estimated surplus was £1,192,000, the actual surplus more than £2,500,000; in 1875–6, the estimated surplus was £500,000, the actual surplus £1,250,000; in 1876–7, the estimated surplus was £144,000, the actual surplus £1,000,000. In 1877–8, the estimated surplus was £1,803,300, and the most recent accounts showed that the actual surplus would probably be £2,750,000. These figures were, of course, exclusive of the Expenditure on Public Works Extraordinary and on Famine relief. He did not condemn the practice of under-estimating Receipts. The Government of India were perfectly right to be on the safe side; but with Estimates so carefully framed, it would, in his opinion, have been amply sufficient to have estimated for a surplus of £1,500,000 instead of for a surplus of £2,156,000. Unless some unforeseen disturbance of the finances occurred, there would have been every probability of realizing an actual surplus of £2,000,000 at the end of the year.

His (the Earl of Northbrook's) opinion, that taxes had been unnecessarily imposed, was confirmed by the figures of the Budget itself. Besides the estimated surplus having been, in his opinion, in excess of the real requirements of the case, he found that Customs' duties had been taken off to the amount of £232,000; so that, upon the face of the Budget, it appeared to him that if no taxes had been taken off, some, at least, of the new taxes would have been unnecessary.

But the news received that morning from Calcutta was that the salt tax had just been very considerably reduced in Bengal and the North-West. He could not, of course, state precisely what the financial effect of that measure would be; but he could state the calculation of his responsible Advisers of the financial effect which would have followed from a somewhat similar measure which was under his consideration in the year 1873. In that year, he was informed that to reduce the salt duty in Northern India to 2 rupees 4 annas, and in Bengal to 2 rupees 12 annas, being somewhat less than the reduction which, if the report was correct, had been made now, would involve a loss to the Revenue of £758,000.

What was the meaning of the course adopted by the Indian Government? It was this—that the Government found that they had a greater surplus than they expected to have; and they had, therefore, in the middle of the financial year, made a considerable reduction in the duty on salt, The calculations they had made in December last were, in fact, too gloomy. They had supposed themselves to be in a worse financial position than that in which they really were, and, anticipating now a larger surplus than they had expected either in December or March, they resolved to remit other taxation, instead of to abstain from levying the new taxes they had put on. Now, those taxes were put on for an express purpose, and they were justified as having teen put on for that purpose only. Sir John Strachey, speaking on the 9th of February, 1878, said— These new taxes are required for the sole purpose of giving us, year by year, a sufficient surplus of Income over Expenditure to meet Famine Charges. Again, the Preamble of the Bills which imposed the new taxation made that clear. It ran thus— Whereas, in order to provide means for defraying the Public Expenditure from time to time incurred and to be incurred for the relief and prevention of Famine in British India, it is necessary to effect a permanent increase of the Revenue. And the proceeds of the taxes were to be applied to that purpose only.

It appeared to him that in the face of that statement, the Government of India were bound, the moment they saw they had imposed new taxes which were not required, to have abstained from levying them, instead of using the surplus for the purpose of taking off old taxes.

But it might be said that the taxes which were imposed it was advisable to impose, and that the taxes which were reduced it was advisable to remit. He did not think that anyone who was well acquainted with India would concur in that view. The new taxes were a licence tax, and an increase of the cesses on land. The licence tax was an unpopular impost, bearing as it did on the poorer portion of the commercial classes throughout India, while the increase of the cesses on land disturbed the settlement under which an occupier of land held his land for a certain term of years. Necessity could alone justify the imposition of such taxes, and they ought to be removed as soon as possible. He knew it was thought by many that it was very advisable to reduce the salt duty, and to get rid of the Customs' line. He did not wish to undervalue the importance of that measure, and he would gladly have gone further in that direction than he did when he was in India, had he been able to do so without imposing fresh taxes; but of all taxes, the salt duty weighed with least oppression upon the people of India, and created the least discontent, and such was the opinion expressed by Sir John Strachey on the 27th of December last. He said that— Payment of the tax is distributed over the year by almost daily instalments, each of them infinitesimally small; and that— In the years 1859, 1860, and 1861, the salt duty was raised in Bengal by 12 annas a-maund, and in the Upper Provinces by one rupee a-maund, not only without occasioning discontent or reducing consumption, but the measures hardly even attracted attention. On the same occasion, Sir Ashley Eden, the Lieutenant Governor of Bengal, whose attention to the welfare of the people is well known, gave it as his deliberate opinion that a reduction of the salt tax in Bengal was not required. He called it— A sacrifice of Revenue in concession to theory which would afford no real relief to the people. The changes made in the Customs' tariff might be desirable in themselves, especially the remission of the export duty upon sugar. But, in his opinion, however right it might be to make those reforms, they ought to have been postponed until they could have been effected without the imposition of new taxes.

In India, it was unwise and unsafe to take off taxes to which the people were accustomed and to impose others. The noble Marquess opposite (the Marquess of Salisbury) used wise words on this point, when examined a few years ago before a Committee of the other House of Parliament. He said— The difference between England and India in matters of finance is this—that in England you can raise a large increase of taxation without in the least degree risking the security of your institutions; but you cannot do so in India. When he (the Earl of Northbrook) was in India, a Correspondence took place between the Government of India and the noble Marquess on the subject of certain reductions of Customs' duties. The Government of India expressed their opinion that it would be highly inexpedient to impose fresh taxes for the purpose of making those reductions, and the noble Marquess, both in writing to the Government of India, and in his place in that House, expressed his entire concurrence with that opinion, and said that the Customs' reform he wished to make "was not by any means intended to involve any increase of taxation." He (the Earl of Northbrook) had then expressed the satisfaction with which he had received that assurance from the noble Marquess. It was renewed last year in explicit terms by the Under Secretary of State in the other House of Parliament. But what had been done now? New taxes had been put on, and immediately afterwards Customs and other duties had been taken off, which, if they had been left alone, would have made some, at least, of the new taxes unnecessary.

Their Lordships should bear in mind what was the opinion of men who had governed India in reference to the effect of imposing fresh taxation. He had had to consider the question in India with the advice and assistance of the best and ablest Indian Civil servants, and he had made himself acquainted with the opinions of his Predecessors. He found that, in a Paper which had been laid before Parliament and was in their Lordships' Library, Lord Mayo said, not long before his lamented death, that— A feeling of discontent and dissatisfaction existed among every class, both European and Native, on account of the constant increase of taxation which had for years been going on. And Lord Mayo added that— The continuance of that feeling was a political danger, the magnitude of which could hardly be over-estimated. Such was the opinion of Lord Mayo; and he (the Earl of Northbrook), after taking every pains he could to inquire for himself, and with the responsibility of the Government of India upon him, deliberately arrived at the same conclusion.

In giving their Lordships his views on the subject of the taxes which had been imposed in India, he had acted with reluctance. Since he had returned from India, he had avoided troubling their Lordships often on matters connected with India. It had been his desire to give what little support he could to Her Majesty's Government upon Indian affairs, and it was especially his desire to interpose no difficulties in the way of the Government of India. At the same time, in a matter of such importance to the welfare of India, it was his duty to express his opinions and to point out the danger of imposing fresh taxes. He might have hesitated if he had thought there was no remedy; but as the remedy was clear, there was an additional reason why he should take that opportunity of expressing his views on the subject. He trusted that the reduction of the salt tax might be postponed, and that the Government of India might be able to remit some part, at least, of the new taxes which had been imposed. He would only add that the danger to the stability of British rule in India, from the imposition of unnecessary taxation and anything like extravagant administration of the finances, was far greater, in his opinion, than any likely to arise from the recent alteration of the position of Russia in Asia Minor. The noble Earl concluded by moving for Copy of any Correspondence between the Government of India and the Secretary of State for India in Council on the subject of the excess of supply of Civil Engineers for service in India.


I rise to speak on the subject at considerable disadvantage after the noble Earl who has had such long experience of India and Indian finance; yet I will endeavour, as well as I can, to go through the various topics to which he has called attention, and I think I shall, in the end, be able to show your Lordships that the indictment which he has framed against the taxation of India is not of the serious character he supposes, and that the changes which have been made are of such a nature that they will lay the foundation of a better fiscal system in India, and lead to the redress of those grievances to which he has called your Lordships' attention. This conversation, as your Lordships know, commenced with the remarks of the noble Earl upon the Petition presented from the British Indian Association. Now, I am far from undervaluing that Petition, or those by whom it is signed; yet I am not prepared to admit that it is anything like an accurate statement of the facts of the case. If my noble Friend will read the Petition carefully, he will observe some of the most extraordinary mistakes it is possible to conceive, especially in regard to the Home Charges as affecting the Army of India. For instance, a comparison is made of one item with another, taking no note of the fact that in the one case the figures included stores which, in themselves, represented £1,200,000. With regard to the question of Military Expenditure, to which my attention was drawn on going into the War Office, I found that my noble Friend who preceded me had got into a hot correspondence with the Secretary of State for India, and that things had practically come to a dead-lock. There being no possibility of a solution of the difficulty under existing conditions, I obtained the services of a gentleman whom your Lordships know to be well fitted for the work—Mr. Edward Bouverie — who became Chairman of the Committee that had been appointed by the two Departments, which, under his presidency, and after a complete investigation, came to a decision as to what the War Office ought to receive, and what the India Office ought to deduct. I can say, with the utmost confidence, that I have never taken any partizan view of this matter. I offered to refer all questions when I was in the War Office just as I do now that I am in the India Office. There was no desire on the part either of the War Office or the Treasury to treat India unfairly, or to lay any undue burdens upon her; but when the Petitioners complain of having now to pay differently than for the East Indian Army under the old system, it is my duty to point out that they entirely forget that instead of sending them out recruits, we now send them out the manufactured article. The Home Charges are charges which almost entirely affect India. It is quite true that we have the troops in England, and can make use of them in any great pressure or emergency; but they are being prepared for the Indian Army; and, therefore, India ought not to complain if this is charged in the expense. But I do not desire to waste time upon that point, which has practically been given up by the noble Earl; for he said he did not see how any great reduction could be made. When, however, I come to tell what has been arranged, your Lordships will see there is every prospect of things being put upon a sound footing. A dispute has been going on between the two Offices—the War Office and the India Office—for many years, in respect to the claims of one or the other; but that has been settled by the Imperial Government surrendering a claim to some £150,000, and in March next that whole matter will be ended. An arrangement is under consideration as to the sums to be paid in future; and it is proposed that that arrangement shall remain in force for a certain number of years, and will then be subject to revision. With regard to Abyssinia, I need not go into that matter, inasmuch as a different system as to the employment of troops out of India has recently been adopted, by which the whole of the charges are placed on the Imperial Government. There may, of course, be cases in which a different state of affairs may arise; and, therefore, we cannot lay down any hard-and-fast line on this subject. Now, my noble Friend (the Earl of North-brook) has expressed his opinion that a further reduction of the Army in India is not desirable. Certainly, after the pains taken some years ago on this question, it is impossible to approach it with a view to anything like a great reduction. We might make reductions here and there; but I think my noble Friend was right in not holding out any hopes to the Petitioners of making any such reduction as would meet the views they have expressed. Now, with regard to public works, I do not think that too great caution can be exercised. There is a notion afloat that you cannot spend too much upon public works, or make too many of them to benefit India; but there was never a greater delusion. Works may fail to be of any utility to a locality, and therefore it is of the utmost importance that the greatest care should be taken in the selection of localities. It is possible that works may exceed in cost the advantage to be derived from them; and then they became a burden instead of a benefit. Such works, I am sorry to say, exist already. On the other hand, irrigation works and railways should be introduced wherever it is reasonably probable that the benefit they will confer will be proportionate to the outlay involved. Indeed, it is essential that they should be undertaken. Railways are especially valuable if they are well laid out, and with a due regard to the needs of the people. In the late Famine, the railways did more than anything else to save life; for it enabled the authorities to transport enormous masses of food, estimated at millions of tons, which otherwise could not have been carried to the starving people. We do not know how much more awful the calamity would have been without the railways. Now, as to what the noble Earl has said in reference to Sir Andrew Clarke, the head of the Public Works, I think that what he desires is that we should not send out in great numbers from Cooper's Hill engineers who are not perfectly educated in their profession, that we should keep them back until they are more completely educated, for fear that there should not be employment for those of only moderate attainments. That recommendation was attended to by my noble Predecessor in Office, who, while unable to prevent students from going out in accordance with the terms of their engagements, had persuaded one-half of those who might have done so to remain in this country, and to study engineering works practically in order that they might be better fitted for their duties in India when they did go out. As to the railways in Asia Minor, about which the noble Earl has asked me, no application has yet been made to the English Government for guarantees; and if there had been, I should certainly consult the Government of India before taking any responsibility upon myself. In a great question of this sort, I will not commit myself further than to say that both the Government and the country will have full time to consider the matter before anything could be done to impose a tax on the Revenues of India. In regard to the general administration of India, it is very desirable on many grounds—but, above all, because pledges have been given both by Acts of Parliament, and Proclamation—that Natives should be employed in Government work; it is essential that we should redeem our obligations; but, at the same time, we must take care that they are placed in positions in which they cannot come into collision with the legitimate claims of the Indian Civil Service. Means ought to be taken to provide for the employment of Natives, not in the lower places which they might enter by competition, but also in the higher places which they might obtain by selection on the score of special fitness. If Natives were to be admitted to the Councils of a Lieutenant Governor—on which I do not express an opinion—that official, no doubt, would have the selection of Native members; and, of course, would choose men qualified to assist him. I now come to what is the pith of my noble Friend's speech—the question of taxation. There is one thing absolutely clear, from the speeches of Sir John Strachey and others in the Legislative Council, and that is that throughout all these proceedings the chief object has been to equalize the salt duties, to abolish the barbarous system of Customs' lines, to reduce the transit dues, and further to enter into engagements with the Governments of States producing salt, in order that we may practically obtain control of the salt made in India. The noble Earl expressed himself anxious for the equalization and the lowering of the salt duties, and says that if he had had a surplus he would have used it to accomplish those objects. But, as a matter of fact, he had, according to his statement, a surplus for four years, and it is curious he did not do it. Why, even with that surplus, he looked forward to the necessity for additional taxation, in order to meet these constantly recurring Famines, which were becoming ordinary instead of extraordinary. In five years, the extraordinary expenditure on Famines has amounted to £16,000,000, and the surplus of which he speaks was swallowed up. He did not advert to the fact that the income tax has been abolished; and therefore it has become necessary to have recourse to the new taxes, which are now objected to. It is impossible, or, at least, unwise at present, to revive the income tax; had it been kept partially alive, it might have sufficed or have been raised, and these new taxes would not have had to be imposed. But as it is, is it unreasonable to impose a new tax for the purpose of effecting fiscal reforms, when those fiscal reforms will furnish the means of meeting the expenses of constantly recurring Famines? The noble Earl did not rely upon the surplus to meet the Famine Expenditure; he thought it necessary to provide another fund for the purpose; and this, let me point out, is exactly what is being done by Sir John Strachey. He has been endeavouring to accomplish that which four successive Governments have been attempting to do — namely, to enter into arrangements with the States that produce salt, so as to get the entire trade into our hands, and thus, for one thing, to put an end to smuggling. In the other House, an ex-Minister and eminent authority as a chemist declared that in India vitality cannot be kept up without a certain quantity of salt; a Native without his salt was not, if I may use the expression, worth his salt. Well, what has been the effect already of getting rid of the transit dues? The price, exclusive of duty, has in a part of India been reduced from three rupees to less than 1 rupee per maund. It is very desirable that there should be an uniform salt tax throughout India; it would now be throughout a very large portion 2 rupees 8 annas, or about ¾d. a-pound, which cannot press hardly upon the Natives. I might, in explaining the needs of India, call attention to the depreciation of silver, which exercises so injurious an effect on the finance of India at the present moment. This, I fear, is not to be cured by legislation, but depends upon ordinary rules of political economy. I now come to the question of the licence and cess taxes; and Sir John Strachey defended them upon a principle which has recently been maintained with great urgency in your Lordships' House—namely, that when dealing with the poorer classes we should endeavour to make them thrifty and look after themselves as far as possible. He said that it was upon the agriculturists and small traders that the great weight of the Famines fell; and that, therefore, it is not an unreasonable thing that they should pay towards this fund which is to provide against future Famines. The licence tax falls upon the trader, but it is small, and it is perfectly absurd to compare the small trader in India with a similar man in England; while the cess tax is a tax on rentals, and on proprietors, and if you look at the burdens laid upon these Provinces in former times, you will find that a less amount is now demanded than was taken then, because, instead of taking one-half, you take only one-third now; and it is a tax not on the rent payer, but upon the man who receives the rent, and it is so small that it will not press upon the occupant. You may find that sometimes it will reach the occupant; but, as a rule, I think it is of so small an amount that it will not affect the proprietor to such an extent as to make him look for someone to bear the amount on his behalf. I agree with my noble Friend that new taxes, whether at home or in India, are very undesirable, and nobody can be more strongly of opinion than Lord Lytton and Sir John Strachey that Taxation and Expenditure must be reduced as far as possible, but that you must make both ends meet; but when they have to deal with exceptional circumstances, such as Famines, which seem to prey like wild beasts on different parts of India, it then becomes necessary to look for some resource which shall be permanently available. With that view, Sir John Strachey has endeavoured to obtain £2,000,000 above his Expenditure—that is, £500,000 over as surplus, and £1,500,000 to be invested in reproductive works, so as to enable him, when Famine comes, to borrow money on the interest arising from the investment so made. I hope to Heaven these Famines may pass away; but we have had them constantly since 1874, and nothing can be more distressing than to read the accounts of them, while, on the other hand, nothing can be more heroic than the way in which the Civil servants in India, for the most part, have acted in dealing with them. If by so small a taxation as this you can provide remunerative Public Works, which may tend to bring to an end these disastrous Famines, you will have achieved a work which will be an honour to Sir John Strachey, who introduced it and to this country, for having sanctioned it.


considered the Armies of India reduced to the lowest standard consistent with safety. A few thousand men, such as the Force sent to Abyssinia, or that recently sent to Malta, might be temporarily employed out of the country for Imperial purposes, or employed to maintain order on the North-West Frontier; but the country could not safely bear any permanent reduction of the Army. With regard to the Public Works, he observed, that nothing was so expensive and wasteful as a fluctuating condition of those Works. At times there had been most urgent and pressing demands for the extension of the Public Works. Then, when a fit of economy seized the Government, there had been sudden reductions; but the Establishments could not be suddenly reduced without great sacrifices, and remained a burthen on the Public Works, increasing their cost enormously. With regard to the railways, he considered that no new works of magnitude should be commenced until the great military arteries—the lines of railway from the sea at Bombay by the Indus Valley to Lahore, and. the continuation of the military line, from Calcutta to Peshawur through Lahore, had been completed. The progress of the Lahore and Peshawur portion had been most dilatory. Regarding the Councils for the Lieutenant Governors of Provinces, he considered that it would be a very beneficial measure to give them, and to appoint to them Natives of approved ability and loyalty; but as Councils were very expensive bodies, involving large salaries, he trusted that their cost would be met by reductions in the Civil Establishments.

Petition read, and ordered to lie on the Table.