m HJ UC-NRLF GIFT itaifetfotl INDIAN FINANCE. MR. THOMAS B. MOXON. [READ JANUARY 12TH, 1881.] B BUILDINGS. RIDGEFIELT-. :TBR; MANCHESTER STATISTICAL SOCIETY. Indian Finance. BY THOMAS B. Moxox. [Read January 12th, 1881.] THE study of Indian Finance is one well worthy of our attention, and one too which requires very careful consideration. The sur- rounding conditions are so dissimilar to those with which we are familiar that, if we would understand the problem, we must put aside all preconceived ideas and carefully qualify ourselves to look at the subject from an Indian standpoint. This is no easy matter. Accustomed as we are to the confined area of our own islands, we do not readily comprehend the immensity and diversity of the interests involved in the one word " India." Even old residents do no*t shake off this contracted feeling entirely, and herein is found one of the gravest difficulties that present themselves to the student of Indian Administration, almost every author, uncon- sciously of course, allows local colouring to warp his arguments, and on the strength of particular instances indulges in wide generalisations. To commence with, we must not regard India as a country, a nation, a state; it is in truth a continent, as large and as populous as the whole of Europe, exclusive of Russia, peopled by as many ' -109 2 MR. THOMAS B. MOXON tribes; "IjuiU up o % f as many jstates, and characterised by as many peculiarities. It "is, as**Sii'.J*. Strachey puts it, farther from Lahore to alf u Jfca :&$n*.f frjrt. Lpnjlon to Naples, and there is probably not as'mucn dfffeYence'BeTwe'en' England and Italy, in their physical conditions and in the character of their inhabitants, as between the Punjab and Bengal. The one province of Lower Bengal is as large and more populous than the whole of France. The total population of India is ten times that of England and Wales, although only 191,000,000 are actually British subjects, the remaining 49,000,000 being governed by native Princes, who indeed acknowledge the supremacy of our Queen, but who, so long as no serious irregularities occur, are allowed to govern their principalities according to their own system of laws and adminis- tration. There is still one more important fact for us 'to consider at the outset, and that is the dissimilarity between the occupations of the people of India and those of the United Kingdom, as shown in the following table : EATIO OF CLASSES OF POPULATION. P1 England & Wales* Ireland India (1801). (1861). (1878). Professional 2'4 ... 1'8 ... 3-6 Domestic ... 57'4 ... 56 P 8 .., 6'2 ' Commercial 31 ... 2'2 ... 5'2 Agricultural 101 ... 18'3 ... 56'2 Industrial 24'3 ... 12'3 ... 131 Indefinite, Independent, and ) >, Non-Productive \ Labourers (mostly agricultural) ... ... 12 P 3 100* 100- 100- In India, the professional class includes Government Servants, and half those described as non-productive are actually professional beggars. * The ratios for Scotland are much the same as those for England ON INDIAN FINANCE. 3 Wide as are the divergencies shown in this table, they fall short of the full truth, for it is believed that fully 80 per cent, of the total population of India is closely connected with the land. This enormous proportion of agricultural population must of course have a considerable influence upon the system of taxation. We may well suppose that such a population, and under, as we shall see by and by, such unfavourable conditions, is not likely to have much to spare for luxuries and taxes. It is only by the exercise of strictest economy that they manage to exist at all, and it is believed that one-fifth of the whole population is always on the verge of famine. Nor has our civilized rule been an unalloyed benefit. It is true that we have given peace, and also true, as Dr. Hunter recently said, that consequently in Bengal each square mile has to feed three times as many mouths now as in 1780, and this with little, if any, compensatory improvement in agriculture. It is true that we have given a system of fairly effective laws, but it is also true that under our rule the load of debt has undoubtedly increased, and to-day one third of the landed proprietors are deeply and inextricably in debt, whilst yet another third are also in debt, but not beyond hope of recovery. That is to say, not beyond such hope as is possible where money is borrowed at from 20 to 30 per cent interest. With a people so poor, and with an aristocracy so embarrassed, it is clear that taxation should only be very light in its incidence, and so it appears to be when we read that it is only 4s. per head ; but in all statistics of comparative taxation it is essential that we should find out the relative value of money, as a purchaser of labour, in order that we may obtain an equable standard of comparison. To do this we select that occupation which, whilst fairly exhaustive to the physical frame, requires the least possible amount of skill. Such labour will be remunerated by little more than will purchase the bare necessaries of life and offer the very slightest inducement to labour. The wages it earns closely approxi- mate to the cost of the food essential to the full preservation of 4 MR. THOMAS B. MOXON health and strength. Selecting the navvy as our representative labourer, we find that in India he receives four annas, or about sixpence, per day; in England he receives 3s. 10d., so that in this respect, in the cost of life-food, the value of money in India and in England is as 7 to 1, and taxation in India at 4s. per head is equivalent to taxation in England at 28s. per head. To put it in another form : 4s. represents eight days' labour in India, and eight days' labour in England equals 30s. 8d., so that 4s. in India is equal to 30s. 8d. in England. We will not, however, press our argument so far, but, leaving a margin for contingencies, will content ourselves with the ratio of 7 to 1. If, then, we compare 28s. with 49s., that being the rate of public expenditure per head in the United Kingdom, and remember that the larger portion of the population of India is in a position only one remove from that of our agricultural labourers, and that 4s. per head means that each peasant farmer gives nearly a fortnight's labour yearly to the state, we shall hardly think it light taxation for India. If, too, in both cases, we eliminate the charge for interest on debt (other than for productive works in India), we get, as the cost of administration, the comparative figures of 24s. 6d. for India against 33s. for England. It is true, we are told, that if the native of India will not trade, or own land, or use spirituous liquor, or wear English cloth, &c., ike., his taxation will be reduced to the equivalent of four days wages only, but the fallacy of this reasoning is that, though it might hold good in the case of any single individual, such abstenence on the part of all would only result in an alternative tax being imposed to supply the deficiency, since it would only reduce the revenue without affecting the expenditure. We are told that our Government makes lighter demands upon the people than the old native rulers ; and this is correct, but it must be remembered that what they extracted from the people they spent amongst the people, whilst we draw from India, in pensions, &c., four or five millions a year, for which India receives no equivalent whatever, and almost as much more for services ON INDIAN FINANCE. 5 which, however necessary to our rule, are only of negative .advantage to India.* In fact, it appears that our administration is actually neither light in cost nor compensatory in its expenditure, and it seems very desirable that such alterations should be made as will lighten the burden of taxation and foster the productive powers of the country. We will consider the present constitution of our Administration and then review the financial system of that Administration. The British Administration of India is entrusted primarily in England to a Secretary of State, who is a member of the Cabinet. He is assisted in his deliberations by a Council of fifteen members, of whom five form a quorum. A majority of this Council must consist of persons who have been resident in India, and the members are appointed by the Secretary of State for India, for a . period of ten years, which he may, if it seems good to him, prolong to fifteen years. They have no executive power the Duke of Argyll in 1869 denied their power to veto by vote of a majority any acts involving expenditure, and they are not allowed to sit or vote in Parliament. If we remember that Indian Administrators on their return are often rewarded with a peerage, it will be diflicult to imagine an arrangement better adapted to evade effective parliamentary control than this Council for India, which, without securing the independent judgment of life members, deprives the House of Commons of experienced criticism and leaves the affairs of this great country to be adjudicated upon by an assembly from which the most competent judges are excluded. In India the administration is entrusted to the Governor- General, Viceroy of India, who is appointed by the Crown, but who is expected to act under the orders of the Secretary of State for India. In matters of Imperial policy this submission no doubt is given, but in matters of internal policy, owing to the powerlessness of the Council and the ignorance of Parliament, * See Table of Incidence of Loss by Exchange. 6 MR. THOMAS B. MOXON many disagreements arise, and a high official quite recently acknow- ledged the difficulty of getting the financial policy of the Secretary of State in Council carried out in India. The weakness of the control in England is not compensated for by the arrangements in India. The Governor-General is assisted by a Council of five members, three selected by the Secretary of State and Council, and two appointed by the Crown. In effect this Council is composed of the heads of the chief administrative departments, and possesses none of the qualities of a European Cabinet. In addition, the Commander-in-Chief of the Forces in India is also a member, ranking next after the Governor-General. For the purpose of making laws this Council is assisted by from six to twelve additional members, nominated for two years by the Governor-General, and of whom half are to be non-official persons, though this is not essential to the legality of any act. At present there are ten of these members, only three of whom are natives of India. They are not allowed, without previous sanction of the Governor-General, to introduce any measure affecting the Indian Debt or Revenue, or by which any charge would be imposed on such revenues, or affecting the discipline or maintenance of any part of Her Majesty's military or naval forces, and the Governor- General may approve, disapprove, or refer to London any measures they pass. This constitution securing a majority to the official members, and the tenure of office being limited to two years, the power of control over the executive possessed by the independent members is very limited indeed, and, practically, the legislature and executive are one. In certain cases of necessity the Governor-General may himself enact laws to be in force for not more than six months, and when absent from the seat of government he, with one member of Council, can make orders affecting all India. Mr. Maine, in 1867, stated that only cases of special importance were submitted to the full Council. The Lieutenant-Governors of the various provinces are assisted by similar councils with similar powers for provincial legislation. OX INDIAN FINANCE. 7 Even if we should concede the unsuitability of representative government for Asiatic races, as we know them at present, it must surely be possible to devise some consultative assembly of natives of high rank, and associate it with the administration. The conqueror Akbar entrusted the civil rule almost entirely to the chiefs he had subjugated, and his power was not weakened thereby. But it is not alone in this point we might well learn from that sage eastern potentate. We seem to have constructed our administration on thoroughly military lines, and but one or two statesmanlike minds have grasped the truth, that unless we offer to the higher class natives some openings for their natural and legitimate ambition it will most assuredly vent itself in discontent with our rule. FINANCES. In considering the published accounts we are apt to be misled by the the amount quoted as " Grand Total Revenue," for 1878-9, 65,199,602. This includes 4,869,020 net receipts of the Guaranteed Railways, of which actually only 265,327 directly relates to the Government guarantee, being earnings in excess of guaranteed interest. This and other items we can best summarise thus Guaranteed Co.'s Eeceipts (less surplus earnings) 4,603,693 Cost of Collecting Revenue 6,441,332 Eefunds and Drawbacks 406,562 Receipts in Reduction of Expenditure 8,377,686 Sundries ... 973 19,830,246 Deducting this total we arrive at a Net Revenue of 45,369,356, as in the following statement, based upon the Government form of 8 MB. THOMAS B. MOXON accounts, but although this form is adopted in some official Returns, we fail to see the reason why the Cost of Collecting Revenue should be included in the deductions. Such a deduction tends to mislead us in estimating the total taxation of the country, though it enables us to see what is the net amount contributed by each tax towards the general revenue. We should prefer to look at the other side of the accounts, where we find a Total Net Expenditure of 42,619,705 (the Provincial and Local Balances are items allotted for expenditure but not expended), and add to this total the Cost of Collecting the Revenue, giving a true Expenditure for the year of 49,061,037. STATEMENT OF REVENUE, 1878-9. Based on Government Form of Accounts. Sources. Gross. Expenses of Collection, &c. Net. Land Revenue, less refunds Forests 22,278,421 605,433 2,966,489 454 934 19,311,932 150 499 Tributes 703,660 703 660 Excise less refunds . 2613 414 87 839 2 5 9 5 575 Assessed Taxes, less refunds 874 929 37 617 837 312 Provincial Rates, less refunds Customs less refunds 2,608,938 2 261 322 64,431 200 417 2,544,507 2 060 905 Salt, less refunds 6 907,774 404 743 6 503 031 Opium 9,399 401 1 698 730 7 700 671 Stamps, less refunds 3075271 115 45 9 2 959 819 Mint ... . 172335 103991 68 344 Miscellaneous 374 365 306 689 67 676 Miscellaneous refunds - 64 575 - 64 575 Total Revenue 51,810,688 6,441,332 45,369,356 OX INDIAN FINANCE. STATEMENT OF EXPENDITURE, 1878-9. Based on Government Form of Accounts. Heads of Expenditure. Gross Expenditure. Receipts. Net Expenditure. Administration .. 1,487,852 1 487 852 Political Agencies &c 448 793 448 793 Allowancies under Treaties, &c Minor L)e ? -artments 1,826,484 355,347 84,977 1,826,484 270,370 Law and Justice (.Receipts less re-) funds j 3,437,790 841,612 2,596,178 Police 2 419,119 211,108 2 208 Oil Marine 548,703 250,595 298 108 Education 978,254 147,425 830 829 Ecclesiastical , 155,200 155 200 Medical 669,059 44 332 624 727 Stationery 471,470 47,096 424 374 Post Office 1 033 327 911 806 121 521 Telegraphs (Receipts less refunds)... Civil Furlough and Absentee ) Allowances . . ( 470,790 231,561 371,563 99,227 231 561 Superannuation, Retiring, and ) Compassionate Allowances \ Interest on Public Debt (other) than for Productive Works) ... \ Interest on Savings' Banks, &c., ) Funds ^ 1,997,327 4,575,069 ) 378 952 ) 667,485 628,367 1,329,842 4,325,654 Army 17,092,488 974,781 16 117707 Loss and Gain by Exchange 3,359,144 474,485 2 884 659 Famine Relief 313 420 3134^0 Ordinary Public Works 4,318,247 571,076 ) Irrigation Works 630,919 168,619 [ 4,425,495 State Railways . . . 226,846 10 822 \ ORDINARY EXPENDITURE Payments and Receipts in respect } of Guaranteed Railway and > Irrigation Co 's Guarantees.... ) Productive It rigation Works State Railways, Gross Payments and Receipts ) Interest on Debt for Productive ) Works . \ 47,426,161 1,047,479 381,550 734,377 1 407 824 6,406,149 265,327 966,006 [ ! 41,020,012 782,152 817,541 TOTAL EXPENDITURE Provincial and Local Balances, ) net surplus ( 50,997,391 8,377,686 42,619,705 715,405 Surplus Revenue for year 2 034 246 45,369,356 10 MR. THOMAS B. MOXON In this statement we find the Gross Revenue set down at 51,810,688, but to arrive at the gross taxation upon the people of British India we should deduct the item Tributes, 703,660, and, some maintain, the whole of the net receipts from Opium, 7,700,671. We demur to this, though certainly 2,390,000 of the Opium Revenue is derived from a duty on that manufactured in native states. However, conceding the point, we arrive at a Gross Revenue, from actual taxation, of 43,707,357. Allowing for the variation between the par value of the rupee, I mean Is. 10d., and the valuation of 2s., iipon which these accounts are based, that shows, upon a population of 191,500,000, a taxation of about 4s. per head. Here again we meet with one of the disturbing elements in a comparison between English and Indian taxation. Although the receipts from opium may be excluded from our estimate of taxation they are necessary to enable taxation to meet expenditure, so that we must take them into account in any estimate of the cost of British rule in India. They represent about ninepence per head, which, raised to the money value of England, is equivalent to 5s. 3d. That is to say, the cost of Government in England being 49s. 3d. per head, the cost in India is equivalent to 33s. 3d. ; or, deducting charges for Interest on Debt other than for productive works in India we arrive at 30s. 3d. for India against 32s. lOd. for England j or, deducting provincial rates, as part of what in England is termed "Local Taxation," we arrive at an Imperial Expenditure of 28s. 4d. in India against 32s, lOd. in England, the local taxation being as 9s. is to 18s. 3d. per head. Another fact, however, in the consideration of comparative taxation is the relative average remunerativeness of occupation. From Professor Leone Levi's Memoir on the earnings of the working classes in Great Britain, in 1877-78, we discover that whilst the average earnings of the agricultural labourer were only 32 per annum, as against 46 in all other wage-earning occupa- tions, the percentage of the former was so small only 16 J per cent of the total number that the average earnings for all classes OX INDIAN FINANCE. 11 was as high as .43 '70 per annum. In England agricultural occupations [employ only 10 per cent of the population, in India 56 per cent. If England stood in the condition of India the average wage earning would be only 33 in place of .43 70, and this gives a fair but not exaggerated idea of the comparative ability to sustain taxation, never forgetting that as the wage decreases the margin above absolute needs decreases in immensely larger ratio, and it is out of this margin that taxation is paid. Taking into account this relative ratio of earnings and also the relative labour value of money, we find that taxation of 33s. in England is represented by the equivalent of 25s. 3d. in India. The following table may make our meaning clearer : Per head. India. England if as agri- cultural as India. England as it is. Revenue . .... s. d. *4 9 s. d. s. d. 49 3 At English, money value *33 3 37 49 3 Cost of Administration, exclusive of unpro- ductive debt *30 3 25 3 32 10 Cost of Administration, excluding Local Expendi- ture 28 4 25 3 32 10 Local Expenditure 9 11 4 18 3 This table goes to prove that, all being taken into account, the administration of India is as costly as that of Great Britain in proportion to her resources. Before we deal with the several branches of revenue and expenditure we must make important variations in many of the items, based upon a careful study of the detailed accounts. These alterations will be found in the following " Revised Statements," which explain themselves. In addition to the particulars of income and expenditure, we have added a column in which the " Loss by Exchange" is apportioned among the various services, with as much accuracy as is possible with the limited information at our *These include a small amount of Local Taxation. 12 MR. THOMAS B. MOXON command, and we think it will be found both interesting and instructive. REVISED STATEMENT OF NET REVENUE, 1878-9. Sources. Net Revenue. Land Revenue 19,311,932 Forests 150,499 Tributes 703,660 Receipts in Native States for Opium 2,390,000 Less for Troops, about 340,000 - 2,753,660 Excise 2,525,575 Less on Opium used in India 466,955 2,058,620 Assessed Taxes 837,312 L ess for Famine Insurance, about .. 547,000 290,312 Provincial Rates 2,544,507 Less for Famine Insurance, about 52,000 2,492,507 Customs 2,060,905 Salt 6,503,031 Less allowance to Native States to secure monopoly, about 200,000 6,303,031 Opium 7,700,671 Plus Excise on that used in India 466,955 Less Tax on that grown in Native States 2,390,000 5,777,626 Stamps 2,959,819 Less Court Fee Stamps , 2,150,909 808,910 Mint 68,344 Miscellaneous 67,676 Famine Insurance 599,000 Expenditure 313,420 285,580 Miscellaneous Refunds .. -64,575 Net Revenue 42,365,027 ON INDIAN FINANCE. 13 KEVISED STATEMENT OF NET EXPENDITURE, 1878-9. Rough Proportion Expenditure Heads of Expenditure. of Loss by Proper. Exchange. Administration 1,487,852 47,000 1,534,852 Political Agencies, &c 448,793 2,700 451,493 1 > 626 > 484 7 > 300 1,633,784 Law and Justice 2,596,178 Less Court Fee Stamps 2,150,909 445,269 Minor Departments 270,370 500 270,870 Police 2,208,011 Marine 298,108 30,300 328,4 i1 may be increased, but not on account of any improvements mad; by the tenant or landlord, the grounds justifying an increase he MI- held to be, speaking generally, only such as raise the general value of land in the whole district. There are several distinctive tenures in India which we may notice. In the North Western Provinces (8 1,7 7s square miles, 30,787,000 population) the system is called /. The proprietor cultivates a portion of his estate, like ; i lands in Ireland, and lets the rest, either to tenants at will, or on lease, or to tenants with right of occupancy. If lie fail t< ; pn p . he revenue charge, the estate is sold, and he loses his p/opi i.-tory rights, but * 448,320 of these towns and villages haveles* than 200 inhabitants. ON INDIAN FINANCE. 17 is still a hereditary cultivator, with right of occupancy, subject to payment of the customary rent. There is also a putteedaree tenure, a kind of village holding, where the village lands are assessed as a whole by government, and the inhabitants apportion the land and charges among themselves. This system affects 90 per cent of the area of these provinces. All the lands are noted down in the registers of the survey, which contain the name of the proprietor, the Government assess- ment, the name of the occupier, the amount of his rent, the duration of his lease, the area of the estate and the quality of the land. These registers are in the hands of the village accountant, an old officer retained from the native regime, and are open to the public ; the effect of which, we may remark in passing, has been to encourage the spread of education, from the desire of the peasants to read these records for themselves, and so be protected against fraud. As we have said the government revenue is fixed or " settled" for thirty years, and the occupancy tenants enjoy most of the privileges of the Punjab Tenancy Act, which we will soon consider. In those parts where water is near the surface and can be obtained by digging through a firm shallow soil, the tenant is expected to dig the necessary temporary wells at his own cost ; where lined wells (permanent wells) are required, the landlord has the right to build the wells and charge the tenant with remunerative interest. The occupancy tenants are estimated at 1,500,000, holding 4*8 acres each, and the tenants at will at 1,200,000, holding four acres each. The superlative advantage of the revisable settlement, which exists in the greater portion of India, is the direct chain of communication between the highest governing power and the meanest ryot, and we ask your careful consideration of the follow- ing descriptions, as from time to time a strong disposition is evinced to do away with this revisable settlement and create throughout all India a class of landlords, absolute proprietors of the land and all its future earnings, in spite of the convincing proofs, as we think, of the disadvantages of that system of permanent settlement, given 18 ME. THOMAS B. MOXON by its operation in Bengal In the North- West Provinces then the head official is the Lieutenant Governor, immediately under whom are the Revenue Board, of two members and a secretary rather a nominal Board however followed by eight Commis- sioners, who communicate with thirty-five District Officers, who in turn each deal with three or more native Sub-Collectors, supervising the Hundreds, which are composed of Townships in the charge of village accountants. Such an arrangement seems almost essential to the comfort and wise government of a country like India with no system of representation whatever. It keeps the supreme ruler acquainted with the desires and needs of the people, forewarns him of famine, and offers an organised force for whatever public measures he may decide on. Its cost is of course greater in itself than it would be in what is termed a " permanently settled " district, but the economy with which it enables other duties to be done and other taxes collected far more than compensates for the extra outlay. One cannot pass over the North- West Provinces without remarking on the energy, ability, and public spirit, which, from all we can see, have for long characterised its administrators and their staff. Not to run through the roll of meritorious mention, the last Famine Commission have to declare that only in the North-West Provinces, of all the local governments, have organised measures been taken for the practical improvement of agriculture. The Punjab, area 107,010 square miles, population 17, 6 11, 49 8, is the last settled province, and, as showing the most matured ideas of the able civil administrators of British India, we give a resume of the important provisions of the " Punjab Tenancy Act of 1868." It provides : " That the Act is not to apply where there are already decrees or agreements in writing affecting the tenure of the land. That if a tenant, his father, grandfather, uncle, and grand uncle, have paid no rent nor service to the proprietor, or has ON INDIAN FINANCE. 19 involuntarily parted with his proprietary rights, and has continually occupied the land or any part of it or other lands owned by the same landlord, or is now the rep- resentative of a person who settled on the land along with the founders of the village, or has held the land for twenty years, he shall be deemed to have the " right of occupancy." Any other claim to .this right may be submitted to the courts. The rent of a tenant having the right of occupancy shall not be raised, except by mutual agreement, without decree of court, and for these reasons an increase in the area of his holdings, when the rent is to be increased pro ratd, or because his rent is below the usual rent of such soil in same district and under like tenure. The rent having been raised by decree cannot again be raised until five years have expired. Abatement may be claimed by a tenant with occupancy rights if the area is reduced by floods, or like causes, or if the productive powers of land have been decreased by powers beyond his control. Remission of rent may be granted by the court to tenant if the area is reduced, or produce diminished by drought, hail, or other calamity, beyond tenant's control, and full rent is not considered equitable, provided that the land tax (due to government from proprietor) be also proportionately remitted. Ejectment of a tenant with occupancy rights can only be made by decree of court, because rent is in arrear, and on the proprietor tendering, in addition to the value of the growing crops and tenant's improvements, such compensation as the court thinks fit, being not less than fifteen nor more than thirty times the net annual profit en the average of the three last years of tenancy. A tenant at will may be ejected by decree, if rent is in arrears, or, when not under ease, by notice given as prescribed, 20 ME. THOMAS B. MOXON but he cannot be evicted in the middle of the seasons, unless, while the rent is in arrear, he has failed to cultivate the land properly, and he is entitled to receive the value of the growing crops or other ungathered products of the earth, unless sown or planted after notice to quit. Compensation for Improvements If any tenant (or the predecessor of a tenant having right of occupancy) make the following improvements, his or his representatives' rent shall not be enhanced, nor shall they be ejected, until they have received compensation for money and labour expended in improve- ments not thirty years old at time of enhancement or ejectment. Improvements are denned to be water tanks or channels, drainage, protection against floods, construction of wells, reclaiming and clearing of waste lands, and other works of like nature, or renewals, reconstructions, alterations or additions which, though not required for maintenance, increase durably their value. Disputes as to value of improvements may be referred by either party to the court, which shall determine their value, taking everything into account, including aid given by landlord directly or indirectly, by favourable rent or otherwise. But a tender of a twenty years' lease at the annual rent then paid bars all claim for improvements made previously Jto that tender." This Act was passed during Lord Mayo's governorship. The ocoupancy tenants in the Punjab are estimated at 540,000, with an average holding of 6|- acres, and the tenants-at-will at 1,100,000, with an average holding of not quite 6 acres. In Madras and Bombay the tenures are ryotwari y and in a less degree zemindari. The ryotwari tenants hold their lands direct from the government, as occupancy tenants, with rent or assess- ment fixed for thirty years. They may resign all or any portion of their holding at the end of any agricultural year, and their own improvements are excluded from the valuation when the property is re-assessed by the government officials. They have full power OX IXDIAX FIXAXCE. 21 to sell, mortgage, or let, subject to government rentcharge, and their children inherit the occupancy. Although the Government assessments were at first unfor- tunately too high, they have now been reduced to a scale which leaves a fair margin for the periodical deficient crops, if the culti- vators would exercise a little thrift. This is an important fact to remember, as some authors, overlooking the re-assessment, have instanced these provinces as proofs of the faulty principle of the system of revisable settlements, whereas the error was one of detail only. Others again have stated that already where the settlements have been revised, an unreasonable addition has been made to the rent, whereas it can be conclusively shown that in every province the average rent has been reduced, the increased yield of the tax being entirely due to the increased area put under cultivation. The zemindars hold about a quarter of the whole territory of Madras presidency. They pay a moderate quit rent, fixed in perpetuity, and sub-let their estates to 1,000,000 cultivators who are at present only tenants-at-will, but will shortly be taken under the segis of the " occupancy " law. In Bengal, in 1793, Lord Cornwallis, with the best of inten- tions, made a permanent settlement, fixing the value of the government share of the rent in money for ever. This he did with the hope of creating a landed native aristocracy, well disposed to our rule, and who would promote the interests of their tenants. After reading everything we can find bearing on the question, we are forced to the conclusion that the scheme has been in every particular a grand failure. To go no further, the Bengal Famine Commission of 1866 declare that "It cannot be said there are two opinions on the fact that the great body of zemindars have lamen- tably failed in the duties expected from them, and which the practice of generations has shown they ignore in fact." Again, " In no part of India is there so little improvement in the mode of cultivating food grains." In 1866 Mr. Geo. Campbell declares, before a commission, that Bengal tenants often will only pay their 22 ME. THOMAS B. MOXON rent after judgment, because they can only rely on the receipt given by the court; and in 1853 the Rev. A. Duff, before the Lords' Committee, declares that though the law settles the rent " at the local rate," that is so indefinite that " practically the zemindars get what they please," and "though a casual observer, seeing the exuberantly fertile condition of the soil might not think it, the Bengal ryot is a down-trodden man. His degradation, depression, and utter dispiritedness make him submit to any illegal exaction of his landlord rather than hazard worse consequences." This system, under which already 10,000,000 tenants groan, is the system which some commend as the panacea for all the troubles of India. Its effect, so far, has been to put into the pockets of the Bengal zemindars 5,000,000 a year, and to lessen the Govern- ment Revenue on the other hand by exactly the same amount, which of course has to be made up by additional charges on the other provinces. Nor is there any real ground for the assertion that the receipts in Bengal from other taxes compensate for this loss, the facts being that, though the density of population in Bengal and in the North West Provinces is almost identical, the total taxation of Bengal is only 3s. 2 Jd. per head, against 4s. 5d. in the North West Provinces, and against an average of 4s. per head for all India. Nor is there any compensatory saving in the cost of administration, which is 2 14s. per hundred of population in Bengal, against 2 17s. in the North West Provinces, but 29 16s. per 100 of revenue in Bengal, against 19 13s. in the North West Provinces. Although too, the landlords in Bengal have been richly dowered by this settlement, in 1793 receiving only one-eleventh of the rent or 300,000, and now, seven-ninths of the rent or 14,000,000, we do not find that they have fulfilled the purpose of their creation. The concession was granted to them with the expecta- tion that they would spend more money upon the improvement of their estates, and with such a rental as they now collect it might well be expected that all necessary works for prevention of famine, Ac., would have been constructed by them. The truth, however, ON INDIAN FINANCE. 23 is that over 4,000,000 of public money has been spent on Irrigation works in this Province, almost as much as has been spent in any Province of India. Passing by all this, perhaps the most serious effect of this permanent settlement is, that in Bengal there is no organised staff reaching each and every class of the population. Rulers rule with inaccurate and incomplete knowledge of the population, and the people have little, if any, opportunity of making their needs known to their rulers. " There is no close or intimate knowledge of the people of Bengal on the part of the officers, and therefore there is a want of life in the administration of the province." Such was the verdict given in 1867 by a government official, and again, the Famine Commission of 1880, in their report, refer to "the want of definite agricultural information from Bengal." This Commission points out that what is required to increase the prosperity of the country is a system which grants security of tenure to the actual cultivator, and it should be noticed, that this security of tenure is quite compatible with revisable settlements. Undoubtedly the growth of population makes an improved system of agriculture desirable, but peasant proprietors and small tenants do not readily adopt new ideas with, to them, unknown risks. They labour too in India under peculiar disadvantages. Nowhere, perhaps, is the value of manure for the soil more clearly recognised, but so scarce is wood and coal that much of the dung has at present to be used as fuel, though perhaps in time the Forest Commission may amend this. The Indian Government do not overlook the importance of the scientific agriculture, but, with the usual disposition to anglicise everything, are sending a few natives here to study at one of our Agricultural Colleges, although the conditions prevalent in India have no counterpart at all here, and the money would have done three or four times as much good if expended in India. The Forest Department is one of great importance, and it is hoped that its operations may, in years to come, prove highly beneficial to the country in their effect upon the rainfall and upon the supply of fuel. 24 ME. THOMAS B. MOXOX The Tributes paid to the Imperial government by the various native rulers are 703,660. The revenues of the native princes are fully 10,000,000 in all. We have added to this head the amount received for duty upon opium grown in Native States, for though it is grown under the supervision of British officers, they are paid by the native producers, and the impost can only be regarded as a transit duty or additional tribute. We have on the other hand deducted 340,000 which is about the amonnt these states contribute for army purposes, and which therefore goes to reduce the general army charges. The Excise duties comprise License Fees, Distillery Fees, Still-Head Duty, and Duty on Drugs, 268,380. We deduct the duty on opium consumed in India, in order to get the net receipts from opium under their proper head. ASSESSED TAXES These are chiefly the much abused license tax of which so much has been said. A license tax is no iiiuova- tion in Indian finances. It is recognised in Menu, and is identical with the Mohturfa which we abolished some years ago ; but it is nevertheless true, that any tax based upon profits is most repug- nant to the whole nature of an Oriental, and prolific in deceit and extortion. A roughly graduated capitation tax is the nearest approach to an income tax that the sentiment of the people will admit of, and when government have assessed it in a lump sum upon a given district, leaving the apportionment in the hands of a native punchayet or arbitration court, it has proved successful. In favour of this license tax it must be remembered that it is the only tax levied upon personal property, and that with a mini- mum taxable income of 500 rupees equivalent to about 350 in England a tax of 5d. in the cannot be regarded as that grinding exaction which it was at one time described to be. One of the objections, which still exists in a modified form, is the discrimination in favour of professional and Government salaries, where it is only 3Jd. in the on a minimum of 800 rupees, and with a higher minimum in the case of military servants. What does seem to be wanted is some tax which shall specially fall upon the zemindari OX INDIAN FINANCE. 25 rents of Bengal, which, from a somewhat overstrained idea of honor, are almost free from taxation, though they have risen to 37 times their original amount, and the State has had to pay for the shortcomings of their receivers. As a portion of these assessed taxes were raised designedly for famine purposes, I have taken so much as a set off against famine expenditure. PEOVINCIAL RATES. These are actual taxes upon land. A large portion of the receipts are appropriated to provincial services, and, reasonably enough, the taxpayers contribute more readily to funds which they see expended before their eyes, than to funds which, whatever may be their ultimate appropriation, lose their identity in the general and Imperial collection. CUSTOMS. The chief receipts here are for cotton manufactures, 750,000; liquors, 364,000; metals, 140,000; and from ex- portsrice and paddy, 563,000 ; and indigo, 43,500. The receipts from Cotton Duties are reduced, as you are aware, but there is still considerable dissatisfaction with regard to these duties both here and in India. On the part of India the feeling seems to be that, whilst the protective character of the impost is assigned as the ground of our objection to it, the real reason is the hindrance it opposes to our trade, and the question is not unnaturally asked, Why do you force us to admit your manufactures free, even if it is to our advantage, whilst at the same time you tax our tea and coffee, and tobacco ? You would have us to admit what you have to sell without any taxation, but when we offer you what we have to sell you don't hesitate to bar our way with frightful imposts. Against our modest 5 per cent., you oppose 10 per cent, on our coffee, 17 per cent, on our tea, and 450 per cent on our tobacco. These duties of course are not protective, but are they just towards us 1 You say they are requisite to the support of your Administration, and we reply that our duties are essential to us ; give your man his free breakfast table and we will give ours his free shirt. We should be proud indeed if this paper should induce a less 26 MR. THOMAS B. MOXON interested sympathy with India, and contribute to the reduction of unnecessary and extravagant expenditure, which alone makes such imposts as those on cotton imports, and rice exports, necessary or defensible. It is neither possible nor profitable that a duty should be levied in India on tobacco, seeing that it is grown in almost every garden. The Export duty on rice is said to be mainly on soft rice for the manufacture of starch, and not on food rice. SALT DUTY. This tax yields over one-seventh of the net revenue of British India ; it is at the rate of 5s. to 5s. 9d. per maund of 82Jlbs. Its total incidence is 7d. per head, which, raised to our values, equals 4s. per head levied upon one of the first necessities of life. It is easy to make out a black case against this tax, but after all the problem appears to be, how to govern a populous poor country if all are not compelled to contribute, at least in some slight degree ; and for the most part the population can only be touched by dealing with absolute necessities, their luxuries are so few and untaxable. OPIUM. Adding to the receipts the Excise Duty upon opium consumed in India, we find this drug contributes 8,167,626, net, to the Exchequer, close upon one-fifth of the net revenue. Deducting from that enormous total, 2,390,000, the duty levied upon native grown opium, there remains 5,777,626 as the clear balance due to the Indian governmental cultivation of the poppy. In 1878, the last year for which I have returns, 62,300 piculs, or chests, of opium were imported by China say, Malwa piculs, 30,270, Patna, 18,559; Benares, 11,388; Persian, 2,085; but the crops grown in China itself were estimated at 50,000 piculs in Szechuen, and 15,000 piculs in Yunnan. The Szechuen yield too is equal in quality to that of Bengal, and, although the imports of the year I speak of are under the average, this Szechuen crop is equal to a most favourable crop of Malwa opium. Apart from the propriety of this trade, it is a question how far in face of this native supply we can calculate upon this item of revenue continuing to increase. ON INDIAN FINANCE. 27 It is true that a portion of the opium supplied to China may be regarded as a medicine in the fen countries of China, of whose extent and population we have but little idea. In our own fen districts, on the borders of Lincolnshire, it is said the chemists sell immense quantities rolled into little sticks in pennyworths and twopennyworths, and the authority from whom I quote says, " I have seen fen farmers who were in the habit of buying laudanum by the half- pint or more on every visit to their market town." Of course he does not ignore the deleterious influences of such a con- sumption of the drug, but to a small extent no doubt it does give relief, and in a country of similar character and such vast extent, where medical science is not usually considered advanced, it is quite possible that a fair quantity is used as medicine. It has been noticed as a fact that in the hot summer weather the con- sumption of the drug perceptibly diminishes. The duty we levy upon opium makes the cultivation in China so profitable that (and it is a lamentable fact) the poppy is cultivated to excess in place of food grain, even in districts subject to famine, and the well-meaning attempts of Chinese officials to alter this state of things are frustrated by the peasants, who do not hesitate to resort to arms to protect the poppies. This, too, in a country where distances and want of means of communication are almost insurmountable obstacles to the distribution of food in seasons of scarcity. It is very questionable if chinchona (Peruvian bark), now being cultivated in India, will bear a duty that would in any degree compensate for the loss of the opium revenue, although as a government monopoly its growth may be remunerative. STAMPS. It will be noticed that 2,150,909, credited under this head, is the proceeds of Court Fee Stamps, and has accordingly been transferred to the head of Expenditure for Law and Justice. It is said that the stamp duty upon arbitrations has been unreason- ably increased, and if this is so, it is a serious injustice, as the native punchayet, or village court of arbitration, was a cheap tribunal which, from thorough acquaintance with local men and 28 MR. THOMAS B. MOXON affairs, was capable of giving decisions quite as equitable as those of our more cumbrous system. FAMINE INSURANCE. The revenue under this head is a portion of the License Tax about 150,000 is contributed by Bengal. Why this should be levied upon traders instead of upon the favoured zemindars, we are not prepared to explain. The total net receipts under this head being in excess of the expenditure we have treated the balance as revenue. Turning to the other side of the accounts, the first item of expenditure is for administration. This includes the salaries of the Secretary of State for India, in England, with his Council and the charges of the India Office, amounting in all to 218,352. It may be remarked, quoting from Mr. Fawcett, that the salaries in this office are from 20 to 30 per cent higher than for similar services in our own Government offices, also in London. This head also covers the salary of the Governor-General, 25,000; allowances for his staff and household, 16,639 ; and for Durbars, or State receptions, 11,000; in all 52,719. But to this must be added 119,079 for tour expenses, including extra allowances to clerks and servants. The expenses of the Lieutenant Governors and of the general Imperial administrative departments are also comprised herein. The " Tour Expenses " arise thus The Supreme Government is seated at Calcutta, a place which is condemned as unhealthy by a great concourse of European and native testimony. In summer the climate is so enervating to Europeans that were the Govern- ment to remain there it would be at a considerable sacrifice of efficiency and vigour. Accordingly, about fifteen years ago, Sir J. Lawrence instituted the summer tour to Simla, which is nearly 1,100 miles away from Calcutta, and in 1867 he claimed that his expenses did not at all exceed those of his predecessors, and that the trip to the hills had materially increased the working power of the Europeans. So far this is a thorough justification of the alteration, but it does not take into account the disorder, in- convenience, and delay, consequent on moving the Executive of a ON INDIAN FINANCE. 29 great government twice in a year over a distance of 1,100 miles. At that time too Simla, though so far off, was the nearest accessible hill station, but now a railway has been constructed to Dargeeling, only 320 miles from Calcutta, which appears to have every possible advantage as a sanatorium. Why then if the Supreme Government must be in an extreme corner of the continent, should it not be located there 1 ? Beyond the fact that Calcutta has always been the metropolis little can be said in its favour. It is unhealthy, situated away from the centres of eastern political activity, avoided by many high-class natives, in the midst of a people who do not correctly represent the feelings, ideas, or circumstances of the natives generally, and whose advice, when followed, has proved to be anything but wholesome, but it is the old capital, it is on the water way of the Ganges, and it has an European public opinion of more or less value. POLITICAL AGENCIES. These charges may be roughly generalised as salaries for ambassadors, termed "residents," at native couits, political allowances, subsidies to hill tribes, &c., &c. ALLOWANCES UNDER TREATIES. We have deducted herefroin and from the Salt Revenue .270,370, being, as near as we can judge, the amount paid as compensation to native potentates for the surrender of their sources of supply. Before dealing with the various heads of Civil Expenditure, we must consider the composition of the Civil Service, particularly as to the employment of natives in high office. It is true that the civil service of India is to a certain extent opened to competi- tive examination but this, as far as it affects the natives, is most delusive. Refer to the regulations, and see how the marks are apportioned; purely English subjects 900, Greek 600, Latin 800, French 500, German 500, Italian 400, Mathematics 1,000, Natural Science, not over 800, Logic 300, Sanscrit 500, Arabic 500. These form a very fair test of an English education, but is it likely, is it desirable that natives should devote their attention to these subjects, half of which will not be of the slightest practical use for them in public service] Moreover, such an examination proves 30 . MR. THOMAS B. MOXON nothing as to the administrative capacity of the candidate, and many of the high class natives possess this ruling ability in no small degree, as Sir Geo. Jacob, Sir Bartle Frere, Sir Richard Temple, and many others have freely testified. It seems as though we could not shake off the idea that all Orientals are unjust and untrue. It is convenient to forget that Clive found the European civilians under paid and corrupt ; that the Chinese Foreign Custom service, with few European supervisors, is a success, that even the Turk, with regular pay and strict justice, proves honest under the control of Mr. Laing. Akbar the Great, the conqueror, entrusted big civil service to the natives, and was faithfully served. His dynasty reigned 500 years and fell not from the defection of the Hindoo civilians. To pass by argument after argument, we may sum up in Sir Bartle Frere's words in 1859 : " Unless we can keep India prin- cipally by native agency, in whose fidelity we can feel the same reasonable confidence we felt when building our empire, we shall soon become weary, if we do not become incapable , of holding it." Is it conceivable that all the ambition of cultivated Indians will for ever submit to a government from which they are excluded ? The native peasants have reason to bless our rule ; we need only to give the nobles their just share of our benefits and honours and they too will be bound to us. It is true that this question has been often raised ; true too that the opposition is not all from the Indian Service, for the Duke of Argyll vetoed a recent attempt to admit natives ; and true too, we are glad to say, that, under Lord Lytton's administration, it was resolved that no one not a native of India should be appointed to any judicial or administrative branch of the un- covenanted Civil Service, without the previous sanction of the Governor-General in Council ; and, later, provision has been made for the appointment, by selection on probation for two years, of natives to the extent of one-sixth of the civilians appointed each year. These natives are to be eligible for any post except Secretary to a Governor, Chief Magistrate of a District, Commissioner of a ON INDIAN FINANCE. 31 Division, or Commissioner of Customs, and to these posts they may be admitted after sanction of Governor-General in Council. Such a decision redounds to the fame of its author. But what is one-sixth 1 Only a very small instalment of justice. Safety would be fully secured if one-sixth were the proportion of appointments reserved to Europeans. We leave this part of our subject with regret. So much might be said of the merits of the natives, and of their loyalty when once that loyalty has had trust reposed it ; so much of the saving in salaries (estimated at fully one-third), and consequently upon pen- sions, and in furloughs, which their employment would contribute to. And yet we should like it to be understood that we do not grudge Europeans their rate of pay and pension. The talents exhibited by many administrators, whose names we have hardly heard of, are cheaply purchased by present salaries. Our objection is to the most unnecessary number of Europeans who are employed. MINOR DEPARTMENTS. This expenditure includes cost of Sur- veys, say 1 50,000; Model Farms, Experiments with Cotton, Tea, Silk, Chinchona (the latter most successful), and 1,655 " Exploring for Coal." A country which spends nearly 18,000,000 on its army, and which impoverishes its land for want of fuel, spends 1,655 in one year in exploring for coal ! Why should not the example of Queensland be imitated 1 That colony has offered 5,000 for the first 500 tons of native manufactured iron. That, however, necessitates the non-interference with commercial enterprise which certainly is not sufficiently understood and prac- tised in India. LAW AND JUSTICE. In this Department native talent and there is a peculiar adaptability in Hindoos for legal pursuits has been freely made use of. Of course, in the minor courts, a full knowledge of the vernacular is far more essential than a knowledge of English law, and Sir H. J. S. Maine, who was, I believe, legal member of the council, remarked in 1871, that, except where the Indian legislative council had interfered, and of late it has done so rather freely, the English domination of India at first placed the 32 MR. THOMAS B. MOXON natives under a less advanced regimen of civil law than they would have had if they had been left to themselves a strong testimony to the equity of the principles of native law. We have before referred to the native punchayets or arbitration courts. These properly consist of five assessors, two representative of the plaintiffs, two of the defendants, and one selected by these representatives, but in many cases any number of reputable residents are allowed to sit, the discussion is carried out in public, and the judgments are characterised by a high degree of excellence. POLICE. These number 143,000, averaging one to each 1,100 of population, or to every nine square miles, taking in whole area. It may be noted that one third of this force is armed with firearms, and whilst their value may be increased thereby as auxiliaries to the army the detective element proportionately languishes. In justice some of the charge should be transferred to the Army Department. EDUCATION. In British India there are about 35,800,000 boys and 31,200,000 girls under twelve years of age; of these 1,700,000 native boys and not over 85,000 girls are on the rolls as scholars of the various schools, of which there is one to every fourteen square miles on average, as compared with one inspected school for every six square miles in the United Kingdom. The population of British India is six times as large as that of the United Kingdom, but there are only half as many scholars in all India as in England. Of the net expenditure of public money for education in India only one half is expended on lower and primary schools, whilst in England five- sixths of the expenditure is so applied. It should, however, be remembered that India has not the independent universities and colleges to fall back upon which we possess, but relies upon Government to provide all. Still there seems some justification for the complaint that too much attention is paid to high-class and too little to elementary education. One point more, we believe all the high-class teaching is in English. If this be so it is much to be deplored, as unnecessarily limiting the results. It is surely not essential to cultivation and civilisation that one should be a proficient in the English language 1 ON INDIAN FINANCE. 33' ECCLESIASTICAL. This is principally contributions to the Church of England in India. STATIONERY. The stores bought in England cost 188,000. Apart from the cost of handling those stores here, the loss by exchange on this item alone is about 40,000. We are told that the stores can be bought cheaper here than in India, but we more than doubt it, if these two charges, handling and loss by exchange, be included, and even if it be true, seeing that all materials for paper making abound in India, it would show greater foresight to offer native industry the encouragement at least of purchasing in India, instead of positively discouraging it by buying in Europe. This is, however, only another instance of the way in which the interests of India suffer through a determination to Anglicise everything. Since we have referred to the Stores Department we may say that evidence was given in 1872 to this effect : The amount of stores sent to India was about 1,400,000, of this 500,000 to- 600,000 went direct from the government manufactories, leaving 800,000 to be dealt with by a department, which costs 148,404. Manchester merchants will not readily believe that goods subjected to such "packing"' charges were cheaply delivered in India. CIVIL FURLOUGH AND ABSENTEE ALLOWANCES. These are almost entirely paid to Europeans, and are increased, by 48,800, by estimated loss on exchange. We repeat, we do not think the allowances are too high not at all ; but they are too many, and that will only be remedied by the employment of more natives. SUPERANNUATIONS,