m m ■■jf./;^:«-^"- W^ -'•*;- -*• --^ ■I \'^' 'i'.m: EEPLY TO MAJOR THE HON. E. BARING'S BUDGET SPEECH IN THE LEGISLATIVE COUNCIL OF HIS EXCELLENCY THE GOVEENOR-GENERAL OF INDIA, ON MARCH 8, 1882. Reprinted from the Friend of China, the Organ of the Society for the Suppression of the Oxnara Trade, May and June, 1882. PUBLISHED FOR THE SOCIETY BY DYER BROTHEES, AMEN CORNER, PATERNOSTER ROW. PRICE ONE PENNY. /O EEPLY TO MAJOR BARING'S BUDGET SPEECH. The Indian papers published a full report of the speech delivered on March 8, 1882, by Major the Hon. E. Baring, the Finance Minister to the Legislative Council of His Excellency the Governor- General of India, in introducing his Financial Statement for 1882-83 — and it will appear in this country, we suppose, as usual as a Parliamentary document. A considerable portion of this speech deals with the opium question. Major Baring avowedly enters the lists as the champion of the opium revenue, and no apology is necessary for the following criticism on his argument. The telegraphic report of the speech in the Times called it a ''Surprise Budget." A sorrowful surprise it must have been to those who expected that the Indian Government would manifest some degree of sympathy with English j^ublic opinion*, and make some attempt to fulfil the hopes kindled by Lord Hartington in the last debate. This speech teaches us once for all that nothing is to be hoped for from Calcutta, except under compulsion. The Indian Government which fostered the opium trade from its cradle in Warren Hastings' time until its baleful shadow stretches over half the globe, which showed no sign of compunction during the worst days of smuggling and of war, is not the quarter from which self-reform is to be expected. Lord Hartington bids them consider their connexion with opium, they reply by deliberately rendering the dependence of India on the drug more abject than before. Having a surplus of nearly three millions sterling at command, they have devoted this to the total repeal of import duties and reduction of the duty on salt. This is nothing short of direct defiance of British public opinion. Deprive us of this opium-gold, they say, and India is bankrupt; and having said this, they proceed to do all that is in their power to ensure that it shall be so. Forcibly it recalls the proverb, Que7n Deus vult jperdere, jorius dementat. MAJOR BAEING'S COURTESY AND CANDOrE. While we cannot but profoundly regret this immoral and 4 REPLY TO MAJOR BARING's BUDGET SPEECH. perilous decision, we cordially acknowledge the personal courtesy o£ Major Baring himself. Instead of the contemptuous epithets and affected disdain with which less responsible persons have assailed us, Major Baring reasons calmly, soberly, respectfully, as one discussing with those who have much reason on their side. We note also in the speech an evident desire to be fair and truthful, and, except where the exigencies of a foregone conclusion positively forbade it, we gladly recognize that the desire has not been ineffectual. That there was immense production of opium in China long ago, that Indian opium is there only as the luxury of the rich, that if Britain abandons the trade a score of rivals are ready to take it up, these and other fallacies find no place in Major Baring's argument, are on the contrary more or less distinctly or impliedly disavowed. All the recent folly about the harmlessness of opium, about each race having its favourite narcotic, is put to shame by a plain honest utterance like this : — " A great deal has from time to time been written as to the effects of opium, both on the individual and the Chinese nation. I do not think that anything is to be gained by discussing this subject at any length. That opium when used in moderation for medicinal purposes is beneficial ; that in China it is very often used to excess ; that when used to excess its effect is baneful ; and that it would be better for the Chinese if they smoked less opium, are truisms which may be generally accepted." These sentences concede all that is needful for our argument. A drug of which, this must be said ought not to be forced on a reluctant people. THE BENGAL MO:firOPOLT SYSTEM. Major Baring's main argument divides into three parts, the monopoly, the treatment of China, and the need of the Indian re- venue. In regard to the monopoly we need not occupy much space, since here both sides are agreed. Last year the Executive Committee of our Society recorded the following resolution on its minutes, which was afterwards published in the Friend of China ;— " That, a proposition having been made that the Grovernment of India should abandon the monopoly of opium, and throw the cultivation of the poppy and the trade in opium open to private capitalists, this Committee regards such proposal with extreme distrust and disapproval ; believing that it would be practically an arrangement for perpetuating the Opium Trade without any diminution of its attendant evils. They are convinced that there would be serious risk of aggravating these very evils, both by the increase of production, and by the creation of new vested interests, which the Government would find it hard to control ; tbat the change of method in India would be no alleviation of the wrong done to China ; that this Committee, therefore, declines to support the proposal." REPLY TO MAJOR BARING's BUDGET SPEECH. § This resolution was arrived at some months before it was known in this country that the Indian Government had come to the same decision, for pretty much the same reasons. During the earlier years of our Society considerable stress was laid on the odium of such a trade being directly carried on by the Government, and there was a strong feeling that if the trade were in private hands the scandal would not be so grievous. But no formal proposition for the abandonment of the present system to be replaced by pri- vate trade was ever made by the Society, and the more the thing was looked at, the more plainly it was perceived that the change would be " out of the frying-pan into the fire." In our dislike of the monopoly we had the sympathy of eminent Indian officials, Sir W. Muir, Sir C. Trevelyan, and others, who even formally advocated its abolition. Almost every one responsible for the system has ex- pressed a similar dislike. Major Baring himself, like the rest, finds the Government in a " somewhat false and invidious position." If one thinks of it, these perpetual regrets that such a system was allowed to come into being, these reluctant admissions that it is " false and invidious," are sure signs that we are involved in a bad business. The Indian Government and the Anti-Opium Society are agreed that, being in, we cannot get out of it by the way of throwing the trade open to private capitalists. This being settled, what is the next step in the reasoning ? Both sides admit "something " wrong, something "false and invidious," but Major Baring says, because we cannot throw the trade open, we will not make any change whatever. We say, "You must retain this monopoly, but use it for right ends, use it not for revenue, but for human weal, use it to reduce the production and the consumption of opium, instead of to increase them." THE TREATMENT OF CHINA. The deleteriousness of the drug being frankly granted, some show of denial that the Chinese are compelled to admit it was imperative — since Major Baring lacked the moral courage to decline responsibility for the treatment of China, and to call upon Mr. Gladstone to answer to that charge. The denial of palpable fact is a poor controversial shift, which may serve a tem- porary purpose when no one is present to expose the falsity ; but in this case it did not escape a challenge. The Hon. H. J. Rey- nolds significantly remarked, — " But on the question of the policy pursed towards the Chinese Govern- ment in relation to the opium trade, I cannot speak with the same confidence. It may be perfectly true, as the Honourable Member has told us, that the admission of opium was not forced upon China at the Treatj' of 6 REPLY TO MA JOE BAEING^S BUDGET SPEECH. Tientsin — that Ciiina draws from imported opium a large revenue which she would be reluctant to sacrifice — and that the Chinese Government is at present unable, and possibly unwilling, to suppress the use of opium in that country. But if it is really the fact, as the promoters of the anti- opium agitation persistently declare it to be, that the Chinese Government, if it were left free to act as it pleases, would absolutely prohibit the admission of opium into the Treaty Ports, on the ground that its intro- duction demoralizes the Chinese people — if, I say, this is the fact, then I greatly doubt whether the Government, either here or in England, will very long be able to resist the claim that China shall be permitted to act as she thinks fit in the matter. And I may add that, looking on the question as one of international morality, I think the claim is one which we should have no right to resist." Mr. Reynolds does not quote the anti-opium contention with exact accuracy. We have not ventured to prophesy what China will do when she is free. Possibly changed circumstances, or progress of ideas in China may, in the future, lead to a new policy. But we have insisted on the facts that when China was free to act as she thought best, the trade in opium was absolutely pro- hibited ; that since the legalization which our opponents assert was not forced upon her, she has expressed her desire to have the legalization rescinded, and prohibition restored ; that up to this day by the mouth of her highest officials she declares that her " single aim will be in the future as in the past to repress the traffic." In spite of these antecedents pointing in that direction, it would not be safe to predict that China, free to act, would cer- tainly at once prohibit the import of opium. Year by year the vice has increased by " leaps and bounds," and with it the interior poppy-cultivation. This greatly increases the difficulty of resist- ing the progress of the vice ; and, proportionately, the temptation to " regulate " it after our fashion, that is, to make it a source of revenue, becomes greater. We do not therefore prophesy. But whether China would elect to use liberty for prohibition or regulation, to deny to her liberty to act as she deems right and expedient is manifestly unjust ; and the British nation, we are confident, will agree with Mr. Reynolds that this claim is one which we have no right to resist. We may here remark in passing that a voice from Peking has whispered to us that if we had a report from the Chinese Ministers of that interview between them- selves and Sir Thomas Wade, as to which Lord Hartington last year read a telegram to the House, and which Major Baring quoted in his speech, it would put a different complexion on the matter. Sir T. Wade telegraphed, — " I went to the Yamen on the 16th to speak of various matters. Four ministers received me. Adverting to opium, I observed that the autho- EEPLY TO MAJOR BARING S BUDGET SPEECH. 7 rities, in some places, were taxing opium, native and foreign : in others, were trying to increase both sale and consumption of both. Without at all denying the right of the Chinese Government to do as it chose, I said I should wish to know which course the Government approved. They said the question was embarrassing. The Chinese Government would be glad to stop opium -smoking altogether ; but the habit was too confirmed to be stopped by official intervention. No idea of abolishing the trade at present was in the mind of the Government. Alluding to the desire of well-disposed people at home to see England withdraw from the trade, I asked if it would be of any use to diminish yearly the exports from India. They said so long as the habit exists opium will be procured either from India or elsewhere. Any serious attempt to check the evil must originate with ^ the people themselves. The measure I suggested would affect the Chinese revenue, but would not reach the root of the mischief. I said that the suggestion about [diminution was purely my own, that I had no authority to speak of it from my Government. I am satisfied that even if opium be bonded, as my Convention proposed, the Government of India will not lose a farthing. But production of Native opium is in- creasing fast, and will sooner or later supply the Chinese demand." Lord Hartington adduced this to show that " we are prepared for the ratification of the Chefoo Convention ;" but somehow, in spite of our preparedness, that Convention is still unratified. The unwary reader might understand the words, " without at all denying the right of the Chinese Government to do as it chose," to mean that China is free to deal with opium as she likes. But the meaning of Sir T. Wade is, that China may 'do what she chooses after the opium is^imported ; and this measure of freedom is practically limited, as Lord Salisbury pointed out, by the facilities for smuggling ; but she may not prohibit the importation, nor may she increase the import duty. Several interesting ques- tions arise out of this telegram ; for instance, what was this pro- posed " diminution " ? and why was it proposed ? Sir Thomas Wade is most meagre in his information, and if we had the long- promised despatch in explanation of these interminable negotiations, it would still be safer to hear what the Chinese have to say before drawing our conclusion. Somehow John Bull is hoodwinked and deceived, although the diplomatists would be most indignant if they were accused of intending this result. If only one could get Sir T. Wade, Sir. li. Alcock, &c., before an honest British jury, and have them passed under a cross-examination, a few plain questions would demonstrate to every man and woman in these islands that Britain does to-day deny to China liberty to deal with opium as she pleases. Sir R. Alcock knows the truth. Sir T. Wade knows the truth ; and yet their articles and their telegrams are quoted in support of the opposite to truth ! This is very regretable, to say the least of it. 8 EEPLY TO MAJOR BARING'S BUDGET SPEECH. THE PLEA or PINANCIAL IfECESSITT. Financial necessity is India's excuse for the opium trade. Lord Ripon, in his observations on Major Baring's speech, said : — "My view on the subject of opium is a very simple one. I do not deny that there are objections of various kinds to the opium revenue. I do not deny that it is not a satisfactory branch of our revenue in many ways ; but I say distinctly that I will be no party to abandoning that revenue unless I can clearly see my way to replace it by some other form of taxation which would be neither oppressive to the people nor strongly repugnant to public opinion. Well, I can see nothing of the kind. I have considered the question very carefully. I have considered it with the utmost respect for the opinion of those excellent men who take a different view of this subject from that which I take, and who are moving at home in the matter ; and I have been totally unable to discover the taxation by which our opium revenue could be replaced, and by which, without oppression, without incurring a great, and I may say a just, un- popularity, we should have the slightest chance of recouping ourselves if we were to abandon that revenue in whole or in part. As I said before, it is, in my judgment, the first duty of the Government of India to con- sider , the interests of the people of India ; and it is from that point of view that I look at this question ; and looking at it from that ipoint of view, I can have no doubt that the course which the Government of India have determined to take, namely, that of maintaining our position with respect to the opium revenue, is a just and right one." This is a fair summary of the Indian Government's case. When the Viceroy has added that retrenchment to an am omit equal to the opium revenue is as impossible as increased taxation, he thinks that all is said. India's interests are paramount. Whether China suffers, whether China is wronged, he declines so much as to inquire, until you have sliown him how to replace the revenue. Major Baring made some feint of examining these not unimportant questions, but he also evidently relies upon this as his impregnable position. " The loss of the Bengal opium revenue would result in the normal annual expenditure of the Government being greater than its receipts ; that is to say, that India would be insolvent.'* There is a measured solemnity in the language in which this dread cjonsummation is set forth which attests the Finance Minister's deep sense of its extreme gravity. So strong does he feel in the moral security of this position that he turns round and remonstrates with us on the immorality, cruelty, and injustice of the action we propose. He says : — " From the language which is occasionally used on this subject in England, I am led to infer that many influential persons, animated by a laudable zeal to benefit the population of China, are perhaps somewhat forgetful of the duty we owe to the population of India. It has been calculated that the average income per head of population in India is not more than Rs. 27 a year : and, although I am not prepared to pledge myself to the absolute accuracy of a calculation of this sort, it is sufficiently REPLY TO MAJOR BARING'S BUDGET SPEECH. 9 accurate to justify the conclusion that the tax-paying community is exceedingly poor. To derive any very large increase of revenue from so poor a population as this is obviously impossible, and if it were possible, would be unjustifiable. Apart from the practical issues involved, there are, indeed, two aspects of the question from the point of view of public morality. If on the one hand, it be urged that it is immoral to obtain a revenue from the use of opium amongst a section of the Chinese commu- Tiity, on the other hand it may be replied that to tax the poorest classes in India in order to benefit China, would be a cruel injustice, and it is to be remembered that no large increase of revenue in India is possible unless by means of a tax which will affect those classes. To tax India in order to provide a cure — which would almost certainly be ineffectual — to the vices of the Chinese, would be wholly unjustifiable.'' To this we must demur, that we have from the first and all through our agitation, steadily kept the interests of India in view, and have openly advocated that rather than inflict hardship upon the ryots, the British tax-payer ought to put his hand in his own pocket. Moreover, the immediate question is not of taxing India, but whether it is right to tax China for the henefit of India, and that by the shameful method of pandering to Chinese vices and obstructing the efforts of the Chinese Government to repress them. But we must not be led into a digression. Stripped of all disguise, what the Viceroy and Major Baring say amounts to this : "Even if we are forcing opiumjnto China, even if we are inflicting serious injury on the Chinese people, we cannot cease our opium trade. India must have the money, and that necessity over-rides all moral considerations in regard to China. Our duty is to India. We are morally bound not to oppress the I'yot. We are morally bound not to let him starve, to give him railways, irrigation-works, education, healthy jails, and all the parts and appliances of a civilized Christian Govern- ment. As we cannot do this without our opium revenue, we must have that revenue, regardless of its consequences to China." The argument is this, or it is nought ; however those who employ it may shrink from the naked truth. This is not a case which can be settled by ascertaining the balance of harm and loss. If the gain and the loss were both in India, it might then with plausi- bility be argued thus : " If you stop the trade, so many ryots and their families are saved from ruin by opium, but on the other hand, so many will perish from starvation for lack of the canals and railroads which the opium money would construct ; which way lies the balance? " But having to do with an alien nation that argument can hardly be ventured upon. It would be a little too much to ask that Chinese should perish, in order that Hindoos may not starve. Therefore, the only possible mode in which this A 3 10 REPLY TO MAJOR BARING'S BUDGET SPEECH. argument from financial necessity is presentable, is that which in fact it has assumed, viz., that the Indian Government is bound by- considerations of justice, morality, and humanity, so far as India is concerned, and not bound by them beyond the ocean and across the Himalayas. This, in fact, is a reductio ad ahsurdum, and proves that the premiss is erroneous. A financial necessity to commit a moral wrong is an impossibility. No such necessity can exist. IS THE PLEA SIT^CEEE? Major Baring gravely warns us in a tone of authority that if the opium revenue is meddled with the certain result will be — Indian bankruptcy. Is this the real belief of our Indian states- men, or is it a bugbear dressed up to frighten us ? Probably the truth lies somewhere between the two. The loss of the opium revenue cannot be contemplated by a responsible statesman with- out dislike and even alarm ; but that Major Baring, or any one else, seriously regards it as irremediable, it is difficult to conceive. We invite our reader to a calm, dispassionate consideration • of the case ; and that he and we may conduct this inquiry honestly, it is desirable that we should for the time dismiss opium altogethej* from our minds. The loss as a financial loss is not greater nor less because it is loss of opium revenue, it is the possible loss of so many lacs of rupees or of so many million pounds sterling which we have to contemplate ; and while discussing the financial problem, the moral considerations connected with opium ought to be left out of sight. Let us imagine, if you please, that a farther fall were to take place in the value of silver, or suppose that the Hindoos were all to give up eating salt. S?jppose anything you please, possible or impossible, which would reduce the Indian income by a certain number of millions ; the question before us is, would bankruptcy ensue, or would there be a way of escape ? For our part we shall try to avoid the very word "opium" during this financial discussion. THE AMOUNT OP THE INCOME. First of all we must agree upon the amount of the threatened in- come. The total net revenue concerned is set down in the accounts for 1880-81 as 8,451,294Z. But this sum vastly exceeds the real average income. It appears from Major Baring's statements, that the high income of this and preceding years is due to the sale of accumulated stock. The average production of the last twenty years has been 50,154 chests, while during each of the last two years 56,400 chests have been sold. This, of course, could not go on without trenching upon the reserves ; and we are told that the EEPLY TO MAJOR BARING's BUDGET SPEECH. 11 reserve, which in 1878 amounted to 48,482 chests, on 31st of December, 1882, willbereducedto 15,084, showing an average annual sale of 6679 chests in addition to the amount produced during the period. These 6679 chests, at the average price of 1201. , produced over 800,000Z. Major Baring tells us that the Government do not expect to be able to increase the production, and even to maintain it at the present rate, an additional payment to the cul- tivators of 215,000Z. has to be made. It is plain, therefore, that the recent high total has been reached in a financially illegitimate way ; and that the illegitimate increment must be deducted to arrive at an estimate of prospective revenue. The average net revenue o£ the past ten years was 7,052,000/., of the last four years 7,731,000Z. If from the latter average we deduct 800,000/. for the decrease of stock, and 200,000/. for the increase of cost, we should reach an average of 6,731,000/. It will, therefore, not be an illiberal estimate to set down the prospective net income as 7,000,000/. We have then to do with the annual sum of 7,000,000/. according to the received fashion of representing the finances of India in Parliament and elsewhere. This received fashion is now widely divergent from the reality. In India the revenue is re- ceived and the expenditure is made not in pounds stg'ling, but in silver rupees. Once the rupee was worth about one-tenth of a sovereign : hence the fashion of speaking of Indian accounts in sterling figures, calling, for instance, seventy millions rupees, seven millions sterling. The money really is not sterling but rupees, and in these Government accounts the rupee is conventionally taken as worth two shillings, the real present worth being Is. 8d. If, therefore, we had to replace the rupee income, 7,000,000 of sovereigns would not be required, but only five-sixths of this, or 5,822,200/., a very substantial diminution of charge. When we look closer into this income we see that part of it is derived from the Bengal production, part from the article produced in the native states. As far as their internal agriculture and commerce go, these states appear to enjoy the rights of independent states, and it is questionable whether Britain has any more power over them, or responsibility for them in these respects, than it has over and for Persia, or any other foreign power. As Major Baring does not take into his calculation the possibility of the income from taxation on this Malwa article being assailed, we may deduct this amount. The average taken from the ten years 1871-81, for which the amounts are given by Major Baring, is 2,794,760/. nominal sterling, or at the exchange of Is. 8d., 2,328,800/. Deduct this from 5,822,200/. 12 EEPLY TO MAJOE BAEING's BUDGET SPEECH. and we have a sum of 3,493,400/. Major Baring, in his argument, assumes the Bengal net revenue as worth 5,000,000/. Translate this nominal sterling into the real value of the rupees, and it amounts to 4,166,000/., which is nearly 700,000/. above our estimate. This difference is considerable. According to Major Baring " the average net revenue derived from the Bengal sale during the last ten years is 4,358,000/.," i.e. nominal sterling, or really at pre- sent exchange 3,631,666/., a sum not differing so much from our calculation. The higher estimate assumed by Major Baring is justified by the returns of the last three or four years, but these we have already seen were exaggerated by sales in excess of pro- duction. If it were not that it is the professed purpose of the Finance Minister to frighten us by the threat of bankruptcy, we should not dare to bandy arguments with so great a financial authority. But under the circumstances we do venture to indi- cate that by arithmetical calculations based on data given by him- self, the total sum may be made out as under three and three quarter millions of English gold sovereigns. This sum is again liable to diminutions ; there is the interest on the advances, which would be saved if the trade ceased, and there is the increase on the Malwa taxation which Major Baring anticipates. On the other hand, he expects loss through diminished exports, charges for pensions, &c. It will be better, therefore, having duly noted our own calculations, to accept, for the purpose of this argument, the sum of 5,000,000 (nominal) sterling, as the probable annual value of the income under consideration. WILL THE LOSS BE TOTAL ? Granted then that the income is 5,000,000/., is a total loss in- evitable ? It is difficult to deal with this question without break- ing the compact we have made with ourselves and our readers, not to mention during the financial inquiry the nature of the article involved. In our last issue we gave vent to our feelings in some strong expressions of condemnation of the argument which ig- nored altogether the possibility of diminishing an evil to the extent of, say, one-half or one-third, because of the alleged impossibility of extinguishing it at a blow. Now, however, we must not renew that complaint ; and, to keep ourselves perfectly cool and dispassionate, we will consider only the case of a total surrender of this income, which is a possible contingency ; just putting in the reminder, that after all there may be a diminution of this loss by a sale for medical purposes, that the loss, if eventu- ally total, might perhaps by mutual agreement with the other REPLY TO MAJOR BAEING's BUDGET SPEECH. 13 party be approached by degrees on a scale of diminishing pro- duction through a series of years. Let us not altogether forget these possible mitigations of the financial difficulty, although for the present we mention them no more, but confine ourselves to Major Baring's hypothesis of total loss. THE THREAT OF BANKRUPTCY ABSURD. Would the extinction of 5,000,000/. of Indian revenue this very day involve either national insolvency, or the imposition of new taxation amounting to cruelty ? Such is the terrible alter- native by which Major Baring would frighten us into silence. But go up close to this grim two-headed hobgoblin, and you discover that it is a mere turnip-and-white-sheet affair. We do not need to go outside of Major Baring's own statement to expose its falsity. He winds up by saying that if no taxes were taken off, the surplus at the end of 1882-83 would be 3,171,000/. Of course the extinction o£ 5,000,000/. of revenue would prevent any taxes being taken off, and this surplus of 3,171,000/. would be changed into a deficit of 1,829,000/. Would a deficit of less than 2,000,000/.— of little more than 1,500,000/. at the true exchange for the rupee — reduce India to bankruptcy? The suggestion is absurd. It is but a few years back that a chronic deficit of a million or two was commonly regarded as the normal state of Indian finance, and'nobod}'- was alarmed. But it may be supposed that this 3,000,000/. surplus is pledged to certain purposes, or at least demanded by irresis- tible pressure for these purposes, so that one must regard it as practically already gone. This is not so. Everybody knows, and we state it without fear of contradiction, that, but for the existence of a surplus, neither of the two great items of revenue which are to receive the benefit of it, would have been touched. In India the reduction of the salt duty was quite unexpected, and the abolition of the cotton duties is regarded as a grievance, a positive injustice. Were India as independent as Canada and Australia, assuredly there would have been no taking off of cotton import duties ; in all probability quite the other operation, an in- crease of them. It is therefore certain that at the time when Major Baring was on his legs expounding this budget, if a tele- gram had come in telling him that 5,000,000/. of his revenue had suddenly vanished, he would have had to provide for a deficit of less than 2,000,000/. This would have been a very unpleasant state of affairs, but nobody can pretend to think that a deficit of less than two millions would mean financial ruin to India. The bankruptcy scare is a sham. 14 EEPLY TO MAJOR BARINg's BUDGET SPEECH. POSSIBLE SAVING IN ARMY CHARGES. Sir George Balfour, M.P., in a letter to the Times of May 2nd, points out that for the three years 1878-79 to 1880-81, the total military expenditure of India, including the war charges, amounted to 66,938,020/., or more than 22,000,000/. a year. For the two following years the estimated charges are — 1881-82 budget estimate, 18,645,000/.; regular estimate 17,703,000/.; 1882-83 budget estimate 15,483,000/. Hence he concludes that if peace is pre- served we may reasonably expect that the military charge will be reduced to the standard sum of about 15,000,000/. This expecta- tion is fortified by the brothers Strachey who tell us, — *' The cost of the Army, apart of course from war, has increased during the twelve years by 218,866/. It was 15,247,134/. in 1869-70, and 15,466,000 in 1880-81. It was intermediately reduced by more than a million, and was at its lowest point,'^ 14,218,578/., in 1873-74. From 1869-70 to 1872-73 the average annual charge was 14,922,733/. ; from 1873-74 to 1877-79 it was 14,433,550/.; from 1877-78 to 1880-81 it was 15,636,006/. ... " In 1879 Lord Lytton appointed a special commission to inquire into these subjects. It had for its president Sir Ashley Eden, one of the most eminent of Indian administrators, and it included among its members some of the most distinguished of Indian soldiers among whom may be named Sir Frederick Roberts, and Sir Peter Lumsden. . . It declared its belief that if its recommendations were adopted, the strength and efficiency of the army in peace and war, and the popularity of the service, would be greatly increased ; and that without the sacrifice of any- thing that had any value, the military expenditure of India might be reduced by 1,250,000/. a year." According to Sir George Balfour, who includes war expenditure, we may hope for an annual saving of seven millions as compared with the outgoings of 1879 to 1881, a sum equal to the total net revenue concerned in its largest form. But this enormous deduc- tion we will not insist upon ; a comparison between war and peace being unfair. Looking at the army charges on a peace footing, we are shown a possible saving of a million and a quarter. Our terrible deficit, which is to land us in bankruptcy, can thus be reduced from 1,829,000/. to 579,000/., or in round figures 600,000/. Bankruptcy forsooth ! PUBLIC WORKS EXPENDITURE. The question whether the supposed extinction of 5,000,000/, would make India bankrupt depends upon the expenditure on public works. In the accounts these are divided into two classes, the Ordinary and the Productive. By ordinary public works are meant roads, barracks, some of the railways, telegraphs, &c., all those public works being included in this class which are not EEPLY TO MAJOR BARING's BUDGET SPEECH. 15 expected to return interest for the capital laid out on them. The Productive works are those which are expected to yield a fair return for the capital expenditure. In regard to this second class there is now a general agreement that they ought not to he charged to the yearly income. While it was supposed that the name might be delusive, fears were expressed which are set at rest by the convincing fact that these works are beginning to return interest for the money spent on them. As to the unproductive works, in the face of threatened bankruptcy, the question arises, ought they to be undertaken at all? Some of them may be imperatively required, others may be of great convenience and utility, but by no means so urgently demanded that their construc- tion could not possibly be postponed. In the Statement of Eevenue and Expenditure for 1878-79 in Mr. H. S. Cunningham's *' British India and its Rulers" (page 110), the Net Eevenue is set down as 45,275,211Z., and Net Expenditure as 42,525,560/., showing a surplus of 2,749,651/. In the Expenditure are included two items for public works. Ordinary 4,425,495/., and Productive 1,599,693/., together more than 6,000,000/. Probably a considerable portion of this expenditure was as imperative as that on Law and Justice, Police, Education, and other items. It is altogether repugnant to our intention and desire to suggest that India should "be stinted in public works, or in any benefit which it is in the power of good government to bestow. But it is certain that the view taken both by the rulers and the people of India as to the necessity of many of these public works would be greatly affected by the diminution of income we are considering. Practically, diminished resources would not mean bankruptcy, but the postponement of some desirable works, and the transference of others from the current to the capital account. The real meaning of the Indian Government in this threat of bankruptcy is discernible in the words of the Viceroy in this very connexion. In the paragraph succeeding that which we have already quoted from his speech, Lord Kipon, contemplating a possible saving of army expenditure, says: — " It seems to me that every rupee of that expenditure which may be saved from unnecessary or unproductive objects is urcjently needed for purposes of the highest importance to the people — public works, educa- tion, sanitary questions — questions that I can scarcely number, but all of which make most urgent demands upon the Government for money, and I can hold out no hope that by any reduction of aggregate expenditure we can save, not seven or eight millions, but one or two millions, out of the necessary expenditure of this country for great objects of public im- portance." 16 REPLY TO MAJOR BARING'S BUDGET SPEECH. This sentence reveals the delusion under which the Viceroy and his advisers are labouring. To them every expenditure seems ^' necessary " when you threaten a source of income they do not want to part witl). " Suppose we do save a million of army charges," say they, ^' it will be swallowed up by necessary increase in expenditure on public works, education, sanitation, and a num- ber of other imperative items." But is this increase " necessary " and "imperative " ? If so, why did you abolish the imjyort duties, and reduce the salt duty ? Your self-delusion is self-exposed. To you everything is " necessary " which you think desirable. But when Lancashire puts in a strong claim, the necessity disappears ! ELASTICITY OF THE INDIAN EBVENTJE. The quotation from the brothers Strachey about the army charges is taken from a book called " The Finances and Public Works of India, from 1869 to 1881," by Sir John Strachey, G.C.S.I., and Lieut. -General Eichard Strachey, R.E., F.R.S. The name of Sir John Strachey is associated with an enormous blunder in the estimated expense of the Afghan war ; and the English public is hardly prepared to receive him as a high authority on Indian Finance. Yet such he and his brother appear to be ; and as Sir John preceded Major Baring as Finance Minister we cannot deny his right to be heard on financial questions. This book, too, establishes its own claim to respectful consideration. Here is evidence of long and extensive acquaintance with the sub- ject ; and the writers treat not oxAj of what they know, but of what they did, for the two brothers have had a large share in shaping the financial policy of which they write the history. We cannot recommend implicit confidence in them, for on one subject as to which we are able to judge, they manifest a spirit the reverse of impartial and unprejudiced. Nevertheless their book contains a large amount of most valuable information, and the opinions of the authors are not to be pooh-poohed. What then do they say about this risk of bankruptcy ? The possible saving in military expenditure does not rest on their authority, but is quoted by them from an official report. The following, however, is their own : — " Taking together all sources of revenue, the net receipts have risen from 42,375,176Z. in 1869-70, to 49,431,000/. in 1880-81. This increase of 7,055,824Z. has been spread in a most satisfactory way over all the great branches of the revenue. There is eveiy sign that this will continue ; but whatever may happen hereafter, we may, at least for the present, dismiss as erroneous all statements regarding the absence of elasticity in the revenues of India. If they have not shown themselves to be elastic, it is difficult to conceive what elasticity means,'' REPLY TO MAJOR BARING^S BUDGET SPEECH. 17 Sir R. Temple, in his " India in 1880," does not write so confi- dently about "elasticity," but he too states that there is a slow and steady increase of revenue all round. An increase of 7,053,821jZ. spread over eleven years, gives an average rate of increase of 61il,438Z. Unless then this appearance of elasticity in the past is an illusion, we may without much rashness hope for an increase of 600,000?. in the ensuing year, and in that case the sum required to balance our deficit would be exceeded without one penny being added to taxation. POSSIBILITY OE IN'CREASED TAXATION But retrenchment possible is not yet actual, and a hope that revenue will continue to prove elastic, is only a hope. We must face the question, Could India bear nevr taxation if some portion of its present income were taken away ? The brothers Strachey confidently assert that it would, — " It would undoubtedly be possible to increase largely the income of the State without serious injury to the industrj'- of the country, and without political danger, in the event of any great financial emergency ; such for instance, as might conceivably, though not improbably, arise if we were suddenly to lose the greater 'part of our opium revenue, or if the diffi- culties caused by the fall in the value of silver in relation to gold should attain to very alarming dimensions." We beg the reader's pardon for the line we have italicized : it is the Stracheys', not ours — and the brothers Strachey are staunch defenders of the opium revenue. Leaving that question, and look- ing only to our financial problem, we find the Stracheys utterly rejecting the national insolvency theory. In their view the loss of five millions, and much more than five millions, could be made up, under the pressure of necessity, " without serious injury to the industry of the country, and Avithout political danger." We are almost afraid to try the credence of the reader with the brilliant possibilities with which these veteran financiers dazzle us. We will make a list of the possible subjects of new or increased taxation,, giving figures where the authors give them, — Rates on Land — Income and License taxes 1,500,000 Registration 500,000 Tobacco tax 3,000,000 or 4,000,000 Sugar 1,000,000 Railway trafiic 500,000 It would be an error to suppose that the Stracheys recommend the imposition of the above taxes. On the contrary, they dismiss the tobacco monopoly " as impracticable, except under the pressure of some financial catastrophe, so great that it would justify almost 18 EEPLY TO MAJOR BA.R1NG's BUDGET SPEECH. any experiment." The sugar tax is also in their view an alternative for the tobacco tax, as in India sugar is mixed with tobacco. We have not space to give their observations on the other items : it will thereforebe best to give at full length their own concluding words : — " There would be little difficulty, in case of necessity, in almost imme- diately increasing the revenue by existing and other taxes of a little objectionable nature, to the extent of at least 2,000,000/. a year ; and if a much larger sum than any which could be provided by such means, or by the growth of existing revenues, should be required in consequence of some great financial catastrophe, the income of the State could certainly be increased by several millions a year without injury to the country." WHO IS EIGHT ? Sir John Strachey's views are marvellously diverse from those of Professor Fawcett. Passing from his glowing pages to the work on Indian Finance by the Postmaster-G-eneral, is like the transition from a tropical summer to the east winds of an English spring. Which side is right ? There is one circumstance which makes us suspicious of Sir John Strachey. Sis policy reqiiired financial 'prosperity. Afghan wars and abolition of cotton duties cannot be effected without a surplus and the prospect of surpluses. On the other hand, Mr. Fawcett's policy, which is economy and retrenchment, required an embarrassed treasury. To preach economy to a full treasury and a rising income, is to preach to heedless ears : therefore it is possible his bias led him to take a gloomier view than was warranted. However this may be, whether Sir John Strachey or Mr. Fawcett is right, Major Baring certainly is wrong, for he tries to take both views at once. The state of Indian finance is for him flourishing and hopeful when he is bidden to yield to Lancashire's demand for free cotton ; the prospect clouds over and becomes desperate when he hears the increasing volume of the demand of the English conscience that the opium trade shall not be supported against the just protests of China. Englishmen who are not officially compelled to do so, may shrink from the gigantic task of investigating the nature and conditions of Indian finance ; but when they see millions of surplus given away, it will be impossible to persuade them that to leave China free from coercion in respect to opium will involve the bankruptcy of India. coNCLrsiOK As the Times correspondent remarked, this is a " surprise-budget.'* The remissions of taxation were not expected, and in India were not even desired. The salt duty is one which to English ideas is objectionable, and we would rejoice to see it lowered, if it REPLY TO MAJOR BARINg's BUDGET SPEECH. 19 could be righteously done ; but the natives of India are used to it and do not complain of it. On the other hand, of the remission of the import duties they do complain and that vociferously. In the legislative council itself, native members expressed loud dis- approval, and the native press of India echoes the dissatisfaction. The Hindoo cry is that their interests are sacrificed to those of Lancashire. We do not choose' to go into the question whether this is a well-founded cry ; but it proves to demonstration that India was not eager for the repeal of the cotton duties. Amusing, if it were not also sad, is Major Baring's sensitiveness to native opinion in the matter of opium, while he is in the very act of de- fying it as regards cotton. The Hindoos, he tells us, would feel aggrieved if we were to give up the opium revenue, and we must not hurt their feelings ; but to their clamour against his free trade in cotton goods, he is conveniently deaf. On the whole Major Baring makes but a poor exhibition as champion of the opium trade. There is no grip of the subject, no honest dealing with the facts. He tries to impale us on the horns of a dilemma. We must mean, he says, one of two things : either the simple change from monopoly to ordinary trade, or the total suppression of the traffic. If the former, this will do no good to China ; if the latter, then the thing is impossible, India would be bankrupt. To which the sufficient reply is, there is a third course open. If India cannot at this time bear the sudden loss of the whole opium revenue, according to your own showing, she could bear the loss of a part. To try to drive us into a corner by the argument that unless we can bring in the millenium to-day, nothing whatever should be attempted for the removal of evil, is mere clap-trap, un- worthy of a serious statesman. Major Baring concludes with a vague misty far-away promise that, if only we let him gather in as much opium-gold now, and for some years to come, as he can possibly get, at some unknown future day India may be able to do without this source of revenue, and then our demands shall be gratified. Why does he cajole us with this dim and distant hope? If this opium revenue is sound, honest, unobjectionable, then why hold out the most distant prospect of voluntarily parting with a single coin of it, however rich India may become ? If it be unsound, dishonest, an offi^nce before God and man, what wretched cant is this talk about the impossibility of cutting it off, when you are giving away millions of surplus quite unnecessarily ! There is a dilemma for you, Major Baring, which you will find harder to dispose of than that which you were pleased to propound to us. Pablicatlons of the Society for the Suppression of the Opium Trade. SIXTH ANNUAL KEPORT, aud proceedings of the Annual Public Meeting, May 9, 1882. Price One Penny. ENGLAND, CHINA, AND OPIUM. Three Essays reprinted from the Contem- porary Meview. By the Hon. Sib Edwaed Fey, one of the judges of the High Court of Justice. Price One Shilling. THE OPIUM QUESTION. A Review of the Opium Policy of Great Britain, and its results to India and China. -By the Kev. Arthtjh, E. Mottle, B.D., of the Church Missionary Society, Ningpo. Price Sixpence. BRITISH OPIUM POLICY AND ITS RESULTS TO INDIA AND CHINA. By F. S. TuENEE, B.A. Price Four Shillings. REPLY OF THE K'EUEN KEAE SHAY. Translated from the Chinese by the Rev. J.Chalmees, D.D. Price One Penny, or Seven Shillings per Hundred. THE FRIEND OF CHINA, Published Monthly, Price One Penny. 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