m 
 
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 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<KS 
 
 Education 830,829 
 
 Ecclesiastical 155,200 
 
 Medical 624,727 
 
 Stationery 424,374 40,400 464.774 
 
 Post Office 121,521 19,600 141,121 
 
 Telegraphs 99,227 
 
 Less Construction Charges ... 50.248 48,979 12,800 61.779 
 
 Civil Furloughs, &c., &c 231,561 48,800 280,361 
 
 Superannuations, &c., &c, 1,329,842 261,000 1,590.842 
 
 Interest on Debt 4,325,654 554,500 4,880^154 
 
 Army 
 
 Effective 12,838,425 
 
 Less by Native States 340,000 
 
 12,498,425 
 By Public Works Depart. ... 1,090,528 
 
 13,588,953 418,600 
 
 Non-effective 2,603,063 410,000 17,712,335 
 
 Afghanistan 676,219 15,500 
 
 Loss by Exchange Sundry heads not) 43 5 - g 
 
 apportioned here \ 4d ' Ddy 
 
 Ordinary Public Works 4,425,495 
 
 For State Telegraphs 50,248 
 
 4,475,743 
 
 Less for Army 1,090.528 
 
 3,385,215 17,700 3,402,91 1 
 
 ORDINARY EXPENDITURE 1,930,259 37,061,283 
 
 Guaranteed Railways, &c 782,152 805,400 1,587,552 
 
 Productive State Works 817,541 *149,- 00 966,541 
 
 Net Loss by Exchange 2,884,659 
 
 NET EXPENDITURE 39,615,376 
 
 Provincial Su i plus Balances 715,405 
 
 Surplus Revenue for Year 2,034,246 
 
 42,365,027 
 
 Thia Loss is on Transfer of Capital. 
 
14 MR. THOMAS B. MOXON 
 
 Taking the departments in the order in which they are found 
 in these statements, we commence our survey with 
 
 THE LAND REVENUE. 
 
 This is not only the first but also the most important item in 
 the accounts, yielding nearly one half the net income of the State ; 
 and however interesting we may find the Land Question to be in 
 our own country, we shall find it not one whit less interesting or 
 important in our Eastern Dependency. 
 
 In India there are nearly eleven millions of tenants whose 
 holdings do not exceed 5 acres, over four millions more whose 
 holdings are between 5 and 10 acres, and upwards of five million 
 tenants-at-will. In Ireland, to which we naturally turn our 
 thoughts, there were, in 1867, 128,734 tenancies of under 5 acres 
 each, 173,475 of from 5 to 15 acres, 136,503 of from 15 to 30 
 acres, and a total number of 597,118 tenancies. In 1841 the 
 figures were : holdings of from 1 to 5 acres, 310,436 ; holdings of 
 from 5 to 15 acres, 252,799; holdings of from 15 to 30 acres, 
 79,342. 
 
 In Ireland, as Dr. Hunter recently pointed out, there are 169 
 persons to the square mile, but in Northern India there are 
 thirteen districts, equal in size to Ireland, which have to support 
 680 persons to the square mile 5 without allowing any deduction 
 for waste lands. 
 
 In India from the remotest times the sovereign power has 
 enjoyed a share of the produce of the land, which it has taken out 
 of the rent paid by the cultivator to the proprietor, or landlord as 
 we should call him. 
 
 The Institutes of Menu, the oldest code of Indian law, fix 
 this share at one-sixth of the gross produce of the land. The 
 Mohammedan conquerors rapaciously raised their demands to one- 
 third, or even more, if they could get it. 
 
 This charge was both assessed and payable in kind, and in 
 many states it was part of the unwritten law that a cultivator 
 
OX INDIAX FINANCE. 15 
 
 should not be evicted for non-payment of rent, though the landlord 
 was entitled to step in and manage the estate until his claims 
 were satisfied. 
 
 This form of raising revenue has special advantages in India. 
 It is in consonance with the traditions of the people, and is hardly 
 looked upon by them as an imposition of taxation, but rather as a 
 rentcharge ; and this is exactly what it is. The State claims for 
 the use of the commonweal a portion of produce which would 
 otherwise go entirely to the landlord in an increased rent ; and as 
 the landlords there never had a claim to all the rental no wrong is 
 done to them. 
 
 This source of revenue too does not suffer from the depreciation 
 of money. The forty-six shillings which to-day will purchase a 
 quarter of wheat, in 50 years may only purchase half a quarter, 
 but the life-sustaining power of the wheat will be as great then as 
 now, and a quarter of wheat may then be worth ninety-two 
 shillings. Now, if a State receives its taxes in money, it follows 
 that as money depreciates government officers will require higher 
 salaries, and consequently taxation will have to be increased ; but 
 if its revenue is a share of the rental of the land, its income will 
 increase without the necessity of irritating additions to taxation. 
 
 This admirable arrangement we found in operation when we 
 entered India, and with characteristic energy we set to work to 
 improve upon it by bringing it more into agreement with our own 
 civilised system. 
 
 Under native rule, as we have said, taxes were paid in kind, 
 and amounted to ten-elevenths of the true rental of the land. We 
 have reduced these taxes until they only amount to one-half of the 
 true rental, but, on the other hand, we require payment in cash. 
 The people from whom this revenue is collected are, for the most 
 part, so poor that it is essential that the taxes should be collected 
 immediately after the harvest, and if we remember that more than 
 80 per cent of the population are closely connected with agriculture, 
 that roads are only of recent construction, that distances are long 
 and railways few, and that out of the 493,429 towns and villages in 
 
16 MB. THOMAS B. MOXON 
 
 British India 480,450 have less than 500 inhabitants each,* we 
 shall see how completely the cultivators are at the mercy of the 
 grain dealers, and how, consequently, our demand for payment in 
 specie is an important counterpoise to the reduction of taxation, 
 and a serious grievance in the eyes of the natives. How far a well 
 devised system of currency could alleviate this not imaginary 
 hardship we cannot here consider, but we must, in justice to our 
 rule, point out that unless carefully guarded, the power to claim 
 rent in produce may, in the hands of an unscrupulous proprietor, 
 be an opportunity for gross injustice. 
 
 We have also enacted a law for the sale by auction of estates, 
 in default of payment of taxes. This, to a people who cling so 
 tenaciously to their ancestral lands, is a most bitter humiliation, 
 from which their native rulers spared them, though they seques- 
 trated the land until the dues were paid. 
 
 On the other hand we have enacted a law whereby a tenant 
 after twelve years' tenancy, shall become an " occupancy tenant;" 
 shall be protected against eviction and rack reining, except by 
 action at law, for reasons and subject to conditions we will shortly 
 bring forward ; and we have also fixed the Government claim for 
 revenue for periods of thirty years, subject r ion at the 
 
 expiration of that time, when the Government a> 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, <fec., &c. These, as will be seen in the first ' 
 Statement of Expenditure, are largely reduced by contributions to' 
 special pension funds. The only complaint is, that they go almost 
 entirely to Europeans who have left the country, so that more than 
 a quarter of a million must be added to them for loss by exchange. 
 The employment of native officials would extinguish the loss by 
 exchange, reduce the cost of pensions, and retain the money to 
 circulate in the country. 
 
34: MR. THOMAS B. MOXON 
 
 INTEREST ON DEBT OTHER THAN FOR PRODUCTIVE WORKS. 
 The average rate paid upon the debt proper, irrespective of loss 
 by exchange, is 4: 7s. per cent j the rate for the deposits of service 
 funds, savings banks, &c., on which there is no loss by exchange, 
 17s. The receipts in reduction are 237,758, being profits on 
 note circulation, and 390,609, payments for interest on advances 
 chiefly to Municipalities and Native States. Apart from the 
 Government Securities held by the Paper Currency Department 
 amounting to 5,865,000, it is believed that the natives of India 
 hold 20,000,000 of Government Stocks, and we cannot but think 
 that with half the disposition to popularize and facilitate dealings 
 in Government funds which we see in France, India would have no 
 need to borrow in England. 
 
 Although distances are so great, and an Oriental's disposition 
 to conceal his wealth so strong, only the very slightest attempt, as 
 far as we can see, has been made to popularize coupon bonds, and 
 when loans have been issued in India, they have been offered in 
 such a way as in practice to be left to great capitalists, who profit 
 largely, instead of being offered really to the public, as is done in 
 France in every department. 
 
 It is interesting to notice in connection with the recent 3 per 
 cent loan issued in London at 103 12s., with silver at 52d. per 
 ounce, that if silver should rise to 60d. again, as at any rate is 
 possible, the loan will only cost India a little under 3 per cent ; 
 and if it should still be at 60d. when the loan is repaid, the Indian 
 Government will save 13 on every 100 it has to repay, because, 
 with silver at 52d., for every 100 gold received they can send 
 out 1,230 rupees, and with silver at 60d. they will be able to buy 
 100 gold with 1,066 rupees. 
 
 A great question is, should England accept the responsibility of 
 India's debts ? When India can raise money at 3 J per cent, it 
 hardly seems necessary to base the question on the ground of 
 economy. The strongest argument appears to be, that if England 
 plainly accepted the responsibility, which many believe she has 
 practically incurred, Parliament would exercise a supervision over 
 
ON INDIAN FINANCE. 35 
 
 Indian expenditure which at present it sadly stands in need of. If 
 it was necessary for Imperial purposes that India should, at 
 considerable cost to herself, amalgamate her army with the general 
 forces, surely she may ask for the compensatory relief which a 
 British guarantee would afford. 
 
 ARMY. And now we come to the Army, which represents one- 
 lialf of the net ordinary expenditure of the country, costing 
 17,712,335 a year, inclusive of 828,600 estimated loss by 
 exchange. A popular idea is that for our yearly expenditure in 
 England of 15,000,000 we get an army of 200,000 men ready to 
 go anywhere, but the fact is, this expenditure only secures the 
 services of 140,000 men, the other 60,000 being supported 
 out of the Indian revenues. Our European and Native Indian 
 armies are composed of 325,000 men say 200,000 Europeans and 
 125,000 Natives and the total cost of the two armies is 
 33,000,000. In 1879 the German army on a peace footing 
 numbered 400,000 men, and cost under 17,000,000 the French 
 army numbered 469,000 men, and cost 21,500,000. It is true 
 that these two European armies are based on compulsory service, 
 and that the rate of pay is barely enough for subsistence, but still 
 the comparative cost and the comparative numerical results 
 excite remark. 
 
 Up to 1858 the East India Company had its own independent 
 army, whose courage and ability made our Indian Empire, but 
 after the mutiny, against the strong representations of such men 
 B& Sir J. Outrani, Major-General Vivian, and Colonel H. M. Durand, 
 this army was merged in Her Majesty's 'general forces. Sir J. 
 Outranks words were almost prophetic. "The amalgamation of 
 armies will entail heavy burdens on Indian finance, prove other- 
 wise injurious to the best interests of the people of India, and tend 
 greatly to shake the stability of British power in the East." 
 
 The " heavy burdens " soon appeared. Sir T. T, Peers, in 
 1872, testified that the cost of recruits under the old East Indian 
 Company's system, allowing for enhanced prices, would be 40 per 
 man ; under the new regime the actual cost was 67. Again, in 
 
36 MR. THOMAS B. MOXON 
 
 the same year, 1872, the Commander-in-Chief in England thought 
 it necessary that first captains should be raised to the rank of 
 majors, their duties remaining j ust the same. The Duke of Argyll 
 declined to increase in India a pay, already sufficiently liberal, on 
 the ground of a mere verbal alteration in rank, but " rank carries 
 pay," and forthwith a terrible hubbub arose, not nearly so bad 
 however as the mutiny of British officers in the days when Clive 
 interfered with their pay, and when, by-the-by, that uncompro- 
 mising commander committed the mutineers to the care of his 
 faithful sepoys. More fortunate in 1872, the officers got their pay, 
 and 50,000 a year was added to the cost of the Indian army. 
 
 Whatever, too, may be the merits of the short service system 
 as regards England, it is clear it must perceptibly increase the cost 
 to India, who has to defray the transport of her troops both ways, 
 a charge amounting, in 1878-79, to 350,000. But beyond the 
 financial loss, she suffers seriously in other respects. The line 
 pensioners have all their ties in England, and return to settle 
 here, abstracting a part of their pension from India, and depriving 
 her of the moral support which she derived from the pensioners of 
 the old local army, who settled in India and intermarried with the 
 natives. Nor do the officers manifest the same interest in a 
 country to which they are so lightly tied. Sir J. Lawrence and 
 Sir J. Outram, in 1859, said: "Royal officers, as a body, know 
 nothing of the language, customs and feelings of the natives. 
 They live in a perfect state of isolation from them, and return 
 home practically no wiser than when they started;" and short 
 service can only intensify that evil. What are the tangible advan- 
 tages derived from the union of the two forces, we confess we 
 cannot see. 
 
 It is true that a recent commission has suggested alterations 
 in the Indian army which would save 1,500,000 a year, but its 
 report is not published yet, and so late as March, 1880, the 
 Commander-in-Chief in India expressed opinions in council clearly 
 showing that he was indisposed to accept any such propositions. 
 
 Lord Canning, Lord Northbrook, and Lord Mayo have all 
 
ON INDIAN FINANCE. 37; 
 
 recommended a reduction of the army rather than the imposition 
 of more taxes Sir T. L. Seccombe, late Financial Secretary, con- 
 siders a reduction of military expenditure desirable, particularly in 
 the home charges, but still nothing is done. Nothing, except that 
 The Times of the 25th November, 1880, refers to proposals for 
 increasing the number of European officers, on account of the 
 experiences in Afghanistan, though its own correspondent, a few 
 days before, hints that the staff corps system is not without 
 responsibility for the defects, as might well be the case, seeing that 
 it makes to an officer's interest to qualify himself for staff or civil 
 employment, rather than to endear himself to his men in the way 
 our pioneers in India did with such brilliant results, and in a way 
 which is essential to the able handling of native regiments. 
 General Sir F. Haines declares he never yet heard a commanding 
 officer say a good word for the staff corps, but still it continues. 
 
 The fact appears clear that the great cost of the army is in 
 the European portion. Why is the European army so large 1 
 Why is the whole army so large 1 In 1853 Lord Dalhousie said a 
 railway from Calcutta to the North West Frontier would enable 
 him to make great reductions in the army one officer said to the 
 extent of 50,000 men. Then there were no railways in all India, 
 now there are 8,545 miles open. We cannot find the numbers of 
 the army in 1852, but it then cost 11,000,000 and now costs 
 nearly 18,000,000. In 1857 there were 52 telegraph stations 
 only, now there are 250, and 18,600 miles of line. Hardly any town 
 of importance is more than a few hours' ride from a telegraph 
 .station ; roads, too, have been made and improved to a large extent, 
 but all this effects no reduction in the army charges. 
 
 We have no wish to say anything as to the pay or pension of 
 Europeans ; both are liberal, but the money is well spent if 
 thoroughly efficient officers are secured; what we object to is the 
 number of Europeans employed. Actually it was testified by 
 Sir T. T. Pears, the Military Secretary, before a Commission in 
 1872, that one-fourth of the total number of officers charged to 
 India were on furlough in England at one and the same time, and 
 
38 MR. THOMAS B. MOXON 
 
 this too whilst very few non-commissioned officers and no privates 
 needed, or at any rate obtained the privilege, and when such men 
 as Lord Elphinstone could spend thirty years in India without 
 furlough, at a time be it remembered when there were not the 
 advantages of short service reliefs to England. 
 
 If the European army must be so great in order to control the 
 native portion, we may again quote from Sir Bartle Frere, we 
 believe <c The idea of keeping one portion of an army to watch 
 another and guard against its proving faithless, seems utterly 
 inconsistent with any possible conditions of permanent security," 
 and if we must regard another mutiny as possible, we can conceive 
 of nothing which would accelerate such a step more than our 
 present internal administration of the army. Whilst it is in 
 evidence that the pay of the British army has been largely 
 increased during the last seven years, it is also in evidence that, 
 allowing for rise in prices, the native troops were no better paid in 
 1875 than in 1795. Down to 1875, and I am aware of no change 
 since, no native soldier was pensioned whilst he could carry arms, 
 and if not invalided at the expiration of fifteen years' service his 
 pension did not increase until after forty years' service, which, to 
 Asiatics, is equivalent to refusing any pension for service at all 
 What better scheme could have been devised to increase invalid 
 pensions and make old soldiers disseminators of disaffection 1 If 
 we add that "the pension of a native officer was so small as to 
 compel him to retain his post when inefficient, and at last to retire 
 on a pittance which barely enabled him to exist," we complete a 
 picture of an army whose loyalty is a virtue on which we have no 
 right to count. We fear these iniquitous regulations still exist. 
 
 Sir J. Lawrence in 1859 also objected to native commissioned 
 officers being discarded " Unless human nature is altered there 
 must be prizes for ambition, or discontent," he said ; but so late as 
 1875, Major-General*?. S. Lumsden (Adjutant-General) says: "How 
 can native officers, with regular troops, be able when they are 
 subordinated even to the sergeant-major; in irregular troops, 
 where he has been properly treated, he has been greatly prized." 
 
ON INDIAN FINANCE. 39 
 
 Much more testimony, equally favourable, is easily to be found 
 so early as 1783, Col. Fullarton established, by means of the 
 natives, a complete and effective intelligence department, and plenty 
 of instances could be given of the loyalty of native officers in the 
 time of the Mutiny. The Indian is no less susceptible to generous, 
 honorable treatment than ourselves, and only needs opportunity to 
 prove his mettle and his loyalty. 
 
 Of course, the bogey of the Mutiny is held in our face ; but 
 men of undoubted ability before the Mutiny denounced the dis- 
 cipline of the Bengal army as faulty, and its composition as bad ; 
 one race being allowed to become predominant in its ranks. If, 
 indeed, natives are never to be trusted, we shall, as Sir Bartle Frere 
 said, "soon find the burden of holding India too great to be borne." 
 There is another course equally efficacious and far cheaper than the 
 employment of Europeans, if foreign forces must be kept up, and 
 that is the enlistment of negroes and natives from the Cape, as has 
 long since been suggested. 
 
 The next objection to the'reduction of the general army is the 
 size of the combined armies of the native princes, aggregating 
 315,000 men, and 5,300 large guns ; but, in the first place, many 
 of these troops are only equal to an armed police force, whose 
 duties they fulfil ; and in the second, most of the native princes 
 are too well contented with a vassalage which imposes little restric- 
 tion upon them, and guarantees their territory from the grasping 
 hands of ambitious neighbours. As a fact too all the larger 
 native armies were found on our side in that Mutiny which surely 
 must have been a sore temptation to doubtful allegiance. Fully 
 one-third of these troops acted vigorously for us, another third 
 were under the temporary rule of Englishmen at the time of the 
 Mutiny, and no inconsiderable proportion of the remainder were 
 true to us. Can we ever forget the Raja of Jhind, the first person 
 who moved against the mutineers at Delhi, or the Begum of Bhopal, 
 who held true to us when her army mutinied, and her family strove 
 to arouse her religious hatred, or the Raja of Gwalior, who cast in 
 his lot with us and cajolled his army out of their resolution to 
 
40 MR. THOMAS B. MOXON 
 
 march against us ? Such are the princes whose allegiance we are 
 asked to doubt. It is difficult to abstain from filling a page or two 
 with the long list of princes and chiefs whose loyalty is summed up 
 in the words "did good service in 1857." 
 
 Whatever military men may say, our hold upon India must be 
 the affection of her people, not the magnitude of our armies. Read 
 the life of Colonel Meadows Taylor to see the fidelity of natives to 
 one who proved his love for them. He was a man who, by moral 
 force alone, held together a whole district full of latent disaffection, 
 and not only held it but obtained most valuable supplies for our 
 troops from it. For such a life-long, able service as his India can 
 ever afford to pay even larger salaries than those now paid, but 
 such men are rare. 
 
 Before leaving this subject we must refer to the great expendi- 
 ture in England, amounting, including loss by exchange, to over 
 4,600,000, fully half of which is for "non-effective " payments. 
 
 Loss BY EXCHANGE. The following table, which only claims to 
 be approximately correct, apportions this loss amongst the various 
 departments, and merits a careful study. The 15,000,000 which 
 India yearly pays to England is here divided, and we see to what 
 items of expenditure the loss by exchange is chiefly due. It will 
 be noticed that only 554,500 (little over one-fifth of the whole 
 loss) is attributable to payment of interest on loans ; and it may 
 be remarked here that the great loss on remittances for the 
 Guaranteed Railways is to a certain extent compensated by the 
 gain in former years on the same account, as we shall hereafter 
 explain. 
 
 We have only time to regret the disappearance from the Home 
 Accounts this year of the two examiners and two assistant- 
 examiners of malt-liquor, who presumably have fallen victims to 
 duty. They were required to examine 2,000,000 to 3,000,000 
 gallons a year, and the fact that English beer at Simla sells at 
 9 rupees per dozen, whilst good native brewed yields a handsome 
 profit at 5J rupees, is a sufficient comment upon their professional 
 ability and upon the economy of the system. 
 
ON INDIAN FINANCE. 
 
 41 
 
 ROUGH CALCULATION OF THE INCIDENCE OF THE LOSS BY 
 EXCHANGE ON THE SEVERAL DEPARTMENTS, 1878-9. 
 
 Xet Payments Loss by 
 
 in England. Exchange. 
 
 Administration 218,351 47,000 
 
 Minor Departments 2,247 500 
 
 Marine 144,002 30,300 
 
 Stationery 188,024 40,400 
 
 Political 12,935 2,700 
 
 Superannuation, &c., Allowances 1,218,445 261,000 
 
 Miscellaneous 26,874 5,700 
 
 Civil Furloughs, &c 227,079 48,800 
 
 Stamps 41,645 8,900 
 
 Post Office 91,356 19,600 
 
 Telegraphs , 59,409 12,800 
 
 Treaty Allowances 34,064 7,300 
 
 Interest on Debt 2,578,805 554,500 
 
 Army Efiective 1,970,750 
 
 Non-Efiective 1,936,074 
 
 3,853,964 828,600 
 
 Afghanistan 72,086 15,500 
 
 Public Works, Ordinary 82,370 17,700 
 
 Guaranteed Railways 5,664,932 805,400 
 
 State Productive Works 692,896 149,000 
 
 15,209,484 2,855,700 
 
 Operations on Capital Account 371,967 80,000 
 
 14,838,517 2,775,700 
 
 Balance of Remittance Account 572,000 ) i no QKO 
 
 Sundries 54,241 \ lU8,y& 
 
 15,464,758 2,884,659 
 
 Bills on and from India 15,464,758. 
 
 Net Loss by Exchange 2,884,659. 
 
 ORDINARY PUBLIC WORKS. This, in the first instance, represents 
 the cost of works, which, though of undoubted utility and even 
 necessity, can never prove directly self-supporting, and are there- 
 fore charged in the regular expenditure of the year. The money 
 is chiefly spent in the repairing and making of roads, civil buildings, 
 &c., &c. The establishment charges are very high, but we shall 
 deal with them in considering "Productive Public Works," i. e., 
 works which it is anticipated will pay their way. It should be 
 remarked though, that when works, projected as remunerative, 
 disappoint the judgment or belie the calculations of their "official 
 promoters, they are turned into this category of Ordinary Public 
 
42 MR. THOMAS B. MOXON 
 
 Works. We have unfortunately not been able to find the informa- 
 tion which would enable us to state the total sum sunk in these 
 abortive enterprises and consigned to the convenient oubliette of 
 this department. 
 
 GUARANTEED RAILWAYS. When railways were first introduced 
 into India, the interior being little known, and most of the first 
 lines being constructed for Imperial as much as for commercial 
 purposes, it was quite reasonable and necessary that the money 
 should be raised by the aid of a Government guarantee. The 
 Government reserved to themselves certain control, and although 
 as pioneer lines they were somewhat expensively constructed, they 
 have been fairly remunerative, in one or two past years hardly 
 requiring as a whole any contribution from public funds on account 
 of this guarantee. In the near future they may be expected to 
 prove a certain source of revenue instead of expenditure. It should 
 be remarked, in reference to the loss by exchange on this head, 
 that the usual rate of exchange named in the contract between 
 Government and the railways was Is. lOd. per rupee, so that 
 though of late years there has been a loss on exchange, against it 
 must be set the profit made by Government in past years. It may 
 be a question whether Government or the companies themselves, 
 in their own interest, should not reduce the rates of carriage in 
 some cases. In India the rates for grain are 22s. per ton for 450 
 miles, whilst in America, where we have similar long distances, the 
 rate is only 10s. a difference heavily handicapping India in the 
 grain export trade. 
 
 Nor are we without proof in India itself of the advantages of 
 lower rates of carriage. Mr. Danvers, the Government Railway 
 Director, in his report for 1878-9, says : "Whilst the East Indian 
 Railway, with a 3 pie rate (f d. per mile), has increased, during 
 the last 5 years, 21 per cent in number of passengers and 19 per 
 cent in receipts, the Oude and Rohilkund, with a 2 pie rate, has 
 increased 25 per cent in numbers and 50 per cent in receipts. As 
 is not unusually the case, it transpires that this railway is not only 
 liberally but also economically managed. 
 
ON INDIAN FINANCE. 43 
 
 Latterly Government have constructed State lines in place of 
 giving guarantees. A consideration of our next section will assist 
 us in arriving at a conclusion as to whether the new system, con- 
 duces to economy and success. 
 
 PRODUCTIVE PUBLIC WORKS. These are works that, as we have 
 before explained, are expected to pay their own way. They, as 
 well as the Ordinary Public Works, are in charge of the Public 
 Works Department, established in 1864, which comprises a Military 
 Works Branch, a Civil Buildings and Roads Branch, an Irrigation 
 Branch, and a Railway Branch. 
 
 When Government first began sending out engineers for, of 
 course, no one ever thought of looking for native or local men 
 there were already plenty of them in the country, in the opinion 
 of Mr. Sowerby, an engineer with Indian experience ; and he refers 
 to one work which took six years to complete, that could have 
 been made in six months, but the officer in charge had nothing 
 else to do ! 
 
 Now if there is one thing more than another that Indians 
 understand, from centuries of training, it is the science of irriga- 
 tion. Their abilities have been often acknowledged. Our most 
 profitable irrigation works are based upon those of ancient rulers, 
 and it has been said that the native works at Hyderabad are quite 
 as stupendous, quite as good, and a great deal more skilfully con- 
 structed than those at Poonah, the work of our own engineers. 
 Add to this they know the vernacular, are acclimatised, and cost 
 less than Europeans, and you can sum up the advantage of their 
 employment. Not only were they and the locally employed 
 Europeans rejected, but an establishment was opened in Bombay 
 which would probably have accommodated all the engineers in 
 Great George Street, and in one year all the work this great office 
 had to do amounted to 900,000, not full work for one single 
 leading English engineer. In fact, Mr. Sowerby, speaking in 1879, 
 said : " The engineering staff now employed by Government would 
 be sufficient to carry on works to the extent of 30,000,000 a 
 year, if fully employed." In 1879 the total expenditure on public 
 
44 MR. THOMAS B. MOXON 
 
 works of both classes was 9,557,910, including establishment 
 charges. In 1877-8 establishment charges were 3,270,000, 
 exclusive of pensions, so that the actual work done was only 
 .6,287,910, that is to say, establishment charges were nearly 
 equal to 50 per cent on the work done. It is true that economies 
 are contemplated to the extent of nearly 500,000, but part of it 
 is to be by dispensing with the Public Works Member of the 
 Council, which looks rather like economising by dispensing with 
 control. 
 
 Of course a staff thus created regardless of expense, could 
 hardly be expected to be economical, and so we find Mr. Sowerby 
 testify. "The cost of supervision, which under me was 7J per 
 cent, rose to 25 J per cent under the Public Works Department, 
 though the price of labour had considerably fallen meanwhile;" but 
 Mr. Sowerby says, page 27 of the East India (Public Works) 
 Eeport, 1879, "this fact was noticed in the Times of India, and in 
 the next year they managed to alter the form of the accounts, so 
 as to apparently reduce the cost to 18 or 19 per cent, whereas, in 
 reality, the expense continued the same." 
 
 With such liberal establishment charges it might be fairly 
 anticipated that great ability would be ensured, but at the end of 
 1871, Public Works, which were originally estimated to cost 
 4,165,141, had actually cost 6,462,750, and were not all then 
 completed. Mr. Sowerby in the same report remarks that when 
 the Taptie irrigation scheme was first brought forward, it was 
 made to show a profit of 25 per cent, but after being criticised in 
 the Times of India, it was returned for revision, and then showed 
 2J per cent. In the same report it is stated that no irrigation 
 work in Bengal proper has paid its working expenses, though all 
 were promoted as profitable investments. 
 
 We are well aware that the report of the Famine Commission 
 just issued says the net revenue on the total capital expended in 
 irrigation works is 6 per cent, and, if we exclude unfinished works, 
 7 per cent ; but then we must remember the failures of this costly 
 department are turned over to the " Ordinary Public Works," and 
 not allowed for in these estimates. 
 
OX INDIAN FINANCE. 45 
 
 Mr. Dacosta says that an officer who had been in charge of the 
 accounts of the Public Works Department, told the Indian Finance 
 Committee in 1871 that thq Ganges Canal was yielding 7J per 
 cent upon the capital invested, whilst the accounts since laid 
 before Parliament show that it never was financially profitable, 
 and that at 31st March, 1876, the total loss amounted to 
 1,490,705. 
 
 Perhaps the evidence of Sir T. L. Seccombe, who was for fifty 
 years in the Financial Department of the India Office, and is now 
 Assistant Under-Secretary of State, may assist us in explaining this 
 discrepancy. He says (page 48 of the East Indian Public Works 
 Report, 1879) that the item interest during construction is omitted 
 from the accounts of Productive Public Works, that the form as 
 first prepared at the India Office did include a column for interest, 
 but that it was struck out at the instance of a gentleman who had 
 been connected with the Public^Works Department ; and that this 
 question of interest is so large that, in regard to such a work as 
 the Ganges Canal, the inclusion of it would probably diminish the 
 profit which is now received from that canal by almost one half. 
 This valuable information was withheld on the plea that " at the 
 present time the account was sufficiently complicated without it ! " 
 
 Having thus got a Department, costly, and whose returns are 
 misleading Sir T. L. Seccombe further informs us, that up to 
 1879 the Financial Department has exercised no check to ascertain 
 whether the works upon which 4,000,000 or 5,000,000 per 
 annum have been expended are really within the compass of the 
 Financial Dispatch, and he believes the expenditure which has 
 been made upon works would be found to comply with the descrip- 
 tions given in the dispatches in very few cases. 
 
 No wonder that the Committee, with such evidence before 
 them, report, that "when your Committee examine the process 
 through which the estimates and plans of large public works pass, 
 previous to their sanction, it is evident to them that no ordeal has 
 been suggested by which, with any certainty, a remunerative return 
 can be ensured." 
 
46 MB. THOMAS B. MOXON 
 
 No small share of the indisposition with which ordinary private 
 Indian commercial enterprises are regarded in England, may be 
 attributed to this Department. Its extravagance and inefficiency 
 destroy the reputation of the country as a field for remunerative 
 investments. It is not enough that its cost should be curtailed ; 
 as a working force it should be abolished, and only remain as a 
 consultative council The effect of its existence is to almost close 
 the door to independent engineers, with nothing but bad results to 
 the country. The presence of independent men would furnish 
 that criticism, the absence of which has been so conspicuous in the 
 past ; their desire for employment would ensure activity in origina- 
 ting schemes ; the criticism of their fellows, and of the consultative 
 council, would give a guarantee for soundness now lacking, and, 
 financing for themselves, they would relieve Government from, 
 responsibility for results, and open up a field for the profitable 
 investment of English capital. There are only 8,545 miles of 
 railway open in all the 1,480,000 square miles of India. 
 
 It is not only thus that this Department injures India. 
 Governmental interference is the death of private enterprise. How 
 can a private individual succeed, opposed by the stolidity of a 
 department, whose reputation is staked on the failure of his 
 scheme, or which has officials who have desired to do the work 
 themselves 1 And we are not without instances of such behaviour 
 in India. 
 
 THE CIVIL BUILDINGS AND ROADS BRANCH have done some 
 valuable work, at what cost we cannot say. Up to 1850 no 
 important progress was made in constructing roads, but now there 
 is a very fair network throughout the country. They are of three 
 classes those raised, bridged, and metalled; those raised and 
 occasionally bridged ; and fair weather tracks, available for eight 
 months out of the year. 
 
 THE IRRIGATION WORKS are, of course, of first importance, but 
 we must disabuse our minds a study of the relievo map will assist 
 us of the ideas that all India can be irrigated, or that all requires 
 irrigation, as the following table will show. 
 
ON INDIAN FINANCE. 
 
 47 
 
 IRRIGATION IN INDIA. 
 
 Province. 
 
 Area ordinarily 
 
 Cultivated. 
 
 Acres. 
 
 Punjab 21,000,000 
 
 North W. Province and Oudh ... 36,000,000 
 
 Bengal 54,500,000 
 
 Central Provinces 15,500,000 
 
 Secured by Natural 
 Rain FalL 
 
 Acres. 
 
 .. 6,500,000 
 .. 20,000,000 
 13,500,000 
 15,500,000 
 
 Berar 6,500.000 ... 6,500,000 
 
 Bombay 24,500,000 ... nil 
 
 Sindh 2,250,000 ... 500,000 
 
 Madras 32,000,000 ... 6,250,000 
 
 Mysore 5,000,000 ... nil. 
 
 Ordinarily 
 
 Irrigated. 
 
 Acres. 
 
 5,500,000 
 11,500,000 
 
 1,000,000 
 770,000 
 100,000 
 450,000 
 
 1,800,000 
 
 7,300,000 
 800,000 
 
 197,250,000 68,750,000 29,220,000 
 
 The explanation of irrigated land being found in naturally pro- 
 tected provinces is that the natural rainfall may be amply sufficient 
 for ordinary food crops, and at the same time inadequate for the 
 cultivation of rice. 
 
 There are three classes of irrigated land : that supplied from 
 canals, which never fail; that supplied from wells, which may fail; 
 and that supplied from tanks, which can rarely support two con- 
 secutive years of drought. The Famine Report, from which the 
 last table is compiled, says that of the irrigated land about eight 
 million acres are protected by the better class of irrigation works, 
 and twelve million by wells. 
 
 The average rainfall in India varies from 28 inches in the 
 Deccan to 144 in the Charra-Punji, where, in extreme cases, 100 
 inches have been known to fall in six weeks, and nearly 600 hi a 
 year. 
 
 We can only stay to remark that long before our rule irrig&vlon 
 works were provided by the natives, though some of the most 
 magnificent had been allowed to decay. In Mysore there were 
 38,000 tanks, or reservoirs, and twice that number in Madras, 
 some, such as the Sulikere tank in Mysore, and the Cambam Lake 
 in Karnul, being 40 miles in circumference. 
 
 Another point is that all soil will not bear irrigation on account 
 of inherent properties or of the nature of the sub-soil, so that 
 without great care more harm than good may be done by anything 
 like compulsory irrigation. Where suitable it doubles the value 
 
48 MR. THOMAS B. MOXON ON INDIAN FINANCE. 
 
 of the land at least, though it requires much more labour expend- 
 ing, and in the Cavari Valley, in Mysore, irrigated land lets as 
 high as <35 per acre, against X2 10s. per acre for best dry land. 
 
 THE RAILWAY BRANCH has just the defects of extravagance we 
 have previously alluded to, and that in India is the worst of all 
 faults. Mr. Sowerby points out the Nizam's Railway, constructed 
 by the Government engineer, through a very poor country, which, 
 in his opinion, cost nearly twice as much as it ought to have. done, 
 and on which the stations are little palaces the effect being that 
 the line did not pay, and further railway enterprise was checked in 
 that state. 
 
 This seems to contain the secret of the whole thing, the 
 engineers are ambitious to gain a reputation by the grandeur of 
 the works themselves rather than by the remunerative character of 
 the enterprises. 
 
 We have now completed our survey ; almost all our statements 
 are founded upon official publications, or publications of officials, 
 and we submit that the examination justifies the views " commonly 
 held, and confidently expressed, that the finances of India have 
 been, especially of late years, unskilfully and imprudently handled, 
 in particular, that funds have been wasted on ill-conceived and 
 
 therefore unremunerative public works and that 
 
 unless a change of system takes place, the British nation may have 
 to take over the charge of the Indian Government and the Indian 
 debt, and, secondly, that the resources of the Government, inade- 
 quate as they are to secure its solvency, are provided by excessive 
 taxation 
 
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