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the salt tax is in question. The simple truth is that, reduced as it is, this tax is still an abominable oppression even in Bengal. What it is in the other and poorer provinces I leave the reader to imagine.

Allowing for increased taxation the revenues of India may be said then to have increased between the first year of the period under review and the last, although the most substantial of all revenues, that from land, has declined, even if we add to it the sum, more or less fancifully arrived at, which is set aside as returns from irrigation works. I indeed regard that item in the budget account as one of the worst subterfuges of which Indian accountants have recently been guilty, but space forbids any discussion of the vexed irrigation question here. For the same reason I must put aside the opium question, beyond the mere mention, in passing, that to this source also one of the most oppressive burdens the Bengal peasants have to bear the revenue owes an increase of 2,300,000l. in the twelve years, comparing the first with the last. There is likewise an augmentation of a million in the yield of excise, and of more than 800,000l. in that of stamps, neither of which can be fairly credited to the increased prosperity of the masses.

If the revenue, however, has by any means increased, so has the expenditure. This book says, the surplus on the twelve years would have been about 25,000,000l. but for this and that. It is useless to try to follow the steps by which this fallacious conclusion is reached. The actual truth is that, including the famine and war outlay of the twelve years, there is a deficit of about 9,700,000l. The ordinary expenditure of India was about 53,000,000l. in 1880-81, as against but about 40,000,000l. twelve years ago, including provincial expenditure. This is a difference of something like 13,000,000l. due chiefly to the war in Afghanistan. That war, in short, which was to cost a mere million or two in the opinion of Sir John Strachey, which he believed in 1885 would require only 3,216,000l., exclusive of the cost of the frontier railways, and which Major Baring says, in his budget for 1882-83, had cost up to date 17,551,000l., also exclusive of these railways, has been one main cause of the deficit. Including the railways the war has now cost 21,600,000l., and if we took the Stracheys' estimate of the value of the rupee as other than a rhetorical flourish, that sum alone would be equivalent to the abstraction of two hundred million pounds of the actual wealth of India in four or five years' time. That may be nonsense, but the sober fact is desperate enough, as we shall see.

There remains, however, the money spent on public works extraordinary' or 'reproductive,' which must be treated as part of the expenditure, just as much as war and famine outgoings. This I find amounted in round figures to 40,000,000l. more in the twelve years. Add this to the deficit on the ordinary budget, and it will be found that instead of will-o'-the-wisp surpluses, India has realised deficits in one form or other to the tune of very nearly 50,000,000l. in the twelve years, or an average of rather more than 4,000,000l. per annum.

This money India has borrowed in that time either by direct loans, raised in England under one guise or other, by the depletion of the treasury balances, which are down 3,000,000l. in the last year of the twelve as compared with the first, or by means of the English gifts and war contributions, set down at about 2,700,000l. up to the end of the financial year 1880-81.

From this it follows that the burdens of India steadily increase year after year. Manipulate the accounts as one may, a new loan is as inevitable every year, or every other year, as recurrent new moons. It will be so now that the war is over and paid for, just as surely as it was before, and yet, such are the illusory charms of this hypothetical system of finance, that the present Finance Minister, Major Baring, an honest and reputedly capable man, gravely proposes to pay off each year 750,000l. of the principal of the Indian debt out of famine taxation! He would thus create a reserve' against famines with the one hand, and with the other hand must borrow millions. By a system of interest notes, or small interest-bearing bonds, the Government is now trying to raise money in India; but the natives have no money to spare or trust in their Government, and the scheme will probably fall dead, to be followed by the usual loan in London.


Along with this State-borrowing, too, we have to reckon the insidious expansion of the guaranteed railway companies' capital. The totals have been obscured since 1880 by the transfer of the East Indian Railway to the State; but between 1870 and 1879 the recorded additions to the capital of these companies was over 10,000,000l. It was probably not less than 1,000,000l. more in the two years that have succeeded, whose accounts are completed, exclusive of the bonus or premium paid to the East India railway shareholders; and a new stimulus has been given to this kind of borrowing by the revival of the 'guarantee' system, wholly or partially, a system which has been a frightful source of evils in the past, as the Stracheys most justly say, but one also without which it is impossible to attract capital to India.

Owing to these various necessities, and to the feverish manner in which the English are exploiting India to the uttermost, the debt and the home charges upon that debt mount apace. At the end of the financial year 1878-79 the nominal amount of the debt, State and railway together, was 236,000,000l. Ten years before it was 189,500,000l., or an increase of 46,500,000l. Since 1879 we have to add the two years' net deficits produced by the Afghan war, amounting together to a little over 5,000,000l., after deducting 2,695,000l. credited as the English contribution for that year to the war cost. Then, also, there is the outlay upon the guaranteed railways, which I estimate above at another million, exclusive of any augmentation of the nominal capital of the debt caused by the conversion of the stock of the East Indian Railway Company into Government 4 per cents., or terminable annuities. These figures make the total addition No. 632 (NO. CLII. N. s.)


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to the debt, and interest-bearing obligations of India, 62,000,000l., in the twelve years, less, perhaps, the depletion of the Government balances above mentioned. Most of this, if not all of it, means additional dead weight upon the backs of the natives, and this is twelve years' work. How India is affected by this incessant growth of debt in one shape or other, and, therefore, of foreign obligations, is partly seen in the amounts she has to remit home every year, amounts that have now grown so heavy as to render borrowing an absolute necessity of the State. Sir John Strachey sees this, recognises fully the supreme danger to Indian finances of the present state of the exchanges, and the impossibility of paying off any part of the principal of the Indian debt unless the conditions alter. But, like almost all Anglo-Indians, he refuses to trace this dead-lock, this persistent adverse exchange, to its true source. All the blame is laid upon silver. Silver fell in price after its demonetisation by Germany, and that fall, they all cry, brought the Indian exchange to the ground, ruined the Indian banks, and embarrassed the Indian Government. Therefore, it is argued, if silver could be rehabilitated, all would be well, and all that is necessary for its rehabilitation is that England should consent to take the metal at its old ante-Germandemonetisation parity price as compared with gold. In short, the salvation of Indian finance is to be found, according to Anglo-Indians, in bi-metallism. They rave about it, write endless dissertations upon it, and so obscure the true question at issue in a cloud of words and futile demonstrations, that many persons are deluded into thinking there must be something valuable in what they say. But it is only their way of pleading poverty.

Now I am not going to enter upon a refutation of bi-metallism here; it would be labour wasted, for that is just one of those crazes against which there is no arguing. Bi-metallism is the remedy of those who feel the distressful state into which Indian finances are falling, and their feelings are so acute upon that point that their judgment is swamped. But a few plain statements of fact and equally plain deductions may be useful to those who, uninterested in India, may still be able to judge dispassionately.

The first of these facts is that the heaviest part of the expenditure of guaranteed capital on Indian railways came to an end in 1872, and that since then accordingly the annual remittances of fresh capital from England to India have been less on the average than they were in the fifteen years preceding that date. One effect of these heavy remittances of capital was to obscure for a time the steadily-growing counter-pressure of home charges,' which was all the while mounting up, for the capital raised in England was equivalent, while under transmission in money or in goods, to a debt of England to India, which could be set off against the Indian debt in the shape of interest, army and transport charges, superannuation and furlough allowances, and other home expenses of the Indian Government. In this way the balances accruing to India on account of loans raised in London

were available as a set-off against the debts of India, and fewer bills had to be drawn by the India Council in London upon the Indian Treasury.

When, however, the capital raised began to decrease, the effect of the home charges instantly made themselves felt to an extent not before experienced. They required more bills to be drawn in London on the Indian Treasury, and the supply of bills being soon in excess of the demand, the exchanges became depressed. This would have happened whether Germany had demonetised silver or not, and the only difference would have been that, had silver kept its old price, when the exchange reached a given point, silver would have been poured into London from India. India, in other words, would have been denuded of her metallic currency and reserves to meet these increased payments, just like any other country overladen with debt, and in all probability would ere now have been bankrupt had the outpour of silver on this market not long since produced the same results as the German demonetisation-such a fall in price, that is to say, as would have stopped the export of the metal from India.

The fall of silver in Europe, coming as it did nearly coincidently with the increased pressure on the Indian exchanges, saved India from that catastrophe, and stimulated instead the export of Indian produce tea, rice, cotton, indigo, wheat, and so forth-to a gross value never known before except for a brief period at the height of the American Civil War, when the totals of her exports went about as high as they do now. But there was no other relation between the two things-the fall in silver and the collapse of the Indian exchange. The latter was caused primarily by the sudden increase in the adverse balance created against India on account of her debt and of the railway capital, and was aggravated during the famine years by the increased amount due by her for freightage on imports or transhipment of food, and as it is now by the augmented earnings of some of her railways over and above the guaranteed interest.

Confining the attention for the moment to the Council drafts, which form the only test we have of the truth of this view of the exchange question, it will be found that previous to 1872 the total of these drawn in any one year had never reached ten crores of rupees, say nominally ten millions sterling. The average of the ten years preceding 1872 had been about six crores per annum, the immense stimulus given by the cotton famine' in Lancashire to the growth and export of Indian cotton having, in the years 1864 to 1866 inclusive, added an average of 20,000,000l. a year to the value of the exports. In 1872 the total jumped to 10 crores 70 lacs, in 1873 to 14 crores 70 lacs. In the financial years 1875, 1876, and 1878, famine and war expenditure, by augmenting the borrowings here, reduced the total of the bills, but it never again fell below II crores of rupees, and after each dip mounted with a bound to a higher figure than before. In the year ended March 31, 1879, the total was

about 17 crores, in 1880 it was 18 crores 35 lacs, 1881 18 crores 33 lacs, and in the year just ended over 22 crores. Turned into true sterling it may be said that the permanent requirements of the India Council in London now amount to at least between 18,000,000l. and 20,000,000l. per annum, including the guaranteed interest of the guaranteed railways, the heavy military and civil home charges, and the price of stores, &c., sent out to the order of the Government in India. Borrowings may lessen or obscure this total in some years, but were there no borrowings that is the sum which India must meet every year-to such height has the load our alien Government has imposed upon her been raised. And so greatly does this load overbalance the exchanges against her, that it takes between eleven and twelve rupees to buy the pound sterling. Were India not thus deeply laden with debt, did she enjoy a true balance of trade in her favour, then the purchasing power of her rupee in the exchange market would be as effective as before silver fell in value. It would show its effectiveness by such an import of silver as would materially raise its price.

In addition to these debt and administrative charges, India has to pay for the stores ordered privately by the unabsorbed guaranteed railways, and to find the means of meeting their surplus' dividends. India has furthermore to find the means to meet all the private remittances of Englishmen in India, be they civil servants of the Crown there, soldiers, or private individuals busy making their fortunes. Till recently the profits of the English banks formed a considerable item under this head; but of late they have made none, and by their failure the load is perhaps lightened to the extent of half a million or so compared to what it used to be. Nor is this all the catalogue. India has to pay for all the over-sea carriage of all her goods fetched and despatched. The value of the foreign trade of 1880-81 is put at 127,671,000l., exclusive of specie, and it required 6,469,000 tons of shipping to carry it. Were the average cost of seacarriage only 258. per ton, and it is probably a good deal more, this would mean at least 7,750,000l. to be paid by India over and above all her other burdens.

Take the Government, the guaranteed interest and the railway dividend charges at 19,000,000l. only, and the whole of the other private remittances, including English officials' savings and traders' profits, at another 5,000,000l., and we have with these freight charges a total annual debit against India of nearly 32,000,000l. But the excess of her exports over her imports of merchandise and stores in 1880-81 was under 21,500,000l., or if the specie movements are included, as they should be, on both sides of the account it was only about 14,000,000l. On that showing, therefore, the trade of India is not able to carry half the dead weight of debt and foreign remittances put upon it. As we have, however, included the English exploiteurs' profits-no English word so well expresses the truth-in the amounts remitted, it is necessary to adjust the trade figures as if their profits

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