or in the naval police of the Eastern Archipelago, it is probably not too large, and it is, I believe, efficient; but I should think that its duties might be with advantage confined within narrower limits, and in that case money might be saved. There has been a good deal of question with regard to the employment of the government steamers in the conveyance of mails and passengers. I have no doubt that the duty, taken alone, may be better performed by a private company; but if we are to pay for government steamers at any rate, I see no reason why, when they are idle, they should be debarred from such duties merely that one great private company may have a complete monopoly of the traffic. No one is constrained to go as a passenger by a government steamer; but it is perfectly natural and reasonable that Government should send some of its mails by its own unemployed steamers, instead of paying other people to do the same thing. The French and other Governments follow the same system. It is quite clear that the Peninsular and Oriental Company, while they have already so much to do, made such efforts to get possession of the comparatively petty Bombay line, not so much because it is in itself of great importance to them, but because it is the only little loophole through which a few persons escape the meshes of their monopoly. CHAPTER VII. FINANCE. General financial position; necessity of improvement; how to create a surplus; review of items of receipt, and proposed measures in regard thereto; review of items of charge, and proposed reductions; home charges; general result; application of the surplus; finance of different local governments; financial treatment of Madras; Punjab finance; altered form of accounts; local finance and responsibility; plan of local budgets, and financial distribution; remittances by hypothecation. ON a former occasion* I have made as clear as I can our financial circumstances. Another year's accounts do not render our prospects more promising. The year General finan- 1849-50 turned out, indeed, more favourably than was estimated, and there was a surplus exceeding 300,000l.; but in the following year a very much smaller sum was realised from opium; the salt revenue also fell off; and the estimated deficit is upwards of 600,000l. The charges for these years must have included the remains of some war charges which we might have hoped subsequently to reduce had we not been again involved in another war. I understand, however, that the opium is selling well this year. Taken altogether, it appears that our finances, while by no means in a desperate state, are certainly not in a prosperous condition. The comparative situation of our revenues and charges is not such as would justify a prudent government in remaining content with things as they are. We barely pay our expenses in time of peace; protracted war and extraordinary deficiencies must involve farther loans; and under the most favourable cir * Modern India, chap. x. cumstances we have no permanent surplus to devote to the improvement of the country. I think that in the exercise of proper prudence, now that we have completed the empire and Necessity of cannot look for extraordinary extension of improvement. revenue, we should make a great effort to put the finances on such a healthy basis that we may not have occasion to get further into debt, and that our ordinary charges on our ordinary revenue may leave both that marginal surplus for extraordinary contingencies which is indispensable to all trustworthy finance, and a sufficient revenue available for public improvements. If the Indian Government has not been very extravagant-has not got recklessly into debt beyond its power of payment-it must also be admitted that the proportion of the revenue expended on public works and improvements has been excessively small. We are, no doubt, in a better position than states which have undertaken great works by a profuse expenditure of borrowed money; but while in peaceable possession of so great an empire, it is certainly our duty to do more than pay our current establishments. We ought to improve the country and promote the civilization and comfort of the inhabitants. My present end is to consider how the means for these objects can be obtained. I certainly would not borrow money for ordinary improvements. The noxious and dishonest modern practice of drawing bills on posterity, to obtain money for present expenditure, has been carried a great deal too far, and the faith of national creditors will, perhaps, only be shaken when these constantlyincreasing, never-diminishing, loads of debt become too heavy to be supported, and recoil in great national bankruptcies and repudiations. I would only at present make an exception as to borrowing money for trunk lines of railroad in India, inasmuch as the immediate saving and facilities afforded thereby must more than repay Government as a mere government speculation, and Government alone can make railways in that country. But for everything else we must either find ready money for improvements, or the country must remain unimproved. At present we have no money for such purposes. How are we to get it? How can we Inexpediency of ation. We can but look for slow and gradual increase of the income derived from our present revenues, create a surplus? and some of our taxes are such as we should certainly mitigate whenever we are in a condition to do so; while, on the other hand, I know no new tax which we could with advantage impose. It has been often remarked that, under our rule in India, increasing tax- capitalists, and all the superior classes unconnected with the land, do not contribute a fair share to the expenses of the state and in payment for their own protection,-in fact, that they are hardly taxed at all. It certainly is so, but neither can I suggest any mode of getting at them short of the arbitrary confiscations of native rulers, nor am I clear that the exemption of the capitalist is not in the end advantageous in a country where capital is not yet so abundant as we could wish, and where all classes depend very much on the capitalist for assistance. An income or property tax would never work in India, and, in truth, every culti vator, every weaver, and the Government itself, benefits by the increase of capital in each village, even though it is in the hands of others. I am not prepared then to recommend any plan for a great increase of taxation. In the previous political and military chapters I have already indicated the quarters from which it seems to me that financial improvement is most likely to arrive. By a political Political means of improving our finance. management, less liberal in great things and more discreet in small things, I think that we might save money; and if we assume the management of Oude now, and of Gwalior on the first convenient opportunity, and manage them on prudent principles, we shall undoubtedly find great gain to our revenue. Military = By a redistribution of the army without £1,150,000 700,000 500,000 . £2,350,000 And if we can reduce the strength of the army, that will be so much additional gain. In fact, I hope that, if we have continued peace, we may save a good deal more, but would be content with so much in the mean time. I shall here briefly review some of the principal items of receipt and expenditure. Review of items The land revenue can only (except by extension of territory) be very gradually increased with the increasing wealth, population, and pros- of receipt. perity of the country, and through im- Land revenue. proved management on our part. In Bengal, Hindostan, and the Punjab, we cannot look for any great immediate |