In addition, pressure was exercised from the outset by the newly elected legislatures to secure the speedy implementing of the promised increase in the recruitment of Indians for the All-India Services. Finally there was the reaction on the morale of the services caused by the reluctance of the central government to allow due weight to the opinions of officers of local governments who were depressed by the spread of anarchy during 1921 and 1922, and were well aware that, given power, they could check it.

The grant of permission to retire on proportionate pensions* served merely to accentuate the demoralisation of those who remained and to check recruiting at home among those who might have joined the Indian services. The crisis in the services was brought to a head by a resolution of the Assembly passed in February, 1922, followed by permission, given to the Indian Government by Lord Peel (then newly installed at the India Office), to institute inquiries as to the measures possible to give effect to the promised increased recruitment of Indians. In actual point of fact the inquiry, as formulated in India, assumed a shape almost positively hostile to the continuance of European recruitment on its existing lines. Provincial governments were asked whether the "recruitment of Europeans for the All-India Services should be discontinued or largely reduced and, if so, in what services and to what extent?" Such an inquiry was inconsistent with the repeated asseverations of the authors of the new constitution that European public servants of the best type would become more than ever necessary in India, and with the definite instructions to governors that the rights of such public servants were to be scrupulously respected.

The O'Donnell Circular, in which the inquiry was propounded, was dated May 30, 1922. It was made public some two months later. Its exposure was followed by instructions to the local governments to refrain from all inquiries affecting the future of the Superior Services; and in March, 1923, the announcement was made that a thorough inquiry was to be instituted into the position of those services. The inquiry took the form of the Lee Public Services Commission appointed in June, 1923. report followed well within a year and legislation based on its

Its

*Under this arrangement by July, 1923, no fewer than 93 Police Officers, 64 Indian Civil Servants, 41 Engineers, 22 Education Officers, and 17 Forest Officers had prematurely abandoned their life's task.

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findings reached the Statute Book in the parliamentary session of 1925. As a consequence, rules calculated to restore the selfesteem and contentment of a large proportion of the European public servants in India are now in force. The European public servants in the country have been further fortified by the repeated recognition by Lord Reading of the fact, based on his own experience, that the European element in the Indian services is still not merely indispensable, but in the best sense actively beneficial to the population which it seeks to serve.

Unfortunately Lord Reading leaves unsolved such vexed problems as the future of India's medical service, the powers and personnel appropriate to the Public Services Commission, and due provision for the families of deceased officers in important key services. The relative stabilisation of the position in the services, however, followed by the resumption of brisker recruiting in the schools and universities of the United Kingdom, would of themselves suffice to make Lord Reading's Viceroyalty a noteworthy sign-post along the road to post-war reconstruction in India.

By far the greatest services rendered by Lord Reading to India have been in the financial sphere. The budget to which the Finance Member was working, when Lord Reading arrived in India, resulted at the end of the year in a realised deficit of no less than 34 crores (over £22,000,000) on a gross estimated expenditure of 127 crores, or some £85,000,000. Heavy new taxation had been imposed by vote of the first Reformed Assembly a few weeks before Lord Reading's arrival, and still heavier taxation was necessitated in the first budget of Lord Reading's Viceroyalty in order to meet yet another prospective deficit amounting to 32 crores on the then existing basis of taxation. By March, 1923, when Sir Basil Blackett introduced his first budget, the result of five years' realised deficits had been to add 100 crores, or over £66,000,000 to the national debt of a country whose total indebtedness to-day-two-thirds of it consisting of productive expenditure on railways and irrigation-is barely £500,000,000. A serious feature of the financial position had been the sharp decline in railway receipts and equally sharp ascent of railway expenditure, with the result that the net loss to the State on railway working in 1921-22 exceeded £6,000,000, and in 1922-23 £1,000,000.

Lord Reading set his teeth as a flint to secure a balanced budget based on the Indian taxpayer's capacity to pay. One of his earliest and most important acts in the financial sphere was the appointment in 1922 of the Inchcape Retrenchment Committee, which made a thorough overhaul of Indian finances, and suggested recurring savings of 19 crores, or over £12,000,000. During the three financial years which have since elapsed, the great bulk of the economies suggested by the Inchcape Committee have been incorporated in successive budgets. The era of deficits terminated in 1923. Progress has since been achieved which in the past three years has resulted in steady surpluses of from 1 to 4 crores. The salt tax has been reduced to its former innocuous level of one rupee (sixteen pence) per maund of 80 lbs. ; the much hated cotton excise duty has been removed at a sacrifice of between one and two millions sterling; the contributions made from the Provincial Exchequers to the Exchequer of the Central Government have been steadily reduced; and the final extinction in the near future of the State traffic in prepared opium is now in sight. Military expenditure has been reduced from over 77 crores in 1921-22 to less than 55 crores (some £38,000,000) in 1926-27, despite the assumption in the trans-frontier tribal tract of new responsibilities on the Razmak road.

Pari passu with this reduction of current expenditure--and increase of current receipts-there has proceeded a steady reduction of floating debt and consolidation of permanent debt on the basis of lower interest charges. As the accumulated result of the four years of Sir Basil Blackett's productive incumbency of the Finance Membership, the saving to the Indian taxpayers by debt reduction and funding now amounts to 3 crores, or over £2,000,000 a year, in a budget in which expenditure stands at approximately £60,000,000. The present is the third successive year in which no resort has been had to foreign loan markets, and it is becoming a serious question whether the reaction from profligacy to economy is not retarding productive expenditure on railways and other works. During Lord Reading's last cold weather in India, the Hilton Young Commission was engaged in ascertaining whether the time had yet come to endeavour to base the Indian currency on a gold standard or on some stable gold exchange standard.

One of the greatest financial and administrative achievements

of Lord Reading's Viceroyalty has been the restoration to a paying B basis of the State-owned railways in which £360,000,000 of Indian public money is invested. The working profit of the lines has exceeded five per cent. of the capital net charge in each of the past three financial years and, after meeting all interest charges, the taxpayer has profited by relief of taxation to the tune of between three and four millions sterling per annum. This great result has been attributable to the unflinching determination with which Lord Reading, assisted by Sir Basil Blackett and Sir Charles Innes, has carried out the chief recommendations of the Acworth Railway Committee, which reported in the August following his accession to the Viceroyalty.

For a generation the separation of railway from general finance has been the pious hope of every Indian Government, but it remained for the late Sir William Acworth to recommend, and for Lord Reading to achieve, the long discussed want. The

urgency of the problem was intensified by the squandering of the railways' large War-time surpluses in relief of the taxpayer, and the non-existence after the War of reserve funds adequate to the work of overcoming the dilapidations of permanent way and rolling stock which had accumulated during the War period. These were so serious that, during the "boom" period of 1920, foreign and domestic trade valued at many millions sterling were lost to India. By Lord Reading's great reform a Railway Budget, distinct from the Finance Member's general statement of revenue and expenditure, is now presented annually to the Assembly by the Chief Railway Commissioner, the presiding officer of the reconstituted Railway Board. The quota payable from net railway receipts to the national budget is determined on the basis of a fixed and agreed formula, and the railway administration thus has a direct interest in any increase of profits.

Meantime an effort has been made to place capital expenditure on the railways out of reach of the exigencies of the Finance Member by the allocation of £100,000,000 for capital disbursement in equal instalments of 30 crores per annum, over an entire quinquennium. Unfortunately the capital sum which the railway administration has succeeded in profitably expending fell to some 20 crores in 1923-24, 13 crores in 1924-25, and 23 crores in the financial year recently completed. In his first budget Sir Basil Blackett suggested that, short of the exhaustion of India's borrowing capacity or of the capacity of her loan markets, almost no

limit could be placed to productive expenditure on new transport facilities in India. The Acworth Committee was of the same opinion and was disinclined to set any limit to the interest pay-L ments which might be necessary to give India the railway mileage she needs. The Viceroyalty of Lord Reading has brought India nearer to a sound practice in railway expenditure and administration than at any time in her previous history. Lord Reading's successor will find a firm rock awaiting him whereon to build an even more substantial edifice.

In his speech at Bombay on his first arrival in India, Lord Reading declared that he had set out hopefully upon an arduous task because “all his experience of human beings and human affairs had convinced him that justice and sympathy never failed to evoke responsive chords in the hearts of men of whatever race, creed, or class." They were, he said, the two brightest gems in any diadem. Without them there was no lustre in a crown. With them there was a radiance that never failed to attach loyalty and affection. He added that the justice now confided to his charge was not confined within statutes or law reports. It was a "justice that was unfettered and had regard to all conditions and circumstances. Above all it must be regardless of distinctions and rigorously impartial.'

Throughout his term of office in India, Lord Reading was as good as his word. His policy throughout observed a scrupulous regard for legality. Cases unfortunately sometimes occur in which legality is not always maintained au pied de la lettre, even where an Oriental administration has become saturated with British influence. The earliest evidence of Lord Reading's determination in this matter was the resignation in July, 1921, of a powerful member of his Viceregal Council, following on a disclosure in court showing that improper instructions had been received, nominally from the Government of India, to withdraw a case against two Bengali merchants charged with delinquency in the supply of munitions. Non-legal motives had been permitted to prevail. The author of the instructions proved to be the Commerce Member, who had not consulted the Viceroy but had contented himself with an informal mention of the matter to two colleagues. The Viceroy and the said member parted company without further ado, and India was thus early afforded impressive evidence of a sterner interpretation of the spirit of British justice.