rity for an expenditure on the Affghan War without any limit of time or of amount, and this under full notice that an unknown proportion of that expenditure might hereafter be demanded of them from the purse of the English people. About as well might the House of Commons, instead of voting the Army Estimates from year to year, simply constitute a power of charge in the name of the Administration; and then wait until, in some future year, it should be called upon, when the money had been spent, to settle the account in the lump by a vote of ratification.

Not less remarkable is the disrespect exhibited by the present Government to the legislative office of the Lords and Commons of the United Kingdom. Of this Sir Alexander Gordon, on the 13th of December, pointed out in his place in Parliament the following noteworthy instance :--

On the 28th of February, 1876," Lord Salisbury instructed Lord Lytton as follows:

The Queen's assumption of the Imperial title in relation to her Majesty's Indian subjects, feudatories, and allies, will now for the first time conspicuously transfer to her Indian dominion, in form as well as in fact, the supreme authority of the Indian Empire. It will therefore be one of your earliest duties to notify to the Ameer of Affghanistan and the Khan of Khelat your assumption of the viceregal office under these new conditions.

Now the Queen assumed the dignity of Empress of India under the Royal Titles Act of 1876. At the time when the Ministry gave these presumptuous instructions, that Act had not passed. Even of the Bill, the House of Lords had had no cognisance whatever; and the House of Commons had expressed no judgment on its merits, which were much contested. It had just been brought in, on the 21st of February. It was not read a second time till the 9th of March. It did not receive the Royal assent till the 27th of April, two months after Lord Salisbury had written to Lord Lytton his instructions for acting upon it. It must indeed be gratifying to those members of the House of Commons, who confide in the wisdom of the Government, to witness the reciprocal confidence which that Government reposes in their docility.

Domestic policy, then, as well as foreign, and that which lies deeper than any policy, the essential principle of Parliamentary government, will have to be considered and determined at the coming Election by the nation. But one word more as regards that foreign policy. The standing motto of Liberalism is friendship with every country; as it was indeed of Toryism, until the new-fangled Toryism of the day, not less turbulent than it is superstitious, came into vogue. Liberalism has disapproved, and must disapprove, that antagonism to freedom which has commonly marked the continental policy of Russia, almost though not quite as much as that of

11 Affghan Papers, p. 156.

Austria; a State which, unlike Russia, has perhaps never once been led astray by any accident, into a sympathy with external freedom. But the braggart language, the unseemly suspicions, the one-sided moral laws, the fierce national antipathies, which so many writers among us have been labouring to cherish, are as truly alien to the spirit of true Liberalism, as is tyranny itself. Not only is the true fraternity of nations a great article of the Liberal creed, but, as a creed of justice, it requires that the proceedings of Governments, and of despotic as well as free Governments, should be received and judged in a spirit of equity no less than of caution. It further demands that, in the administration of our foreign affairs, and in the firm defence of our interests as well as our honour, neither womanish alarms at every rustling breeze, nor a mean and selfish egotism, should be suffered to prevail. Probably if Liberal writers and statesmen were called upon to declare what Foreign Minister, what period of policy abroad, they thought to be the very best images of principles truly English, they might point to the period and the person of Mr. Canning. I have sorely shaken the nerves of some by holding that we ought to imitate Russia (as I would imitate the worst Governments, either foreign or domestic, that history could produce) in its good deeds. It seems that even a truism, which is all but vapid, can terrify the morbid mind. But I must add another truism, at the risk of exciting similar terror. In determining what deeds of Russia, or any other country, are good, and what are bad, we must be governed by the same rules of evidence, and the same laws of justice, as we apply in considering our own. What, for the happiness of mankind, requires, both here and elsewhere, to be exorcised, is that spirit of unconsidering selfishness which, and which almost alone, makes this smiling world into a world of woe. As to the disregard of our true British interests, which is often so freely charged, it will be time enough to weigh and confute the imputation, when so much as a single case can be gathered from the page of history, in which a country has been injured through a mere deficiency of regard to its own welfare. It is the excess of that sentiment, involving as it always involves its misdirection, which through all generations has marred the fairest prospects of humanity: and which yet will mar them.

W. E. GLADSTONE.

December 22, 1878.

THE

NINETEENTH

CENTURY.

No. XXIV.-FEBRUARY 1878.

THE FINANCIAL CONDITION OF INDIA.

As there seems to be every probability that during the next few months an unusual amount of public attention will be directed to Indian affairs, I think the present may be regarded as a suitable time to consider the financial condition of that country. With the view of treating the subject with as much clearness as possible, it will be desirable in the first instance to ascertain what is the real revenue of India. Much of the complexity which so often confuses discussions on Indian finance arises from the want of any definite understanding as to the sense in which certain terms are employed. From the last financial statement of the Indian Finance Minister, it appears that he estimates the real revenue of India at between 37,000,000l. and 39,000,000l.; whereas a short time afterwards the revenue was officially stated at more than 63,000,000l. This great disparity of course arises from the gross revenue being referred to in the one case and the net revenue in the other. It has not unfrequently been said, in discussions on Indian finance, that it cannot be of any moment whether the revenue is estimated at its gross or its net amount; it is, after all, simply a matter of account. In one sense this, no doubt, is true; but I believe there will be no difficulty in showing that it is of the first importance to give as much prominence as possible to the net, as distinguished from the gross, revenue of India.

Few things have done so much harm to Indian finance in the VOL. V.-No. 24.

past, or may cause greater embarrassment in the future, than an exaggerated idea as to the revenue which the Indian Government has to spend. Although there is much in the present financial condition of India to cause most serious apprehension, yet there is one circumstance connected with it which may fairly be regarded as a most hopeful omen for the future. Until quite lately, India was looked upon as an extremely wealthy country, and there was no project, however costly, that India was not supposed to be rich enough to pay for. Now, however, juster ideas of the resources of the country and of the condition of the people prevail. The recurrence of famines, and other circumstances which have caused more attention to be directed to Indian questions, have at length led the English public to take firm hold of the fact that India is an extremely poor country, and that the great mass of her people are in such a state of impoverishment that the Government will have to contend with exceptional difficulties if it becomes necessary to procure increased revenue by additional taxation. It is not more true of an individual than it is of a nation that, if it is desirable to check all extravagance and secure rigid economy, the amount of the income which is available for expenditure should not be over-estimated. It is often said that if a man comes into possession of an encumbered estate, the mere amount of the mortgages and other debts upon the property does not form an accurate measure of the real extent of his embarrassments, for he has constantly to contend with the difficulty of possessing an income so much less than its nominal amount. Having perhaps ten thousand a year to spend, he is regarded by the world as the possessor of twice as much, and is expected every hour of his life to live accordingly. The position of India is, I believe, not dissimilar to this. Year after year the Government of India has been living beyond its means. Deficits have been repeatedly recurring, and debt has been steadily and surely accumulated. Nothing, therefore, can be of greater importance, and nothing can be more likely to bring about a better state of things, than to ascertain what is the real amount of the revenue which the Indian Government has at the present time to spend.

On official authority it was stated, when the Indian Budget was last discussed in the House of Commons, that the revenue of India in 1876-77 was 55,995,785l., in 1877-78 58,635,4721., and the revenue for 1878-79 was estimated at 63,195,000l. Although I do not desire to question the correctness of these figures as mere statements of account, yet I believe it can be easily proved that they are calculated to produce the most mischievous and misleading conclusions as to the true position of Indian finance. In the first place they would seem to show that the revenue of India, which is almost

See Speech of Mr. Stanhope in the House of Commons, August 13, 1878. Hansard, vol. ccxlii.

stationary, is rapidly increasing; and in the second place a most exaggerated opinion is likely to be formed of the resources of the Indian Government. If the items of revenue and expenditure for any year are examined, it will be at once seen that the large foregoing totals of revenue are arrived at by estimating gross instead of net revenue, and by including amongst the receipts many items which really do not represent revenue, but expenditure. Thus the following is an official statement of the ordinary revenue and expenditure for the year 1876-77, the last year for which the actual figures have been arrived at. I think, moreover, it is fairer to compare the revenue and expenditure of 1876-77, rather than that of 1877-78, because in 1877-78 the finances were seriously disturbed by the famine in Southern India, and the greater part of the cost of the famine fell upon that year. In the following table all the items of receipt and expenditure are included which are contained in the official return. I have, however, with a view of exhibiting the accounts in the simplest possible manner, arranged the items of receipt under three classes. In the first class, all those receipts are included which represent real revenue. The second class embraces those receipts which are exceeded in amount by the expenditure necessary to obtain them, and must therefore be regarded as items of expenditure rather than as sources of revenue. In the third class various items of expenditure are included against which, as a set-off, there are no corresponding receipts.. Ordinary Revenue and Expenditure, 1876-77.

6

2 See Finance and Revenue Accounts,' printed as a Parliamentary paper, No. 176, May 16, 1878.