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British merchants who carry on their great business in India make no similar complaint of the native merchants, whom they find upright and honest. Our officers do not know the natives as they used to do when our Government was less centralised, and they are every year becoming more strange to the people by the increase of indoor judicial duties and the frequent changes from one locality to another. . . .

APPENDIX Q

MR H. E. SULLIVAN, MEMBER OF THE FAMINE COMMISSION OF 1878, ON INDIAN LAND REVENUE

[Extract.]

1. In a speech delivered before the Legislative Council of India, in February 1860, the late Mr Wilson, when in his capacity of Finance Minister he introduced a bill for the levy of a licence duty and a tax on incomes, made the statement that the opium revenue of India could "in no sense be called a tax," and that the land revenue could "only be regarded as rent." As these views have been adopted in the Report, I propose briefly to record my reasons for considering that they are unsound.

2. In propounding the above theory Mr Wilson desired to show that the natives of India being but lightly taxed, were able to submit to a further contribution to the necessities of the State, and as it has been

suggested, at paragraph 180 of the first part of our Report, that additional cesses should be imposed on the agricultural classes of Bombay and Madras to meet the cost of protecting those provinces from the effects of drought, I presume that in adopting his ideas on the subject my colleagues have the same object in view. I wish I could see my way to arriving at the same conclusions, but as it is a fact that in most parts of India, and especially in the above-named provinces, the agricultural classes already contribute largely to the public revenues, a proposal to increase their burdens cannot be hastily accepted, and the mere assertion that the deductions which are now made from their profits are not of the nature of taxation will not put them in a position to bear additional imposts which, if no such deductions were made, might not press heavily on them. They know that year by year they have to pay a certain amount to the official tax-gatherer, and it is a matter of indifference to them by what name their contribution is known to economists. The distinction aimed at in the Report is far too subtle for the mind of the Indian taxpayer to appreciate, even if it had an accurate basis to rest on; and this, notwithstanding that the high authority of Mr Wilson can be cited in its favour, I am inclined to doubt.

3. I am at a loss to understand how the revenue derived by the Government of India from the opium monopoly can be said to be "in no proper sense raised by taxation." (See chap. i., section vii., of part ii., pages 89-93.) There is no question as to opium being a valuable product of the soil, which in spite of a very

heavy duty is in great and increasing demand; and it is equally certain that were the present restrictions on its manufacture and sale removed a considerable portion of the nine millions which now form a principal asset of the public revenue would go into the pockets of the agricultural and mercantile classes. By intercepting these profits it seems perfectly clear to me that a heavy tax is imposed by the State on this branch of agricultural and commercial industry, a tax far exceeding in amount the share of produce and profits which by prescription the ruling power in India is entitled to claim. When the matter was discussed at a meeting of the Commission it was alleged that the profits of the monopoly were derived from the foreign consumers, and to a large extent this is doubtless correct; but I contend that if the monopoly were abolished the growers could command their own terms with the merchants, and as the growth and manufacture of the commodity is confined to a comparatively limited tract of country, there would be keen competition amongst the latter to secure it in view of the enhanced profits to be obtained from the trade being thrown open. To maintain the proposition that the opium revenue is not in any way raised by taxation of the people of India it must be shown that the price paid by Government to the growers is as much as they would receive if there were no State monopoly, and that the merchants' profits suffer no diminution thereby; and until this is satisfactorily demonstrated the elimination of this item must, in my opinion, vitiate any calculation of the incident of taxation.

4. Still more earnestly do I protest against the process of reasoning by which it is sought to uphold the theory put forward by Mr Wilson that the land revenue of India is of the nature of rent, and is not raised by taxation. Rent is a payment made by the occupier of a property to the owner for the use of the same, and to establish the above position it must be shown that the ownership of the soil in India vests in the State. Mr Wilson did not venture on such a statement, possibly because a few weeks before he made his speech a bill had been introduced into the Legislative Council to amend an existing Act for the acquisition by Government of land for public purposes; but it is directly asserted in the Report. It is there stated that "the land revenue is therefore with more propriety regarded as a rent paid by a tenant, often a highly favoured tenant, to the paramount owner than as a tax paid by the owner to the State." This idea of the Government of India being a vast landed proprietor, and the occupiers of the soil its tenants, was repeatedly brought forward in the course of our discussions, and, although opposed by me to the best of my ability, has found expression here and elsewhere in the Report. I, therefore, now place on record my reasons for dissenting from a doctrine for which I believe there is no historical foundation, which the action of Government itself goes to disprove, and which, if accepted, might lead to most mischievous results.

5. In support of the theory of the proprietary right of the State in the soil it is stated in paragraph 2, page 90, that by "immemorial and unquestioned pre

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scription the Government is entitled to receive from the occupier of the land whatever portion it requires of the surplus profit left after defraying the expenses of cultivation." If for the sentence which I have italicised the words "a certain fixed portion" be substituted, the claim of the State would be correctly represented. That foreign conquerors did by force take such portion as they required may be conceded, but it is inaccurate to say that they were entitled to do so. The claim of the State is distinctly limited by Menu, the oldest authority on the subject. He He says, "" The revenue consists of a share of grain, and of all other agricultural produce. On grain, one-twelfth, one-eighth, onesixth, according to the soil and the labour necessary to cultivate it. This also may be raised in cases of emergency, even as far as one-fourth." Now here there is not a word which can be twisted to show that the State has any right of ownership in the soil; all that it is entitled to is a certain fixed share of the produce; and on this ancient right, and on this only, our system of land revenue settlement is based, as were those which we found in existence when the country came under our rule. Coming down from Menu to our own times, let us see if the British Government has ever asserted a general right of ownership in the land. When railways were first commenced in India one of the concessions made by the State was the provision, free of charge to the companies, of the requisite land. If, as represented in the Report, the Government was "the paramount owner," and the agricultural community merely its tenants, all that it had to do was

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