far the most objectionable feature in our existing policy. Taxes spent in the country from which they are raised are totally different in their effects from taxes raised in one country and spent in another. In the former case the taxes collected from the population at large are paid away to the portion of the population engaged in the service of Government, through whose expenditure they are again returned to the industrial classes. They occasion a different distribution, but no loss of national income."

"But the case is wholly different when the taxes are not spent in the country from which they are raised. In this case they constitute no mere transfer of a portion of the national income from one set of citizens to another, but an absolute loss and extinction of the whole amount withdrawn from the taxed country. As regards its effects on national production, the whole amount might as well be thrown into the sea as transferred to another country."

"The Indian tribute, whether weighed in the scales of justice or viewed in the light of our true interest, will be found to be at variance with humanity, with common sense, and with the received maxims of economical science. It would be true wisdom, then, to provide for the future payment of such of the Home Charges of the Indian Government, as really form the tribute, out of the Imperial Exchequer. These charges would probably be found to be the dividends on East India stock, interest on Home Debt, the salaries of officers and establishments and cost of buildings connected with the Home Department of the Indian Government, furlough and retired pay to members of the Indian Military and Civil Services when at home, charges of all descriptions paid in this country connected with British troops serving in India, and a portion of the cost of transporting British troops to and from India."

In another work,2 tracing the rise and consolidation 1 Our Financial Relations with India, by Major Wingate. London, 1859. 2 Economic History of British India (1757 to 1837), pp. 46, 69, 113. 291, and 408.

of the British Empire in India down to the accession of Queen Victoria, we have seen that the total revenues of India, from the commencement of the British rule down to 1837, exceeded the total expenditure incurred in India, in spite of the high pay of British officials and the wasteful expenditure of Indian wars. The figures which we have given in the present chapter show a similar excess of the income over the expenditure incurred in India during the first twenty-one years of the Queen's reign from 1837 to 1858. Therefore, if India had been relieved of Home Charges from the commencement of British rule, India would have had no Public Debt when she was transferred from the Company to the Crown in 1858, but a large balance in her favour. The whole of the Public Debt of India, built up in a century of the Company's rule, was created by debiting India with the expenses incurred in England, which in fairness and equity was not due from India. If the financial relations between India and Great Britain during the century had been referred to an impartial judicial tribunal, there can be little doubt what the verdict of that tribunal would have been. Great Britain had gained far more from India than was represented by the Home Charges; Great Britain should in equity and fairness have borne those charges; and India morally and justly had no Public Debt in 1858, but, on the contrary, could claim credit for excess payments made.

In

In justice, however, to the East India Company, it should be stated that the Home Charges under their administration was comparatively small, and was a little over one-tenth of the annual revenues of India. the twenty years preceding the Mutiny the revenues rose from twenty millions to thirty-one millions, and the Home Charges rose from two and a half millions to three and a half millions. One of the saddest results of the administration of India under the Crown is that the Home Charges have been permitted to increase by leaps and

bounds, not only absolutely, but relatively to the revenues, the Crown Government being irresponsible. The result justifies the opinion of John Stuart Mill, quoted in the last chapter, that the administration of India through a Secretary of State and his Council "would be the most complete despotism that could possibly exist' under British rule.

The total Indian Debt, bearing interest, was little over 7 millions in 1792, and had risen to 10 millions in 1799. Then followed Lord Wellesley's wars, and the Indian Debt rose to 21 millions in 1805, and stood at 27 millions in 1807. It remained almost stationary at this figure for many years, but had risen to 30 millions in 1829, the year after Lord William Bentinck's arrival in India. That able and careful administrator was the only Governor-General under the East India Company who made a substantial reduction in the Public Debt of India, and on the 30th April 1836 the Indian Debt was £26,947,434.1

The following table shows the Public Debt of India for twenty-one years, from the year of Queen Victoria's accession to the abolition of the East India Company. The figures have been compiled from official records.2

The increase of 2 millions in the total Debt in 1839-40, shown in the table, was not a real one;

This was the "Registered Debt." Besides this, there were Treasury Notes and Deposits, making the total "Indian Debt," £29,832,299. Add to this the Home Bond Debt," and the total Debt of India on April 30, 1836, was £33,355.536.

2 The Commons' Committee's Report of 1852, Appendix 2, gives figures for seventeen years, from 1833-34 to 1849-50. The Statistical Abstract gives figures for twenty-six years, 1839-40 to 1864-65. For ten years, therefore, 1839-40 to 1849-50, we have figures in both the records, but the figures do not agree. The total debt for 1839-40, for instance, according to the Commons' Report, was £32,438,078, while according to the Statistical Abstract it was £34,484,997. Some portion of the total debt must have been left out in the table given in the Commons' Report, Appendix 2. I have taken my figures for two years only from the Commons' Report, i.e. for 1837-38 and 1838-39, as the Statistical Abstract gives no figures for those years. For the remaining nineteen years, 1839-40 to 1857-58, I have taken my figures from the Statistical Abstract, as being the more correct record of the total debt of India.

the apparent rise is simply due to two different systems of keeping the accounts followed in the two records from which the figures have been taken, as has been explained in the footnote. But from 1840-41 Lord Auckland's unfortunate Afghan War began to tell on the finances of India, and the total Debt of India rose from 34 millions to 43 millions by 1844-45. The East India Company were not alone in protesting against the expenses of the Afghan War being thrown on the finances of India; there were many members of the House of Commons who agreed with John Bright when he said: "Last year I referred to the enormous expense of the Afghan War-about 15 millions sterling-the whole of which ought to have been thrown on the taxa⚫tion of the people of England, because it was a war commanded by the English Cabinet, for objects supposed to be English." 1

The annexation of Sindh by Lord Ellenborough, and 1 John Bright's speech made on August 1, 1859.

the Sikh Wars of Lord Hardinge and Lord Dalhousie brought fresh liabilities, and the total Debt of India rose to 55 millions by 1850-51. There was a fluctuation after this, and endeavours were made to reduce the Debt, but it rose in the last year of Lord Dalhousie's administration to 59 millions. The Mutiny which occurred in 1857 raised the Debt in one year by 10 millions, so` that on April 30, 1858, the total Debt of India stood at 69 millions sterling.

If ever there was a case of justifiable rebellion in the world, says an impartial historian,' it was the rebellion of Hindu and Mussulman soldiers in India against the abomination of cartridges greased with the fat of the cow and the pig. The blunder was made by British Administrators, but India paid the cost. Before this, the Indian Army had been employed in China and in Afghanistan ; and the East India Company had received no payments for the service of Indian troops outside the frontiers of their dominions. But when British troops were sent to India to suppress the Mutiny, England exacted the cost with almost unexampled rigour.

"The entire cost of the Colonial Office, or, in other words, of the Home Government of all British colonies and dependencies except India, as well as of their military and naval expense, is defrayed from the revenues of the United Kingdom; and it seems to be a natural inference that similar charges should be borne by this country in the case of India. But what is the fact? Not a shilling from the revenues of Britain has ever been expended on the military defence of our Indian Empire."

"How strange that a nation, ordinarily liberal to extravagance in aiding colonial dependencies and foreign states with money in their time of need, should, with un- * wonted and incomprehensible penuriousness, refuse to help its own great Indian Empire in its extremity of financial distress."

1 Lecky's Map of Life.

1