CHAPTER IX

TEA, SALT, AND OPIUM

JOHN BRIGHT’S report was submitted in 1848. Five years after, the East India Company’s Charter came up for renewal. And, as usual, a thorough inquiry into the Company’s administration was made by Select Committees of both Houses of Parliament in 1852 and 1853. We shall have to refer to this inquiry when dealing with the general administration of the Company; but some interesting facts about the production of tea, salt, and opium, elicited during this inquiry, should find a place in the present chapter.

TEA.

The most important evidence on the culture of tea was given by Dr. Royle of Saharanpur Botanical Gardens, whose evidence before the Cotton Committee has been referred to before. He had recommended the cultivation of tea to the Indian Government in 1827 and 1834; it was first undertaken by the Indian Government in 1835; and in 1842 the first tea was manufactured. At the time when the witness was examined (1853) the cultivation of the plant was going on to a considerable extent all through the North-West Himalayas, and also in Assam.

Not more than 10,000 lbs. had been grown in Kumaon in any year yet, but the cultivation was extending. The whole of the mountains from Sikkim, through Nepal and Kumaon up to the Kangra valley and even to Kashmir, was suited to the cultivation of tea. Dr. Jameson, who had been employed by the East India Company, had reported that “nowhere could the tea plant thrive with greater luxuriance than it was doing in the Kangra valley. Tea was not an article of general consumption by any part of the population of India.”[^1]

The Government of India had transferred all their interest in the growth of tea in Assam to a Company, and a Company was proposing to purchase from the Government the tea cultivation in Kumaon.[^2]

SALT.

Among the sources of the Company’s revenues in British India, their monopoly in salt and opium was not the least important. Salt was prepared in Bengal by the Company’s agents, and a duty of 5s. per Maund (82 lbs.) was added to the cost of production before the article was placed in the market. A duty of 4s. per Maund was raised on salt obtained from mines in the Punjab; while salt prepared in Native States had to pay a duty of 4s. or 5s. before it passed into British territory.

Madras salt was formed by solar evaporation on the margin of the sea, and was cheaper than Bengal salt; and the Company derived a considerable revenue by selling it at 2s. the Maund. In Bombay the Government permitted manufacturers to remove the salt from the pans on payment of a duty of 1s. 6d. the Maund. Salt imported into India from England or other countries paid a duty of 5s. or 6s. the Maund, so that the importers might not under-sell the duty-paying Indian salt.[^3]

The net revenue of the Company derived from salt manufacture rose from £800,000 in 1793 to nearly £1,300,000 in 1844. The total quantity of salt manufactured by the East India Company in these fifty-two years is estimated at a little over two hundred million Maunds; and the total revenue derived from the manufacture at sixty millions sterling.[^4]

From what has been stated before, it will appear that the East India Company endeavoured to hold the balance evenly between the salt manufactured by them in India, and the salt imported from Great Britain. The House of Commons had dictated this policy by a Resolution of their Select Committee in 1836; and it was the object of the Company to comply with this Resolution. But in working out the principle the Company went too far, and gave an undue advantage to the British manufacturer. For they included the expenses of securing and protecting revenues in the “cost price,” and thus added to the selling price of the Bengal salt. The British manufacturer obtained the full advantage of this blunder, and the sale of British salt went up by leaps and bounds. Two witnesses,[^5] both interested in the sale of British salt in India, supplied the Select Committee with figures which are given below.

The great increase in the import of British salt alarmed the Bengal Board of Revenue; and they submitted an able and lengthy letter[^6] pointing out the unfairness of enhancing the price of the Bengal salt by including in the “cost price” various charges which did not fall within the definition of cost.

Lord Dalhousie, then Governor-General of India, dealt with the important subject in an able Minute,[^7] from which we make the following extracts:—

“The representatives of the Board of Revenue, in my humble judgment, have established that, under the existing system, no injustice is done to the importer of salt, but that great and growing injustice is inflicted on the native producer of the article.”

“The direct effect of this has been to enable imported salt to compete with native manufactured salt so successfully that it is thrusting the latter out of the market, while, if the selling price of native salt were, what it would be in the hands of native traders, it might still hold its ground.”

“The Government, in my opinion, should be far less ashamed of confessing that it has committed a blunder than of showing reluctance to remedy an injustice lest it should at the same time be convicted of having previously blundered.”

“It may be too that the imported salt, with the many advantages which it is shown to enjoy in its import over other articles of commerce, may still drive the native salt out of the market, even at its readjusted price. If this should prove to be the case, the Government will have to consider the question under that new aspect. Its present duty is obvious.”

“So great a change, however, cannot with propriety be carried into effect until a reference shall have been made to the Honourable Court of Directors. Let this be done by next mail, and as the case is urgent, an early reply should be requested.”

A reference[^8] was accordingly made to the Court of Directors, explaining the injustice done to the Indian salt, and demanding sanction for redress.

While the authorities in India were thus endeavouring to readjust the “cost price” of Indian salt so as to give it a fair chance of competing with imported salt, the importers of British salt were not idle. British manufacturers, professing a desire to supply the people of India with their superior article, petitioned the House of Commons for a total abolition of the duty on imported salt. And they hoped that, if that measure were adopted, the impure Indian salt would be driven out of the market, and the population of India would be consumers of British salt.

The merchants, manufacturers, tradesmen, and others of the city of Manchester held that “a constant supply of salt, of good quality and at a reasonable price, is of the utmost importance to the extensive population of India.” The duty of £7 per ton imposed in India on imported salt was not less than 2000 per cent. upon the value of the article, and was “highly oppressive towards the native population of India.” It was therefore prayed that British salt might be imported to India either free, or on payment of a nominal duty.

The inhabitants of Northwich, in the county of Chester, stated that 600,000 tons of salt were annually made in the salt districts of Cheshire, and gave employment to 5000 Englishmen. That if British salt could be sent to India on the same duty as other produce, a quantity for the consumption of India could be sent from Cheshire “pure in quality, certain and sufficient in supply, and low in price.”

The inhabitants of the borough of Droitwich complained that the manufacture of salt by the East India Company in India was a “manifest violation or evasion of Act 3 & 4 William IV., cap. 85, by which the Company were required to close their commercial business”; that the duty of £7 per ton of salt imported into India limited the import to 50,000 tons per annum, while the consumption in India ought to be over 800,000 tons; and that it was the duty of the East India Company to collect their revenues in India “without excluding the British merchant from the benefit of a market to which he has natural and paramount claims to be admitted.”

The mayor, alderman, and burgesses of Wych, otherwise Droitwich, in the county of Worcester, also complained that the East India Company by their enormous duty of £7 per ton “excluded British salt from the Indian market.”

The Chamber of Commerce of the city of Gloucester also pointed out that the manufacture of salt by the East India Company was a “manifest violation and evasion of Act 3 & 4 William IV., c. 85,” and protested against the exclusion of the British merchant “from the benefit of a market to which he has natural and paramount claims to be admitted.”

The merchants, manufacturers, and tradesmen of St. Helens held that a plentiful supply of good salt at low price was “of the utmost importance to the well-being of the people of India,” that Indian salt was of inferior quality and costly, and that “if the salt manufactured in England could be imported into India free of duty, or upon the same terms as other commodities at an ad valorem duty, and free from all excise imposts when imported, a sufficient supply to meet the wants of that country would be easily sent.”

The inhabitants of Winsford, in the county of Chester, submitted a petition word for word the same as the petition from Northwich referred to above.

The Chamber of Commerce of Worcester complained that the manufacture of salt from the inexhaustible springs of Worcestershire was materially circumscribed from the ports of British India being virtually closed against British salt. “An enlightened and humane policy would provide for and encourage unfettered importation on payment of a reasonable duty for revenue only; whereas the restrictions imposed by the Indian Government are made to protect a monopoly of its own of inferior salt, carried on, as your petitioners are advised, in direct violation of Act 3 & 4 William IV., c. 85.”

The Chamber of Commerce of Bristol submitted a vigorous and well-argued petition on the hardship caused by the salt tax in India. “The price to the consumer here [in England] is but about 30s. per ton instead of £21 per ton as in India; and if it were necessary to abolish the salt tax at home some years since, it appears to your petitioners that the millions of her Majesty’s subjects of India have a much stronger claim for its remission in their case, wretchedly poor as they are, and essentially necessary as salt is to their daily sustenance, and to the prevention of disease in such a climate.”

The merchants, shipowners, and tradesmen of Liverpool held it to be “the sacred and solemn duty of the Government to afford to the people of that country [India] the same fostering care as is and ought to be afforded to the people of this country.” And they were of opinion that “the abolition of the duty on salt in British India would be not only a great boon to the people of that country, to which justice and humanity entitle them, but would also tend greatly to improve and strengthen the mercantile interests of this country generally by increasing particularly the demand for cotton and other goods of English manufacture.”[^9]

It is clear from the extracts given above, that the merchants and salt manufacturers of England joined an organised movement on this occasion primarily and mainly in their own interests. But it is nevertheless true that they honestly believed their interests in this instance to be the same as those of the tax-payers of India. It would have been a happy event for India if this prayer had been heard, and the duties imposed, both on manufactured salt and imported salt, had been withdrawn. The result would probably have been different from what the manufacturers of England expected.

The Select Committee of the House of Commons had abundant evidence before it to show how the salt tax operated in India. In a petition submitted by the Madras Native Association, and signed by T. Ramaswami and others, the petitioners described the state of things in Madras:—

“That in the year 1806 the Government established an agency for the control and management of the salt department, the first consequence of which was the doubling of the price of the article, which was then fixed at 70 rupees (£7) the garce, when the average consumption for the space of three years amounted to 31,685 garces, at the end of which time, in the year 1809, the price was again raised from 70 to 105 rupees (£10, 10s.) the garce, being three times as much as it had been prior to the Government monopoly. But as the enhanced price naturally decreased the consumption, the price, in 1820, was again fixed at 70 rupees (£7); but after a course of eight years the price was again fixed at 105 rupees (£10, 10s.), which was still further raised to 180 rupees (£18) in 1844; but in the same year it was reduced 120 rupees (£12), at which price it has ever since continued. But this being the wholesale price, it is of course sold to the retail dealer at an advance, who necessarily adds his profit, to be paid by the consumer.”

“And the consequence is that either the people go without salt altogether or substitute an unwholesome article, obtained from common earth impregnated with saline particles, which they manufacture at the risk of punishment; the procurement of salt other than that of the monopoly being prohibited under the penalty of fine and corporal punishment, inflicted at the discretion of the Collector or his Tahsildar.”[^10]

Similarly, in a petition submitted by the British Indian Association of Calcutta, and signed by Raja Radha Kant Deb Bahadur and others, the harshness of the salt operations was fully exposed:—

“The selling price of salt is arbitrarily fixed by the Government, and is at all times so high that, though the country has abundant resources for the manufacture of the article, English merchants can afford to import it. The dearness of the article induces even those who live near the salt manufactures to use earth scraped from the salt lands; while those who reside in the interior have recourse to the alkali found in the ashes of burnt vegetables. The officers employed in the salt department are vested with judicial powers contrary to all principles of justice and policy, and necessarily employ them very irregularly and vexatiously. The subordinate officers are furnished with opportunities, on pretence of preventing smuggling, of harassing the carriers of salt and the refiners of salt-petre. Your petitioners are of opinion that, among other reforms required in this department, it is desirable that the Government, if they cannot immediately afford to forego so odious a source of revenue, should fix an unvarying rate of impost on the manufacture of salt, say 200 rupees [£20] on every 100 maunds [8200 lbs.], whereby not only the poor will be greatly benefited, but the laws will be rid of the anomaly of judicial excisemen, and the traders of the harassment caused by the subordinate officers of salt Chowkis. But as salt is the necessary of life, the duty on salt should be entirely taken off as soon as possible.”[^11]

Cultivators from Bombay submitted their petition to the Bombay Government against the oppressive salt tax on November 26, 1852; and Rustomjee Viccajee, who was examined by the Select Committee of the House of Commons in the following year, quoted from this petition. The petitioners urged that the produce of their fields supplied them with food enough for eight months in the year; that during the remaining four months they subsisted on vegetables, “which they season with chillies, and salt when the latter was free from duty; but when it was made subject to duty, they were obliged to forego even this poor comfort.”[^12]

The evidence, given by many distinguished and experienced officials, was not less strong than the evidence which came from the inhabitants of Bengal, Madras, and Bombay.

Robert Bird, who had served for thirty years in India as a Judicial and Revenue Officer, and was the author of the great Land Settlement of Northern India, was asked if the Salt Tax was as oppressive as it was represented to be.

“I do not know,” he replied, “how oppressive it is represented to be, but that it is a very severe duty there is no doubt whatever. It is a duty of very nearly 300 per cent., or perhaps 250 per cent., upon the cost of production of the article, but it is only levied on the frontier. When Lord Auckland came up to the Western Provinces, as he was in the habit of doing, to discuss with me all the operations I was engaged in, he spoke to me about this, and said that great complaints were made about the hardships inflicted upon the people as regarded the salt duty, especially the ill-effect produced and the disrepute brought upon the Government by the palanquins of females, in which females are carried across the frontier, being searched for salt. . . . I could only say, that if they were not to be searched, we should have more Lot’s wives brought into the Western Provinces than you ever saw in any country; that every woman’s palanquin would be filled with salt from top to the bottom.”[^13]

Frederick Halliday, who was then Secretary to the Government of India in the Home Department, and shortly after was appointed the first Lieutenant-Governor of Bengal, spoke of the corruptions and extortions inevitable in such a system as that of the Company’s salt monopoly in India. He was of opinion that if that monopoly was withdrawn, and the people of India were allowed to manufacture their own salt, imported salt would have no chance in India.

“The present price of the Government manufactured salt in Bengal is very much raised to the consumer in the market by the necessary want of economy, not to say extravagances, connected with the Government system of manufacture, and by those many peculations, and extortions, and corruptions, which are inevitable in such a system, and carried on with such instruments. It has seemed almost certain under those circumstances to persons informed upon the subject, that if the Government were to withdraw, and if there were no duty imposed, and the whole were left perfectly free, the native manufacturers in Bengal would forthwith completely and entirely undersell the imported salt, and there would not be a grain of salt imported into Bengal.”[^14]

It is needless to add that all memorials and agitation against the Salt Tax failed. The salt revenue was not given up.

OPIUM.

The only other article in which the Company retained a monopoly was opium. And the method of raising a revenue from the article was clearly explained before the Select Committee by F. W. Prideaux, who was employed at the India House as Assistant-Examiner of India Correspondence.[^15]

In Bengal the cultivation of poppy was altogether prohibited except for the purpose of selling the juice to the Government. Cultivators, wishing to cultivate the plant, were permitted to do so only on condition of their delivering the juice to the Government at a fixed price. The juice was then sent to the two principal factories, one at Patna and one at Benares, where it was manufactured into opium and then sent down to Calcutta. It was there sold by auction, and the Government revenue consisted in the difference between the price it had cost the Government, and the price which was realised for it from the merchants who exported it to China.

In Bombay no poppy was cultivated and no opium was manufactured; the Company’s opium revenue was derived from the opium grown and manufactured in the Native State of Malwa. Merchants of that State sent the opium to the British port of Bombay for export to China; and the British Government realised a duty of £40 on each chest (123 lbs.) of opium on its passage through British territory. Previous to 1843, the Malwa opium used to pass out of India by way of Sindh; but after the British conquest of Sindh in that year, there was no exit for that opium except through British territory, and on payment of the duty on the transit which formed the opium revenue of Bombay. The conquest of Sindh had thus a pecuniary value in increasing the opium revenue of Bombay.

In Madras no opium was produced.

There has been much controversy in England as to whether the Opium Revenue can really be called a tax on the people of India, whether the wars undertaken in China for maintaining the revenue were justifiable, and whether the opium monopoly should still be retained by the Indian Government at the present time. The object of the present work is to place facts before our readers to enable them to form their own judgments, and we have no desire to enter into these controversies. No sound economist will, we think, deny that a Government monopoly, which excludes the people from a profitable industry, and stops cultivation, manufacture and trade in a paying article, is a tax on the people, in the truest sense of the word. No impartial historian has defended Lord Palmerston’s wars in China in order to force the Chinese to admit Indian opium into their ports against the wishes of their Government. And no sober statesman desires to keep up the Government monopoly in this article, if it can be safely dispensed with.

At the same time, as opium is not a general article of food, the people of India do not consider the Government monopoly in the article to be nearly as hurtful to the people as the salt monopoly. There is no strong feeling in India against the first as there is against the second. Still they believe the Government would do well to abolish the monopoly as a monopoly, and derive a legitimate income by imposing heavy duties on the manufacture and sale of the article, as duties are imposed on the sale of all intoxicating drugs and liquors. The British Indian Association fairly represented the opinion of the people of India in their Petition to the House of Commons.[^16]

“Justice requires that the interference of the Government with the cultivation should cease, and that revenue derived from the drug should be in the shape of fixed duties on manufacture and exportation, but principally on the latter, as is in some measure the case with regard to Malwa opium. By the adoption of this principle, the cultivators will possess that freedom of action which all men possess under Governments which are not constituted on arbitrary and despotic principles; and whatever is lost by such an arrangement will be more than made up by the saving that will ensue from the abolition of the expensive establishments which are now necessary.”

The appeal, however, was in vain. Neither the East India Company, nor the Government of the Crown which succeeded in 1858, was willing to surrender the monopoly, or exchange it for a tax on the production and exportation of opium.