Book III, Chapter 11: Royal Commission on Expenditure

CHAPTER XI

ROYAL COMMISSION ON EXPENDITURE

THERE was a growing feeling of uneasiness at the continuous increase of the Indian Debt and the Indian expenditure. There was a complaint that the apportionment of charge between Great Britain and India was neither just nor expedient.

Able and cautious financiers had reduced the Public Debt of Great Britain by over a hundred and fifty millions after the Crimean War, but there was no decrease in the Indian Debt. On the contrary, the cost of the Abyssinian and other wars had been unjustly charged to India, and a needless Afghan war had swelled the Indian Debt. Mr. Gladstone had marked the growing evil with pain and solicitude; he had appointed a Select Committee on Indian Finance to remedy it; but the Finance Committee discontinued its work after 1874 and achieved no results. Mr. Gladstone had also relieved the Indian Exchequer of five millions sterling, which was paid out of the Imperial Exchequer as a portion of the cost of the Afghan War of 1878. But the balance, about eighteen millions sterling, fell on India. During the long administration of Lord Salisbury, from 1886 to 1892, Indian finance went from bad to worse; Indian expenditure increased under the rule of Lords Dufferin and Lansdowne. When Mr. Gladstone formed his fourth and last administration in 1892, the people of India looked for some redress.

For the first time in the history of the British Parliament, an Indian was elected as a Member. Born in 1825, Mr. Dadabhai Naoroji had from his early youth devoted himself to social and political reforms in his own country. In 1854 he was Professor of Mathematics and Natural Philosophy at Elphinstone College, Bombay; in 1855 he visited England, and was appointed Professor of the Gujrati language at University College, London. He gave his evidence before the Finance Committee of 1873, as we have stated before. In the following year he was appointed Prime Minister of Baroda State, when Lord Northbrook seated a young prince on the throne of the deposed Gaekwar. Returning to England after a few years, he once more devoted himself to an untiring advocacy of the cause of his country. And in 1892, at the ripe age of 66, he was elected Member for Central Finsbury, and entered the House of Commons.

With a zeal and capacity for work undimmed by age, with a sincerity of patriotism which called forth the admiration even of his opponents who disagreed with his opinions and resented his vehemence, Mr. Naoroji continued his labours in the House of Commons for three years. If anything could add to the fame and influence of such a patriot, it was the absolute sincerity of his convictions, the unsullied purity of his motives, the childlike simplicity of his character, the beauty and charm of his private life. Like the great Gladstone, Mr. Dadabhai Naoroji riveted his hold on the hearts of his countrymen as much by his life-long political work as by his high and spotless private character. And men of all classes and persuasions in India were as proud of their Grand Old Man.

For three years Mr. Naoroji pressed for financial justice to India in the House of Commons, and his endeavours bore fruit. A Royal Commission was appointed in May 1895, “to inquire into the administration and management of the Military and Civil Expenditure incurred under the authority of the Secretary of State for India in Council, or of the Governor of India, and the apportionment of charge between the Governments of the United Kingdom and of India for purposes in which both are interested.” Lord Welby was the President of the Commission, and Leonard Courtney, George Nathaniel Curzon, Sir William Wedderburn, Sir Donald Stewart, Thomas R. Buchanan, William S. Caine and Dadabhai Naoroji, were among the Commissioners. Mr. Curzon resigned his seat on the Commission in the following year on being appointed Under Secretary of State for Foreign Affairs.

The Commission began their work well, and recorded a mass of valuable evidence given by such witnesses as Sir Charles Bernard, Sir David Barbour, Sir Auckland Colvin, Lord Cromer, Lord Wolseley, Lord Northbrook, Lord Roberts, Lord Lansdowne, Lord Ripon, and a number of other distinguished witnesses. All this evidence was recorded within two years, from November 1895 to July 1897. And the Commission then went to sleep for three years!

When the final report was at last submitted in 1900, there was a feeling of disappointment in England and in India. Sir Henry Fowler himself gave expression to this sense of disappointment in the House of Commons. The Commission had elicited much valuable evidence; but the majority of them hesitated to come to the obvious conclusion. They would not radically disturb the existing financial relations between Great Britain and India. They would not withdraw from the Indian tax-payer charges for which India alone was not justly liable. In the closing year of the century, a year in which India was suffering from the severest famine known in the history of modern times, her starving population failed to obtain that financial justice which they had expected from the British Parliament and from a British Royal Commission.

The majority of the Commissioners submitted a Report which, with reservations, covers 150 folio printed pages. A few of the recommendations made on the apportionment of charge deserve mention.

Civil Charges.—The majority of the Commissioners recommended that the United Kingdom should contribute £50,000 towards the expenses of the India Office, and should pay half the charges incurred at Aden and in Persia.

Employment of Indian Troops out of India.—They held that India had a direct and substantial interest in keeping open the Suez Canal, in questions affecting Siam, Persia, and the Arabian coast, and in questions affecting Afghanistan and Central Asia. That India had sole interest in punitive expeditions on her borders. That India might have a modified interest in questions affecting the East Coast of Africa as far as Zanzibar. That subject to these principles questions of apportionment of charge between India and Great Britain might be referred to a tribunal for mediation.

Naval Charges.—They found that India maintained a local marine, was responsible for the defence of her coasts, and contributed £100,000 for general naval defence undertaken by the Admiralty. They held that the contribution was not excessive.

Army Charges.—They held that the Capitation Charge of £7, 10s. on every British soldier sent out to India should be continued. But they recommended that half the cost of the transport of troops to and from India should be paid by Great Britain. On the point urged that the Indian Army was maintained largely for the Imperial purposes of Great Britain, they stated: “When the time for revising the present arrangement arrives, the exceptional position of India as to military charges should be borne in mind. If, on the one hand, she imposes a certain strain on the Imperial resources in the supply of services which she properly pays, on the other she renders services to the Imperial Government which should not be disregarded.”

The only relief to India, therefore, which the Commission recommended out of the Imperial Exchequer was:—

A minority of the Commissioners consisting of Sir William Wedderburn, Mr. Caine, and Mr. Naoroji submitted a separate report, covering forty printed pages, and pointing out more thoroughly the financial injustice done to India, and the redress which was needed.

The Government of Lord Salisbury acted on the report of the majority with some modifications. To contribute £50,000 from the Imperial Exchequer towards the cost of the India Office would be to enable Members of Parliament to bring on a debate on India by moving a reduction of this supply. The India Office does not appreciate such debates on Indian administration, and the proposed contribution was not made on account of the India Office.

On the other hand, the really larger questions of reduction of the Indian Debt, reduction of the Home Charges and of taxation, and reduction of the military expenditure remained untouched. The duty of relieving the Indian tax-payer of the burden of a heavy and excessive taxation remained unfulfilled. The problem of bringing to the lives of the two hundred millions of British subjects in India something of that comfort and prosperity, which are the heritage of British subjects elsewhere in the world, remained unsolved.

We conclude this chapter with a few extracts from the very valuable evidence recorded by the Commission. The evidence with appendices fills nearly 1500 folio pages, in double columns and small print. Our extracts, therefore, do not pretend to be a summary of this enormous quantity of evidence, but will only convey to readers the opinions of some notable witnesses on some important points of administration.

LORD CROMER ON A COURT OF ARBITRATION.

13,642. That is what we should like to hear?

My view of the question of the Home Charges is this: I believe there is a very general wish in this country, in Parliament, and amongst Ministers of whatsoever party, to deal not only justly, but even generously, with India; but I think it would be an extremely good thing if you could arrange in some way a Court of Arbitration to deal with these matters. It is not only that the Settlement should be just, it is of the highest importance that everybody in India should think it is just, not only Natives, but the European public, who have also to be considered, and the Government of India themselves. Under the present system, although I am not alluding to any special point, or saying that the distribution has been unjust, there is no means of making the people in India think it is just. It is supposed to be arranged between the various departments and the India Office, and the general impression, rightly or wrongly, is that the English view is advocated with greater strength, and more successfully, than the Indian view. Whether that be right or wrong, the mere fact that such an opinion exists is an evil, and therefore I should be very glad if something could be done to have some Court of Arbitration to settle these matters. That is all the more desirable, because a great many of these matters must be rather the subject of equitable compromise than anything else. Take the case of Aden, to which somebody alluded in the course of these discussions; it is perfectly impossible for anybody to make any precise calculation as to what contribution India should pay for Aden. India is very much interested in Aden, and so are Ceylon, Hong Kong, and the Straits Settlements, and English commerce generally. It is a matter of judgment how much India should pay; and it would satisfy Indian opinion, and do a great deal of good in that way, if there were some Court of Arbitration instituted to settle these matters.

13,650. Would you give power to either party to refer any question on which there was an apportionment of charge to the Board of Arbitration ?

I think I should. I should make them the Court of Appeal; in fact I almost think they ought to be constituted by Act of Parliament with the necessary powers laid down specifically.

13,651. Something like the Judicial Committee of the Privy Council ?

Very much of that nature, yes.

13,652. And when a question arose between Home Departments and the Indian Government as to the apportionment of any charge, would you give the power to either party to refer it to the Board of Arbitration, or would it necessarily go there ?

No; I think I would give either of them the power of referring; of course, restricting myself to financial questions—nothing else but pure finance.

13,653. And in regard to these charges which have permanently to be apportioned between England and India, the military charges, and the capitation grant, would you say that they, at intervals of five or ten years, should be referred to this Board of Arbitration ?

I think so. My inclination certainly would be to give the utmost possible guarantee to the Indian taxpayers and Indian public that all these questions are decided by some body of men who are quite independent, and who are not in any way biassed against them.

LORD NORTHBROOK ON WARS OUTSIDE INDIA.

14,108. Have you paid any attention to the arrangements made for the payment of troops lent by India for service out of that country ?

Yes, I have had occasion to give considerable attention to this matter.

14,109. Do you think that fair treatment has been given to India in the apportionment of those charges ?

I think that India has been hardly treated.

14,110. Could you go through the various cases and give us your reasons ?

The cases will be found in Sir Henry Waterfield’s Memorandum in the appendix, page 364. I think I might take them in the order in which he gives them there.

14,111-2. I suppose you are going to take them from paragraph 16, are you ?

Paragraph 19.

14,113-4. Quite so, I see 19 ?

Well, I will not go back to anything before the Abyssinian Expedition. I think that in the case of the Abyssinian War it was not right to charge India with the ordinary expenditure of the expedition.

14,119. Do you remember the ground upon which the Government decided at the time that India had an interest in Abyssinia ?

No, I should like to see that. I never heard of it. I believe a protest was made at the time.

14,120. I am speaking from memory now. Was it not put forward that the Government of India was concerned in this question, because Abyssinia, being within the purview of India, you may say the prestige of the English name must not be endangered by allowing any English official subjects to be taken prisoners ?

The idea may have been put forward. I do not think any impartial person would have paid the slightest attention to it.

14,121. I think I remember a French critic arguing at the time that the war was for the purpose of discovering a sanatorium for English troops ?

That would be a better reason than the reason adduced as regards prestige, in my opinion. Then I come to the next case, the Perak Expedition. It was a very small one, but in this Perak case I cannot conceive any one doubting that India has been hardly treated. Here was an expedition beyond the frontier of India, and for which, in order that any portion of the Indian revenue should be applied, it is by statute necessary that there should be an address to the Crown from both Houses of Parliament. I happened to be Governor-General at the time, and I protested against this charge being put upon India. Not only was no notice taken of the protest made by the Government of India, but not even were the statutory addresses from both Houses moved so that the law was broken, and the charge so made upon India was never repaid. It has remained charged upon India from that time to this, contrary to the law, and contrary to the protest of the Government of India. That is the case of Perak; that is the second one I have got to deal with, and I think this case is perfectly clear. I do not think that any answer can be given to it. In regard to the expedition sent to Malta, the whole of the expenses, both ordinary and extraordinary, were very properly paid by the Government of England.

14,124. Have you mentioned the Egyptian operation of 1882?

I am coming to that now, that is the next case, the Egyptian Campaign of 1882. This was a case with which I individually had a good deal to do. Therefore I should not like to give any very strong opinion against the arrangement that was made. There was no doubt that, as regards keeping the Suez Canal open, India had a substantial interest. It had an interest. The question was what interest, how much the interest was. In the first instance it was intended that India should pay the whole cost of the expedition that was sent. That was when it was supposed that some very small force would have been sufficient. That was the reason why the Government at that time thought India should pay the whole. The English Government were put to very considerable cost, and we thought that India would be put to a small cost, and we thought she might very fairly pay the small cost of the troops sent to Suez. However, the operations became very extended, and it ended in the expedition from India becoming a large expedition. The whole cost was, I think, £1,700,000, and the ultimate arrangement made between the two Governments, the Government of India and the Government of England, was that India paid £1,200,000, and England paid £500,000. That was the arrangement that was made, and it was accepted by the Government of India, but it certainly was accepted unwillingly. The Government of India thought it had been very hardly treated in the matter, and I think that, looking at it now, I must say that it would have been perhaps better if we had charged India half, that India should have paid £850,000 and England should have paid £850,000. I do not want to press that, because I myself was in the Government at the time, therefore I cannot say that I considered it at the time to be an unfair arrangement.

14,127. [Soudan War.] Would you consider that if the original plan had been carried out, India was sufficiently interested in the expedition to justify her being called upon to contribute?

If you ask me my opinion, I should say, “No, certainly not.” I do not think there was a substantial interest of India in any expedition to the Soudan, but my argument rests upon this, that when by a statute the revenues of the Government of India are not to be used excepting after addresses from both Houses of Parliament, it is essential that the terms of that statute should be strictly adhered to, and, in my opinion, the continued employment of the Indian troops at Suakim as a garrison was not covered by the address. It alone could authorise the expenditure of the money, that is my point. As regards the force sent to Suakim last year, I say that certainly India should not have been charged.

14,165. Now you have gone through and brought before us the ground for the differences of opinion between the two Governments ?

I should like to be allowed to sum it up before you go to the next question.

14,166. Yes, if you please.

To sum up what I have put before the Commission with respect to these cases of troops lent by India, I think certainly that, if the ordinary charges of that Abyssinian War were £600,000, that is a sum of money which India has a fair and equitable ground to claim. The whole of the Perak ordinary charges ought certainly, I think, to be paid. I will take the Suakim charges to be about £200,000, I do not know exactly what they were, but whatever the charges for Suakim were, I think the whole of the garrison charges at Suakim ought to be refunded to India. My opinion is that, on equitable grounds, £350,000 ought to be given to India in respect of the Egyptian Expedition of 1882, so that the charges should be divided between the two Governments, and I think that those sums ought, either directly, or in some other equitable manner, to be allowed to India now. I do not see any reason why it should be considered that because India has been inequitably treated, and in some cases, in my opinion, illegally treated, during many years, that that treatment should not be redressed by some action at the present time. That concludes all I have to say upon that matter.

LORD LANSDOWNE ON THE INDIAN ARMY.

15,996. Have you considered, Lord Lansdowne, from the point of view of India itself, whether, supposing she were isolated from the United Kingdom, it would be necessary to maintain a force such as is borrowed from the United Kingdom, and in the same degree of efficiency?

I should say certainly not. The Indian Army is organised with a view to the possibility of its employment upon operations which have nothing to do with the internal policy of the country or with the mere repression of tribal disorders upon the frontier.

15,997. Then would it be a fair suggestion that the difference in the cost of training that force so borrowed, between what would be necessary for Indian purposes and the standard which is kept up for Imperial and home purposes, should be borne by the home exchequer?

It is very difficult to express these things precisely in terms of money; but your question seems to me to point to the principle which I was endeavouring in my answers to the Chairman to enforce.

15,998. That we, for home purposes, for Imperial purposes, are keeping the army at a higher standard of efficiency than India, taken by itself, would require, and that we should make that consideration an element in arriving at the settlement of charge between the two countries?

Certainly an element.

15,999. That cannot be put into figures, but still it is an important element in the spirit in which we should approach this settlement?

That is my view.

SIR HENRY BRACKENBURY ON THE INDIAN ARMY.

14,782. It is not the amount that either the War Office or anybody else is proposing to charge India?

I perfectly understand that; but, as I understand it, the basis of these charges generally is, that India should repay to England what it can be proved that England would not pay but for the military requirements of India, subject to what, I think, is called some sort of rebate. Well, my personal opinion is, that it is altogether wrong that there should be any such theory as that at all, and if I might be allowed to give my reasons for that opinion, in the first place, I would say that the army in India is largely in excess of the requirements for the preservation of internal order in India. The strength of the army in India is calculated to allow of a powerful field army being placed on or beyond the Indian frontier, in addition to the obligatory garrisons required for keeping order in India. The necessity for maintaining in India that powerful field army, in addition to the obligatory garrisons, is caused by the approach of a great Military Power into a position which enables her to threaten directly Afghanistan, to which we are under treaty obligations, and indirectly to threaten the security of India. The foreign policy of India is directed entirely from England by her Majesty’s Government, and it is part of British foreign policy generally. The object of British foreign policy generally, I believe, is to secure British rule over the British Empire. If it were desired to maintain British rule in India only for India’s sake, then I think it would be fair to make India pay to the utmost farthing everything that could be shown was due to Britain’s rule over India; but I cannot but feel that Britain’s interest in keeping India under British rule is enormous. India affords employment to thousands of Britons; India employs millions of British capital; and Indian commerce is of immense value to Great Britain. Therefore it seems to me that India, being held by Great Britain, not only for India’s sake, but also for Great Britain’s sake, Great Britain should pay a share of the expenditure for this purpose; and in estimating what that share should be, I think that England should behave generously, because, in the first place, England is a rich country, and India is a poor country. It is not altogether a fair basis of comparison of their comparative richness and poorness, but it is one that is worth bringing to notice, and that is the income tax of India, as compared with the income tax of this country. In India you have an income tax of 2½ per cent., about 6d. in the pound. I cannot lay my hand exactly on what that income tax produces, but I believe that the 6d. in the pound produces less than £1,000,000 sterling; in England every penny produces considerably over £2,000,000 sterling.

SIR AUCKLAND COLVIN ON THE VICEROY’S COUNCIL.

3216. May I ask you one or two questions which Sir Ralph Knox wished to ask you, and which I shall be glad to put you even in an imperfect way? They referred to the Constitution of the Council of the Viceroy. Am I not right in thinking that the number of the Council, the Executive Council, I think you call it, is eight?

Not so many as that.

3217. Seven?

There are the Viceroy, the Commander-in-Chief, the Military Member, the Home Member, the Public Works Member, the Finance Member, and the Legal Member—seven. It varies; it is not necessarily the same; the Public Works Member is not always there.

3218. Out of that number we may say that all represent spending departments, except the Viceroy himself and the Financial Member?

I should not make that exception there; I should make no exception there. The Viceroy is in charge of the Foreign Department, which has a large political area beyond the Indus, which causes very considerable expenditure.

3219. Unless the Viceroy throws his weight on the side of economy, the Financial Member stands quite alone?

Yes.

SIR DAVID BARBOUR ON THE WEAKNESS OF FINANCIAL CHECK.

2224. I think I am right in saying that in many respects the Financial Member stands alone as against the whole of the other Members of Council, in respect that he is the one to furnish funds, and the others want to spend funds ?

That is the case, of course; that is necessarily the case. The different departments want money, and he has to keep some check upon them, if he can.

2225. So that, though he may be stronger in his department individually as against any particular department, he is not strong enough to resist the whole of the Council ?

He cannot resist the majority.

2226. And the general feeling is that he has got to provide the funds for the necessary requirements of the others, so that he finds himself rather in antagonism with the general feeling of the Council ?

Of course he must have continual controversies going on as regards particular items of expenditure; that is inevitable.

2227. And therefore, supposing the Viceroy is inclined to some military operation, and the Military Member of the Council is not actively opposed to the Commander-in-Chief, there would be at once a very large majority against the Financial Member ?

Oh, yes, of course.

2301. And in the whole arrangement of the Budget and of expenditure the Indians themselves have no voice whatever ?

Of course they have no direct and immediate voice; but there is no doubt that the Government of India does pay a certain attention to public opinion in India; every Government does.

2302. But they have no direct voice in the matter?

No direct voice as far as I can see.

MR. D. E. WACHA ON THE GROWTH OF EXPENDITURE.

17,743. Looking at the evidence you have given us on the increase of expenditure generally, may I ask you whether you have arrived at any conclusions on the strength of the facts as stated, which you would like to place before us?

From the foregoing examination of the progress of expenditure, it will be evident to the Commission—

(1) That the financial embarrassments which prevailed during the decade owe their origin principally to the enormous growth of military expenditure, which has led to the imposition of additional taxation, which now amounts, including the customs duties on cotton goods, to nearly 6 crores [four millions sterling].

(2) That the growth in civil expenditure is also very considerable. But so far as this is concerned there is not much cause of complaint save in one respect, namely, that the costly foreign agency absorbs a large portion of the revenue which could be considerably saved if there was more extensive employment of Indians in the higher grades of the administration. It may be observed that adequate civil expenditure of a productive character is much to be desired. I mean such as gives the taxpayers a fair quid pro quo, such as education for the masses, more efficient administration of justice, greater village and town sanitation, and all other works of public utility which contribute to the expansion of provincial resources and prosperity of the people.

(3) That the burden or exchange might have easily been borne, without resort to fresh and enhanced taxation, had the military expenditure been on the basis of 1884–5.

(4) That a similar growth, if allowed to go unchecked in future, is liable to plunge the Government into fresh embarrassments, leading to further taxation, which is neither desirable in the interests of good and stable government, nor in the interests of the people, among whom there prevails sullen discontent, inasmuch as their capacity to bear further burdens has been greatly crippled. The Secretary of State writes imperative despatches for strict economy, and for exercising utmost care in public expenditure, for the danger of increasing the burdens of taxation has to be borne in mind. (Vide Despatch of 12th April 1888, vol. ii., Appendix, p. 141; Despatch of 3rd November 1892, vol. ii., Appendix, p. 154.)

These warnings seem to fall on deaf ears, and Secretaries of State do not enforce what they enjoin, and the despatches only remain pious intentions. At any rate, the Commission must have noticed how, in spite of them, expenditure has grown apace. Since 1892 taxation to the extent of about 3 crores [two millions sterling] has been added, while the military activity beyond the frontiers was even greater in consequence of the acquisition of Gilgit, which ultimately led to the occupation of Chitral at a cost of 1 1/2 crore [one million sterling], and with a permanent annual charge of 25 lakhs [£166,000]. The State Secretary himself is a silent or originating party to this kind of expenditure, so that it may be truly observed that the despatches are practically of no effect, and that both the Secretary of State and the Government of India must be held equally responsible for that expenditure.

It is a well-known fact that India has no true surplus to speak of. It lives at the best from hand to mouth, and is oftener than not in a condition of embarrassment from which it relieves itself only by windfalls or borrowing or by enhanced taxation which every time that it is imposed diminishes the capacity of the taxpayer, whose income does not exceed Rs. 27 [36s.] per annum.

From 1849-50 to 1894-5 there has been a net deficit of 37.62 million Rs. [twenty-five millions sterling]. In other words, during the forty-six years, Indian finances have exhibited an annual deficit of Rs. 800,000 [£533,000] on an average. The most essential fact seems to have been invariably lost sight of, that India is made a poor country by the “bleeding” it has been subjected to, and can, therefore, have but a poor revenue. That a system of administration, however well-meaning, which takes no cognisance of this essential fact, but goes on adopting a western system of Government, a system of alien Government in which the people have no voice, and which is besides known to be costly, must in the long run end in financial disaster, however long it may be in coming in. I go further and say it is a system unnatural and foredoomed to failure. Under the circumstances Indians cannot but view with the gravest apprehension any further increase of expenditure.

MR. G. K. GOKHALE ON THE EXCLUSION OF THE PEOPLE OF INDIA FROM HIGH OFFICE.

18,331. I think you were going to offer some observations on the services.

Yes. In every department of Indian expenditure the question of agency is one of paramount importance. According to a Parliamentary return of May 1892, we have in India in the higher branches of the civil and military departments a total of 2388 officers drawing Rs. 10,000 a year and upwards, of whom only sixty are Natives of India, and even these, with the exception of such as are Judges, stop at a comparatively low level. And they are thus divided. (See table on next page.)

In addition to these the railway companies employ 105 officers, drawing Rs. 10,000 a year and more. They are all Europeans, and their total salaries come to 16 lakhs 28 thousand rupees. If we come down to officers drawing between Rs. 5000 and Rs. 10,000 a year we find that we have 421 Natives in the civil department, as against 1207 Europeans and 96 Eurasians. In the military department there are 25 Natives, as against 1699 Europeans and 22 Eurasians. In the public works department there are 85 Natives, as against 549 Europeans and 39 Eurasians. And in the incorporated local funds there are 4 Natives, as against 22 Europeans and 3 Eurasians. The total salaries of officers of this class are thus divided:—Civil Department: Natives, Rs. 2,905,000; Eurasians, Rs. 650,000; and Europeans, Rs. 8,830,000. In the Military Departments: Natives, Rs. 164,000; Eurasians, Rs. 139,000; and Europeans, Rs. 13,698,000. In the Public Works Department: Natives, Rs. 537,000; Eurasians, Rs. 278,000; and Europeans, Rs. 3,962,000. And in the Incorporated Local Funds: Natives, Rs. 25,000; Eurasians, Rs. 17,000; and Europeans, Rs. 146,000. In addition to these there are, under the railway companies, 258 officers of this class, of whom only 2 are Natives, 8 being Eurasians, and 248 Europeans. Their salaries are thus divided: Natives, Rs. 12,000; Eurasians, Rs. 50,000; and Europeans, Rs. 17,100,000. In England £125,360 is paid as salaries by the Indian Government, and £54,522 by railway companies, all to Europeans. The financial loss entailed by this practical monopoly by Europeans of the higher branches of the services in India is not represented by salaries only. There are besides heavy pension and furlough charges, more than three and a half millions sterling being paid to Europeans in England for the purpose in 1890. The excessive costliness of the foreign agency is not, however, its only evil. There is a moral evil which, if anything, is even greater. A kind of dwarfing or stunting of the Indian race is going on under the present system. We must live all the days of our life in an atmosphere of inferiority, and the tallest of us must bend in order that the exigencies of the existing system may be satisfied.

MR. G. SUBRAMANIA IYER ON CONTROL OVER FINANCE.

18,767. Perhaps you would run through them, would you?

Yes. Before proceeding to express my views on the subject of the system of provincial finance, which is an important wheel in our financial machinery, I shall point out my remedies thus far.

There can be no doubt that one way of strengthening the financial position of India would be, as Sir Auckland Colvin says: “In some way, without undue interference with the authority of the Government of India, to establish a control emanating from what theoretically is at present the last Court of Appeal, Parliament. A Committee of the Members of Parliament, such as Sir William Wedderburn has suggested, to scrutinise the financial statement every year and to submit a report to the House of Commons before the financial statement is brought up for discussion, would in some measure secure this end. The Committee would of course pay due attention to the opinions of the non-official Members expressed in the Legislative Council of the Viceroy.” It came out fully in the evidence before the Commission that the present system, by which disputes regarding the apportionment of certain charges between the two Governments are kept up for years and finally decided to the satisfaction of neither party, should be put an end to. It has been suggested that the principles which should be the general basis of apportionment should be laid down in a Treasury Minute, and that the application of these principles to instances where the two Governments might not agree, should be left to an arbitrator, or a body of arbitrators, chosen by both the Governments. This suggestion commended itself to the Marquis of Ripon and the Marquis of Lansdowne. It would be a better system I think to rest the power of final decision in the Judicial Committee of the Privy Council. The Privy Council is a tribunal well known in India, and would command from the people greater confidence than any arbitrators chosen from time to time. I have already pointed out the importance of the Members of the Secretary of State’s Council being men in touch with the actual financial conditions of the day in India. To secure this end the present system of appointing them for ten years, and keeping them on for a further period if the Secretary of State chooses, should be abolished. Their term of office should extend only to five years like the Members of the Government of India and the Provincial Governors, and they should not be eligible for re-appointment. Among the Members of the Council there should always be several Indians possessing necessary qualifications and not necessarily official. They should be appointed on the recommendation of the elected Members of the Legislative Councils. They would take care to put before the Secretary of State the Indian view, which he has no means of knowing under the existing system. Coming to the constitution of the Government of India in India, I have already pointed out the desirability of the Governor-General being divested of control over any particular department, so that he may have more time than he has at present to attend to internal affairs of the country, which unfortunately do not receive the same attention that they used to receive in years previous to 1885. The Members of the Governor-General’s Legislative Council should be empowered to vote on the Budget, although any decision adverse to the Government of India may be overruled by the President. There should be given greater scope for interpellation, and whenever any measure of legislation affecting finance is in contemplation, the views of the public bodies should be obtained beforehand as far as possible.

MR. SURENDRA NATH BANERJEA ON THE WIDER EMPLOYMENT OF INDIANS.

19,320. You are going to proceed to give us your opinion on the growth of expenditure?

Yes. The question of the wider employment of the people of India in the public service of their own country is more or less a financial problem. The expenditure has gone on increasing, especially in the military department; and the Indian public opinion regards the growth of military expenditure as utterly beyond what the country can bear, and as seriously interfering with legitimate expenditure on the most necessary domestic improvements. The people of India who are capable of forming a judgment on the subject are at one with Sir H. Brackenbury in the opinion that the cost of the portion of the Indian Army, in excess of what is necessary for maintaining the internal peace of the country, should be met from the British Exchequer, and the expenses of the salaries of the European portion of the Army ought to be fairly apportioned between England and India. Until this is done, the resources of India will not be found equal for the purposes of good and progressive government, and no improvement is possible in the condition of the masses. By the wider employment of the people of India in the public service, economy would be introduced, and an impetus imparted to the intellectual and moral elevation of the people. Ten years ago the Public Service Commission, presided over by the late Sir Charles Atchison, at that time Lieutenant-Governor of the Punjab, and consisting of some of the most distinguished officials and non-official representatives of the day, reported upon the question of public employment in India. The gist of their recommendations may be summarised as follows: That indigenous agency should be more largely employed in the public service; that the recruitment of the official staff in England should be curtailed, and advantage taken of qualified agency obtainable in India. In other words, the provincial service, recruited in India, should be the backbone of the administrative agency, subject to European supervision and control. “Considerations of policy and economy alike require,” observed the Commission in their Report, “that so far as is consistent with the ends of good government, the recruitment of the official staff in England should be curtailed, and advantage taken of qualified agency obtainable in India.” As a matter of fact, however, the higher appointments in almost all branches of the public service are held by Europeans, although more than ten years have elapsed since the Commission submitted their Report.