Rulers of India: The Earl of Mayo Part 7

It became apparent, however, that reductions alone would not suffice to produce equilibrium. Lord Mayo had therefore to decide whether he would permit the Budget arrangements of the year to stand, with the knowledge that they would result in deficit, or resort to the unusual, and in India almost unprecedented, {145} expedient of additional taxation in the middle of the year. He decided, after careful inquiry, that the circ.u.mstances demanded the latter course.

Had the threatened deficit been preceded by a period of prosperity and financial accuracy, he would not have deemed so severe a policy needful. But the public expenditure had, during three consecutive years, largely exceeded the revenue, and Lord Mayo found that solvency could only be secured, in the first place, by immediate and most stringent measures; in the second place, by a permanent improvement in the finances to the extent of three millions sterling a year. I mean, of course, the aggregate improvement derived from the twofold sources of reduced expenditure and increased taxation.

For these and other cogent reasons, Lord Mayo determined to make it clear by measures of unmistakable vigour that his Government was resolved to place the finances upon a permanently sound basis. He raised the income tax from 1 to 2-1/2 per cent. during the second half of the financial year, and enhanced the salt duty in Madras and Bombay. The former measure was estimated to add 320,000 pounds and the latter 180,000 pounds to the revenue of the year; total, 500,000 pounds.

By means of this half-million of increased taxation, and the 1,150,000 pounds of reduced expenditure, Lord Mayo hoped to cover the estimated deficit of the current year, namely, 1,650,000 pounds. He thus explained his views to the Secretary of State.

'While the acc.u.mulated deficits of the three years {146} ending with 1868-69 have amounted to 5-3/4 millions, the cash balances in our Indian treasuries have fallen from 13,770,000 pounds at the close of 1865-66 to 10,360,000 pounds at the close of 1868-69, and, notwithstanding our recent loan of 2,400,000 pounds, are at this moment lower than they have been at this season for many years.

During the same period our debt has been increased by 6-1/2 millions, of which not more than 3 millions have been spent on reproductive works.[4] Your Grace has reminded us that successive Secretaries of State have enjoined us so to frame our estimates as to show a probable surplus of from half a million to a million sterling. We entirely agree with your Grace in acknowledging the soundness of this policy. We have no doubt that, excluding charges for Extraordinary Works provided for by loan, our expenditure in time of peace ought to be so adjusted to our income as to leave an annual surplus of not less than one million. The necessary conclusion to which we are thus led is, that nothing short of a permanent improvement in the balance now subsisting between our annual income and expenditure of at least three millions sterling will suffice to place our finances in a really satisfactory condition. How, by reducing our expenditure and increasing our income, we can best obtain such a result, is the problem that we have now to solve.

'We are satisfied that there is only one course {147} which we can properly follow. We must no longer continue to make good the deficit of each succeeding year by adding to the public debt. And we must determine, whatever be the difficulty of the task, that there shall henceforth be no room for doubt that, in time of peace, our income will always be in excess of our ordinary expenditure.'

[Footnote 4: Par. 71 of Despatch to Secretary of State No. 240, dated 20th Sept. 1869.]

I have mentioned the immediate measures by which Lord Mayo endeavoured to stay the impending deficit. But he felt that such measures strained the whole mechanism of the Government; that to stop public works on a sudden involved waste of material, while the increase of taxation during the current year disclosed in a most undesirable manner the shortcomings of our system, and might prove a cause of perilous discontent among the Indian people. 'We have played our last card,' he once said in conversation, 'and we have nothing left in our hands to fall back upon, except to devise measures which will prevent the recurrence of a similar crisis hereafter.' He accordingly resolved to find a permanent remedy, by removing the causes of the financial misfortunes in past years.

His reforms divide themselves into three branches. First, improvements in the mechanism of the Financial Department of the Supreme Government itself. Lord Mayo thought that it would be vain to ask the Local Governments to set their houses in order, if they could point to confusion or want of prevision in his own. Second, the more rigid enforcement on the Local Governments of economy in framing their {148} estimates, and of accuracy in keeping within them. While thus increasing their fiscal responsibility, Lord Mayo also extended their financial powers. Third, a systematic and permanent readjustment of the revenues and the expenditure.

First, as regards defects in the mechanism of the Financial Department, Lord Mayo found that the disastrous series of fiscal surprises were due in part to unpunctuality in the submission of the yearly estimates by the Local Governments and Departments, so that the Supreme Government had not sufficient time to examine and collate the accounts before the season for delivering the financial statement arrived. He discovered, also, grave deficiencies in the Financial Department itself as regards intelligent observation of the progress of the finances during the year. While, therefore, the Local Governments throughout India were complaining of the number and complexity of the statistical returns required from them, the last act in the process which would have rendered these returns fruitful of results, namely, their careful collation by the Finance Department, was inefficiently performed.

Without such final collation, the gathering of statistics is indeed a thankless task. I merely repeat the statement of the Member of the Government best qualified to speak on the subject, when I say that, up to Lord Mayo's time, no sufficient provision existed for the intelligent use of the statistical materials which daily poured in.

It did not seem to be understood that the toil expended by scattered {149} Departments upon the compilation of returns can bear no fruit unless they are intelligently studied by the central bureau for which they are compiled. Statistics as they existed in India before Lord Mayo's rule were sorrowful memorials of faithful subordinate labour, rendered unavailing by the indifference or neglect of higher officials.

The financial collapse in 1869, forming as it did one of a series of similar catastrophes, gave a new impulse to better work. The preparation of cla.s.sified statistics was undertaken on a systematic basis and with an extended scope. Having thus put his own house in order, Lord Mayo took measures to ensure punctuality in the submission of the Estimates by Local Governments and Departments. He also organised, or to speak more correctly, remodelled a system by which the Supreme Government now obtains full information bearing upon the progress of the finances month by month. Mr. Chapman, the Secretary to the Department and the officer most competent to speak, thus wrote of the results:--'It is not too much to say that it has become impossible for the Government to remain long ignorant of any important fact affecting the finances. Expectation may be disappointed, misfortune or mistakes may occur; but the Government will at least be promptly informed of the event, and it is difficult to exaggerate the importance of prompt.i.tude in this respect.'

The second great branch of Lord Mayo's financial reforms consisted in his more rigid enforcement of {150} economy upon the Local Governments. A fertile source of financial difficulty has always existed in the division of the British administration of India into a number of governments, separated from, although subordinate to, the Governor-General in Council. Before Lord Mayo's Viceroyalty the separate governments, while so far independent ent.i.ties as to be responsible for the civil administration and improvement of their several Provinces at the cost of the imperial revenues, had, in regard to their revenues, no independent financial powers. Towards the end of every year, each Local Government presented to the Governor-General in Council its estimates of expenditure during the coming twelve months. The Governor-General in Council, after comparing these aggregate estimates with the expected revenue from all India, granted to each Local Government such sums as could be spared for its local services.

The system acted in a manner most unfavourable to economy. The Local Governments were under no compulsion to adjust their expenditure to any limited scale of income, and several of them fell into the habit of framing their demands upon the Imperial Treasury, with an eye rather to what they would like to spend than what was absolutely required. 'Practically,' writes one who had the official control of the system, 'the more a Government asked, the more it got; the relative requirements of the Local Governments being measured by their relative demands. Accordingly they asked freely and {151} increasingly. Again, knowing that any money saved at the end of the year was lost to the provincial administration, a Local Government was little anxious to save.' These words, while representing the facts, do not necessarily involve a reproach. In India more money can be spent with advantage on almost every branch of the administration than the revenues will permit.

Lord Mayo clearly discerned that, in order to secure the co-operation of the Local Governments in the work of financial reform, he must invest those Governments with a share of the financial responsibility. After an exhaustive preliminary correspondence with each separate Administration, he issued a Resolution on the 14th December, 1870, which may be called the Charter of the Provincial Governments. By this doc.u.ment, which in due time received the approval of the Secretary of State, a fixed yearly consolidated grant was made to each Government, to enable it to defray the cost of its princ.i.p.al services, exclusive of the Army, but including Public Works. The grants thus made were final, for a period usually of five years, and were liable to reduction only in case of severe financial distress happening to the Supreme Government. They belong absolutely to the respective Local Governments. No savings from any one of them revert to the Imperial Treasury. Their distribution is left to the discretion of the Local Governments, without interference on the part of the Governor-General in Council.

The services thus made over to them included the {152} protection of person and property, the education of the people, the record of changes or transfers connected with landed property, sanitation, Local Public Works, and a number of minor branches of government. For official purposes they were grouped as follows: Jails, Registration, Police, Education, Medical Services (except 'Medical Establishments'), Printing (an enormous item in India), Roads, Civil Buildings, and various Public Works, Miscellaneous Public Improvements, and various minor services.

This well-jointed system of Provincial and Imperial Finance continues to be the basis of Indian Finance to this day. It has received further developments since Lord Mayo's time, but its principles remain unchanged. Sir John Strachey thus summarised the state of things which preceded it:--

'For many years before Lord Mayo became Viceroy, the ordinary financial condition of India had been one of chronic deficit, and one of the main causes of this state of affairs was the impossibility of resisting the constantly increasing demands of the Local Governments for the means of providing many kinds of improvement in the administration of their respective Provinces. Their demands were practically unlimited, because there was almost no limit to their legitimate wants. The Local Governments had no means of knowing the measure by which their annual demands upon the Government of India ought to be regulated. They had a purse to draw upon of unlimited, because of unknown, depth. They saw on every side the {153} necessity for improvements, and their constant and justifiable desire was to obtain for their own Provinces and people as large a share as they could persuade the Government of India to give them out of the general revenues of the Empire. They found by experience, that the less economy they practised, and the more importunate their demands, the more likely they were to persuade the Government of India of the urgency of their requirements. In representing those requirements they felt that they did what was right; and they left to the Government of India, which had taken the task upon itself, the responsibility of refusing to provide the necessary means.

'The Government of India had totally failed to check the constant demands for increased expenditure. There was but one remedy: namely, to prevent the demands being made; and this could only be done by imposing on the Local Governments a real and an effectual responsibility for maintaining equilibrium in their local finances.

There could be no standard of economy until apparent requirements were made absolutely dependent upon known available means. It was impossible for either the Supreme or Local Governments to say what portion of the provincial revenues was properly applicable to local wants. The revenues of the whole of India went into a common fund, and to determine how much of this fund ought fairly to be given to one Province and how much to another, was impracticable.'

'The distribution of the public income,' {154} Major-General R.

Strachey wrote, 'degenerates into something like a scramble, in which the most violent has the advantage. As local economy leads to no local advantage, the stimulus to avoid waste is reduced to a minimum.

So as no local growth of the income leads to an increase of the local means of improvement, the interest in developing the public revenues is also brought down to the lowest level.' It is right to add that the reforms by which Lord Mayo put an end to this unprofitable state of things were in a large measure due to the initiative of General Richard Strachey, supported by the administrative authority and experience of his brother, Sir John Strachey. But the question of Local Finance first presented itself to Lord Mayo during his inquiries in the India Office, and he discussed it at Madras on his way out to Calcutta.

Lord Mayo's third and heaviest task was the permanent readjustment of the revenues to the expenditure. He accomplished this task partly by new taxation, but chiefly by economy and retrenchment. On his arrival in January, 1869, Lord Mayo found two Despatches awaiting his consideration. One was a Despatch from his predecessor, Lord Lawrence, urging on the Secretary of State the imposition of an income tax; or, more strictly, the expansion of the certificate tax into an income tax for the year 1869-70 then about to begin. The other was a Despatch from the Secretary of State sanctioning the proposal. Lord Mayo's first measure with a view to raising the revenues of India was, therefore, to carry {155} out this decision which had been arrived at before he reached India, and to levy an income tax. By efforts to equalise the salt duty in certain provinces, and at the same time to develop new sources of salt supply, and to cheapen the cost of carriage, he laid the foundation of a further increase of revenue, with the least possible addition to the burdens of the people.

It was, however, to economy rather than to increased taxation that Lord Mayo looked for a surplus. Indeed, he strongly felt the necessity of abandoning some of the old objectionable forms of Indian taxation, such as the export duties; and he made a beginning by abolis.h.i.+ng the export duty on wheat. On the other hand, every Department of Expenditure was keenly scrutinised, and severely cut down to the lowest point compatible with efficiency. As a matter of fact, and notwithstanding the new income-tax, the total revenue which he levied from India during his three years of office averaged nearly a million less than the revenue levied during the year 1868-69 preceding his Viceroyalty; while the expenditure averaged about five millions per annum less than that of the year preceding his Viceroyalty. The following table exhibits the results of the system of vigilant economy by which Lord Mayo converted a series of years of deficit into a series of years of surplus. For purposes of reference to the Parliamentary accounts it reproduces the conversion at the then official rate. It does not, accordingly, show the exact balance in sterling, as worked out for the table earlier in this chapter.

{156}

_Indian Revenue and Expenditure under Lord Mayo (at the then official rate of ten rupees to the pound)_.

+---------+------------+----------------------+--------------+ Ordinary Year. Revenue. Expenditure. +---------+------------+----------------------+--------------+ pounds Year of Deficit pounds 1868-69 51,657,658 preceding Lord 54,431,688 Mayo's Rule. Year of equilibrium; 1869-70 50,901,081 his first year of 50,782,413 office. 1870-71 51,413,685 Years of Surplus; 49,930,695 his last two years 1871-72 50,109,093 of office. 46,984,915 +---------+------------+----------------------+--------------+

Lord Mayo did not live to see the permanent fruit of his labours. But I cannot conclude this brief sketch of them more fitly than by a letter which the Financial Secretary to the Government of India wrote to me three years after Lord Mayo's death, when his work had been tested by the touchstone of time.

'Lord Mayo's close personal attention to financial questions never flagged. He had by decisive measures established steady surplus for chronic deficit; he had increased the working power of the Local Governments, while checking the growth of their demands upon the Imperial Treasury. He had established a policy of systematic watchfulness and severe economy. The time was now coming when the results of all his exertions and sacrifices were to be gathered; when the Viceroy would be able to gratify his nature {157} by granting relief from the burdens which he had reluctantly imposed. Lord Mayo was occupied with such questions on the very journey which ended so fatally. He had reason to hope that effective remission of taxation would soon be practicable, but he was still uncertain what shape it ought to take. It should never be forgotten that the welcome measures of relief which the Government subsequently found itself in a position to effect, were possible only in consequence of Lord Mayo's vigorous policy of retrenchment and economy.

'He found serious deficit, and left substantial surplus. He found estimates habitually untrustworthy; he left them thoroughly worthy of confidence. He found accounts in arrear, and statistics incomplete; he left them punctual and full. He found the relation between the Local Governments and the Supreme Government in an unsatisfactory condition, and the powers of the Local Governments for good hampered by obsolete financial bonds. He left the Local Governments working with cordiality, harmony, and freedom, under the direction of the Governor-General in Council. He found the Financial Department conducted with a general laxity; he left it in vigorous efficiency.

And if the sound principles be adhered to, which Lord Mayo held of such importance, and which in his hands proved so thoroughly effective, India ought not again to sink into the state from which he delivered her.'

{158}

CHAPTER VII

LORD MAYO'S MILITARY POLICY

The Mutiny of 1857 left on the hands of the Government of India two great armies--a vast shattered wreck of Native Troops, and a European Force, fewer in numbers, but admirably equipped, hardened by a fierce struggle, and organised on the basis of constant readiness for war.

In the year preceding that memorable lesson, the Native army had numbered 249,153 men; the European regiments 45,522. The teaching of the Mutiny resulted in the reduction of the Native army to nearly one-half, and in the increase by over one-half of the British troops.

In 1862, after all apprehension of renewed hostilities had disappeared, and the armies rested on their new peace footing, the Native force consisted of 140,507 officers and men, the European troops of 75,337. Under the vigorous Government of Lord Lawrence from 1864 to 1869, as the civil administration grew more effective, and the country settled down into a.s.sured internal tranquillity, it was found possible to make further reductions, {159} which left the Native army on the 1st April, 1869, at 133,358 of all ranks, and the European force at 61,942.

This was the situation when Lord Mayo reached Calcutta. But exactly a fortnight after his arrival, the Duke of Argyll, as Secretary of State for India, penned a Despatch which gave a fresh impulse to questions of Indian military reform. His Grace pointed out that notwithstanding the numerical decrease in the forces since the Mutiny, the expenditure on them had increased from 12-3/4 millions sterling in 1856-57 to over 16 millions in 1868-69. He also referred to the fact, that while a new and costly system of police had been organised, the expectations of army retrenchment based upon it had borne no fruit. The Despatch concluded with a hope that the Viceroy would devise means to bring down the army military expenditure in India by a million and a half sterling.

Lord Mayo found that army retrenchment might be effected by two distinct lines of approach,--by economy in the military administration, and by numerical reduction of the forces. Each of these subjects again divided itself into two great branches, the former into retrenchments in the Staff, and retrenchments in the Army Departments; the latter into reductions in the European troops, and reductions in the Native army. He ascertained that retrenchments aggregating 79,000 pounds were possible without any sacrifice of efficiency in the Staff and the Military Departments; and he stringently carried them out. {160} But when he came to reductions in the European troops and in the Native army, he found that the questions involved were of a more complex character; and as his views on these points have been sometimes misunderstood, I shall endeavour to state them in his own words.

As regards the European troops, he believed that he had not one man too many in India. In a private letter to one of Her Majesty's Ministers, after urging his plan of retrenchment, he writes thus: 'One thing, I implore, may not be done, and that is the removal of a single British bayonet or sabre from India. We can, I believe, reduce our military expenditure by a million, without giving up one of the little white-faced men in red.' 'We are strongly impressed with the belief,' he wrote, in his public Despatch a few weeks later, 'that we have not one British soldier too many in this country. We should most strongly object to any reduction of their number, because we are convinced that such a step could not be taken without endangering and weakening authority, one of the mainstays of British rule.'

Nevertheless, he proposed to reduce the charges for the European troops by half a million sterling. This, too, without decreasing the total rank and file by a man, or the pay of either officers or men by a s.h.i.+lling. He proved that a chief cause of the increased military expenditure, of which the Secretary of State so justly complained, arose from the fact that European regiments in India had gradually declined from their full {161} effective strength, so that a larger number of separate regiments were required to give an equal total of fighting men. He proposed, by strengthening each regiment, to keep the same total of fighting men, and to reduce the number of separate regiments. He would thus get rid of the costly organisation of eleven extra European regiments, and of the heavy drain on the Indian Treasury which the needless number of regimental headquarters involved. The rank and file would be slightly increased, the pay of officers and men would remain the same. The Indian military authorities believed that efficiency would not be lessened, while the abolition of the superfluous regimental headquarters and similar charges in the British cavalry and infantry alone would yield an annual saving of 297,220 pounds. A corresponding, but not quite identical, reform in the artillery would add a further saving of 271,542 pounds sterling a year. Total saving in European troops, 568,762 pounds.

In Lord Mayo's minutes on proposed retrenchments in the Native army, two considerations constantly came to the surface. First, that the lengthy, exposed frontier of Northern India, with the fierce elements of internal disquiet within it, rendered any substantial reduction of either Native cavalry or Native infantry in Bengal impossible.

Second, that the separate _esprit de corps_ of the Madras and the Bombay Native armies would resent reductions which fell exclusively upon them, and left the Bengal Native army untouched. The Viceroy and {162} the Commander-in-Chief were most anxious to avoid wounding the _amour propre_ of any one of the three gallant bodies of men who make up the Native army in India; but their paramount duty--a duty which ranked above all local considerations--was so to shape their reductions as not to impair the defences of British India.

After long and earnest discussion with his military advisers and the Local Governments, Lord Mayo submitted the following proposals to the Secretary of State.

As regards Native artillery, Lord Mayo's Government followed out the accepted policy of dispensing with Native gunners, and his proposals were readily sanctioned by the Secretary of State. He abolished two Bengal batteries (namely the Eurasian Battery in a.s.sam, and one light field battery of the Punjab Frontier Force); the Native Company of Artillery in Madras; and one Native company of artillery in Bombay.

Total reductions of Native artillery, four batteries or companies; annual saving, 17,003 pounds.[1]

[Footnote 1: Sanction conveyed in Despatch from Secretary of State to Governor-General, No. 23, dated 27th January, 1870, par. 10.]

Regarding the cavalry and infantry in the Bengal Native army, the Viceroy came to the conclusion (as demonstrated by his military advisers) that not a man could be spared. But with their consent he found that a considerable saving could be effected by reducing the number of separate regiments, and bringing up the strength of the remainder to a more efficient standard. He proposed, therefore, a reduction of one regiment of Bengal Native cavalry, and {163} one of Bengal Native infantry, raising the rank and file in the other regiments so as to maintain the same total of rank and file in the Bengal Native army. Annual saving 27,200 pounds a year.

As regards the Madras Native army, he acted on the decision of the Governor (Lord Napier of Ettrick), confirmed by the opinions of the Commander-in-Chief in India (Lord Sandhurst), and of Major-General Sir Henry Durand. 'In the Madras Presidency,' its Governor had written, 'it is my opinion that the cost of the army far transcends the wants of the country.' Indeed, Madras had for years sent her redundant troops, amounting to one regiment of Native cavalry and five of infantry, to do duty at Bengal stations. This proved to be an extravagant arrangement. Thus a regiment of Madras cavalry, with a strength of only 300 privates, cost 22,937 pounds a year, while a regiment of Bengal cavalry cost only 21,963 pounds for a strength of 384 privates.

The waste was intensified by the 'family system' of the Madras sepoys, who are accompanied by their wives and children--a system which may be suitable for a stationary local army, but which produces many evils if such corps are moved to other Presidencies. For example, the Commander-in-Chief had lately had to represent the difficulty which would arise with a Madras cavalry regiment, if the Bengal plan were enforced of sending it out into camp, in event of an epidemic of cholera. The Madras corps in question had only a strength of 202 fighting men at {164} headquarters, and were attended by no fewer than 1296 women, children, and followers.

Lord Mayo proposed, therefore, that henceforth the Madras regiments should be kept to their own Presidency. This would enable him to reduce five regiments of Madras infantry, and one of Madras cavalry, then serving at Bengal stations (or a number equal to them). He also found he could safely dispense with three other regiments of Madras infantry. Another separate regiment of Madras cavalry would be saved by incorporating three into two. Total reduction of the Madras Native army--cavalry, 2 regiments (1 dispensed with, and 1 reduced by incorporating 3 into 2); infantry, 8 regiments reduced out of 40.