MAJOR BARING'S FIRST BUDGET.
-FINANCIAL ability is often found to be an hereditary quality, and we should not wonder at all if Major Evelyn Baring, who certainly succeeded in Egypt, turned out in India a successful, and possibly an original, financier. It seems an odd proceeding to make an Artilleryman Finance Minister of an empire, but Major Baring has had ten years' training in Oriental administration, and is only a soldier in the sense that the elder Pitt was " a cornet of horse." Se is certainly a bold financier, and one who understands where it is that taxation presses most heavily upon the people. There is a certain optimism in his Budget, and optimism is rarely wise in India, where the unforeseen is usually also the disas- trous, but it complies with two at least of the three conditions essential to the prosperity of the Indian Treasury and of the Indian peoples. The first. is, as we maintain, that there should be a large permanent surplus, a surplus exceeding, if possible, one million as a minimum. Something happens in India costing great sums of money in every decade. Either there is a war, or an insurrection is mismanaged, or the rains fail, or opium falls off, or an American hits upon a new lode of silver, or there is some other calamity, and a sum ranging from two to twenty millions has suddenly to be provided. So certain is this re- currence of misfortune, that a surplus would be needed, even if it were not so necessary to reduce Debt, which, however, as we contend, is of binding obligation. Whatever the rights of a conqueror, his right to pledge the resources of the future is the most questionable, and any increase of the Indian Debt for any purpose except self-defence or remunerative works ought to be regarded as a breach of our duty, either towards the tax- payers of the future, or the capitalists whom repudiation would rob of their investments. With this condition of a large sur- plus, Major Baring has not fully complied. He has estimated the opium revenue for the coming year, 1882-83, at its full amount, £7,250,000 net, and even then has left himself only a surplus of £285,000, the expected revenue being £66,459,000, and the expected expenditure £66,174,000. That is, in our judgment, too little, more especially as the loss on remittances to the India Office has been calculated at only 161 per cent., which may prove to be a too favourable estimate. But then this risk is qualified by a statement which means that, if neces- sary, the Licence Tax, or rough Income-tax under Schedule D, will be revised so as to supply the deficit ; and it is run for the- sake of reductions of the greatest moment and advantage to trade, to the industries of Lancashire and to the body of the Indian people.
Major Baring has complied with the second condition of good Indian finance, namely, that there should be no peddling, but that every change made should be on a scale sufficiently large to be intelligible to the people, And felt by them ; and with the third, that in remitting taxes, those taxes should be selected which press on the very poorest class,—the people below the hereditary peasants. There are but two such taxes, those on salt and clothing—for the Indian, as a rule, abstains from alcohol, knows nothing of coffee, and drinks tea, if at all, only as medicine for continued indigestion—and Major Baring has reduced the salt tax thirty per cent. in Bengal, and twenty per cent. in all India, and swept away the duties on imported clothing altogether. He has terminated the long controversy between the Free-traders of Lancashire and the Protectionists of Bombay by one splendid stroke, has abolished import duties altogether, except for alcohol, opium, and salt, and has made of the entire empire, for purposes of trade, one immense free port. Great as the concession is, the loss to the revenue is not enormous—less than a million and a quarter—and the gain to commerce, in the absence of fric- tion, of bonded warehouses, of official inquiries, and of worry in the ports of entry, may prove to be very great. Indian duties are not high, but even a duty of five per cent. often
makes the difference between profit and loss, and crushes a
trade which, if it were let alone, might expand to enormous dimensions. We should not think a half-crown duty on corn a light matter, and that would be only five per cent.; while is the wine trade, duties apparently insignificant have been known to prevent importation altogether.
The Revenue, if it proves absolutely necessary, can be re- *couped by a revision of the licence duty, or by a revision of the spirit duties, which are injuriously low, or by licences on the sale of sugar, or by the imposition of a receipt stamp on all pecuniary transactions, or by one of many other devices, and still leave the Government its final resource, the tobacco monopoly, which was proposed by Mr. James Wilson, and which, politically dangerous as it is, may one day replace the monopoly of opium. The only real argu- ment against the abolition of the import duties is that advanced by the higher natives of India, and entitled, if only because it is their argument, to serious attention. They say, and say truly, that one drawback to British rule has been the extinction of variety in native industry. The country may be richer, as a whole, but large classes, such as the muslin weavers, the carpet makers, and the metal workers, have been ruined by the competition of Europe, and the whole people reduced to such a depend- ence on agriculture that a drought of two years is like a sentence of death passed upon whole populations. This evil, which is an evil, though it may be exaggerated, and may also be compensated by great gains, can, they say, be partially obviated by protective duties, which give native manufacturers, especially of cotton goods, time to organise their factories, to instruct and discipline their hands, and to establish their con- nection with the retail distributors. They cannot, the natives say, be independent at first, because they cannot work upon the scale indispensable, if they are to compete with the vast and highly-organised manufacturing system of Great Britain. Ultimately, they maintain, they will be able to compete with Manchester on equal terms, but they cannot do it yet. There is such force in this argument, that we hardly wonder it should carry away every native trader, but the answer to it is clear. It can never be wise for a Govern- ment to tax the whole body of the people in order to swell the profits of a few, and it is especially wrong in India, where entire classes are so poor, that any tax whatever reduces their supply of food below the sanitary limit. There are, speaking roughly, but on the authority of Sir R. Temple's recent calculation, forty millions of persons in India who are below the level at which direct economic benefit is ex- perienced from British rule. The majority of these persons do not eat enough, and to tax their slight clothing for the benefit of the shareholders in a dozen or two cotton mills is an oppression, not diminished by the fact that years hence a cotton industry may have revived in India. It ought not to revive, at the cost of the pinching of those forty millions of stomachs. It may be said that the cost to each person is slight; but in the first place, it is each household, and not each per- son, that we have to consider • and in the next place, injustice is not affected by amount. Millions are taxed to benefit, not the State, but either the shareholders in mills, or the few persons who would be affected by the alternative licence duties, and that is unfair.
Without, therefore, considering Lancashire at all, the aboli- tion of the duties is right ; while if it is right, there is no reason why Lancashire should not be considered. It would be most unjust to tax India for the benefit of Lancashire, but it is not unjust to take off taxation, or even, supposing the licence duties to be revised in compensation, to shift taxation from the very poor on to the comparatively rich. Some modicum of clothes may be taken to be a necessity of life, and to take off a tax which presses on it must in itself, if the principles of modern finance are true at all, be wise, as well as humane, more especially when the remission is part of a much larger policy, a policy which makes of the Indian Empire the most perfect example of Free-trade in the world. From the moment the Budget becomes law, one-fifth of mankind may buy or sell any article, except alcohol, opium, or salt, without paying any tax whatever to the State, which, nevertheless, protects such buying and selling with its whole organised power. That is a privilege the value of which cannot be diminished by the accidental fact that in consequence of this concession, Lancashire may have a little more to sell. Lanca- shire is a very bad place, but not so bad that justice becomes injustice, and wisdom roily, whenever Lancashire benefits by either.
The ruling idea in Major Baring's mind, the relief of the mass of the people, comes out strongly in a suggestion which is barely mentioned in the telegram, but which may prove an event in Indian financial history. " A scheme," says Reuter, " is an- nounced for facilitating borrowing from small local investors, by the issue of Stock Notes in small denominations,- the interest on which will not be enfaceable to Europe." In other words, the peasant who now buries his 25 rupees in an earthen pot is to be asked to lend them to the local Collectorate at 4 per cent., that is, to receive 1 rupee a year as interest. It is very possible that he will not do it, but it is also quite possible that he will. He is very apprehensive of robbery, and en- tirely of the Jew opinion that money ought, under a decent system of things, always to be producing interest. If he finds he can sell his note readily, and hide it easily, and draw his interest from the Post Office without too much trouble, he will be very apt to prefer a Stock Note to coin ; and if he does, the financial effect may be very great indeed. A heavy loan could be " placed" in Eastern Bengal alone, without the intervention of any contractor ; while the body of prosperous peasants might, by degrees, be interested in the stability of the British Government. An Indian, when strongly moved, is a self-sacrificing being ; but if the success of an insurrection meant the loss of all the hoards of a district, the peasantry inhabiting it would be apt to show themselves strongly Conservative, and very dangerous to the insurrectionary force. The peasantry of Bengal would not fight the Sepoys when they marched from Chittagong, but they disapproved them, and intimated their disapproval with a mild decision worthy of Quakers. They declined to sell any food, they withdrew their boats from all fenies—so reducing the marching power of the Sepoys by more than one-half— and whenever they could catch a straggler, they tied him to a bamboo, and carried him like a salmon to the Magistrate, to be executed. Nothing ever daunted the Mutineers like the silent, passive, incurable antipathy of a race which, neverthe- less, never struck, or wounded, or killed one Sepoy.
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