A Vindication of England's Policy with Regard to the Opium Trade

by Charles Reginald Haines

As long ago as 1832, the question of abolishing the opium monopoly suggested itself to the East India Company; and the same course was proposed by Sir Charles Trevelyan in 1864.[127] If the opium revenue is to be retained while the monopoly is abolished, there is only one practicable course to be pursued. A Customs duty must be laid on the export of all opium. And this method has obtained the support of many able men who, objecting to the opium traffic as at present conducted, and at the same time seeing the difficulties in the way of its total abolition, propose this compromise. Such are Sir Bartle Frere,[128] Sir Richard Temple, the Marquis of Hartington, and others. But there are many serious drawbacks even to this solution of the difficulty, and such as have always prevailed against it when it has been proposed, as it often has, in Council. On the one hand, the revenue derived from this system would be much less. Sir Evelyn Baring, who is studiously moderate in his figures, informed us in his financial statement for 1882 how much loss would actually in this way ensue. For whereas a chest of Bengal opium costs us to manufacture it 421 Rs., we can sell it for 1,280 Rs. (average of ten years), thus making a clear profit per chest of 859 Rs.; but if we decided to introduce the excise system, the opium would not bear more than 600 Rs. a chest as export duty.[129] The average number of chests exported may be taken as likely to be 45,000. Duty on these would give £2,700,000. But our net revenue from Bengal opium is at least £5,000,000, so that our loss would be nearly two millions and a half; and besides the loss to the Imperial exchequer, the Provincial Governments would lose a part of their income. Moreover, the cost of preventive establishments would be great, and still some part of the produce would evade duty. Again, the cultivators would suffer in every way. Their actual profits would be less, and the zemindars would take the opportunity of squeezing them by rack-renting and other recognized means of oppression, as has been the case in indigo-cultivation, where great disturbances have been caused among the ryots. Add to this that vested interests would be created which would render any return to the old system very difficult, if not impossible. On the other hand—and this must be clear even to the anti-opiumists—India would not release herself from the responsibility of the traffic, whatever that may be, by this means. Direct participation in the manufacture may be more undignified for an Imperial Government than merely a share in the profits; but it cannot affect its moral responsibility. Nor would an ounce less opium enter China because of this measure. “The monopoly,” says Sir Henry Pottinger, “has rather tended to check than otherwise the production, as it certainly has the exportation, of the drug.”

Dismissing, then, this possibility as one perforce abandoned by the opponents of monopolies, no less than by the opponents of opium, the only other alternative left to us is the total abolition of the growth and manufacture of opium in India. But we are confronted with a difficulty to start with. Do the supporters of this theory mean that the cultivation of opium should be forbidden throughout all India? If so, how are we to deal with the native States which cultivate the poppy, and derive a considerable, in some cases a principal, part of their revenue from this source? A previous attempt to interfere with this cultivation occasioned serious disturbances, and almost a civil war. Are we ready to go to that length to enforce our advanced ideas of total abstinence on the independent States of Holkar and Scindia? If they do not mean this, how are we to prevent the cultivators in Malwa taking up the trade abandoned by us, and instead of 45,000 chests, sending 90,000 to China yearly? Again, if the poppy culture be strictly forbidden in all India, how are the legitimate wants of the Rajpoots and the Sikhs in the Punjaub, and the inhabitants of Orissa and Assam, to be supplied? Shall we go to China for our opium, thereby getting a more deleterious drug at higher prices, and inducing our subjects to substitute for the comparatively beneficial opium the maddening stimulus of bhang and the poisonous mixtures imported under the name of “French brandies,” but composed of such deleterious ingredients as potato spirit and fusel oil? It would, indeed, be a strange finale if the success of this agitation should cause China to export opium into India as she already does into Burmah.

Apart from these contingent possibilities the financial objections to this measure are overwhelming in the opinion of all who are or have been responsible for the financial administration of India. The immediate effect of the cessation of the culture of the poppy would be the disturbance of the cultivation of land amounting to 500,000 acres in British India alone, the readjustment of which would be a difficult and troublesome business. But, of course, the point to be chiefly considered is the immense loss of revenue that must unavoidably ensue. Some, no doubt, of this loss might be made good by the cultivation of other crops on the poppy lands, which comprise some of the best land in the presidency; but how much would thus be recouped is uncertain. In any case it would not amount to a tithe of the loss, and would, moreover, go mostly into the pockets of the zemindars, or middlemen. Again, the present staff employed in the manufacture would have to be pensioned, which would be another item of expense. Practically we may assume, then, that the Indian Exchequer would lose some six millions a year; and this loss would have to be met at once. The importance of this opium revenue to India can scarcely be over-estimated. It is, next to the land tax, the largest item in the revenue. It forms one-seventh of all the revenue of India. It is the most easily collected and the most productive tax ever known. It, and it only, by its marvellous increase, has enabled a series of Chancellors of the Indian Exchequer to tide over the difficulties occasioned by unexpected wars and disastrous famines. It has given the Indian Government the power to carry out innumerable sorely-needed reforms in the administration of justice, in the promotion of education, in the organization of the police and the post-office, in the reduction of the salt tax, and in the furtherance generally of public works; and this will seem no exaggeration when it is stated that in the last twenty years opium has poured into the Indian treasury the colossal revenue of £134,000,000 sterling.

Do away with this revenue and we sacrifice all chance of carrying out these reforms to a successful conclusion, and cripple our whole administration in India. But it behoves us to consider how the deficit could be met, if it became necessary. And we may here again remark that it is to the utmost degree unlikely that the British tax-payer will put his hand into his own pocket in order to help India out of her difficulties. Nor, if England did offer to meet the deficit, would that be a good precedent to establish. A gift of £20,000,000, which the anti-opiumists speak of, would not nearly cover India’s loss. It would cost three times that sum in ten years, i.e. if the present rate of revenue be maintained, as there is good reason to suppose that it will.[130] How, then, could the loss be made good?

The expenditure, civil and military, might be curtailed by doing away with the separate establishments of the Bombay and Madras Presidencies and centralizing the whole in Bengal. But this curtailment of the civil expenditure could not bring much relief, as it only amounts to £10,000,000 as it is. A reduction of the military establishments, besides being a danger in the face of Russia’s advance towards India, would necessitate a corresponding diminution of the independent native armies, a step which would be unpopular if demanded by our Government. However, this will be necessary if the opium revenue be cut off.

Among other possible expedients for increasing the revenue or lowering the expenditure are a cessation of ordinary, as distinguished from productive, public works, such as roads, railways; a reimposition of abandoned taxes like the customs duties, the salt tax (lately partially remitted), the tobacco tax, and the income tax—but there are grave objections to all these; or the land tax could be augmented, as the periods for new settlements came round, and these, perhaps, afford the best prospect of an increase of revenue.

Such are the principal heads under which an increase of revenue might on an emergency be secured. But the increase would not in any case be large; and it must not be forgotten that Sir Evelyn Baring, in his Budget statement for 1882, has given it as his opinion (and who is more able to give an opinion on the subject?) that an aggregate increase of taxation is not possible, even reduction in some branches absolutely necessary; while any essential decrease of expenditure is quite out of the question. So far from the expenditure showing a tendency to decrease, or even to remain stationary, it has increased last year by a million and a half, this year[131] by three millions and more—under a Liberal Government.

Apart from these direct means for making good the loss of the opium revenue, there is the prospective one of a general increase from reproductive public works, and from a prosperous condition of the country; but it must be borne in mind that this would be greatly lessened and impeded by any increase of taxation.

“It cannot be too clearly understood,” says Sir Evelyn Baring (sect. 59), “that neither by any measure tending to develop the resources of the country, nor by any increase of taxation which is practically within the range of possibility, nor by any reduction of expenditure, could the Government of India in any adequate way at present hope to recoup the loss which would accrue from the suppression of the poppy cultivation in India.”

On the whole, then, we may conclude with Sir Evelyn Baring that without the revenue which she derives from opium India would be insolvent; that is, her expenditure would be permanently in excess of her income. India is by no means a rich country except in the language of poetry, and her inhabitants are perhaps the poorest in the world, the average income of the ryot being twenty-seven rupees a year! On the other hand, the financial prospects of India are not at present so gloomy as Mr. Fawcett and others would have us believe, but under a succession of able financiers, like Sir John Strachey and Sir Evelyn Baring, a wonderful improvement has been effected; but their efforts would have been crippled and their far-sighted policy paralyzed, if it had not been for the magnificent revenue derived from the sale of opium, which has indeed proved, as it has been called, “the sheet anchor” of Indian finance. And if this revenue be badly acquired, there is no question but that it has been splendidly applied; and if the Chinese will have opium, as there is no doubt they will, the superfluity of their wealth cannot be better spent than in the amelioration of the lot of the Indian ryot. This is the very class which would suffer most severely from any increase of taxation, and, as Sir Evelyn Baring says, “to tax India in order to provide a cure—which would almost certainly be ineffectual—for the vices of the Chinese would be wholly unjustifiable.” In doing a little right to China, let us beware lest we do a great wrong to India.