That is, that the Government of India having "pledged itself not to spend one rupee of these special resources," except "for the construction of a particular class of public works"—having declared that "the sole justification for the increased taxation" is that it should be devoted to a particular end—no sooner gets the money into its possession than it expends the entire sum on something else, and then "thinks it wise" not to discuss the matter any further. The Government is very sorry; it really wanted to make an Insurance Fund against famine; but it finds that it "cannot even approximately tell what income will be required to meet the necessary expenditure of the State." Under such circumstances the Government finds it extremely difficult to follow "any settled financial policy," except that of spending every shilling which it can get possession of. Thus it is that an Imperial Government "redeems to the uttermost" the honour of the British nation, and strengthens the confidence of India in "the good faith of her rulers."
The Cotton Duties.
I come, lastly, to the action of the Indian Government in respect to the Cotton Duties. It is, I fancy, generally supposed in England that the duty on imported cotton was designedly protective—i.e., that it had from the beginning been imposed with the intention of favouring the Indian manufacturer at the expense of Manchester. This is a mistake. The duty was imposed at a time when there were no Indian manufactures to compete with those from England, simply as a source of revenue. In India there is a great difficulty in so arranging the incidence of taxation that the well-to-do classes shall contribute their proper share to the necessities of the State. A light duty on imported cotton—as being the universally used material for dress—enabled the Government to reach these classes in a manner that was effective without being burdensome. Even now that mills are at work in India, by far the larger part of these duties had nothing protective in their character, because there is in India no manufacture of the finer sorts of cotton. Whether, however, the duty was or was not protective in its character, both the Indian Government and the House of Commons had repeatedly given pledges that the duty should not be repealed until the Indian finances were in a position to justify the loss of revenue thereby occasioned. Lord Lytton, who throughout his viceroyalty has made a point in all important matters of making a confession of political faith exactly the opposite of his subsequent political action, expressed himself on the subject of the Cotton Duties with his usual copiousness. In reply to an address from the Calcutta Trades' Association, shortly after his arrival in India, he said:—
"I think that no one responsible for the financial administration of this Empire would at present venture to make the smallest reduction in any of its limited sources of income. Let me, however, take this opportunity of assuring you that, so far as I am aware, the abolition or reduction of the Cotton Duties, at the cost of adding one sixpence to the taxation of this country, has never been advocated, or even contemplated by her Majesty's Secretary of State for India.... It is due to myself, and the confidence you express in my character, that I should also assure you, on my own behalf, that nothing will ever induce me to tax the people of India for any exclusive benefit to their English fellow-subjects."
A short time previously he had told the Bombay Chamber of Commerce that "he was of opinion that, with the exception of about forty thousand pounds sterling, the duties were not protective, because Manchester had no Indian competitors in finer manufactures. He thought the £800,000 collected yearly as duty, on finer fabrics, a fair item of revenue. With regard to the duty on coarse goods, he thought it protective, because Bombay mills competed with Manchester; but he did not see how it could be abolished, because it would lead to irregularities in order to evade duty."
These assurances were given in 1876. In 1879, when the finances of India were in a state of almost hopeless embarrassment—when the Famine Insurance Fund had been misappropriated in the way I have related—when the Indian Government frankly acknowledged that it was beyond their power to estimate their future expenditure, even approximately, the Indian Government deliberately sacrificed revenue to the amount of £200,000 derived from this source. The motives which persuaded them to this sacrifice may have been as pure as driven snow; but with Lord Lytton's assurances fresh in their memories, I need not say that their motives were not so interpreted by those in India. There the explanation given was this:—The war in Afghanistan, from which so much had been expected, had resulted, not in success, but ignominious failure. The Government had been compelled to patch up a peace without a single element of permanence in it. Despite of the choral odes which Ministers sang together on the occasion of this peace, it was impossible that they could have been wholly blind to the real character of the Treaty of Gundamuck. They felt that discovery could not be long delayed, and, like the steward who had wasted his master's goods, they hastened to make themselves friends of the mammon of unrighteousness. While, therefore, the war was still nominally unfinished, they sought to propitiate Manchester by throwing its merchants this sop of £200,000. Like Canning's famous policy of calling on the New World to redress the balance of the Old, the prestige of Imperialism, damaged by the failure in Afghanistan, was to be re-established in Manchester at the expense of the Indian taxpayer.
If the Indian Government had any better reason than this for their partial repeal of the Cotton Duties, it is a pity that they did not communicate it to the world. The reason which they did condescend to give was simply this—that the finances of the Empire were so heavily embarrassed, and in such confusion, that it was a matter of no consequence if they become still further involved to the extent of £200,000. I give the actual words, that I may not be suspected of caricaturing the Government:—
"The difficulties caused by the increased loss by exchange are great, but they will not practically be aggravated to an appreciable extent by the loss of £200,000. If the fresh fall in the exchange should prove to be temporary, such a loss will possess slight importance. If, on the other hand, the loss by exchange does not diminish ... it will become necessary to take measures of a most serious nature for the improvement of the financial position; but the retention of the import duties on cotton goods will not thereby be rendered possible. On the contrary, such retention will become more difficult than ever."
According to the Government of India, it was the peculiarity of these £200,000 to be simply an incumbrance, happen what might. If the exchange did not fall, they were reduced to insignificance; if it did fall, their retention became more difficult than ever. The reader will not be surprised to learn that these enigmatic propositions were not accepted in India as a sufficient justification of the act they were supposed to explain.