Rulers of India: The Earl of Mayo

by William Wilson Hunter

² For details of this calculation, see my larger Life of Lord Mayo, vol. ii, p. 6: 2nd Ed., 1876.

Alike in regard to the amount of the Public Debt of British India and to the burden of taxation upon the people, the finances of that country may seem to compare favourably with those of almost any State in the world. But a nearer examination discloses a different aspect. Small as were the demands of the Treasury upon the tax-payer, it had been found impossible to augment them to the level required for the maintenance of efficient administration. Several of the highest of our Indian authorities believed that it would be perilous to do so. The half-century which preceded Lord Mayo's arrival in India had presented a long series of financial shortcomings. Of the fifty-five years beginning with 1814-15, and ending with 1868-69, only sixteen had shown a surplus, while thirty-nine had been years of deficit. The total of the surplus amounted to about 12½ millions sterling; the deficits exceeded 75½ millions of pounds. The period immediately preceding Lord Mayo's arrival was, if possible, even more discouraging. The last three years from 1866 to 1869, had left behind deficits aggregating 5¾ millions sterling. This was for 'ordinary' expenditure alone. If we add the outlay on 'extraordinary' (or reproductive) public works, the total excess of expenditure over revenue in the three years preceding Lord Mayo's first Budget amounted to the vast sum of 11 millions sterling.

Nor was the chronic inadequacy of the Revenue the gravest source of disquietude. The Budget estimates, although framed with the utmost care which the then existing system allowed of, were constantly falsified by the results. During the two years from 1867 to 1869 the Budget estimates had shown a surplus aggregating over 3½ millions, while the actual results disclosed a deficit aggregating close on 3½ millions. Lord Mayo was thus called to deal not only with a chronic deficit, but with a financial system which allowed of an aggregate error in the Budget estimates to the extent of 7 millions sterling on the wrong side during the two years preceding his rule.

Lord Mayo found therefore three financial tasks imposed on him. He had first of all to attack the immediate deficit: amounting to 2½ millions in the year immediately preceding his rule. In the second place he had to reform the whole financial system, which allowed of the Budget estimates being annually falsified by the actual results. In the third place he had to devise and to enforce measures of economy sufficiently stringent to place the finances on a sound footing for the future. With how resolute a will he carried out this work, the following pages will disclose. But before entering on that memorable struggle I may briefly exhibit its results. The subjoined statement shows more forcibly than any words of mine what those results meant to India. The three years preceding Lord Mayo's rule had left a deficit of 5¾ millions in 'ordinary' expenditure alone. In the very first year of his rule he established an equilibrium in the finances of India, and produced a small surplus. The three years which followed his reforms left an aggregate surplus of 5¾ millions, and that period of surplus was only interrupted by the Behar famine two years after his death.

Bird's-eye view of the results of Lord Mayo's Financial Administration.

Years of Deficit. (Before Lord Mayo's arrival.)	Year of Equilibrium. (Lord Mayo's first year.)	Years of Surplus. (After Lord Mayo's Reforms.)
1866-7 £2,307,700 1867-8 923,720 1868-9 2,542,861 ————— £5,774,281 Total deficit of three years reduced to Sterling.	1869-70 £108,779 (Surplus in Sterling.)	1870-1 £1,359,410 1871-2 2,863,836 1872-3 1,616,888 ————— £5,840,134 Total surplus for three years reduced to Sterling.

The four continuous years of surplus which thus resulted from Lord Mayo's measures had only one precedent during the period from 1842 onwards, for which the Parliamentary Abstract gives the returns. That single precedent is found in the years 1849 to 1853, under the rule of the great Governor-General, Dalhousie. Nor has there been any subsequent example of four consecutive years of surplus since Lord Mayo's Viceroyalty down to the present date (1891).

Sir Richard Temple, the Finance Minister, was like Lord Mayo in his first year of office. Warned by the disappointments of his predecessors, Sir Richard Temple framed a very cautious Budget for 1869-70, and estimated for a small surplus of £48,263. It soon appeared, however, that no amount of caution would avail to prevent the falsification of the Budget estimates under the system upon which they were then made up. The first symptoms which caused Lord Mayo alarm was the discovery that the cash balances in the treasuries proved lower than had been estimated by his predecessor. Lord Mayo's anxiety increased as the actual facts of the financial year previous to his accession, 1868-69, became finally known. Item after item turned out worse than had been expected, until the deficit of £889,598, as estimated in March, 1869, grew to the vast sum of £2,542,861, as ascertained from the completed accounts a few months later.

Nor did the disastrous discrepancy appear only in the Actuals of 1868-69. Circumstances occurred to raise a suspicion in Lord Mayo's mind that the same fate might be in store for the finances of the current year, 1869-70. His inquiries led him to order a re-examination of the whole Budget estimates. These estimates, viewed in the light of the actual results of 1868-69, disclosed an inevitable deficit of £1,650,000 for the current year 1869-70, in place of the surplus of £48,263, as announced by the Budget in March. Lord Mayo's perplexities were increased by the circumstance that Sir Richard Temple, after duly delivering the Budget for 1869-70, had found himself compelled to proceed to England on six months' leave. Sir Richard's experience and knowledge were not therefore available at the moment when the Viceroy, in his first months of office, found a new abyss of deficit suddenly open under his feet. Fortunately he had the aid of Mr., now Sir John, Strachey, who was carrying on the duties of Finance Minister during Sir Richard's absence.