a reasonable annual increase in, the present revenue from this source. The Customs may be expected to increase with the return of commercial prosperity Manchester men have cried out that the Indian taxation of their cottons is unjustifiable, while Indian administrators have maintained that but for Manchester influences they could easily and fairly raise a much larger revenue from this source by a not excessive duty of 10 or 15 per cent. So light are the present duties that it seems impossible fairly to complain of them. And although no doubt in almost any other country, not subject to British rule, heavier duties would be and are imposed, experiments already made point so much to the possibility of a successful Indian competition with Manchester powerlooms that an increased duty is not likely to be attempted. The Customs duties on imports will probably remain about the present rate, and the only doubt is whether the export duty on grain and some other articles can be maintained. and the increase of trade. The stamp revenue may be expected to give a fair increase from year to year; but it will be seen that at present this revenue (Court fees apart) is not very large. It comes, then, to this, that in the Tributes and Land Revenue and Salt, yielding upwards of two-thirds of our real revenue, we can expect but small increase in the present generation; that the Opium, yielding more than half the remainder, is a revenue exceedingly precarious and uncertain; and that the really elastic income derived from Customs, Excise, and Stamps, is only about one-seventh of the whole. On the other hand we shall find that the expenditure is doubly elastic: first, because as prices and the value of labour rise, our establishments increase in cost; and, second, because, as we improve and modernise our system, new wants, new establishments, and new machineries are continually created, which much more than counterbalance any possible reductions in our old establishments. Modernised roads and police, and education, and sanitation, and many other things, cost money which must come from Of whom 172,000 were actually under arms. That is the force employed not only to defend and keep order among 150 millions of our own subjects in a foreign and conquered country, but also to defend and control 50 millions in Native States: total 200 millions in a territory covering 1,500,000 square miles. The Indian army is unsupported by militia reserves, or volunteers, or any of the expedients by which armies are supplemented in European countries-and is, in proportion to the countries and populations to be controlled, by far the smallest in the world. It seems quite impossible that we should with prudence farther reduce its numbers, and it would certainly be imprudent in the highest degree to reduce the proportion of European soldiers. Then as respects expense. We have long been accustomed to regard the ordinary British soldier charged to the home taxpayer as a charge, one way and another, of not less than 1007. per man. The same European soldier in India-looking to the higher pay and more rapid consumption of the soldier, the great expense of transport of men and materials, the much more expensive style in which he is housed and kept--cannot be put down as averaging, men, officers, and material together, less than 2001. per man; and that at once accounts for the greater portion of the military expenditure. In addition to the soldiers in the country, India pays for some 6000 or 7000 recruits, invalids, &c., in this country or on the voyage. The Native soldiers are officered by Europeans, paid at least three times as high as officers in this country. Much of the material supplied to Natives costs as much as that supplied to Europeans. And altogether, all over the world, the soldier is every day, becoming a more expensive servant and military establishments more costly. Not only does pay increase and do instruments of war become more complicated, but we have great expenses forced on us by the professors of sanitary science and other sciences; and nowhere are more expensive experiments tried than in India, where we can do our duty to the soldier at other people's expense. Nor are we anywhere so liberal in our views of justice to the officers who have fought our battles as when a British Parliament passes votes which affect only the Indian taxpayers. Altogether the fact seems to be that, however we may save excessive and unnecessary expenditure here and there, the army is an expense which we shall never very effectually check, and which will grow upon us as fast as wages rise and science invents new modes of spending money in instruments of destruction. The marine expenditure in India has been reduced to a minimum; but already it is felt that something more is wanted. There must be some addition to the Indian marine, and the Admiralty demands payment for services rendered by the British Navy. Some increase under this head is inevitable. The new-fashioned police, instituted since the mutiny on the model of the Irish police, is now generally considered to be too military, and, in point of officers, too expensive; but, on the other hand, it is deficient in point of numbers, and if the duties are to be efficiently performed, we must either improve the local police at much additional expense or increase the numbers of the regular police. It is not probable that the civil administration of so vast a country will ever be conducted in all its branches at less than the present cost of three millions; on the contrary, it is in this branch, above all others, that new demands continually arise with the progress of society and the enlightenment of the age. Here there will be constant increase and not decrease. New classes are also continually added to the pension list, causing an increase of retiring allowances. The Native judges are the least well paid of all our public functionaries; the cost of the Courts is continually increasing, and it has been said that the increase in Court fees has been found to be overdone. Education, Science, and Art,' is, of all branches, that which grows most rapidly, in which expenditure most increases and receipts are very small. actly like the ships of our Navy-models in one decade and thrown aside the next, if not at a much earlier time. It might well have been argued that the last and most expensive barracks now in course of construction would probably not be recognised as a useful legacy by the next generation; but the fact has already anticipated the conjecture. The first of these new barracks, constructed at enormous expense on English sanitarian principles, are hardly completed at Allahabad and Jullunder, when they are discovered to be wholly unsuited to the climate and a blunder altogether. So far from its being safe to debit to capital works which return no income, the doubt is whether many of the so-called reproductive works may not entail a heavy burden. They are undertaken by Government principally because private capitalists decline them, and sanguine estimates of Government engineers are under such circumstances not very trustworthy. Especially we cannot take sanguine financial view of Indian State railways. If we confined ourselves to the present lines, doubtless the present deficit would gradually diminish; but it is notoriously shown by all experience that the trunk lines pay best, while branches and subsidiary lines too frequently entail a loss. Now the private guaranteed Companies have already possessed themselves of the trunk lines of communication, while the Government proposes to undertake a great subsidiary system of branch and secondary lines. They have also, for political objects, embarked in two expensive lines in the sparsely inhabited countries near the Indus. Altogether there seems every reason to apprehend that the gain from increase of receipts on the guaranteed lines will be more than counterbalanced for many years to come by losses on new lines. a Finally, we come to 'Public Works,' and the debt may be taken in connection with that department. It has been argued that this expenditure is a profitable investment, and that we may well add another fifty millions to our debt, trusting to increased income. This view has so far been accept- To revert to ordinary works paid for out ed that what are called 'reproductive works,' of revenue, it has been said that at any rate that is, works which are expected to return the State is not bound to undertake so an income on the money expended-irriga- great an expenditure of this kind. The extion works, State railways, and the like- penditure is called enormous and excessive. are placed to a separate account and paid Those who have practical experience of for with money borrowed for the purpose. Indian administration think far otherwiseBut the Government has, as we think most so far at least as the work done is concerned. properly, declined so to deal with works re- We have already shown that, deducting turning no income, especially barracks. It military works, the remaining expenditure may be a very good economy to an embar- of the Public Works department averages rassed landed proprietor, to borrow money about three millions per annum. But of to drain and make judicious improvements this sum a million is absorbed by establishon his land; but to add to his house would ments alone-the very expensive establishcertainly not get him out of his difficulties. ment of European engineers and subordinate Within a single generation half-a-dozen new officers who design and direct the works plans of barracks have been adopted, each both military and civil-with some miscelsuperseding the former and intended to last laneous and unclassified charges. There refor ever. Barracks are in this respect ex-main for actual works about two millions 2 to divide among all the administrations in India-say about 10 per cent. of the land revenue of each province. Now in the absence of any sufficient local taxation, not only all civil and judicial buildings, but all the chief roads and communications of the country, must be made and maintained, and every material improvement must be undertaken from this fund, in a country where extremes of climate and absence of material render roads and most other works abnormally expensive. When complaint is made of the absence of roads, it must be remembered that in most parts of India good roads cost positively more than in England and relatively enormously more, and that every mile of new road involves a very heavy cost of maintenance. Public buildings, too, are continually tumbling down, and new ones are constantly demanded on a greatly increased scale. Hence it is that, large as the total may seem, the public works allowance to each of a dozen different administrations is wholly insufficient to meet many pressing requirements. Lord Mayo's present retrenchment in this depart ment, inevitable though it be, has caused a woful retardation of necessary works; and there can be but little doubt that, if we would do justice to the material resources of the country, we must find, either from imperial or from local sources, an ever-increasing fund for public works which yield no direct return. The conclusion to which we come is that the secret of Indian financial difficulties is this, that only a portion, and that the smaller portion of our income, is really elastic and expansive, whereas almost the whole of our expenditure is expansive in a very high degree. If this be so, the difficulty is not temporary, but chronic, and must be met, not by temporary palliations, but by permanent measures. The fact seems to us to be that, by hook or by crook, we could make the old-fashioned sources of revenue meet the old-fashioned expenditure, even increased as it is by rise of values and of prices; but that, if we would have a modern and civilised administration, if we would have new improvements -education and sanitation and police, and railways and roads and canals-we must devise and enforce new and civilised modes of taxation also. Taking the view that we do of the Indian deficit, and believing that the incidence of taxation which we have exhibited approximates to correctness, we cannot but believe that Lord Mavo and his advisers were right in thinking that the deficit should be at once grappled with, and that the additional taxation necessary should be imposed on the higher classes. Whether, as a permanent arrangement, the arguments for or against the income-tax may preponderate, the Indian Government seem to have acted in a manly and straightforward manner in boldly taking, according to their lights, a course which, however unpalatable with certain classes and however open to objection, is yet in the main founded on principles of justice. We have admitted that the income-tax falls very hard on the European community (who also pay an abnormal share of the Customs duties); but the richer Natives do not seem to us to have real ground of complaint, except in so far as the tax is unequally and capriciously imposed. We do not seek to anticipate the decision of the Government of India as respects new modes of taxation-we would only put the matter in this wise: The opinion has been rapidly gaining ground that all the attempts to impose new taxes by general legislation for all India have been unsuccessful, that everything new must in that country so much partake of the character of experiment that it is difficult to introduce novel taxes uniformly all over so vast an empire at the same time. It is found in fact that, divided, as India is, into a number of local administrations, a too complete centralisation of the finances does not work well. Local administrators have no interest in devising taxes which go to a central treasury and not to the improvement of their own country and people; and, on the other hand, they care little to reduce expenditure, and are always ready to draw everything that can be got from a central milch cow, for the due sustenance of which they are not responsible. Recent discussions have pointed, then, to some project for localising in some degree the finances and giving the local administrations a certain financial responsibility for making the two ends meet. The idea is that if, as in America, certain imperial receipts, such as customs and opium, were taken as imperial revenues to defray the imperial charges with the interest of the debt, while the cost of the army was fairly distributed, local treasuries might be established under a general central control; and it might be left to the local Governments to find the means for making local works and other local improvements, besides administering to the best advantage the ordinary revenues and establishments. A tax successfully introduced in one province might then be copied in others; but an unsuccessful experiment in one province would not affect the others. We must not misuse the term 'local.' Provincial taxation, extending over a coun try as large and populous as France, is one | fered to the people. Tenders were invited thing, and local taxation in the English from great loan contractors, after the Lonsense is quite another thing. The one may don fashion, and taken by European banks be imposed by the Governments and legis- and capitalists; and resort has been very latures of presidencies and provinces; the largely had to the London market. The dif other is in its nature for the most part volun- ference in the value of money between Lontary and in its purposes local in a limited don and India is now really very slight—the sense. Of this proper local taxation there was Indian 4 per cents. are, at the time we write, in former times a good deal in India, such as about par in London, and about 97 in India; we have mentioned in a former part of this but, owing much, we believe, to the mode article the self-imposed taxation of village in which the business is managed, the debt municipalities. But in most parts of India of the Indian Government is more and more these indigenous municipalities have hardly transferred to English holders, by far the been recognised by law, and the indigenous greater part of all new loans having been raispower of the elders has fallen very much ed in England or from English sources in into abeyance. We found village munici- India, and of the vast expenditure on Indian palities; but the towns were generally de- guaranteed railways scarcely a fraction is pendent on the will of the rulers, and with- held by the Natives. Is not this ever-inout a municipal constitution. Our efforts creasing debt of India to England a great have been directed to establish in towns mu- political danger? Would it not be worth nicipalities after our fashion and directed our while to do something to induce the Nato our objects. It must be admitted, how- tives again to trust to us for Indian purposes ever, that there is a good deal of sham about the funds which must certainly result from these institutions. They are generally forced their increased prosperity and wealth, and on the people by the influence of the officers for which they have little secure employof Government, the cesses are imposed on ment? an unwilling people for objects which do We conclude by an attempt to compare in not really interest them; and there is little brief form Indian with English taxation, real self-government. If then we would es- thus roughly expressed in millions stertablish real local taxation for purposes ap-ling preciated by the people, and obtain their real aid in such a system, much still remains to be done before the end is attained. One word of caution as regards the mode of raising that part of the expenditure (for reproductive works only, we must hope) which must be met by loan or guarantee. In former days a large proportion-in fact, the larger proportion-of our Indian loans was raised in India, and from the Natives. Every facility and encouragement were given to private Native lenders, as is the case in France; and the confidence in the British Government was great. It was the practice to keep what was called an open loan-that is a loan at a rate somewhat below the market rate, available to all comers; generally a 4 per cent. loan when the fives were at a premium and the fours were below par. The facility of paying money into any treasury at any time was so much appreciated by the Natives that a good deal of money was always flowing in at a cheap rate in this way, and the arrangement afforded to the Natives most of the advantages of a savings bank. But when English ideas began to prevail, these open loans were denounced as contrary to financial principles and leading to extravagance; so they were stopped, and when money was next wanted, it was borrowed at higher rates and on English principles. The loans were no longer of : TAXES ON CONSUMPTION AND EXPENDITURE. Necessaries:- 6 millions. Grain import abolished in present year. Grain export. %%% Noxious luxuries: Liquors 2% Innocent luxuries: Customs (li- Stamps : 1% On bills and coffee, and taxes, in- Surplus of the post- ways. &c.. contracts.... 3% AND INCOME. United Kingdom. Succession and legacy duty.. 4% millions. Income-tax, say 7 Trade taxes... Total, United " It thus appears that in this country we have now entirely got rid of all taxes on necessaries, while in India there is a very heavy tax on salt and an export duty on grain. In most European countries salt is still taxed-e. g. in France, Italy, Spain, Austria, Belgium, and Russia-but nowhere is the tax so heavy as in India. Tobacco and sugar, taxed in this country, are untaxed in India. In most of the tobacco-producing countries of Europe (e. g. France, Italy, Austria, Spain), and also in the United States of America, tobacco is heavily taxed by means of a State monopoly or an excise, and sugar is also generally more or less taxed. Two classes of well-known British taxes have no representative in India-the assessed taxes and the succession duties. In many European countries there is a considerable tax on sales, such as the Mahommedans levied in India. As respects a succession duty, the great difficulty in India is that, owing to the system of joint family, there are scarcely successions in our sense, but a certain stampduty on the proof of wills has been, we believe, imposed in the present year. Altogether we need not doubt that examples and precedents for every possible kind of taxation will be found in one foreign country or another, and among many suggested taxes the Government must decide. But two cardinal facts we believe that experience proves in regard to Indian taxation: first, that, if we are to have new modes of expenditure, we must devise new taxes to meet them; and, second, that new taxes will not be successfully devised and put in force till there is some provincial localisation of the finances, giving to those who find the money an interest in it more near than the remote interest of supplying a central treasury. the 1870, to January, 1871. AFTER the fall of Sedan, France presented appearance of a vast and dismal inundation. The German hosts pouring onward in a resistless tide overspread and submerged the country, wherein, at that time, Paris, Metz, Strasburg, Verdun, with a few other places of minor importance, looming through the mist of sorrow and despair like so many island rocks above the general flood, alone gave any signs of defensive vitality. France ay, to all appearance, helpless beneath the heel of her enemy; and, for a brief space, the utter prostration of the one combatant and the supreme triumph of the other, raised in the spectators of the contest a delusive hope, that terms of peace which might be accepted without abject humiliation would be conceded by the magnanimity of the con queror. VOL. CXXX. L-5 It was soon found, however, that the hope was not to be realised. Like the cruel servant who went out from the presence of his infinitely forgiving master, to clutch his miserable fellow-servant by the throat with the demand for the uttermost farthing of his little debt, the Prussian monarch resolved that the cup of humiliation should be drained by his helpless enemy to the last bitter dregs. Justifying his purpose by a pretext which had not even the merit of plausibility, King William decreed the continuance of the war, with its bloodshed and all its accompaniments of unutterable horror such as the burning of Bazeilles and Ablis, for the avowed object of uniting to Germany, in an enforced and detested bond, populations who are enthusiastically French. T In Paris the fall of Sedan was speedily followed by the deposition of the Emperor; and the fickle populace, intoxicated with joy at the proclamation of the Republic, danced like maniacs over the grave of the national honour even while 90,000 French soldiers were defiling before their conquerors; and, like spiteful children, stabbed the pictures and broke the busts of the man who, whatever might be his faults, had conferred innumerable benefits upon Paris. The highpriests of the revolution laid on their scapegoat all the sins of omission and commission to which the war and its disasters were attributable; and the surprise and disappointe ment of the nation were extreme that the Germans did not at once accept the plea which sought to exonerate France by heaping all the guilt on her ruler. The demeanour of the Parisians in those early days of their recovered freedom was little calculated. to increase the sympathy of their friends, or to encourage the hope that they would oppose a steadfast resistance to the German. armies now closing around them. But, after a brief period of paralysed disappointment, the luxurious city braced itself to reject all thought of peace and safety if these could only be purchased by cession of territory and by the sacrifice of a people who had fought and bled for France; and, as in former days, the capital carried the nation. along with it. Now that their Jonah was cast into the sea; now that the vices and corruption of the Imperial system were ended; the world should witness the spectacle of the new republic awaking like a young giant from her long repose, and bursting the Lilliputian bonds with which the hated invader sought to bind down her vigorous limbs. A purer system was to be inaugurated; the reign of common sense had taken the place of incapacity and folly; and France was as good |