that, as they are, the Chinese cannot be feared as a military nation, but that with a large number of European officers, their almost unlimited numbers, their obedience to authority, and personal bravery, when properly led, would make them almost irresistible.' Whatever may be the events now impending, whether a contest of cunning diplomacy, or a trial of open force between the two despotisms coming into collision from the extremities of the old world, and—if we may so express it-from extreme epochs of ancient and modern development, but both semi-barbarous, and whatever may be the final issue, there is a peculiar interest in the spectacle of this ancient empire-played out as we have been accustomed to consider its part-rousing its energies for self-defence in the only form in which defence is really effective, by assuming the offensive. ART. VII.-1. Statistical Abstract relating to British India, presented to Parliament, 1879. 2. East India Finance and Revenue Accounts, presented to Parliament, 1879. 3. Some Aspects of Indian Finance. By W. W. Hunter, LL.D. 4. Indian Finance. By Professor Fawcett, M.P. 1880. 5. Reports of the Select Committee of the House of Commons on East India Public Works, 1878 and 1879. 6. Telegraphic Summary of the Indian Budget for ensuing Year. 'Times,' February 25, 1880. 7. Sir John Strachey's Financial Statement, 1880. strained to the uttermost.' The people are ground down. by constantly increasing taxation.' Such are the expressions which have been so commonly used about our Indian possessions by wise men as well as by men who are not wise; and it is of vital importance that it should be known whether this is true or not. We take the question, in the first instance at any rate, in the simple and direct form-Is the amount levied by the Indian Government by way of taxation excessive, either positively or by comparison with the past? We must put aside for the present all discussion of the character of our rule, the effect of the great remittances to England, and other broader questions. Confined then to the amount of taxation actually levied, the question is much simpler than is generally supposed. The Indian system of taxation is so simple, that fair study may enable a man to judge whether it is really so excessive after all, or whether it has very rapidly increased. In the number of this Review for January 1871 an attempt was made to strip the Indian revenue system of its complications, to show of what it really consisted, both under native rule and under our own, and what was its incidence on the different classes of the native community. Subsequent events do not seem to have materially affected the statements then made, and we may refer to that article as showing the then state and incidence of Indian taxation. The general result of our present enquiries is, that still the taxation is not so excessive and so rapidly increasing a burden as has been supposed. The prevalent ideas to the contrary are generally formed on nothing more than the totals of revenues and expenditure set out in the most abstract returns; but Dr. Hunter and others have well shown that for the most part the extraordinary increases in the revenue therein exhibited are due to successive changes in the system of account, by which receipts and charges are more and more shown in the gross. In our opinion this system of showing everything in the gross has been carried to excess, and has become misleading. It almost looks as if the present financial authorities in India prided themselves on big figures, and could not rest without making them bigger and bigger every day, even though the effect is to confuse and demoralize the accounts. Dr. Hunter gives a good illustration of the difference between gross and net when he supposes 300,000l. to be spent in beer, and 250,000l. realized by the sale of the beer to the soldiers, to be exhibited as items of Indian expenditure and revenue. Perhaps this is necessary; but we cannot believe that there was any real necessity for showing the traffic receipts of the guaranteed railways as revenue, instead of adhering to the old established practice of showing only the loss paid by the State to make up the guarantee, or the surplus profit received as the State share. The ne plus ultra of pedantry is reached when, while there is a great loss by exchange, there is also shown a revenue from 'gain by exchange,' instead of setting one against the other. Again, it may be, and is, very desirable to show, separately from the Imperial revenues, the amount of local taxation imposed; but in no country in the world is the local taxation inserted in the general budget, as Sir J. Strachey has put it in the last year's accounts as an ordinary item, between Assessed Taxes' and 'Customs,' thereby showing an apparent sudden increase of revenue which is wholly unreal. The figures given in the Statistical Abstract for British India cover the last forty years. The population is, however, given in a misleading way: it is made to appear that it was 147 millions in 1840, and 183 millions in 1879; but, when we look carefully to to the heading of the column and the explanatory note, we find the fact to be that these figures represent, not the population in 1840 as compared to the population in 1879, but the present population of the provinces which were occupied in 1840 as compared to the present population of those now occupied. This shuts out of view the whole natural increase of the population during the forty years. If we take the ordinary Census returns, we should find that increase to be enormous. But admitting the little accuracy of the old reckonings, no one who has seen the visible increase of population, and the immense extension of cultivation, can doubt that there has been a very large increase indeed. Taking the double increase, both in the population of our older territories and by the addition of many great provinces and various districts, we cannot think that we can be wrong in assuming, for purpose of comparison, that we now deal with a population two-thirds larger than in 1840. That would be to take the population of our older provinces in 1840 at 122 millions, as against 147 millions now. Before comparing the taxation of the beginning and the end of this period, let us briefly recal the general character of the financial history of the time. The system put in force under Lord William Bentinck's administration, and adhered to without material change up to the time of the Mutiny, was to take off all those taxes handed down to us from native rule which seemed especially open to objection, without imposing new ones. We placed the character of our rule to a great degree on the ground of financial moderation. There were many, and we believe there are still some, who, not taking too high a view of our administration and of the blessings of British rule, but accepting the fact, that with some advantages it has also considerable disadvantages in native eyes, would chiefly base our claim to native gratitude and content on the reduction of taxation. According to this view, if we can show that we extort much less than our predecessors, we have a fair claim to the position which we hold. If that claim is not tenable, then the natives may and will desire to get rid of us. The men of the old school, then, while they inculcated moderation in the land assessment, wholly swept away the mass of internal customs with which India was covered, and abolished all the native revenues classed under the head of 'Sayer,' as well as the direct personal and trade taxes known as Moturpha,' substituting only a certain increase or extension of the Salt-tax. The Sea Customs, Excise, and Stamp revenues, were all very moderate, and the Opium revenue, though already considerable, was far from reaching its present dimensions. There were no other · general general taxes, and very little local taxation, or at any rate very little of which the State took cognizance: village officers and others collected their own dues in their own ways, and the Stateregulated local taxation was confined to a few towns, in some of which it had been so ill received, that the Government was little inclined to press it. That was the state of things down to 1857. In consequence of the events of the Mutiny our financial needs were largely increased, owing both to the great increase of the debt and to the increased expense of the Indian army and other establishments, while at the same time our ideas in regard to developments, improvements, and public works grew exceedingly, and led to a more liberal expenditure in that direction. Under the pressure of the first years after the Mutiny, Mr. Wilson largely increased the sea-customs, imposed an income-tax, and made other additions to taxation. Presently, however, reductions in the native army to some degree counterbalanced the increase of the European army; the large expenditure seemed to fructify in increased revenue, the opium revenue grew greatly; and it was found possible to remit the burdens imposed by Mr. Wilson, excepting a part of the income-tax, and some moderate additions to the stamp system. Eventually Lord Northbrook for a time wholly abolished the income-tax, and tried to return to the old simplicity of taxation. On the whole, however, the expenditure increased more rapidly than the revenue, and there has been continually recurring difficulty, to meet which the salt duty was increased in Madras and Bombay, and a licence-tax-a modification of the income-tax-has been reimposed. Moreover, the principle has been established that, if the country generally is to have roads and education, and other things for which the revenues have never hitherto provided, a large portion of the cost of these things must be provided by local taxation, locally administered for the benefit of the localities; and in this view the local taxation has certainly been increased to a considerable degree. The truth is that there would have been need of a larger increase of taxation, or maintenance of the mutiny taxation, but for the fortunate and continuing increase of the opium revenue, which is in no sense or degree a tax on the natives of India, but on the contrary is a benefit and a profit to them, while the money is paid by the Chinese consumers. That is the godsend which has pulled us through. This opium revenue, which was about 2,000,000l. in Lord W. Bentinck's time (1836), and which in the following twenty years more than doubled itself, twenty or twenty-two twenty-two years later still was quadrupled, and in some recent years has exceeded 9,000,000l. These figures are gross receipts, but upwards of six-and-a-half millions is net profit. In the present year the actual receipts have immensely exceeded even these large figures, as will presently be noticed. We have said that if we look only to actual taxation the system is simple enough. In this view we must exclude both opium and what Dr. Hunter has described as commercial and manufacturing undertakings, and also public services which are barely self-supporting, such as the post office and telegraphs. As was explained in our article of 1871 already referred to, the real revenues, besides opium, are derived from-1, land; 2, salt; 3, customs; 4, excise; 5, stamps; 6, assessed taxes; to which, in a general view of the burdens of the people, local taxation may be added. To form an opinion as to whether the taxation is excessive, we have only to look to the character and amount of these revenues, and to satisfy ourselves whether, taken separately or collectively, they can be said to constitute a very heavy taxation. And as, after all, the degree to which a burden is felt depends much on past habit, we may well compare the present figures with those of former periods. The brief sketch already given shows, no doubt, that the taxation is in some respects heavier than it was at a time when it had been reduced to a minimum, the old native taxes having been abolished and our new methods not established; but it is certainly less heavy than under native rule or in the earlier days of our own rule, when the native forms of taxation were in full force. We will, however, take for purposes of comparison what we have called the minimum period, and show where and how there has been an increase. We will not here enter into the question whether the land revenue is taxation or rent. It is at any rate a revenue reserved for public purposes, and which, pro tanto, saves the people from other taxation. Undoubtedly, both in fact and in native feeling, the severity or moderation of the revenue or rent thus taken by the State, is the most important element in the question of financial moderation or the reverse. We are more judged by our land revenue assessments than by all else. In 1840 the land revenue was in round numbers twelve-anda-half millions. Of late years the figures have been a good deal disturbed by suspensions of demand in some years, which abnormally increase the receipts in subsequent years; but setting these off, the present land revenue seems to be nearly twenty-two millions. There has therefore been an increase of upwards of nine millions in forty years. During that period the Punjab, Scinde, Oude, the Central Provinces, and British Burmah, have been |