tens of rupees in the construction of this, of course, has an effect on the Reproductive irrigation works. So that venue for two years, depending on out of the expenditure of the year a total whether you apply it to one year or the of 1,959,305 tens of rupees has been other; and as I suppose active collection applied either to the reduction of debt caused a larger sum to be received in or to investments-in other words, in in- 1886-7 than was expected, we must look creasing the assets of the Government for some loss of Revenue in the next year. of India, and the true deficit is, there- Then, as to opium, the anticipation is fore, £842,421. Then, since this Paper 250,000 tons of rupees worse than it was was circulated, the prospect for the year when the Budget Estimate was framed. 1886-7 has, I am happy to say, consider- Salt has improved by 300,000 tens of ably improved. There has been an rupees; but I am sorry to say that the increase in the Revenue of £1,100,000; position as repards Upper Burmah is of which the Land Revenue gives such as to constitute a serious drain on £476,000; Salt Revenue, £117,000; the finances of India, and the Budget Excise Revenue, £109,000; Railways, Estimate, which showed a deficit of £166,000; and Revenue under other £1,770,500, is made worse by an heads £232,000; making a total im- increase of Army expenditure of 300,000 proved Revenue, as I have said, of tens of rupees, while there is an £1,100,000. Of this improved Revenue, increase of Army expenditure in India however, £420,000 belong to the Pro- of 160,000 tens of rupees, making vincial Governments, leaving an im- a total increase of 460,000 tens of proved Revenue for Imperial purposes rupees; and there is, besides, a proof £680,000. Then, on the Expenditure spective charge for housing troops in side, the expenditure on the Army has Upper Burmah of 100,000 tens of rupees. been £400,000 more than was anti- Thus, on the net result, the prospects cipated. The other heads besides that of of 1887-8 are worse by £610,000 than the Army have altogether improved to when the Budget Estimate was framed the extent of £504,000, of which in India; so that, instead of there being £202,000 belong to the Provincial Go- a small surplus of 16,700 tens of rupees, vernments, leaving a net improvement there is an estimated deficit of 393,300 on these other heads of £302,000. Alto- tens of rupees. But, as hon. Gentlemen gether the expenditure has been worse familiar with Indian finance are aware, than was anticipated by £98,000; it is the practice of the Indian Governtherefore, on the whole, taking into ment to make a very cautious Estimate account the increase of Revenue and the of Revenue; and it is not too much to increase of Expenditure, there has been anticipate that the increase of Revenue a net improvement of £582,000, which will more than make up this present will turn the surplus of 62,110 tens of estimated deficit of £593,000, and that rupees shown in my Statement into a just as the finances of 1886-7 have come surplus of 642,110 tens of rupees. out with a very fair surplus, so the With regard to the year 1887-8, for which Revenue of 1887-8 may show a surplus the surplus shown in my Statement is well on the right side of the account. 16,700 tens of rupees, I am sorry to say There is one other matter which was that the prospects since the Statement mentioned as likely to produce a very was circulated have become somewhat heavy charge in the Expenditure of more gloomy, for the prospective Land 1887-8, but which, so far from being a Revenue is 150,000 tens of rupees real loss to the Revenue of India, is a worse than the Estimate. That, how-matter of gain and congratulation. It ever, is not altogether loss, because is the conversion of Four per Cent Stock the improved Land Revenue of £476,000 in the preceding year means that part of the revenue collected has gone into the account for the year 1886-7, which otherwise might have gone into the account for 1887-8. In fact, of the 23 crores of tens of rupees which constitute the Land Revenue, about six-and-a-half crores were collected in the months of March and April, and

into Three and a-half per Cent Stock effected some months ago. The first issue of India Four per Cent Stock was made in 1863, and by subsequent issues made under various Acts of Parliament the total amount was raised to £53,261,820, which, according to the terms under which the Stock was issued, was redeemable by the Secretary of State in Council on or after the 10th of

October, 1888, on giving a year's notice. | to warn the Committee as to statements Now, owing to there having been in the which may be made by myself if I hold early part of the year a very steady ap- this Office next year, or by my Sucpreciation of Indian credit, the price of cessor. There may be a large amount to the Three and a-half per Cent India be taken into consideration in the exStock, which was first issued in 1880, penditure of the year which would alter rose above par; and the Secretary of the figures I have given. I think it State in Council, therefore, determined might be interesting to the Committee that an offer should be made to the if I were to state the results of a table holders of Four and a-half per Cent which I have drawn up at the India Stock to convert it into Three and a-half Office, showing the credit of the different per Cent Stock, and an advertisement Governments of the world as estimated was issued in February last informing by the value of their securities in the them that the Secretary of State in London Money Market. I find that at Council would issue Three and a-half the head of the list of countries stands per Cent Stock, which is not redeemable Great Britain, which in the London until the 5th of January, 1931, in ex- Money Market can sell its Consols at a change for Four per Cent Stock, and price which yields to the investor pay on the 6th of July the difference £2 19s. per cent; next to Great Britain between Three and a-half per Cent and comes the United States of America, Four per Cent for the five quarters from whose securities sell at a price which July 1887 to October, 1888, thus prac. yields to the investor £3 98. per cent; tically allowing Four per Cent up to third in the list comes the Government October, 1888, when it was compulsory of India, whose securities sell at a price to convert the Four per Cent Stock into which gives the investor £8 98. per Three and a-half per Cent Stock. These cent; fourth comes Canada, with terms were readily accepted by the £3 9s. 6d. ; fifth, New South Wales, regreat majority of the holders. Out of a presented by £3 13s. 6d. ; sixth, Victoria, total of £53,261,820 Stock, no less than by £3 13s. 9d.; seventh, France, with £47,750,000, or approximately 90 per £3 14s. 9d.; eighth, the Cape of Good cent, was converted, leaving £5,472,019 Hope, with £3 19s.; ninth, New Zeato be paid off in October, 1888. The land, with £4 28.; 10th, Austria, with prospective annual saving from the con- £4 10s. 6d. ; 11th, Italy, with £4 10s. 9d., version is about £240,000; but an in- and 12th and last, Russia, whose Stock, creased expenditure is incurred during as I have ascertained, yields to the inthe current year, amounting in all to vestor £5 38. 9d. It appears to me, £800,000 sterling-at 18. 5d. the rupee, therefore, that the credit of the Govern1,097,000 tens of rupees-made up as ment of India, as shown by the value of follows:-The dividends on India Four its securities in the London Money Marper Cent Stock being payable half-yearly ket, is a subject on which the Committee. -April to October-and those on the may well congratulate themselves. Now, Three and a-half per Cent Stock being I want to make some observations on payable quarterly, the inversion in- the net Revenue and Expenditure, which volves the payment of interest for is shown on pages 4, 5, and 6 of the five quarters in 1887-8, and an in- Paper; and, in considering the financial crease in the amount paid of £360,000; prospects of India, the figures given the difference between Four per Cent there are figures which hon. Gentlemen and Three and a-half per Cent Stock may most usefully study. The first obfor the five quarters from July, 1887, to servation I desire to make is that the October, 1888, paid in July, 1887, is net Revenue is steadily increasing, and £300,000; the commission allowed to that increase is more than accounted for brokers and the charges of the Bank of by the Income Tax, and by the Revenue England for management amount to which is derived from Upper Burmah. £140,000. Altogether there will be a If hon. Gentlemen refer, they will see charge thrown upon the Revenue of that a certain portion of Revenue is India for 1887-8 of 1,097,000 tens of derived from new taxes put on since rupees, which, of course, looks like a 1885-6-namely, Income Tax and Land great increase of Expenditure, but which Tax derived from Upper Burmah, and really represents a great saving in the they will find that if these two items future. I mention that because I wish are deducted the net Revenue is in

to the Provinces, deducting which there is a real improvement in Revenue and Expenditure, excluding Burmah and exchange, of 1,466,800 tens of rupees. Now, I wish to say a word on another matter. I must confess that, financially, Upper Burmah has been so far a disappointment. In the Budget Estimate for 1886-7 my Predecessor, rather more than a year ago, reckoned the probable Expenditure in Upper Burmah at 775,000 tens of rupees, and the Revenue at 665,000 tens of rupees, showing a net charge on the Revenue of Burmah of only £110,000. But, unfortunately, both sides of the account, as estimated in the time of my Predecessor, were wrong. The Revenue, instead of 775,000 tens of rupees, yielded only 297,400 tens of rupees, and the Expenditure amounted to 2,038,800 tens of rupees. Therefore, instead of the estimated net charge of 110,000 tens of rupees, there was a net charge of 1,741,000 tens of rupees. Although the Estimate for this year is very much less favourable than that of last year, I hope it will, at all events, prove to be nearer the truth when the revised Estimates come to be considered next year. The present estimate is that there will be a deficit in respect of Burmah, which will come upon the Revenue of India, of 1,770,500 tens of rupees; and since this Statement was circulated telegrams have been received from India, showing that there have been 300,000 tens of rupees additional spent upon the Army, and a probable addition of 100,000 tens of rupees for housing the troops, amounting together to 400,000 tens of rupees, which will swell the estimated deficit to 2,170,500 tens of rupees.

creased. It is also satisfactory to see that not only has that Revenue increased, but that the Land Revenue has also increased. If hon. Gentlemen will turn to page 22 of the Paper they will see that there is a steady increase in the Land Revenue, which, although not large, is a substantial increase. They will also see that the increase in 1887-8 is independent of the Land Revenue received from Upper Burmah, amounting to 320,000 tens of rupees. Now, I do not wish to make too much of this, because the increase is, after all, slight. But I think it is a satisfactory circumstance when rents at home are falling, and when most of the countries which depend on agricultural prosperity are in a more or less depressed condition as to their rents and revenues, that the Revenue of India should show not only no reduction under this head, but should actually show an increase. Another matter which I desiro to point out is that, although the Expenditure has also increased, there is no great increase of Expenditure from what I may call normal causes. No doubt there is one great increase of Expenditure from a normal cause-namely, the increase of Army Charge, which is consequent on the permanent increase of the Army of India, which took place rather more than two years ago, at the time when the Penjdeh incident occurred and there was some apprehension as to the possibility of hostilities. That charge of about 1,500,000 tens of rupees is one which will permanently increase the Expenditure out of the Revenues of India. But what has caused the apparont increase in the Expenditure has been the deficit of Upper Burmah and the great cost of exchange. If it had not been for abnormal causes which were beyond the control of the Government of India, notwithstanding the in- SIR JOHN GORST: It includes all crease of Army Charges, there would charges attributable to the expenditure have been a reduction in the whole Ex-in Upper Burnah. Whereas there is a penditure of India of no less than 43,100 tens of rupees. If hon. Membors will turn to pages 6 and 7 of the Paper they will also see figures set out which clearly show what I am endeavouring to urge on the Committee-namely, that there has been an improvement both in Revenue and in what I call the normal Expenditure. There has been a gross improvement of 1,956,800 tens of rupees. Of that sum, 490,000 tens of rupees comes out of revenues assigned

SIR GEORGE CAMPBELL (Kirkcaldy, &c.): Does that include the ordinary charge for the Army?

great reduction in the extra Marine and Army charges in 1887-8, I should like to point out that it does not give very much relief to the financial position of Upper Burmah, because it is met by an increase in police. It is only candid that I should state that this is the financial result of the annexation of Burmah. When the annexation was made it was not expected that so heavy a charge would be thrown on the Revenue of India by the policy then pursued, and it

It appears on that page that the amount of the capital which has been spent from 1870 to 1888 upon lines still under construction is about Rx14,000,000. At 4 per cent, which is what the Government practically pay, that would represent the amount of Rx560,000, which the Government is paying in the shape of interest on capital from which they are receiving no return at all. Therefore, there is a drain to the extent of Rx560,000 upon the Indian Revenue. The drain, however, will not be permanent; but it will terminate as soon as the lines are completed. Of course, that does not account for all, and I directed further inquiries to see what it is that causes a loss to the Revenue of India in the rest of the same page; and what I found is this: that upon the State lines which were in progress prior to 1880-1

upon pages 10, 11, and 12, figures which, I think, will enable them to judge for themselves as to the present condition of the Indian railways. I want to point out three conclusions which the Committee may draw from these figures. The first is that the Indian railways pay a large and increasing profit upon the capital which is invested in them. That appears most clear from the figures on page 11. The percentage of net receipts on the capital expended on railways has been in the three years under our review 5.27, 5.84, 5.90. Then I want also to call the attention of the Committee to the fact that the Government of India is not making a profit, but is incurring a large and increasing annual charge. That appears on page 12, and in 1884-5 it amounted to Rx1,051,175, in 1885-6 to Rx1,731,713, in 1886-7 to Rx1,458,304, and in the Budget Estimate for 1887-8-I take that date because it was prior it is Rx1,589,400. This is the second conclusion to be drawn from the figures; and the third proposition I want the Committee to consider is that this charge upon the Revenue of India has been entirely brought about by the fall in exchange. For if the Members of the Committee will look at the figures which I have given of the increased charge in the Railway Revenue Account, owing to the fall in the value of rupees, they will see that, but for that increased charge in the three years under consideration, there would not only be no deficit, but a surplus in Railway Revenue administration. Of course, under these circumstances, I inquired, as I dare say every Member of the Committee inquired, how these losses occurred. Of course, we cannot help the loss of exchange. The question I wanted to ask was whether it was likely that this drain upon the Revenue of India by the railway account would be a permanent one, or whether it was likely, in a few years, that there might be an improvement or even a profit? I found, however, that a very large portion of that apparent loss is caused by capital which is sunk in partially constructed lines upon which the Government is paying interest, although the capital at present is making no return. If the Committee will refer to page 76 of the Financial Statement which Sir Auckland Colvin has submitted, they will find how much of that drain upon Indian finance is caused by the circumstance I have mentioned.

to the commencement of the Frontier Lines, the Quetta and Pishin Lines, which are not really railways, but defence works, and which were not made for the purpose of railways, but for defence works. Upon these lines, including the East India Railway, I find that the profit which was made by the Government of India was 6·77, and, exeluding the East India Railway, 5.3 per cent. Of course, the East India Railway has been a most profitable undertaking, most profitable to the persons who furnished the capital, most profitable to the Government of India, and most profitable to the people of India. It pays 87 per cent upon the capital outlay. The whole of that is not taken by the Government of India; but that is what the railway pays altogether upon the outlay. Excluding that railway, we make a profit of 5.3 per cent. The State railways undoubtedly make a profit; but there is a loss incurred upon the guaranteed lines which swallows up the whole of the profit made by the State railways, and converts the profit into a loss. The reason why this loss is incurred on the guaranteed lines is that since the time when the interest was guaranteed there has been a tremendous fall in exchange. It may be said that the guarantee amounts roughly to 5 per cent on the old lines made long ago, and that that guarantee of 5 per cent really imposes upon the finances of India a burden of nearly 6 per cent, because, in order to pay 5 per cent to the English