The Sun.
London, England, 1859-04-08 00:00:00

EAST INDIA LOAN BILL.

The Earl of DERBY rose and said—My lords, in moving
the second reading of this bill I presume that your lord-
ships would hardly wish me again to go over the ground
which I traversed a few days ago, when I gave to your lord-
ships the revised estimate of the Indian finances, and stated
the increased amount of the deficiency which it was then
calculated would have to be provided for in the course of
the ensuing year. I stated then to what amount that defi-
ciency would in all probability extend, and what were the
means relied on by the Indian Government for reducing
the deficiency of £11,500,000 estimated for that year, so as
to require only partial assistance from her Majesty's Go-
vernment, amounting to something like £4,000,000. Your
lordships will also bear in mind that on the present occa-
sion, though I seek your sanction to the second reading of
this bill, I am, in fact, asking for what may be regarded as
a grant on account, for I have already mentioned that it
will be necessary at a future period to ask for a further sum
of £5,000,000 to make up the whole amount required. It
was thought better, looking to the approaching dissolution
of Parliament, that no time should be lost in passing this
bill, and your lordships the other day kindly showed your
willingness to -suspend the standing orders to allow the
Royal assent to be given to it before the next mail goes out.
I do not on this occasion wish to make a lengthened state-
ment on the subject, but I wish to give an answer to ques-
tions that were put to me on a former evening by different
noble lords. I have been asked by the noble lord opposite
(Lord Monteagle) whether it is the intention of the Govern..
meat to propose a vote of thanks to the Governor-General
of India, the commander-in-chief of the army, and the offi-
cers of the military and civil services, by whose exertions
and the blessing of Providence the mutiny was suppressed
and peace restored to India. With regard to that point I
have to state that on Monday next I shall call your lordships'
attention to the subject, and move a vote of thanks in the
usual form. On the same occasion I was asked by the noble
duke below me (the Duke of Marlborough) whether it was
intenesd by any public religious manifestation to testify
the thanks of the nation for the blessing vouchsafed to its
arms. In answer to that question I may state that her Ma-
jesty will be advised to issue her Royal command fora form
of prayer to be drawn up and used in all churches on such
days as her Majesty may think fit to appoint. I now come
to tke question of the noble earl (Ellenborough), who felt
some difficulty in comprehending the statement as to the
system of deposits for Indian railways made in this coun-
try, and the manner in which those deposits are expended
in India. The subject, though somewhat complicated, is a
question rather of account than revenue, and I hope I shall
be able to make it clear to my noble friend and to the house.
From the great number of shares in Indian railways taken
in this country, the amount of the calls made is very large.
In the course of the next year the amount of those salts
will not be less than £6,800,000, or, in round numbers,
£7,000,000. The general course of proceeding with regard
to these railway calls is this,—the amount of the calls
is not transmitted to India ; it is, in the first instance,
paid into the Indian Treasury in this country. Of these
shares 96 per cent, are held in England ; of
every million, therefore, £960,000 are paid up on account
of persons in this country. Of this £960,000 there are
required to be paid for services and work done here
about £400,000, leaving £560,000 to be expended for works
in India. With regard to the £400,000 required for ex-
penses incurred in this country, it is, of course a matter of
convenience that should never be transmitted to India at
all. With regard to the other £560,000 the course is this :
Your lordships are aware that on all Indian railways the
Government guarantees to make up all the interest that
may fall short of 5 per cent. on the capital expended.
When a railway is completed, and returns more than 5 per
cent, profit, the surplus above that amount is divided be-
tween the shareholders and the Government in repayment
of its guarantee. For all works done in India to the
extent of £550,000 is a charge on the finances of India,
and the Indian Government in the meantime take in hand
all the receipts of the railway. There is a running ac-
count kept from month to month between the Govern-
ment in India and the Indian Government here ; the
sums expended in India are placed against the sums raised
in this country, and the result is that neither money nor
bullion is remitted from either side, but the accounts between
the two Governments are squared every month. The esti-
mate of the sum to be received in the next year, 1859-60, is
£6,844,000; on the 7th of April the balance in the home
treasury will be £4,366,000 ; there will, therefore, be in the
course of the year £11,210,000 applicable to the service of
railway companies in both countries. Of this sum £4,445,000
will be required for works in India ; and there will be a
balance for Indian railway purposes in England of, in round
numbers, £6,000,000. I now come to a different but equally
important subject ; the noble earl opposite (Earl Grey) has
asked what steps have been or will be taken to reduce our
great military expenditure in India. I need hardly say that
in India the state of things during the war was exceptional ;
we cannot found upon it any judgment for the future. But
I am quite willing to admit that, among all the modes of
redressing the financial balance, none is so absolutely ne-
cessary as a reduction of our military expenditure. (Hear.)
The military forces at present employed in India amount to
112,000 Europeans and 320,000 native troops, including the
native police. At this moment the number of native troops
in the employ of the Government exceeds by 50,000 the
number of the native army at the commencement of the
mutiny. The native army at the commencement of the mu-
tiny consisted of 260,000 men ; it now consists of 320,000.
The reduction of this force must be a gradual operation.
The mode in which an immediate saving can be effected is
by the discontinuance of the large field establishments, ex-
traordinary commands, and staff appointments. There may
also be a considerable reduction of the troops of the line sent
from this country to India. At the present moment there
are in India no less than 85 English regiments. In the
course of the present year the Governor-General has inti-
mated his intention of returning ten regiments of the line
which have been the longest in India and have suffered the
most severely from the recent calamity. And I must call
your lordships' attention to this, that the sending back
of regiments to this country is an operation which is not
quite of a simple character, but which has to be considered
in two different bearings—first, as it bears upon the expen-
diture of India, and, next, as it bears—as it must, if not
conducted under a regular system—upon the accounts of the
Army Department in this country; because as soon as these
regiments return from India they cease to be a charge upon
the revenues of India, and become a charge upon the home
service of this country. Consequently, when a large number
of them returns from India without previous notice and ,
without previous concert with the War-office here, the effect
must be to disarrange the estimates which have been sub-
mitted to Parliament, and to cause a very large increase in
the military establishment of this country. It is of the most
essential importance that an understanding should be come
to, and at no distant period, with regard to the permanent
peace establishment of India. (Hear.) It is also necessary
that it should be distinctly understood that upon these points
there are great controversies between the most experienced
authorities. There was great difference of opinion upon
these points between the members of the military commis-
sion, the evidence given before which commission has not
yet been printed, nor has the report yet been laid on the
table of your lordships' house. 1:pon some points there
have been very great differences of opinion in that commis-
sion. Upon one point, however, the commission appeared
e unanimous, but I must say that it will be absolutely
ssary, consistantly with a due regard to the service and
e revenue of India, not to follow up the recommenda-
tion of the commission upon it, because it was the opinion
of the commission, and probably a very sound opinion, that
at all times the European troops of all arms in India should
be at least in the proportion of one to two, and in some dis-
tricts
of one to three, to the native troops. The estimate
formed by that commission required a permanent European
force in India of 80,000 men of all arms. Now, my lords,
a European force of 80,000 men of all arms and a corre-
sponding number of native troops—say of 200,000, instead
of the 320,000 now on service—would require an annual
expenditure upon the revenue of India very little short
of £15,000,000. (Hear, hear.) It is quite obvious to your
lordships and to the country that India, possessing alto-
gether, a net revenue of about £26,000,000, cannot afford an
expenditure of £15,000,000 upon her army alone—(hear,
hear)—without estimating any of the contingencies arising
out of a state of war, or any other extraordinary expenses
which it may be necessary to incur. That estimate was
taken '..;or an ordinary state of peace, and it is quite clear
that if no reductions are to be made in the expenditure of
India, it is impossible for the revenue of India to bear it.
(Hear.) Then, my lords, there is another very important
question, upon which, as I before stated, there are differences
of opinion in the commissio; namely, the question as to the
character of the European force in that country. It was
the, opinion of those who were connected with the Queen's
service that the whole of the European force for the ser-
vice"of India should be taken from the regular forces of
her Majesty, that the line and the other corps should serve
by turns in India, and that the European force in India
should, consequently, be supplied in ordinary course from
this country. On the other hand, all those connected with
the Indian service, and most of those who had experience
in India, were very strongly in favour of maintaining not
very large, but considerable local European forces, and I
must say the arguments which they brought forward in
favour of local European forces, commanded by officers
brought up in that service, and acquainted with the man-
ners and habits of the people, and the mode of living in
India, were of great weight There is this further to be
considered—that although a local European force is, no
doubt, on the one hand, subject from long residence in
India to a certain amount of deterioration in point of dis-
cipline and in point of effectiveness, yet, on the other hand,
a local corps in India does not require that system of relief
which would be required if the whole of the European
forces were to be wholly supplied from this country, and
if the existing system of relief were continued, it would be
necessary to maintain here several regiments which would
not be wanted for the home service, but merely for supply-
ing the place of regiments that had been returned to this
country. I do not presume on this subject to express any
strong opinion. I have certainly formed my own opinion,
that a certain local force is, in point of fact, exceedingly de-
sirable for India, would be a considerable saving of expen-
diture, and, moreover, would be exceedingly useful in form-
ing a species of link between the native armies and those
troops sent from this country with no previous knowledge
of the country, and no previous knowledge of the habits and
discipline of the army. I think, however, if I may venture
to pronounce an opinion, that jf a local force is to be main-
tained, it must be maintained subject to the existing en-
gagements with the present officers, aiid. subject to. the au-
thority to which
a local
corpsin India
hliso-thbleectlf
there is to be a local corps, there.oupc , think,. . . every
facility for the purpose of assimilating the drill, discipline,
and everything pertaining to the internal management of
that corps, as between the localaco s and the line. I think,
gamoYeri though this ill a a point of groat dill-

culty, that facilities ought to be given not only for the re-
turn home of regiments from India, but also for exchanges
between officers of the line andofficers of the local European
service, in order, as far as possible, to keep -a esprit de
corps between them, and to prevent the formati, n of an in-
jurious rivalry, but at the same time not to rep: ess an hon-
ourable competition and emulation between ri em. How-
ever, I only mention these subjects beca e they have
engaged the serious attention both of Gov nment and of
Parliament. They are questions upon whichlhere have been
very great differences of opinion between high authorities.
It has been a question between them whether there should
be a local corps at all, and if there should be, what propor-
tion it should bear to the European force. My opinion un-
doubtedly is that that proportion should be defined and fixed,
and that this country should be guaranteed against an in-
tolerable evil, viz., that of the Indian Government calling
in an extraordinary emergency upon this country for 30,000
men one year, for 20,000 another year, and for 25,000 ano-
ther year thereby altogether deranging and disorganising,
the whole system of reliefs in the British army. Upon the
question as to what proportion the local corps should bear
to the European force there arose considerable difficulty,
and I think there will be considerable difficulty in settling
points of detail, upon which it will be absolutely necessary
that we should have the opinion and advice of the Governor-
General and of officers of Indian experience. But that is
not the point which presses at the present moment. It
is in the military expenditure of India that we hope to be
able to effect the greatest amount of reduction, and in
order to arrive at an opinion of what that expenditure may
be reduced to, it would be necessary to come, at the earliest
possible period, to a distinct understanding both with regard
to the numbers of the military forces and their respect-
ive proportions to each other, as an ordinary peace
establishment in India, apart from any extraordinary
emergency such as lately happened, and such as, I trust,
may not happen again. I think I have given, as far as I
could, an answer to the noble earl opposite with regard to
the steps that have been taken for the reduction of this
expenditure when I stated that, first, there will be a reduction
in the extraordinary commands, next that there will be a
reduction in the staff ; thirdly, that there will be a reduction
of the British force in India, and a return of a considerable
portion of that force to this country; and, fourthly, that
there will shortly be, as I hope, largereductions in the over-
grown native army by which the finances of India are now
so heavily burdened. lam not able to state to the noble
earl how far these reductions have been carried into effect.
All I can say is that the attention of the Governor-
General is anxiously devoted to this subject. He is
making every effort in his power to effect reductions,
but at the same time I think that reductions, more
especially as regards the European force, ought to be
made with considerable caution, and not with too great
haste. Although I hope that peace is now permanently
established, yet I think it is very desirable that we should
for some time maintain a considerable and imposing Euro-
pean force to keep the peace and to assert the predominant
authority of this country in India. (Hear, hear.) My
lords, I am not aware of any other points upon which any
question was put to me the other day. If there are any I
hope I may be able to answer them, but, as your lordships
are aware, I am not very familiar with these subjects of
Indian detail. I shall be very happy to give such informa-
tion as is in my power, and now, without further occupying
your lordships' time, I beg to move the second reading of
this bill. (Hear, hear.)

The Duke of ARGYLL hoped that in the future settle-
ment of the question of Indian finance a sound and mate-
rial basis would be decided upon, but at the present time
there were certain questions upon which it was of
the utmost importance that all parties should arrive
at a satisfactory understanding. He wished to know whe-
ther it was true or not that the British Exchequer was
liable for the debt that had been contracted for the sup-
pression of the mutiny. He was fully convinced of the
vast resources of Hindostan, and that they would
in course of time yield sufficient to liquidate all
the immense outlay, but that circumstance would not
justify a profuse and extravagant expenditure being main-
tained. He believed that this country had a deep sense of
the obligations under which they were to the people of India,
and they felt it was impossible that these obligations could
be discharged under the present state of things. They felt
that under the present state of the finances of India that
expenditure was begrudged, and he should have occasion
next week to speak with reference to this in connection with
the education of the people of India. Although they were
most anxious and desirous of taking advantage of the op-
portunity afforded them, he believed it to be true that, in the
present state of things, we could not expend for the purposes
of a most wise benevolence even the most trifling sums
without feeling that it was adding to the embarrassments of
India, and there was a just conviction that, apart from this
altogether, by those laws of political economy that regulate
wealth, and by that wealth that secures the prosperity and
happiness of a people, these embarrassments, if not guarded
against and grappled with in time, might become, with
their attendant evils, a permanent embarrassment to the
Government.

The Earl of ELLENBOROUGH deprecatedany guaran-
tee, in conjunction with his noble friend, to the loan raised
in India for the service of that country. (Hear, hear.) He
did not think the time had yet arrived for a settlement of
that question. He deprecated it not so much on the part of
England as on the part of India. He did not think that a
general guarantee would lead to any extravagance on the
part of the officers employed in India, from a consideration
that their expenditure there would practically be defrayed
here. There would be a danger of constant interference on
the part of Parliament with the Government of India, of a
reduction of the establishment and of salaries, which would
be, he was convinced, utterly fatal to the whole Govern-
ment of the country, and on that account he deprecated it
as a general measure. But there was one point he should
wish to bring under the consideration of the house and of
her Majesty's Government as worthy of consideration, as to
whether it might not be advisable in particular cases, and
in exceptional circumstances, to extend the guarantee.
Their lordships were aware that the revenues of India were
burdened with a permanent payment of £630,000 a year to
the proprietors of East India Stock. At the time the bill
was passed for the government of India in 1833, a sum of
£2,000,000 was set apart, which was to accumulate, and it
was expected that at the end of 40 years that accumulation
would produce a sum of £12,000,000, which would be equal
to the amount of the capital stock of the East India Com-
pany, and enable the Government in time to pay off that
stock. The calculations that were made did not appear to
be extremely correct, or at least circumstances had occurred
since that period which were not calculated to bear them
out, for instead of there being any probability of raising a
sufficient fund by the year 1873 for the purpose of paying
off these £12,000,000 by the calculations the other day it
appeared that, supposing the average price of the funds
to remain for the future as they had been for the
past, that sum would not be raised before the year 1887.
It was therefore a matter for consideration whether
it might not be desirable for the Government of this
country to extend its guarantee to the payment of the
capital stock of the late East India Company, taking, of
course, the £630,000 a year, and having a claim to that ex-
tent on the revenues of India. By a measure of that kind,
which he thought it impossible for the Government, under
the circumstances, to reject, the difficulty, might be sur-
mounted, and it would at once set free the whole of the
sum now accumulated under the head of guarantee fund,
which amounted to £4,000,000, and it would at once re-
lieve the revenues of India from the necessity of having any
loan this year, or relieve us from raising any additional
loan to that which was now under the consideration of the
house. He threw out this suggestion for the consideration
of her Majesty's Government. Whatever the Government
might do in India for the general benefit of the people of
India, they might rest assured that one thing which it was
absolutely necessary to do in the first instance was to give
them the most absolute security with respect to their reli-
gion. Their apprehension on the subject of religion was
the cause of the war in India. Nothing could exceed the
propriety and policy of the sentiments expressed in her
Majesty's proclamation ; and if the Government determined
to carry that proclamation into effect in all its spirit, and
compelled those who acted under the Government to do so,
they might be assured that at no distant period they would
be able to look with satisfaction on the state cf India, and
not with feelings of repentance and regret.
After some observations from the Earl of ALBEMARLE
and Lord MONTEAGLE,
The bill was read a second time, and the standing orders
being suspended, went through committee, was read a third
time, and passed.
Their lordships then adjourned.

HOUSE OF COMMONS.—(YESTERDAY.)
The SPEAKER took the chair at four o'clock.
PRIVATE BUSINESS.

The following bills were read a third tine and passed :
Great Western Railway, North British and Selkirk and
Galashiels Railway Companies, and Tyne Improvement
(verbal amendment to be proposed).
The following bills were considered and ordered for third
reading :—Portsmouth and London and South Western
Railway Companies; South Wales, Pembroke, and Tenby
Junction Railway ; Wear Navigation and Sunderland
Docks ; Hereford and Brecon Railway ; and Lymiugton
Railway.