§ SIR HENRY WILLOUGHBY
said, he had given notice of a Resolution which he believed to be in the interest of the taxpayers both in this country and in India, for his objection to the amalgamation scheme was the enormous cost that would he incurred in the transport of the military backwards and forwards. His Motion was to the effect that all monies required for raising and training officers and men for service in India should be voted in that House in a separate Estimate, and repaid into the British exchequer by the Indian Government, and he suggested that the repayment should take place by monthly instalments. His proposition was supported by the highest authority, and was founded, he believed, on common sense. It had been his intention to have brought the subject before the House last Session; but he was advised by the late Sir James Graham, whom he had the honour of consulting, to wait to see if any action in respect to the matter would be taken by the Government. It had been proved that the accounts in the War Office were not kept in a state of perfection. The hon. and gallant General the Member for Huntingdon (General Peel) had given notice of his intention to make a statement on the want of control on the part of that House over naval and military expenditure, He would not therefore enter into that question now, except to say that it was the clear duty of the House not to add to the difficulties in the War Department, or, by mixing up Indian with British accounts, to render quite unintelligible that which at present was far from being so clear as it ought to be. It was easy to see that the question raised was one of the greatest importance. They had imposed upon the British taxpayer during the last three years for the army a charge of forty-five millions and the greatest confusion had been created by mixing up the Indian and British accounts. The House was now called upon to vote £15,300,000 for the army, and the Estimates for the army 926 and navy together amounted to twenty-seven millions. He observed a remarkable and most important change in the Estimates. A sum of upwards of £900,000 on account of certain home charges for the army in India was now, for the first time, included in the estimate of military expenditure. That charge would be imposed, in the first instance, upon the British taxpayers, whom it was the duty of that House to protect, and they could be protected best by keeping the accounts separate. It was also the interest of the Indian taxpayers that the accounts should be kept separate. There had been a feeling generated in India akin to that which prevailed in the American Colonies before they separated from the mother country. The people of India held the opinion that vast home charges for military purposes were inflicted upon their country by the authorities here, and it appeared that last year they had had to pay under that head a sum of no less than £1,619,000, and it behoved that House to prove, by a thorough discussion of the Estimates, that everything in financial matters was fair and aboveboard. To the Secretary of State for India and his Council the sanction of Parliament would be invaluable, for it would enable them to resist a pressure which papers on the table showed was now brought to bear upon them, and to which they were, perhaps, sometimes obliged to yield. Mr. Laing, who might be called the Chancellor of the Exchequer of India, when addressing the Madras Chamber of Commerce in December last, and alluding to those import duties on British manufactures which many hon. Gentlemen considered so injurious, stated that relief should he looked for in a reduction of the home charges, and of Indian military expenditure. The same view was entertained by the press and the leading men in India, and if the House of Commons desired to give contentment to the people of that country it must see that the military expenses were fairly calculated. He was persuaded that an honest and straightforward conduct on the part of that House, assisted by the publicity which was always given to its proceedings and by the comments of the press, would be found the best means of preventing discontent and maintaining tranquillity and order in India. Supposing the military expenditure for India to be properly discussed and voted, the question then arose, who was to pay it? He hoped the British taxpayers would be 927 kept clear of that burden at least. What authority had Ministers for the feasibility of their scheme that the money voted should be repaid into the British Exchequer by the Indian Government in monthly instalments? In 1860 a very laborious and able Committee was appointed to consider the military organization of the empire. He might cite in favour of his view the opinion of every Gentleman who took part in that inquiry. The report of the Committee, which was drawn up by the late Sir James Graham, stated that the accounts as between India and the British Exchequer were in a most unsatisfactory state. Why were they in an unsatisfactory state? Simply because they were never settled. It was proved before the Committee that certain accounts were kept open for a period of five years. The Committee discovered that at the time they were sitting the accounts of the Persian war had not been closed, while those for the China war of 1856 were only settled, by a sort of compromise, in 1860. Mr. Anderson, the financial Secretary to the Treasury, Mr. Arbuthnot, of the same department, the Accountant General, and the late Lord Herbert, all admitted, in reply to questions from Sir James Graham, that nothing could be more unsatisfactory than the state of the accounts between this country and India. There were accounts kept open for years, disputed balances, and no settlements. But we had now got into a new phase of Indian accounts. The sums were enormous. Last year no less a sum than nearly a million was spent in this country on account of the Indian army. Who was responsible for that expenditure? A large portion of it was prospective—for invaliding and pensions which would fall due at some future period. Who was to look after the fair distribution of that expenditure if the House of Commons did not take the matter in hand? Mr. Anderson told the Committee of 1860 that the best mode of meeting the difficulty would be to arrange that all monies required to be expended in this country on account of the army in India should be voted by that House; that they should be issued under proper checks; that they should be repaid into the British Exchequer by the Indian Government; and that the accounts, after being audited, should be laid before" Parliament in the usual way. That was an admirable suggestion, and it could be easily carried into effect. If hon. Mem- 928 bers looked at the present Estimates, they would find that in no less than seven Votes they were referred to a certain note, which informed them that the sums included something relating to the Indian army. Of course, that struck at the accuracy of our own Estimates, but it also muddled up British and Indian finance in a manner which should not be tolerated for a single day. These were the grounds on which he thought his Motion might be fairly supported; and he thought this was the proper time for submitting it to the House, when they found for the first time Indian accounts muddled up with the English Estimates. Above all he thought it was but justice to the English taxpayer that he should not be charged with these payments. It was a most curious thing to find a necessity for an additional penny per pound on the Income Tax on account of India, and the import duties maintained in consequence of the charges on India in this country. He therefore did hope that the House would uphold its own character by keeping these accounts clear. Whatever control they now had over the army expenditure would be much weakened by mixing up, as a new element of confusion, British with Indian finance.
Amendment proposed,To leave out from the word 'That' to the end of the Question, in order to add the words' it is the opinion of this House, that all monies required on account of the raising, training, &c. Officers and Men for Service in India, and all other expenses connected therewith, shall be voted in this House in a separate Estimate; and that all such monies shall be repaid into the British Exchequer by the Indian Government—instead thereof.
SIR GEORGE LEWIS
I do not at all dispute the right of the hon. Baronet to bring forward this Motion upon going into Committee of Supply on the Army Estimates for this year; but I think the House will see that it can have no bearing on the Estimates that are now on the table, when, in order to give effect to the Motion, these Estimates must be withdrawn and entirely recast, and considerable delay necessarily incurred for the purpose of that double operation. Therefore, whatever importance the Motion may have must be considered as limited strictly to its future operation. But I confess, if the Government had taken the course which the hon. Baronet recommends in his resolution, I should have expected to hear the hon. Baronet himself, as a financial 929 reformer, protest against a system so defective, and call on the House to adopt the course actually followed in these Estimates; because it is an unquestionable fact that the system which has been heretofore followed in presenting to the House the cost of the Indian military expenditure has been imperfect and anomalous. There was a charge of £60,000 for the non-effective service, which was paid into the Exchequer; on the other hand, with regard to the effective service and the Indian depots in this country, the matter was arranged between the Indian Government and the War Department. The War Department incurred the expense in the first instance, and kept a separate account. That account was presented to the Indian Government and the expense paid; but no trace of that transaction appeared in the Army Estimates. And it is an entire mistake when the hon. Baronet says that now for the first time the Ways and Means are affected and the English taxpayer is called on to advance the money. The money was as much advanced before from the British Exchequer as it will be under the present system; the only difference is that there was a transaction between the War Office and the Indian Government of which the House had no cognizance, but which is now brought under the cognizance of the House. The hon. Baronet is therefore entirely mistaken in representing the change made as a retrograde movement. It is a decided improvement on the former system. The whole expense incurred and paid out of the English Exchequer in the first instance appears in the Votes, and we make now a statement of the repayment we are to receive from the Indian Government. That repayment has been arranged on a fixed and simple principle. It admits of being liquidated according to the number of men on the Indian establishment; and there can be no dispute between the Home and the Indian Government as to the amount. Therefore it seems to me that the matter now is placed on the most simple and intelligible footing, of which this House can have no reason able ground to complain. In fact, the whole object of the Government, with a view to simplify these accounts, to make them intelligible, and bring them before the cognizance of this House, has been in a diametrically opposite direction to that described by the hon. Baronet. Their object was to place the whole military ex- 930 penditure in the account, and to show the set-off obtained in a gross sum from the Indian Government. What is meant by the amalgamation of the Indian and the English armies? Assuredly it means that instead of being two they are branches of the same army; and if the army be amalgamated surely the accounts should be amalgamated. It must be useful as far as our Indian depots are concerned, and the expenses in this country on account of India, that they should appear in our army accounts, I cannot admit that the smallest advantage can arise from adopting the plan recommended by the hon. Baronet. But if it were desirable that there should be such a separation between the two Estimates—that we should have one for the English army employed in India and another for the British army—I very much question whether it would be practicable. I trust, therefore, the House will not agree to the Resolution of the hon. Baronet.
§ COLONEL SYKES
rose to second the Motion. In the present year there were 75,899 European troops in India, and 7,629 belonging to the regiments in India in depot here making about 83,500 men. A capitation of £10 upon that number would yield a sum of £835,000; and allowing £3 10s. for the non effective service, this would give a sum of £1,132,500 transferred from India annually, and put into the English Exchequer. He thought the hon. Baronet was right in saying that the House ought to have there accounts separately, and ought to be able to trace what became of the money. When the mutiny broke out, in 1857, there were not 45,000 European troops in all India, and there were not 12,000 in active employ against the 100,000 veteran Bengal sepoys. When Oude was in rebellion, and many Native Princes were hostile, nevertheless that small body of men crushed the mutiny before the arrival of reinforcements from Europe, and in testimony of this he would read to the House the general order of the Governor General, dated the 5th November, 1857—Before a single soldier of the many thousands who are hastening from England to uphold the supremacy of the British power has set foot on these shores, the rebel force, where it was strongest and most united, and where it had the command of unbounded military appliances, has been destroyed or scattered by an army collected within the limits of the North Western Provinces and the Punjaub alone. The work has been done before the support of those battalions which have 931 been collected in Bengal, from the forces of the Queen in China and in Her Majesty's Eastern Colonies, could reach General Wilson's army; and it is by the courage and endurance of that gallant army alone that the head of rebellion has been crushed, and the cause of humanity and rightful authority vindicated.Could it be possible, now that the whole of India was at our feet, and no enemy to oppose us, that we required 83,000 troops? He appealed to common sense whether that could be necessary. Of the European troops maintained in India, 7 per cent died annually, and 3 per cent were invalided; and the people of England had a right to inquire whether it was necessary to spend so much of the youthful blood and sinew of the country in India. The fact was, they had lost that confidence in themselves which they possessed when India was under the rule of the East India Company. They had it on the authority of Mr. Laing, in his letter to the Chamber of Commerce at Madras, that it was the expense occasioned by this large number of troops that necessitated an import duty of 10 per cent on the cotton goods sent from this country to India, and the imposition of an Income Tax in India; and till the European army was reduced those imposts could never be remitted. If the twenty-one nations composing our dominions in India had been inclined to shake off the British yoke, they could have done so when the mutiny broke out; and it was not therefore from necessity, but from the lust of power and patronage, that our large standing army was maintained at the expense of the tax-payers in India. His hon. Friend the Member for Inverness (Mr. H. Baillie) was mistaken in supposing that the massacres in India would not hare taken place if they had had a larger force in India at the time of the mutiny, for these massacres took place in out-of-the-way localities, which would not have been adequately protected even if they had had 200,000 European troops in the country. If the hon. Baronet divided the House he should vote with him.
§ MR. AYRTON
said, the hon. Baronet, and his hon. and gallant Friend who had just sat down, objected originally to the amalgamation of the two services, and it was but natural that they should now object to the amalgamation of the accounts. But the Government, be thought, would have exposed themselves to serious animadversion if, after combining the Indian and English services, they had kept the 932 accounts separate. They proceeded on the more intelligible and satisfactory principle that the whole army should be treated as a single body. In that way they hoped to attain three great desiderata. Firstly, a complete and uniform management of the whole of the army in this country; secondly, that the whole of the expenditure should be submitted to the House of Commons; and, thirdly, that the accounts between the Indian army and the English Exchequer should be placed on a clear and well-defined basis. Economy, too, had been a strong inducement in adopting the amalgamation, inasmuch as several unnecessary appointments, the expense of duplicate depots, duplicate sets of officers, duplicate establishments, were by the amalgamation extinguished. By these means the vast expense of keeping up in this country a subsidiary army, distinct from the British army, would be avoided, and proper supervision and economy would be insured in appointments and establishment charges, over which it would be otherwise impossible to keep any adequate check. No difficulty could arise with the Indian Government, because there was a fixed charge per man, and there never could be any doubt as to the number of men serving there; and there never could be any doubt as to what the cost of the Indian establishment was, as there always had been under the old system. He could not conceive how any objection could be taken to the course pursued by the Secretary for War, except, possibly, that he had not carried economical principles sufficiently far; but he certainly had done all in his power to give that House direct control over the matters which formed the subject of discussion.
said, that if he understood correctly the statements of the hon. Member who had just spoken, his constituents in the Tower Hamlets would have the pleasure of contributing their share to provide the funds for the whole Indian army, inasmuch as his proposal was, that in consequence of the amalgamation of the two armies it was the duty of the Government to bring forward the entire charge for the Indian army—he did not say whether he included Blacks as well as Whites in his proposal—for payment in this country. [Mr. AYRTON: I said the whole charge in this country in respect to Queen's troops in India, not the whole charge of the Indian army in India.] Then, if that were the hon. Gentleman's view, he did 933 not see how it applied to the Estimates on the table, because, so far as he could understand anything in them, they gave what was to be the whole expense in this country. The Government simply said it is estimated that the sum of £985,000 should be charged on account of raising, training, &c.; and the el cetera was, no doubt, a very accommodating ending for a thing which was only estimated in the beginning. But what he was anxious to know was, what amount of money the Chancellor of the Exchequer was going to ask for in Committee of Ways and Means for the service of the year. It was clear that there would be a penny in the pound additional for the taxpayers of the Tower Hamlets, as well as the rest of the country, if the new system of keeping the accounts were adopted. The ordinary course pursued by a Chancellor of the Exchequer in making his financial statement was In say, "You have voted the Army and Navy Estimates, which amount to a certain sum; the Miscellaneous Estimates will amount to so much more, I want you to provide for these amounts in the Ways and Means for the year;" but in the present instance the House would be told that the Army Estimates were £15,000,000, and then they were told in a foot-note, printed in italics, that there was a sum of £900,000 odd which was estimated to be paid back again. Was that, he should like, to know, a satisfactory mode of keeping the public accounts? For his own part he did not think so, and he quite concurred in the opinion that it would be desirable the estimate of the sum which it was said was to be paid back were given in a more detailed shape, for then the House would not be so much at the mercy of the Government when the proposals of the Chancellor of the Exchequer were made in Committee of Ways and Means. He, for one, did not see that the amalgamation of the two armies had anything to do with the question which had been raised. They now happened to require 70,000 of the Queen's troops instead of 30,000, and the expense was proportionately greater.
§ THE CHANCELLOR OF THE EXCHEQUER
I rise to answer the appeal made by the right hon. Gentleman, and I am not at all sorry he has made it, because, as this is a novel arrangement, it is quite right the subject should be discussed in this House, and that hon. Members should obtain a clear view of the grounds on 934 which the alteration was made and what its operation is likely to be. In dealing with the matter I would, in the first place, call the attention of the House to the nature of the old system; and I may observe, in doing so, that I think the right hon. Gentleman was quite right in his concluding observation, that the change recently effected with respect to the settlement of accounts relating to our Indian forces stands entirely apart from the question of the amalgamation of the two armies. This change, in fact, so far as it is a financial improvement and tends to simplicity in our accounts, might and, indeed, ought to have been adopted if the Indian and British establishments had continued upon their former footing. We must bear in mind that there were two great heads of expenditure incurred by Great Britain—in the first instance, with a claim to reimbursement from India, on account of the non-effective service; and, in the second place, on account of that which the right hon. Gentleman had described by the words "raising, training, &c," which I suppose I shall be correct in designating the effective services. Now, the old system has been this, that the Indian Government paid £60,000 a year into the British Exchequer, which was supposed to be a reimbursement of our charge on account of the non-effective service of India. Of the charge or the reimbursement the House of Commons never heard, because the whole of the non-effective services were voted together in the British Estimates, there being no means of knowing how much lay to the charge of one service, or how much to that of the other. Neither was the reimbursement of this amount of £60,000 ever heard of by the. House. [Mr. HENLEY: It used to be.] Not of late years. [Mr. HENLEY: Yes, within a few years.] Well, not, at all events, during the period for which I have been responsible for the finances of the country. The amount was simply paid into the Exchequer and taken credit for by the Finance Minister in Committee of Ways and Means as a portion of the miscellaneous Revenue of the country. Now, the alteration which has been made is this. The whole subject of the justice of this charge has been reconsidered, and in lieu of a fixed payment of £60,000 a year we shall now have a payment varying according to the number of men serving in India. The right hon. Gentleman will see, therefore, that it is impossible we could do more 935 than we have done—namely, estimate approximately the amount forthcoming under this head. We do not. in short, now proceed on the principle of charging a lump sum on India. To do so would invoke the risk of undue gain or loss to the Exchequer of one country or the other. Instead, we have fixed a certain sum per man, which is to be payable to this country according to the number of the force maintained. We get, in fact, £3 10s. per man on the non-effective services, in lieu of £60,000. With regard to the effective services, the old principle was that the War Department and the Indian Government settled the matter together without ever presenting the Estimate to the House, the War Department being subsequently reimbursed the exact amount the Indian depots cost in the first instance. The recommendation made under these circumstances—and it was one, I think, in accordance with the soundest principles of financial administration—was that, in lieu of that system, a new one should be established, in accordance with which the whole charge for those depots should be voted by the House of Commons; that the total cost of them to this country should be estimated as nearly as possible; and that on that Estimate as a basis the calculation of repayment from the Indian revenue should be made. Having, after a careful calculation, fixed £3 10s. for the non-effective, the Government arrived at the conclusion that £10 per man was the proper sum to fix for the effective service. As the system now stands, therefore, you will be called upon to vote, in the first instance, in one single Estimate the whole of this country's charge, both for the non-effective and effective services in India. These charges were estimated for the purpose of reimbursement at so much per head upon the army serving in India. On that basis the repayment will be made into the Exchequer, and will form part of the Miscellaneous Revenue. Some apprehension appears to have been felt in this discussion lest the people of this country should be placed in the position of being under a permanent advance to India in respect of these military charges. On the contrary, the arrangement which has been made will operate in such a manner that practically this country will be under no advance to India at ail. Heretofore, indeed, this country has been under very serious advances of this nature; but now the basis 936 of the settlement that has been adopted will enable us to make the payments from time to time at very short intervals. I do not remember the precise terms, but I think they will be made from month to month; and the arrangement has been come to with the object on the part of the British Exchequer of bringing back into that Exchequer as nearly as possible within the financial year, under the head of Miscellaneous Revenue, the precise sum which will have been paid out within the same financial year under the head of Army Expenditure. Therefore nothing can be more simple than the answer I have to give to the right hon. Gentleman as to the effect which this arrangement will have on the financial statement of the Chancellor of the Exchequer. The first effect will be a certain apparent increase in the amount of charge to be borne by the country; because when he proceeds to state the amount which the House will be called on to vote, or may have voted during the financial year, he will have to include under the Army Estimates the cost of certain effective forces in India, which have never appeared in them before. But it is asked whether increased ways and means will not have to be found in proportion. My answer is, that those increased ways and means will find themselves, because the payments will come back from the Indian Government almost literally as quickly as they go out from the War Department; and therefore the financial Minister will take credit on the other side of his account in the shape of Miscellaneous Revenue to the exact amount of the addition to the Military Estimates.
§ SIR STAFFORD NORTHCOTE
asked, whether they were to understand that the expense of the depots in England was borne under these Estimates, and was to be repaid in a capitation upon the army in India? [The CHANCELLOR of the EXCHEQUER: Yes.] Then the smaller the army in India, and the greater the number of these depots, the greater would be the expense to this country, and the smaller the proportion which the Indian Government would have to pay?
SIR. GEORGE LEWIS
Of course every estimate of this kind must be made upon an average. The estimate of £10 per head was very carefully prepared last year by a Committee composed partly of Members of the Indian Department and partly of Officers of the War Department.
937 Different estimates were put forward on each side, and at last it was generally agreed that upon an average of the strength of the Indian Establishment £10 per head would be a fair charge. Of course extreme cases may occur.
§ SIR EDWARD COLEBROOKE
asked for some explanation of the data on which the £10 per man was reckoned, and hoped that the Report of the Committee to which reference had been made would be laid before the House.
In answer to the contradiction which I received from the Chancellor of the Exchequer, I have to say that I now hold in my band the Estimates for 1854, when the right hon. Gentleman held his present office, and it is there stated that under an Act of George IV. the sum of £60,000 was paid into the Exchequer from the East India Company.
§ SIR CHARLES WOOD
In reply to the questions of hon. Gentlemen, I may state that the old practice was that the moment an English regiment was put upon the Indian establishment the whole expenses Connected with that regiment were transferred to the Indian revenue. The payment of the regiment in India was made in India, and all the charges in respect of it payable in this country were paid by the War Office, and repaid by the Indian Government. The payment for these charges had been commuted into a sum of £10 per head, which included not only the cost of recruiting and training, but covered tinder the term "&c." all other items of charge whatever (which were too many to be enumerated) incurred in this country in respect of a regiment in India. The War Office has no interest in keeping down this expense; while, on the other hand, the Indian Government—which, being charged with the payment, has such an interest—has no means of keeping it down. The consequence is that much disagreeable correspondence has been going on between the two departments; and to that state of things it is desirable to put an end. A Committee was appointed, as my right hon. Friend has said, of which Sir Alexander Tulloh was chair- 938 man; and on that Committee sat on the one side the Deputy Paymaster General and the Revenue Clerk of the Treasury, and on the part of the Indian Department, the Auditor of the Indian Office and the Chairman of the Military Finance Commission of India. They ultimately arrived at the conclusion—which they reported in very general terms—that they had quite satisfied themselves that the arrangement detailed by my right hon. Friend was a fair one, and they accordingly recommended its adoption as a temporary measure, until there had been a further opportunity of going more fully into the matter. On an average of many years hack £8 per head has been found to be a fair charge; but, as everybody knows, many additional advantages have of late years been afforded to the soldier, such as good-conduct pay, greater luxuries in barracks, and the like; and on due investigation it was thought that £2 more per head would be the proper allowance for these extra charges. £10 per head on the effective force mustered in India for the charges at home, and £3 10s. as our contribution towards the pensions and dead weight, is, we think, a fair scale. We therefore introduced it for one year, and it is proposed to continue it for another year, subject to further consideration hereafter. This arrangement, I believe, will greatly simplify matters, and be perfectly just both to this country and to India.
SIR FREDERIC SMITH
doubted whether £10 per head per annum would cover the whole charge of all kinds for the effective force, and thought that in a matter of so much importance the House ought to have the detailed figures of the calculation placed before it.
§ MR. DEEDES
should like to have more clearly pointed out by what means the British Exchequer was to be so quickly repaid the advances.
§ SIR CHARLES WOOD
observed, that a monthly muster-roll of the Indian army was sent home every month, and payments were to be made once a mouth to the Exchequer from Indian funds.
SIR. GEORGE LEWIS
remarked, that if there were 60,000 troops in India, their cost under the arrangement would be known; under the old system the difficulty arose as to striking the balances.
§ Question put, "That the words proposed to be left out stand part of the Question."
§ The House divided:—Ayes 132; Noes 55: Majority 77.
§ Question again proposed.