another. Obstructions were offered to the traffic from whichever direction it came.

It was impossible, without great loss of revenue, to get rid of this inland customs line while the salt tax was levied at different rates in different provinces, and until we had the means of controlling the manufacture and taxation of salt produced in Native States and brought into our own territories.

The first steps towards a better system were taken by the Government of Lord Mayo in 1869. An amicable arrangement was made with the Native States of Jaipur and Jodhpur, under which we acquired the sole right of manufacturing salt at the Sámbhar salt lake, the chief of the salt sources of Rájputána, and from which a large proportion of the supply of Northern India is derived. The same policy was followed during Lord Northbrook's administration, and an important. reduction was made in the length of the customs line in its southern section, where it passed through British territory only.

At last, in 1879, under the Government of Lord Lytton, this system, which had been one of the opprobria of British rule, finally disappeared. In 1878, Lord Lytton declared the maintenance of the inland customs. line to be a great political and commercial scandal, and it will always be a cause of satisfaction to me that I was able to help him in getting rid of it.

The abolition of the customs line was rendered possible by two measures. By the first the duties throughout India, although not quite equalised, were made to approximate so nearly that salt could not profitably be taken from one province to another. By the second measure agreements were entered into with the Native States of Rájputána, under which the

British Government obtained leases and control of all the more important sources of salt manufacture. Liberal compensation was given to the chiefs of the Native. States for loss of revenue.

The equalisation of the salt duties throughout India, at a reduced rate, was completed in 1882 under the Government of Lord Ripon. The duty was then fixed at two rupees per maund (82 lbs.), or about four shillings per cwt. This is equivalent to an annual tax of about fivepence per head of the population.1

This is the only obligatory tax which falls upon the masses of the population in India, and, although they are very poor, it cannot be said that the additional price which they have to pay for their salt is felt as an appreciable burden. The case was different twenty or thirty years ago, when high duties and, still more, the absence of means of communication made it difficult for the poorer classes in some parts of India to obtain a sufficient supply of salt. In 1877 the Government declared that its policy would aim at giving to the people throughout India the means of obtaining an unlimited. supply of salt at the cheapest possible cost; that the interests of the people and of the public revenue are identical, and that the only just and wise system is to levy a low rate of duty on an unrestricted consumption. This principle has been acted upon ever since with satisfactory results. The consumption has steadily increased, and the combined effect of reduction of duty, the extension of railways, and the general improvement in the means of communication, has been to make salt cheaper in the greater part of India than it had

In January 1888, in consequence of financial pressure, the duty was raised to two and a half rupees per maund.

ever been before, while the revenue is larger than before the reform of the old system was begun.

Unfortunately the temptation is always great in times of financial pressure to have recourse to the easy expedient of increasing the duty on salt. The vast majority of the people throughout India are probably unaware even of the existence of the tax; but it is on them—that is, on the poorer classes-that the actual burden falls. The masses remain unmoved and silent, while the small and wealthier minority, who alone can make their voices heard, give loud approval to measures which impose no appreciable obligation upon themselves. No efforts consistent with financial prudence should be spared to reduce to the utmost the price of salt throughout India, and thereby to stimulate consumption. A time of extreme political emergency may come when a large and immediate addition to the revenues is necessary, and when fresh direct and unpopular taxation cannot wisely be imposed. Under such circumstances, the tax on salt might without serious objection be temporarily increased, for the Government would thus be able to obtain, by a small increase of duty, large additional resources, almost without the knowledge of the people. Salt ought to be looked on as the last great financial reserve, to be drawn upon in case of urgent necessity, but not otherwise.

Under existing conditions in India a moderate tax upon salt is open in principle to little objection. The reasons for this conclusion were summed up by the Duke of Argyll, when Secretary of State for India, in a passage which I cannot do better than quote:

'On all grounds of general principles, salt is a perfectly legitimate subject of taxation. It is impossible in any country to reach the masses of the population by direct taxes. If they are

to contribute at all to the expenditure of the State, it must be through taxes levied upon some articles of universal consumption. If such taxes are fairly adjusted, a large revenue can thus be raised, not only with less consciousness on the part of the people, but with less real hardship upon them than in any other way whatever. There is no other article in India answering this description upon which any tax is levied. It appears to be the only one which, at present, in that country can occupy the place which is held in our own financial system by the great articles of consumption from which a large part of the imperial revenue is derived. I am of opinion, therefore, that the salt tax in India must continue to be regarded as a legitimate and important branch of the public revenue. It is the duty, however, of the Government to see that such taxes are not so heavy as to bear unjustly on the poor by amounting to a very large percentage upon their necessary expenditure. The best test whether an indirect tax is open to this objection is to be found in its effect upon consumption.''

The Stamp revenue is derived partly from stamps on commercial papers, and partly from fees, levied by means of stamps, on proceedings in the judicial courts. It amounted in 1886-87 to 3,751,000l., of which more than 1,000,000l. was derived from commercial stamps, and about 2,500,000l. from court fees.

The revenue under the head of Excise is derived. from duties on spirits and intoxicating drugs. The people of India generally are extremely abstemious; the consumption of spirits is for the most part confined to the lower classes, but even among them there is, in the words of the Government of India, a condition of things which, if it existed in England, would be regarded almost as a millennium of temperance. Drunkenness in the English sense of the term hardly exists in India.' There has been a large and steady increase in the excise revenue. In 1870 it was less than 2,250,000l.; in 1880

1 Despatch to Government of India, January 21, 1869.

it was 2,840,000l.; and it was 4,375,000l. in 1886-87. Benevolent people in this country, carried away by the enthusiasm of ignorance, have found in such figures as these the opportunity for indignant protest against the wickedness of a Government which, with the object of obtaining revenue, affords, in defiance of native opinion, constantly increasing facilities for drinking. There is no foundation for such assertions. The sole cause of the increase of revenue has been improved administration and the suppression of illicit distillation and sale. I quote from a despatch of the Government of India the following summary of the facts:

Few subjects have of recent years obtained greater attention at the hands of the Government than questions relating to excise administration. In each of the three larger Governments the excise system has, within the last six or seven years, been completely examined in its operation and in its effects. These examinations have been made under the instructions of the local Governments and in direct communication with us, and the principles on which they have been based, and which have been unanimously accepted by all the authorities concerned, have been these: that liquor should be taxed and consumption restricted, as far as it is possible to do so without imposing positive hardships upon the people and driving them to illicit manufacture. The facts now placed on record show that in this policy the local Governments have been completely successful, and that the great increase of excise revenue in recent years, which has been taken as evidence of the spread of drinking habits, really represents a much smaller consumption of liquor, and an infinitely better regulated consumption, than the smaller revenue of former years.

'There is not the slightest reason to imagine that in the days of native administration the Indian populations refrained from indulgence in a practice which it requires the constant watchfulness of the British administration to prevent. Under the Mohammedan administration which immediately preceded the British rule, the facilities for drinking were very much

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