The aftermath

The First Indian War of Independence (1857-1858)
 by Karl Marx

Taxation in India, Marx 23 July 1858

The Indian Bill, Marx 24 July 1858

Transport of Troops to India, Engels 13 August 1858

The Revolt in India, Engels 1 October 1858

Great Trouble in Indian Finances, Marx 30 April 1859

Taxation in India

Karl Marx: New-York Daily Tribune, July 23, 1858

According to the London journals, Indian stock and railway securities have of late been distinguished by a downward movement in that market, which is far from testifying to the genuineness of the sanguine convictions which John Bull likes to exhibit in regard to the state of the Indian guerrilla war; and which, at all events, indicates a stubborn distrust in the elasticity of Indian financial resources. As to the latter, two opposite views are propounded. On the one hand, it is affirmed that taxes in India are onerous and oppressive beyond those of any country in the world; that as a rule throughout most of the presidencies, and through those presidencies most where they have been longest under British rule., the cultivators, that is, the great body of the people of India, are in a condition of unmitigated impoverishment and dejection; that, consequently, Indian revenues have been stretched to their utmost possible limit, and Indian finances are therefore past recovery. A rather discomfortable opinion this at a period when, according to Mr. Gladstone, for some years to come, the extraordinary Indian expenditure alone will annually amount to about £20,000,000 sterling. On the other hand, it is asserted — the asseveration being made good by an array of statistical illustrations — that India is the least taxed country in the world; that, if expenditure is going on increasing, revenue may be increased too; and that it is an utter fallacy to imagine that the Indian people will not bear any new taxes. Mr. Bright, who may be considered the most arduous and influential representative of the “discomfortable” doctrine, made, on the occasion of the second reading of the new Government of India bill, the following statement:

“The Indian Government had cost more to govern India than it was possible to extort from the population of India, although the Government had been by no means scrupulous either as to the taxes imposed, or as to the mode in which they had been levied. [...] It cost more than £30,000,000 to govern India, for that was the gross revenue, and there was always a deficit, which had to be made up by loans borrowed at a high rate of interest. [...] The Indian debt now amounted to £60,000,000, and was increasing; while the credit of the Government was falling, partly because they had not treated their creditors very honorably on one or two occasions, and now on account of the calamities which had recently happened in India. [...] He had alluded to the gross revenue; but as that included the opium revenue, which was hardly a tax upon the people of India, he would take the taxation which really pressed upon them at £25,000,000. Now, let not this £25,000,000 be compared with the £60,000,000 that was raised in this country. Let the House recollect that in India it was possible to purchase twelve days’ labor for the same amount of gold or silver that would be obtained in payment for one in England. This £25,000,000 expended in the purchase of labor in India would buy as much as an outlay of £300,000,000 would procure in England. [...] He might be asked how much was the labor of an Indian worth? Well, if the labor of an Indian was only worth 2d. a day, it was clear that we could not expect him to pay as much taxation as if it was worth 2s. [...] We had 30,000,000 of population in Great Britain and Ireland; in India there were 150,000,000 inhabitants. [...] We raised here £60,000,000 sterling of taxes; in India, reckoning by the days’ labor of the people of India, we raised £300,000,000 of revenue, or five times a greater revenue than was collected at home. Looking at the fact that the population of India was five times greater than that of the British Empire, a man might say that the taxation per head in India and England was about the same, and that therefore there was no great hardship inflicted. But in England there was an incalculable power of machinery and steam, of means of transit, and of everything that capital and human invention could bring to aid the industry of a people. In India there was nothing of the kind. They had scarcely a decent road throughout India.”

Now, it must be admitted that there is something wrong in this method of comparing Indian taxes with British taxes. There is on the one side the Indian population, five times as great as the British one, and there is on the other side the Indian taxation amounting to half the British. But, then, Mr. Bright says, Indian labor is an equivalent for about one-twelfth only of British labor. Consequently £30,000,000 of taxes in India would represent £300,000,000 of taxes in Great Britain, instead of the £60,000,000 actually there raised. What then is the conclusion he ought to have arrived at? That the people of India in regard to their numerical strength pay the same taxation as the people in Great Britain, if allowance is made for the comparative poverty of the people in India, and £30,000,000 is supposed to weigh as heavily upon 150,000,000 Indians as £60,000,000 upon 30,000,000 Britons. Such being his supposition, it is certainly fallacious to turn round and say that a poor people cannot pay so much as a rich one, because the comparative poverty of the Indian people has already been taken into account in making out the statement that the Indian pays as much as the Briton. There might, in fact, another question he raised. It might be asked, whether a man who earns say 12 cents a day can be fairly expected to pay 1 cent with the same ease with which another, earning $12 a day, pays $1? Both would relatively contribute the same aliquot part of their income, but still the tax might bear in quite different proportions upon their respective necessities. Yet, Mr. Bright has not yet put the question in these terms, and, if he had, the comparison between the burden of taxation, borne by the British wages laborer on the one hand, and the British capitalist on the other, would perhaps have struck nearer home than the comparison between Indian and British taxation. Moreover, he admits himself that from the £30,000,000 of Indian taxes, the £5,000,000 constituting the opium revenue must he subtracted, since this is, properly speaking, no tax pressing upon the Indian people, but rather an export duty charged upon Chinese consumption. Then we are reminded by the apologists of the Anglo-Indian Administration that £16,000,000 of income is derived from the land revenue, or rent, which from times immemorial has belonged to the State in its capacity as supreme landlord, never constituted part of the private fortune of the cultivator, and does, in fact, no more enter into taxation, properly so called, than the rent paid by the British farmers to the British aristocracy can be said to enter British taxation. Indian taxation, according to this point of view, would stand thus:

Of this £9,000,000, again, it must he admitted that some important items, such as the post-office, the stamp duties, and the customs duties, bear in a very minute proportion on the mass of the people. Accordingly, Mr. Hendriks, in a paper recently laid before the British Statistical Society on the Finances of India, tries to prove, from Parliamentary and other official documents, that of the total revenue paid by the people of India, not more than one-fifth is at present raised by taxation, i. e., from the real income of the people; that in Bengal 27 per cent only, in the Punjaub 23 per cent only, in Madras 21 per cent only, in the North-West Provinces 17 per cent only, and in Bombay 16 per cent only of the total revenue is derived from taxation proper.

The following comparative view of the average amount of taxation derived from each inhabitant of India and the United Kingdom, during the years 1855-56, is abstracted from Mr. Hendriks’s statement:

For a different year the following estimate of the average paid by each individual to the national revenue is made by Gen. Briggs:

From these statements it is inferred by the apologists of the British Administration that there is not a single country in Europe, where, even if the comparative poverty of India is taken into account, the people are so lightly taxed. Thus it seems that not only opinions with respect to Indian taxation are conflicting, but that the facts from which they purport to be drawn are themselves contradictory. On the one hand, we must admit the nominal amount of Indian taxation to be relatively small; but on the other, we might heap evidence upon evidence from Parliamentary documents, as well as from the writings of the greatest authorities on Indian affairs, all proving beyond doubt that this apparently light taxation crushes the mass of the Indian people to the dust, and that its exaction necessitates a resort to such infamies as torture, for instance. But is any other proof wanted beyond the constant and rapid increase of the Indian debt and the accumulation of Indian deficits? It will certainly not be contended that the Indian Government prefers increasing debts and deficits because it shrinks from touching too roughly upon the resources of the people. It embarks in debt, because it sees no other way to make both ends meet. In 1805 the Indian debt amounted to £25,626,631; in 1829 it reached about £34,000,000; in 1850 £47,151,018; and at present it amounts to about £60,000,000. By the by, we leave out of the count the East Indian debt contracted in England, which is also chargeable upon the East Indian revenue.

The annual deficit, which in 1805 amounted to about two and a half millions, had, under Lord Dalhousie’s administration, reached the average of five millions. Mr. George Campbell of the Bengal Civil Service, and of a mind strongly biased in favor of the Anglo-Indian administration, was obliged to avow, in 1852, that:

“Although no Oriental conquerors have ever obtained so complete an ascendency, so quiet, universal and undisputed possession of India as we have, Yet all have enriched themselves from the revenues of the country, and many have out of their abundance laid out considerable sums on works of public improvements. ... From doing this we are debarred. ...The quantity of the whole burden is by no means diminished” (under the English rule), “yet we have no surplus.”

In estimating the burden of taxation, its nominal amount must not fall heavier into the balance than the method of raising it and the manner of employing it. The former is detestable in India, and in the branch of the land-tax, for instance, wastes perhaps more produce than it gets. As to the application of the taxes, it will suffice to say that no part of them is returned to the people in works of public utility, more indispensable in Asiatic countries than anywhere else, and that, as Mr. Bright justly remarked, nowhere so extravagant is a provision made for the governing class itself.

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The Indian Bill

Karl Marx in the New-York Tribune July 24, 1858

The latest India bill has passed through its third reading in the House of Commons, and since the Lords swayed by Derby’s influence, are not likely to show fight, the doom of the East India Company appears to be sealed. They do not die like heroes, it must be confessed; but they have bartered away their power, as they crept into it, bit by bit, in a business-like way. In fact, their whole history is one of buying and selling. They commenced by buying sovereignty, and they have ended by selling it. They have fallen, not in a pitched battle, but under the hammer of the auctioneer, into the hands of the highest bidder. In 1693 they procured from the Crown a charter for twenty-one years by paying large sums to the Duke of Leeds and other public officers. In 1767 they prolonged their tenure of power for two years by the promise of annually paying £400,000 into the Imperial exchequer. In 1769 they struck a similar bargain for five years; but soon after, in return for the Exchequer’s foregoing the stipulated annual payment and lending them £1,400,000 at 4 per cent, they alienated some parcels of sovereignty, leaving to Parliament in the first instance the nomination of the Governor-General and four Councilors, altogether surrendering to the Crown the appointment of the Lord Chief justice and his three judges, and agreeing to the conversion of the Court of Proprietors from a democratic into an oligarchic body. In 1858, after having solemnly pledged themselves to the Court of Proprietors to resist by all constitutional “means” the transfer to the Crown of the governing powers of the a East India Company, they have accepted that principle, and agreed to a bill penal as regards the Company, but securing emolument and place to its principal Directors. If the death of a hero, as Schiller says, resembles the setting of the sun, the exit of the East India Company bears more likeness to the compromise effected by a bankrupt with his creditors.

By this bill the principal functions of administration are intrusted to a Secretary of State in Council, just as at Calcutta the Governor-General in Council manages affairs. But both these functionaries — the Secretary of State in England and the Governor-General in India — are alike authorized to disregard the advice of their assessors and to act upon their own judgment. The new bill also invests the Secretary of State with all the powers at present exercised by the President of the Board of Control, through the agency of the Secret Committee — the power, that is, in urgent cases, of dispatching orders to India without stopping to ask the advice of his Council. In constituting that Council it has been found necessary, after all, to resort to the East India Company as the only practicable source of appointments to it other than nominations by the Crown. The elective members of the Council are to be elected by the Directors of the East India Company from among their own number.

Thus, after all, the name of the East India Company is to outlive its substance. At the last hour it was confessed by the Derby Cabinet that their bill contains no clause abolishing the East India Company, as represented by a Court of Directors, but that it becomes reduced to its ancient character of a company of stockholders, distributing the dividends guaranteed by different acts of legislation. Pitt’s bill of 1784 virtually subjected their government to the sway of the Cabinet under the name of the Board of Control. The act of 1813 stripped them of their monopoly of commerce, save the trade with China. The act of 1834 destroyed their commercial character altogether, and the act of 1854 annihilated their last remnant of power, still leaving them in possession of the Indian administration. By the rotation of history the East India Company, converted in 1612 into a joint-stock company, is again clothed in its primitive garb, only, that it represents now a trading partnership without trade, and a joint-stock company which has no funds to administer, but only fixed dividends to draw.

The history of the Indian bill is marked by greater dramatic changes than any other act of modern Parliamentary legislation. When the Sepoy insurrection broke out, the cry of Indian reform rang through all classes of British society. Popular imagination was heated by the torture reports; the Government interference with the native religion was loudly denounced by Indian general officers and civilians of high standing; the rapacious annexation policy of Lord Dalhousie, the mere tool of Downing street; the fermentation recklessly created in the Asiatic mind by the piratical wars in Persia and China — wars commenced and pursued on Palmerston’s private dictation — the weak measures with which he met the outbreak, sailing ships being chosen for transport in preference to steam vessels, and the circuitous navigation around the cape of Good Hope instead of transportation over the Isthmus of Suez — all these accumulated grievances burst into the cry for Indian Reform — reform of the Company’s Indian administration, reform of the Government’s Indian policy. Palmerston caught at the popular cry, but resolved upon turning it to his exclusive profit. Because both the Government and the Company had miserably broken down, the Company was to be killed in sacrifice, and the Government to be rendered omnipotent. The power of the Company was to be simply transferred to the dictator of the day, pretending to represent the Crown as against the Parliament, and to represent Parliament as against the Crown, thus absorbing the privileges of the one and the other in his single person. With the Indian army at his back, the Indian treasury at his command, and the Indian patronage in his pocket, Palmerston’s position would have become impregnable.

His bill passed triumphantly through the first reading, but his career was cut short by the famous Conspiracy bill, followed by the advent of the Tories to power.

On the very first day of their official reappearance on the Treasury benches, they declared that, out of deference for the decisive will of the Commons, they would forsake their opposition to the transfer from the Company to the Crown of the Indian Government. Lord Ellenborough’s legislative abortion seemed to hasten Palmerston’s restoration, when Lord John Russell, in order to force the dictator into a compromise, stepped in, and saved the Government by proposing to proceed with the Indian bill by way of Parliamentary resolution, instead of by a governmental bill. Then Lord Ellenborough’s Oude dispatch, his sudden resignation, and the consequent disorganization in the Ministerial camp, were eagerly seized upon by Palmerston. The Tories were again to be planted in the cold shade of opposition, after they had employed their short lease of power in breaking down the opposition of their own party against the confiscation of the East India Company. Yet it is sufficiently known how these fine calculations were baffled. Instead of rising on the ruins of the East India Company, Palmerston has been buried beneath them. During the whole of the Indian debates, the House seemed to indulge the peculiar satisfaction of humiliating the Civis Romanus. All his amendments, great and small, were ignominiously lost; allusions of the most unsavory kind, relating to the Afghan war, the Persian war, and the Chinese war, were continually flung at his head; and Mr. Gladstone’s clause, withdrawing from the Indian Minister the power of originating wars beyond the boundaries of India, intended as a general vote of censure on Palmerston’s past foreign policy, was passed by a crushing majority, despite his furious resistance. But although the man has been thrown overboard, his principle, upon the whole, has been accepted. Although somewhat checked by the obstructive attributes of the Board of Council, which, in fact, is but the well-paid specter of the old Court of Directors, the power of the executive has, by the formal annexation of India, been raised to such a degree that, to counterpoise it, democratic weight must be thrown into the Parliamentary scale.

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Transport of Troops to India

Frederick Engels in the New-York Tribune August 13, 1858

London, July 27, 1858

At the beginning of the Anglo-Indian war, two curious questions were mooted — the one relating to the respective superiority of steamers or sailing vessels, the other as to the use of the overland route for the transport of troops. The British Government having decided in favor of sailing vessels against steamers, and for the voyage round the Cape of Good Hope against the overland route, the House of Commons, on the motion of Sir De Lacy Evans, ordered, on the 4th of February, 1858, a Committee to be appointed, under the chairmanship of the veteran General, which was to inquire “concerning the measures resorted to.” The formation of this Committee was completely altered by the intervening change of Ministry, consequent upon which three Palmerstonians were substituted for Lord Stanley and Sir John Pakington. The report of the Committee proving, on the whole, favorable to the late Administration, Gen. Sir De Lacy Evans had a protest printed and circulated, in which he asserts the conclusion arrived at to be at titter variance with the premises from which it pretended to be drawn, and quite inconsistent with the facts and evidence laid before them. An examination of the evidence itself must oblige all impartial persons to fully concur in this view of the case.

The decisive importance of a short line of communication between an army in the field and its base of communication needs no demonstration. During the American War of Independence the principal obstacle England had to grapple with was a sea line of 3,000 miles over which she had to convey her troops, stores and re-enforcements. From Great Britain to the mouths of the Indus and Ganges, to Calcutta, Madras, Kurrachee and Bombay, the distance, according to past arrangements, may be reckoned at about 14,000 miles; but the use of steam offered the means of shortening it considerably. Hitherto on all occasions it had been the practice to effect the relief of regiments in India, by this long sea voyage in sailing vessels. This was considered a sufficient reason on the part of the late British Administration, for declaring at the beginning of the Indian troubles, that sailing vessels would still be preferred to steamers for the conveyance of troops. Up to the 10th of July, 1857, of 31 vessels taken up, nearly the whole were sailing ships. Meanwhile, public censure in England and unfavorable news from India effected so much that in the interval from the 10th of July to the 1st of December, among the 59 ships taken up for troops, 29 screw steamers were admitted. Thus a rough test was afforded of the relative qualities of steamers and sailing vessels in accomplishing the transit. According to the return furnished by the Marine Department of the East India Company, giving names of transports and length of passages to the four principal ports of India, the following may be considered the average results as between steamers and sailing vessels.

The same official return, dated Feb. 27, 1858, gives the following details:

It appears, then, from the above that 27 steamers carried to the four ports of disembarkation in India 14,144 men, averaging, therefore, 548 men in each ship; that in 55 sailing ships were conveyed 16,234 men, averaging 289 men in each. Now, by the same official statement of averages, it appears that the 14,144 men conveyed in steamers arrived at their respective places of destination on an average of 37 days sooner than the 16,234 men embarked on sailing ships. On the part of the British Admiralty and the other ministerial departments no arguments were adduced in favor of the traditionary transport but precedent and routine, both dating from an epoch when steam navigation was utterly unknown. Lord Palmerston’s principal plea, however, for the delay was expense, the cost of steamers in most of the above cases amounting to perhaps treble that of sailing ships. Apart from the fact that this great enhancement of charge for steamers must have gradually diminished after the first unusual demand, and that in so vital an emergency expense ought not to be admitted as an element of calculation, it is evident that the increased cost of transport would have been more than compensated for by the lessened chances of the insurrection.

Still more important than the question of superiority as between steamers and sailing vessels, seems the controversy respecting the voyage round the Cape on the one hand and the overland route on the other; Lord Palmerston affirming the general impracticability of the latter route. A controversy in regard to it between his Board of Control and the East India Directors, appears to have commenced contemporaneously with the first information of the Indian revolt reaching England. The question had, in fact, been solved as long ago as the beginning of this century. In the year 1801, when there were no steam navigation company’s agents to aid the military arrangements, and when no railway existed, a large force under Sir David Baird proceeded from India and landed at Kosseir in May and June; crossed in nine days the desert of Kherie, on the Nile; proceeded down that river, garrisoned Alexandria, and in the following year, 1802, several regiments returned to India by Suez and the Red Sea, in the month of June. That force, amounting to 5,000 men, consisted of a troop of horse-artillery, six guns and small arms, ammunition, camp equipage, baggage, and 126 chests of treasure. The troops generally were very healthy. The march across the Suez Desert, from the lake of St. Pilgrims, near Grand Cairo to Suez, was performed in four days with the greatest ease, marching by night and encamping during the day. In June the ships proceeded to India, the wind at that season blowing down the Red Sea. They made a very quick passage. Again, during the late Russian war, in the summer of 1854, the 10th and 11th regiments of Dragoons (1,400 horses, 1,600 men) arrived in Egypt from India, and were forwarded thence to the Crimea. These corps, though their transfer took place during the hot months, or monsoon, and though they had to remain some time in Egypt, are known to have been remarkably healthy and efficient, and to have continued so throughout their Crimean service. In the last instance there is the experience of the actual Indian war. After the waste of nearly four months, some thousand troops were dispatched by Egypt with extraordinary advantage as to economy of time, and with perfect preservation of health. The first regiment that was conveyed by this line passed from Plymouth to Bombay in thirty-seven days. Of the first regiment sent from Malta, the first wing arrived at Bombay in sixteen and the second wing in eighteen days. An overwhelming mass of evidence, from numerous trustworthy witnesses, attest the peculiar facilities, especially in periods of emergency, afforded by the overland route transport. Col. Poeklington, Deputy Quartermaster-General, appointed in October, 1857, to direct and superintend the transit of the troops, and who, expressly prepared by order of the War Department a report for the Committee of Inquiry, states:

“The advantages of the overland route are very considerable, and the trajet is most simple. A thousand men per week can be conveyed across the isthmus by the Transit administration of Egypt without interference with the ordinary passenger traffic. Between 300 and 400 men can move at a time, and perform the distance from ship to ship in 26 hours. The transit by rail is completed to within almost twenty miles of Suez. This last portion of the journey is performed by the soldiers on donkeys in about six hours. There can be no doubt as to the experiment having succeeded.”

The time occupied by troops from England to India is, by the overland route, from 33 to 46 days. From Malta to India, from 16 to 18 or 20 days. Compare these periods with the 83 by steamers, or the 120 by sailing ships, on the long sea route, and the difference will appear striking. Again, during the longer route, Great Britain will have from 15,000 to 20,000 troops, in effect hors de combat, and beyond counter orders for a period annually, of from 3 to 4 months, while, with the shorter line, it will be but for the brief period of some 14 days, during the transit from Suez to India, that the troops will be beyond reach of recall, for any unexpected European contingency.

In resorting to the overland route only 4 months after the outbreak of the Indian war, and then only for a mere handful of troops, Palmerston set at naught the general anticipation of India and Europe. The Governor-General in India assumed that the Home Government would dispatch troops by the way of Egypt. The following is a passage from the Governor-General in Council’s letter to the Home Government, dated Aug. 7, 1857:

“We are also in communication with the Peninsular and Oriental Steam Navigation Company for the conveyance from Suez of the troops that may possibly have been dispatched to India by that route.”

On the very day of the arrival at Constantinople of the news of the revolt, Lord Stratford de Redcliffe telegraphed to London to know whether he should apply to the Turkish Government to allow the British troops to pass through Egypt, on their way to India. The Sultan a having meanwhile offered and transmitted a firman to that effect on the 2d of July, Palmerston replied by telegraph, that it was not his intention to send troops by that route. It being in France likewise assumed, as a matter of course, that the acceleration of the military re-enforcements must at that moment form the paramount object of British policy, Bonaparte spontaneously tendered permission for the passage over France of British troops, to enable their being embarked, if deemed desirable, at Marseilles, for Egypt. The Pasha of Egypt lastly, when, at length, Mr. Holton, the Superintendent of the Peninsular and Oriental Company in Egypt, was authorized to reply on the subject, answered immediately,

“It would be a satisfaction to him to give facility to the passage of not only 200 men, as in the present instance, but to that of 20,000, if necessary, and not en bourgeois but in uniform, and with their arms, if required.”

Such were the facilities recklessly thrown away, the proper use of which might have prevented the Indian war from assuming its formidable dimensions. The motives by which Lord Palmerston was prompted in preferring sailing vessels to steamers, and a line of communication extending over 14,000 miles to one limited to 4,000 miles, belong to the mysteries of contemporaneous history.

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The Revolt in India

Frederick Engels in the New-York Tribune October 1, 1857

The campaign in India has been almost completely suspended during the hot and rainy summer months. Sir Colin Campbell having secured, by a vigorous effort in the beginning of summer, all the important positions in Oude and Rohilcund, very wisely put his troops into quarters, leaving the open country in the possession of the insurgents, and limiting his efforts to maintaining his communications. The only episode of interest which occurred during this period in Oude, was the excursion of Sir Hope Grant to Shahgunge for the relief of Maun Singh, a native chief, who, after a deal of tergiversation, had lately made his peace with the British, and was now blockaded by his late native allies. The excursion proved a mere military promenade, though it must have caused great loss to the British by sun-stroke and cholera. The natives dispersed without showing fight, and Maun Singh joined the British. The easy success of this expedition, though it cannot be taken as an indication of an equally easy subjection of the whole of Oude, shows that the insurgents have lost heart completely. If it was the interest of the British to rest during the hot weather, it was the interest of the insurgents to disturb them as much as possible. But instead of organizing an active guerrilla warfare, intercepting the communications between the towns held by the enemy, of waylaying small parties, harassing the foragers, of rendering impassable the supply of victuals, without which no large town held by the British could live — instead of this, the natives have been satisfied with levying revenue and enjoying the leisure left to them by their opponents. Better still, they appear to have squabbled among themselves. Neither do they appear to have profited by the few quiet weeks to reorganize their forces, to refill their ammunition stores, or to replace the lost artillery. The bolt at Shahgunge shows a still greater want of confidence in themselves and their leaders than any previous defeat. In the mean time, a secret correspondence is carried on between the majority of the chiefs and the British Government, who have after all found it rather impracticable to pocket the whole of the soil of Oude, and are quite willing to let the former owners have it again. on reasonable terms. Thus, as the final success of the British is now beyond all doubt, the insurrection in Oude bids fair to die out without passing through a period of active guerrilla warfare. As soon as the majority of the landholders come to terms with the British, the insurgent bodies will be broken up, and those who have too much to fear from the Government will turn robbers (dacoits), in the capture of whom the peasantry will gladly assist.

South-west of Oude the Jugdispore jungles appear to offer a center for such dacoits. These impenetrable forests of bamboo and underwood are held by a party of insurgents under Ummer Singh, who shows rather more activity and knowledge of guerrilla warfare; at all events, he attacks the British whenever he can, instead of quietly waiting for them. If, as it is feared, part of the Oude insurgents should join him before he can be expelled from his stronghold, the British may expect rather harder work than they have had of late. These jungles have now for nearly eight months served as a retreat to insurgent parties, who have been able to render very insecure the Grand Trunk Road from Calcutta to Allahabad, the main communication of the British.

In Western India, the Gwalior insurgents are still followed up by Gen. Roberts and Col. Holmes. At the time of the capture of Gwalior, it was a question of much consequence, what direction the retreating army might take; for the whole of the Mahratta country and part of Rajpootana appeared ready for a rising as soon as a sufficiently strong body of regular troops arrived there to form a nucleus for the insurrection. A retreat of the Gwalior force in a south-westerly direction then seemed the most likely maneuver to realize such a result. But the insurgents, from reasons which we cannot guess at from the reports before us, have chosen a north-westerly direction. They went to Jeypore, thence turning south toward Oodeypore, trying to gain the road to the Mahratta country. But this roundabout marching gave Roberts an opportunity of coming up with them, and defeating them totally without any great effort. The remnants of this body, without guns, without organization and ammunition, without leaders of repute, are not the men who are likely to induce fresh risings. On the contrary, the immense quantity of plunder which they carry along with them, and which hampers all their movements, appears already to have excited the avidity of the peasantry. Every straggling Sepoy is killed and eased of his load of gold mohurs. If it has come to that, Gen. Roberts may safely leave the final dispersion of these Sepoys to the country population. The loot of Scindiah’s treasures by his troops saves the British from a renewal of the insurrection in a quarter more dangerous than Hindostan; for a rising in the Mahratta country would put the Bombay army upon a rather severe trial.

There is a fresh mutiny in the neighborhood of Gwalior. A small vassal of Scindiah, Maun Singh (not the Maun Singh of Oude) has joined the insurgents, and got hold of the small fortress of Paoree. This place, is, however, already invested by the British, and must soon be captured.

In the mean time, the conquered districts are gradually pacified. The neighborhood of Delhi, it is said, has been so completely tranquillized by Sir J. Lawrence that a European may travel about with perfect safety, unarmed, and without an escort. The secret of the matter is, that the people of every village have been made collectively responsible for any crime or outrage committed on its ground; that a military police has been organized; and, above all, that the summary justice of the Court-Martial, so peculiarly impressive upon Orientals, is everywhere in full swing. Still, this success appears to be the exception, as we do not hear anything of the kind from other districts. The complete pacification of Rohilcund and Oude, of Bundelcund and many other large provinces, must yet require a very long time and give plenty of work yet to British troops and Court-Martials.

But while the insurrection of Hindostan dwindles down to dimensions which deprive it of almost all military interest, there has occurred an event far off, at the utmost frontiers of Afghanistan, which is big with the threat of future difficulties. A conspiracy to murder their officers and to rise against the British has been discovered among several Sikh regiments at Dera Ismael Khan. How far this conspiracy was ramified, we cannot tell. Perhaps it was merely a local affair, arising among a peculiar class of Sikhs; but we are not in a position to assert this. At all events, this is a highly dangerous symptom. There are now nearly 100,000 Sikhs in the British service, and we have heard how saucy they are; they fight, they say, to-day for the British, but may fight to-morrow against them, as it may please God. Brave, passionate, fickle, they are even more subject to sudden and unexpected impulses than other Orientals. If mutiny should break out in earnest among them, then would the British indeed have hard work to keep their own. The Sikhs were always the most formidable opponents of the British among the natives of India; they have formed a comparatively powerful empire; they are of a peculiar sect of Brahminism, and hate both Hindoos and Mussulmans. They have seen the British “raj” in the utmost peril; they have contributed a great deal to restore it, and they are even convinced that their own share of the work was the decisive one. What is more natural than that they should harbor the idea that the time has come when the British raj shall be replaced by a Sikh raj, that a Sikh Emperor is to rule India from Delhi or Calcutta? It may be that this idea is still far from being matured among the Sikhs, it may be that they are so cleverly distributed that they are balanced by Europeans, so that any rising could be easily put down; but that this idea exists among them must be clear, we presume, to everybody who has read the accounts of the behaviour of the Sikhs after Delhi and Lucknow.

Still, for the present, the British have reconquered India. The great rebellion, stirred up by the mutiny of the Bengal army, is indeed, it appears, dying out. But this second conquest has not increased England’s hold upon the mind of the Indian people. The cruelty of the retribution dealt out by the British troops, goaded on by exaggerated and false reports of the atrocities attributed to the natives, and the attempt at confiscating the Kingdom of Oude, both wholesale and retail, have not created any particular fondness for the victors. On the contrary, they themselves confess that among both Hindoos and Mussulmans, the hereditary hatred against the Christian intruder is more fierce than ever. Impotent as this hatred may be at present, it is not without its significance and importance, while that menacing cloud is resting over the Sikh Punjaub. And this is not all. The two great Asiatic powers, England and Russia, have by this time got hold of one point between Siberia and India, where Russian and English interests must come into direct collision. That point is Pekin. Thence westward a line will ere long be drawn across the breadth of the Asiatic Continent, on which this collision of rival interests will constantly take place. Thus the time may indeed not be so very distant when “the Sepoy and the Cossack will meet in the plains of the Oxus,” and if that meeting is to take place, the anti-British passions of 150,000 native Indians will be a matter of serious consideration.

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Great Trouble in Indian Finances

Karl Marx in The New-York Tribune April 30, 1859

London, April 8, 1859

The Indian financial crisis, which at this moment shares with the war rumors and the electioneering agitation in the privilege of absorbing public interest in England, must be considered in a double point of view. It involves both a temporary necessity and a permanent difficulty.

On the 14th of February Lord Stanley brought in a bill in the House of Commons authorizing the Government to raise a loan of £7,000,000 in England, in order to adjust the extra expenditure of the Indian administration for the current year. About six weeks later, John Bull’s self-congratulations as to the small cost of the Indian rebellion were roughly interrupted by the arrival of the Overland Mail, conveying a, cry of financial distress from the Government at Calcutta. On March 25, Lord Derby rose in the House of Lords to state that a further loan for India of £5,000,000, in addition to the £7,000,000 loan now before Parliament, would be required to meet the demands of the present year, and that even then, certain claims for compensation and prize money, amounting to £2,000,000 at least, would remain to be paid from some source not yet apparent. To make things pleasant, Lord Stanley had, in his first statement, only provided for the wants of the Indian Treasury at London, leaving the -British Government in India to its own resources, which, from the dispatches received, he could not but know to be far from sufficient. Quite apart from the expenses of the Home Government, or the Indian administration at London, Lord Canning estimated the deficit of the Government at Calcutta for the current year of 1859-60 at £12,000,000, after allowing an increase in the ordinary revenue of £800,000, and a decrease on military charges of £2 ,000,000. Such was his penury that he had stopped paying part of his civil service; such was his credit that the Government 5 per cents were quoted at 12 per cent discount; and such was his distress that he could only be saved from bankruptcy by the shipment from England to India of £3,000,000 of silver within a few months. Three points thus become evident. First: Lord Stanley’s original statement was a “dodge,” and, so far from embracing all the Indian liabilities, did not even touch the immediate wants of the Indian Government in India. Secondly: During the whole period of the insurrection, if we except the sending from London in 1857 of £1,000,000 of silver to India, the Calcutta Government was left to shift for itself, to provide out of its own resources for the main part of the extraordinary war charges which, of course, had to be disbursed in India, for the barrack accommodation of some 60,000 additional Europeans, for the restoration of the treasures plundered, and for the replacing of all the revenues of the local Administrations which had been swept away. Thirdly: There is, apart from the wants of the Home Government, a deficit of £12,000,000, to be met in the present year. By operations, the questionable nature of which we forbear to dwell upon, this sum is to be reduced to £9,000,000, of which sum £5,000,000 are to be borrowed in India and £4,000,000 in England. Of the latter, £1,000,000 in silver bullion has already been shipped to Calcutta from London, and £2,000,000 more is to be dispatched in the shortest possible period.

It will be seen from this succinct statement that the Indian Government was very unfairly dealt with by its English masters, who left it in the lurch, in order to throw dust in the eyes of John Bull; but it must, on the other hand, be admitted that the financial operations of Lord Canning surpass in awkwardness even his military and political exploits. Up to the end of January, 1859, he had contrived to raise the necessary means by loans in India, issued partly in Government stocks, partly in Treasury bills; but, strange to say, while his efforts had answered during the epoch of the revolution, they failed entirely from the moment English authority was restored by the force of arms. And not only did they fail, but there was a panic in regard to Government securities; there was an unprecedented depreciation in all funds, with protests from the Chambers of Commerce at Bombay and Calcutta, and, in the latter town, public meetings composed of English and native money-mongers, denouncing the vacillation, the arbitrary nature and the helpless imbecility of the Government measures. Now, the loanable capital of India which up to January 1859, had supplied the Government with funds, began to fail after that period, when the power of borrowing seems to have been exceeded. In point of fact the aggregate loans which from 1841 to 1857 amounted to £21,000,000, absorbed in the two years of 1857 and 1858 alone about £9,000,000, equal to almost one-half of the money borrowed during the previous sixteen years. Such a failure of resources, while accounting for the necessity of successively screwing up the rate of interest on Government loans from 4 to 6 per cent, is, of course, far from explaining the commercial panic in the Indian security market, and the utter inability of the Governor-General to meet the most urgent requirements. The riddle is solved by the fact that it has become a regular maneuver with Lord Canning to bring out new loans at higher rates of interest than those given on existing open loans, without any previous notice to the public, and with the utmost uncertainty prevailing as to the further financial operations contemplated. The depreciation of the funds, in consequence of these maneuvers, has been calculated at not less than £11,000,000. Pinched by the poverty of the Exchequer, frightened by the panic in the stock market, and roused by the protests on the part of the Chambers of Commerce and the Calcutta meetings, Lord Canning thought best to be a good boy and to try to come up to the desiderata of the monetary mind; but his notification of the 21st of February, 1859, shows again that the human understanding does not depend on human will. What was he required to do? Not to open simultaneously two loans on different conditions, and to tell the monetary public at once the sum required for the current year, instead of deceiving them by successive announcements, one contradictory of the other. And what does he do in his notification? In the first instance he says that there is to be raised by loan in the Indian market for the year 1859-60, £5,000,000, at 5 1/2 per cent, and that

“when this amount shall have been realized, the loan of 1859-60 shall be closed, and no further loan will be opened in India during that year.”

In the very same proclamation, sweeping away the entire value of the assurances just given, he proceeds:

“No loan carrying a higher rate of interest will be opened in India in the course of the year 1859-60, unless under instructions from the Home Government.”

But that is not all. He opens, in fact, a double loan on different terms. While announcing that “the issue of Treasury bills on the terms notified on Jan. 26, 1859, will be closed on April 30,” he proclaims “that a new issue of Treasury bills will be notified from the 1st of May,” bearing interest of nearly 5 3/4 per cent, and redeemable at the expiration of one year from the date of issue. Both loans are kept open together, while, at the same time, the loan opened in January has not yet been concluded. The only financial matter which Lord Canning seems able to comprehend is that his annual salary amounts to £20,000 in name, and to about £40,000 in fact. Hence, despite the sneers of the Derby Cabinet, and his notorious incapacity, he sticks to his post from “a feeling of duty.”

The effects of the Indian financial crisis on the English home market have already become apparent. In the first instance, the silver remittances on account of Government coming to swell the large remittances on mercantile account, and failing at an epoch when the ordinary silver supplies from Mexico are held back in consequence of the distracted condition of that country, have, of course, sent up the price of bar silver. On March 25, it had risen to the factitious price of 62 1/4 d. per ounce standard, causing such an influx of silver from every part of Europe that the price in London again fell to 62 3/8 d.; while the rate of discount at Hamburg rose from 2 1/2 to 3 per cent. Consequent upon these heavy importations of silver, exchanges have turned against England, and a drain of gold bullion has set in, which, for the present, only relieves the London money market of its plethora, but in the long run may seriously affect it, coupled, as it will be, with large Continental loans. The depreciation, however, on the London money market, of the Indian Government stocks and guaranteed railway securities, prejudicial as it must prove to the Government and railway loans still to be brought forward in the’ course of this season, is certainly the most serious effect on the home market as yet, resulting from the Indian financial crisis. The shares of many Indian railways, although 5 per cent interest upon them is guaranteed by the Government, are now at 2 or 3 per cent discount.

Taking all in all, however, I regard the momentary Indian financial panic as a matter of secondary importance, if compared with the general crisis of the Indian Exchequer, which I may perhaps consider on another occasion.

London, April 12, 1859

The latest overland mail, so far from showing any abatement of the financial crisis in India, reveals a state of derangement hardly anticipated. The shifts to which the Indian Government is driven in order to meet its most urgent wants, may be best illustrated by a recent measure of the Governor of Bombay. Bombay is the market where the opium of Malwa, averaging 30,000 chests annually, finds its outlet by monthly instalments of 2,000 or 3,000 chests, for which bills are drawn upon Bombay. By charging 400 rupees upon every chest imported into Bombay, the Government raises a revenue of £1,200,000 annually on Malwa opium. Now, to replenish his exhausted Exchequer, and ward off immediate bankruptcy, the Bombay Governor has issued a notification, which raises the duty on each chest of Malwa opium from 400 to 500 rupees; but, at the same time, he declares that this increased duty will not be levied till after the 1st of July, so that the holders of opium in Malwa have the privilege of bringing in the drug under the old duties for four months longer. Between the middle of March, when the notification was issued, and the 1st of July, there are only two months and a half during which opium can be imported, the monsoon setting in on the 15th of June. The holders of opium in Malwa will, of course, avail themselves of the interval allowed them for sending in opium at the old duty; and, consequently, during the two months and a half pour all their stock in hand into the Presidency. Since the balance of opium, of the old and new crops, remaining at Malwa amounts to 26,000 chests, and the price of Malwa opium reaches 1,250 rupees per chest, the Malwa merchants will have to draw upon the Bombay merchants for no less a sum than £3,000,000, of which more than £1,000,000 must come into the Bombay Treasury. The aim of this financial dodge is transparent. With a view to anticipate the annual revenue from the opium duty, and induce the dealers in the article to pay it at once, an enhancement of the duty is held out prospectively in terrorem While it would be quite superfluous to expatiate upon the empirical character of this contrivance, which fills the Exchequer for the present by creating a corresponding void a few months hence, no more striking instance could be given of the exhaustion of ways and means, on the part of the great Mogul’s successors.

Let us now turn to the general state of Indian finances, as it has grown out of the late insurrection. According to the last official accounts, the net revenue derived by the British from their Indian farm amounts to £23,208,000, say £24,000,000. This annual revenue has never sufficed to defray the annual expenses. From 1836 to 1850 the net deficit amounted to £13,171,096, or, on a rough average, to £1,000,000 annually. Even in the year 1856, when the Exchequer was exceptionally filled by the wholesale annexations, robberies and extortions of Lord Dalhousie, the income and expense did not exactly square, but, on the contrary, a deficit of about a quarter of a million was added to the usual crop of deficits. In 1857 the deficiency was £9,000,000, in 1858 it amounted to £13,000,000, and in 1859 it is estimated by the Indian Government itself at £12,000,000. The first conclusion, then, which we arrive at is that even under ordinary circumstances. deficits were accumulating, and that under extraordinary circumstances they must assume such dimensions as to reach one-half and more of the annual income.

The question which next presents itself is, To what degree has this already existing gap between the expenses and the income of the Indian Government been widened by recent events? The new permanent debt of India accruing from the suppression of the mutiny is calculated by the most sanguine English financiers at between forty and fifty millions sterling, while Mr. Wilson estimates the permanent deficit, or the annual interest for this new debt to be defrayed out of the annual revenue, at not less than three millions. However, it would be a great mistake to think that this permanent deficit of three millions is the only legacy left by the insurgents to their vanquishers. The costs of the insurrection are not only in the past tense, but are in a high degree prospective. Even in quiet times, before the outbreak of the mutiny, the military charges swallowed sixty per cent at least of the aggregate regular income, since they exceeded £12,000;000; but the state of affairs is now changed. At the beginning of the mutiny the European force in India amounted to 38,000 effective men, while the native army mustered 260,000 men. The military forces at present employed in India amount to 112,000 Europeans and 320,000 native troops, including the native police. It may be justly said that these extraordinary numbers will be reduced to a more moderate standard with the disappearance of the extraordinary circumstances which swelled them to their present size. Yet the military commission appointed by the British Government has arrived at the conclusion that there will be required in India a permanent European force of 80,000 men, with a native force of 200,000 men — the military charges being thus raised to almost double their original bight. During the debates on the Indian finances, in the House of Lords, on April 7, two points were admitted by all speakers of authority: on the one hand that an annual expenditure upon the revenue of India little short of twenty millions for the army alone was incompatible with a net revenue of twenty-four millions only; and, on the other hand, that it was difficult to imagine a state of things which for an indefinite series of years would render it safe for the English to leave India without a European force double its amount before the outbreak of the mutiny. But suppose even that it would do to add permanently to the European forces not more than one-third of their original strength, and we get at a new annual permanent deficit of four millions sterling at least. The new permanent deficit, then, derived on one hand from the consolidated debt contracted during the mutiny, and on the other hand from the permanent increase of the British forces in India, cannot, on the most moderate calculation, fall below seven millions sterling.

To this must be added two other items — the one accruing from an increase of liabilities, the other from a diminution of income. By a recent statement of the Railway Department of the Indian office at London, it results that the whole length of railways sanctioned for India is 4,817 miles, of which 559 miles only are yet opened. The whole amount of capital invested by the different railway companies amounts to £40,000,000 sterling, of which £19,000,000 are paid and £21,000,000 are still to be called in — 96 per cent of the aggregate sum having been subscribed in England and 4 per cent only in India. Upon this amount of £40,000,000, the Government has guaranteed 5 per cent interest, so that the annual interest charged upon the revenues of India reaches £2,000,000, to be paid before the railways are in working order, and before they can yield any return. The Earl of Ellenborough, estimates the loss accruing to the Indian finances from this source, for the next three years to come, at £6,000,000 sterling, and the ultimate permanent deficit upon these railways at half a million annually. Lastly, of the £24,000,000 of Indian net revenue, a sum of £3,619,000 is derived from the sale of opium to foreign countries — a source of revenue which, it is now generally admitted, must to a considerable extent be impaired by the late treaty with China. 148 It becomes, then, evident, that apart from the extra expenditure still necessitated to complete the suppression of the mutiny, an annual permanent deficit of £8,000,000 at least, will have to be defrayed out of a net revenue of £24,000,000, which the Government may, perhaps, by the imposition of new taxes, contrive to raise to £26,000,000. The necessary result of this state of things will be to saddle the English taxpayer with the liability for the Indian debt and, as Sir G. C. Lewis declared in the House of Commons,

“to vote four or five millions annually as a subsidy for what was called a valuable dependency of the British crown.”

It will be confessed that these financial fruits of the “glorious” reconquest of India have not a charming appearance; and that John Bull pays exceedingly high protective duties for securing the monopoly of the Indian market to the Manchester free-traders.