As the cotton duties are now almost entirely imposed on the finer sorts of goods, which are chiefly consumed by the rich, it is obvious that the repeal of these duties would reduce the amount of taxation paid by the wealthy, and would consequently still further increase the inequality in the taxation borne by the poor.

It is sometimes urged that the real objections to these duties are not adequately understood by the people of India, and that they fail to appreciate the loss that is caused to them by their continuance. But precisely the same remark holds true with regard to every country in which a protectionist tariff is maintained. The people of Canada, for instance, appear to be altogether insensible to the injury which they are about to inflict upon themselves, by the more onerous protective duties with which they seem determined to fetter their commerce. But even if India could afford the sacrifice of revenue which is involved in the reduction of the cotton duties, it is of the first importance most carefully to inquire whether there are not other taxes in India which could with greater advantage be reduced. It is now universally acknowledged, that no circumstance connected with the financial condition of India is so serious as the increased burden which is imposed upon her through the loss by exchange. It need scarcely be remarked that, in order to bring about a more favourable state of exchange, it is necessary either to increase the remittances which other countries have to make to India, or to diminish the remittances which India has to make abroad.

If her export trade should increase, there will be a larger amount to remit to India. There will consequently be a greater demand for bills on India, and the price of these bills will advance; in other words, the exchange will become more favourable. At the present time an export duty is levied on rice and some other articles of Indian produce. If these export duties were repealed, the export trade of India might receive an important stimulus, and an influence would thus be brought into operation to diminish the loss by exchange which she now has to bear. The policy which is now being pursued by the Indian Government will produce an exactly opposite result. The reduction of the cotton duties will increase the imports into India. The amount, therefore, which India will have to remit to other countries will be proportionately increased; the demand for bills on India will consequently be diminished; and thus, at the very time when the loss by exchange is causing a most severe strain upon the finances of India, the Indian Government adopts a policy which not only involves an indefensible sacrifice of revenue, but which directly tends to create a still more unfavourable exchange.

Greatly as the remission of the cotton duties is, for the reasons just adduced, to be deprecated, there are other objections of a much more weighty kind to be urged against this needless sacrifice of revenue. The most prominent feature in the Indian Budget of 1878 was the formation of what was described as a famine fund. The present Finance Minister, Sir John Strachey, came to the conclusion, after a careful and exhaustive review of the state of Indian finance, that, the ordinary revenue of that country being barely sufficient to meet its ordinary expenditure, there was no margin left from which any provision could be made for such contingencies as war and famine. During the past twelve years there have been four famines in India; and since 1873 the famine in Bengal and the recent famine in Southern India have entailed an expenditure of 16,000,000l.

As there was no margin of surplus revenue from which this large expenditure could be provided, the money had to be obtained by borrowing, and the debt of India has been proportionately increased. In order to prevent the recurrence of such a state of things, it would obviously be necessary, in years in which there were no famines, to secure a surplus that would enable a fund to be formed, from which the money required for the relief of famine could be provided. After calculating the amount of famine expenditure during the period above mentioned, Sir John Strachey came to the conclusion that, in order to establish a fund adequate for the purposes intended, it would be necessary to obtain an additional revenue of about 1,500,000l. a year. In order to provide this extra revenue, a licence tax of about 2 per cent. was imposed, and this tax was made to reach those who earned no more than four shillings a week. New cesses were levied in Bengal and other parts of India; and although the salt tax was reduced in the parts of the country which paid these new cesses, an additional revenue was raised from salt, and the people of Madras and Bombay, who were just recovering from the effects of a most terrible famine, found the salt duty increased by no less than 40 per cent.

It was so generally admitted that, in the present condition of India, nothing but extreme necessity could justify this new taxation, that the Government lost no opportunity of declaring that the money which was to be obtained from this new and exceptionally burdensome taxation, was to meet a national emergency, and that it should be scrupulously devoted to the relief of famine. Nothing could be more specific than the following declaration of the Viceroy: -

"The sole justification of the increased taxation which has just been imposed upon the people of India for the purpose of insuring their Empire against the worst calamities of future famine, so far as such an insurance can now be practically provided, is the pledge we have given that a sum not less than a million and a half sterling, which exceeds the amount of the additional contributions obtained from the people for this purpose, shall be annually applied to it. . .. We have pledged ourselves not to spend one rupee of the special resources thus created upon works of a different character."