CHAPTER XI.

DISTRIBUTION.

GOVERNMENT.-CAPITAL.-LABOUR.

INDIA.-FRANCE.-ENGLAND.-UNITED STATES.

WE come now to inquire into the revenue systems of the several countries to which we have referred, with a view to ascertain the influence exercised by them upon the condition of both capitalist and labourer.

In INDIA, there was, for a long period, as has already been shown, a diminution in the power of production, attended by a power on the part of the landholder, or capitalist, to demand an increased proportion of that diminished product. The effect of this was to place the cultivator daily more and more at the mercy of the owner of landed or other capital. He was willing, as now in Ireland and in France, to pay almost any price for the use of a piece of land from which he could extract the food necessary for his subsistence. He could not demand a lease, but was willing to remain a tenant at will, liable to be driven off when he failed to comply with the demands of his landlord, however extravagant they might be.‡

Instead of an increased ability to accumulate capital, consequent upon an increase in the power of production, the unfortunate Hindoo found his productive power diminished, at the same time that an increased proportion was taken by the government, which now claimed to be owner of all the land. The effect of this was entirely to prevent accumulation. The great landlord, as a natural consequence, found that the increased proportion gave him no increase of quantity, and further exertions were necessary, on the part of his collectors, to bring the revenue up to the expenditure. New taxes were imposed-new monopolies were creatednew officers were appointed-increased vigilance on all sides was required the exertions of the labourer or the manufacturer were scrutinized-and if he produced a small additional quantity of cloth, or of rice, his taxes were increased--but notwithstanding all these exertions, the actual receipts into the treasury, in 1827-8, exceeded by only 45 per cent., those of 1805, at which time a

* See page 53, ante.

See page 96, ante.

+ See page 99, ante.

↑ Ibid.

large portion of the territory now owned by the Company, was under the government of native chiefs. During a large portion of the time that India has been under the control of the Company, the governors appear to have forgotten that there can be no increase of capital, or improvement of condition, where the government claims all that is not necessary to the support of existence, and that without increase of capital there can be no increase of production from which to derive an increase of revenue.

The labourer had little inducement to exertion where every additional effort was met by an increase of tax. The capitalist would not apply his means to the improvement of his property when of the increased product that might be obtained one half was claimed for the support of government. The necessary consequence was that no such investments were made. The establishment, therefore, by Lord Cornwallis, in parts of the presidencies of Bengal and Madras, of the permanent assessment, although its extravagant amount produced at the moment great injury, was one of the happiest events that could have occurred in British India, and its general effect has been highly advantageous; but, unfortunately, the system was not extended throughout the empire, and hence the slow progress of improvement. By it, the government granted to the Zemindars, or proprietors, all its interest in their lands, upon payment of a fixed annual rent, or tax, the effect of which was precisely the same as if the United States, instead of de

* Revenue, 1805-6, 66 1827-8,

£15,403,409

22,802,947 Rickards, Vol. II.

The gross revenues of the three presidencies, during the fifteen years ending 1828-9, were £309,151,920, or nearly £21,000,000, per annum.

The following statement shows the sources whence these revenues are derived. Direct taxes, £11,885,560

£2,314,982

1,380,099

1,442,570

103,501

60,518

63,048

328,300

70,469

764,759

45,974

19,106

6,593,326

£ 18,478,886

+ See page 127, ante.

Martin's Col. Lib. East Indies, Vol. II. p. 113.

manding payment for the lands which it sells, contented themselves with payment of interest upon a certain fixed value. The proprietors thereof, freed from further taxation, or the apprehension of it, would go on to apply their capital to its improvement, and would reap the benefits thereof, precisely as is now done when lands or lots are occupied under deeds stipulating the payment of permanent ground rents.

In India, however, the tax was originally fixed very high, the consequence of which was that much of the land changed owners, and in many cases it would not sell for the amount of a single year's assessment.* The unfortunate landholders were thus deprived of their property, but their successors were secure in the enjoyment of it, and applied their capital to its improvement, with the full confidence of enjoying the proceeds. The result is to be found in the fact, that land so held now sells for sixty and seventy years' purchase of the rent. Such is the effect of security of property and moderate taxation.

Had the system been extended throughout the empire, the effect would have been a rapid increase of production and a great rise of wages; but, unfortunately, its progress was arrested, and the holders of the lands upon which it was established now enjoy a monopoly of all those the possession of which is secure from the heavy claims of the Company-the great landed proprietor. They are in precisely the situation of the owners of tithe-free lands in England, who are enabled to claim, as rent, the usual proportion of the product, together with that which would be claimed as tithe. The increase of capital which results from the diminished demands of the government in those districts in which the permanent settlement is established, tends to increase wages, and thus we see a gradual advance; but it is slow, pared with that which would take place if the system had been made universal. Were it now made so, capital would accumulate in every part of the empire, production would increase, the share of the capitalist would fall, that of the labourer would rise, wages would increase rapidly, and the amount of profits to be divided among the owners of capital would be greatly increased.

com

In a portion of Bengal the assessment is made every five years, and the capitalist, if he makes an improvement, does so with the knowledge that at the end of that term the government will claim one fourth, or, perhaps, one half, of the extra product. Under the Mouzawar, or village settlement, and the Ryotwar settle

* See page 101, ante.

ment,* ,* the assessment is liable to change every year. The effect of this is that all the capital which might be applied to the land would become the property of the landlord-in the one case at the end of a single year, and in the other at the end of five years.

The ryot has no inducement to exertion, when one half of his earnings is liable to be thus swept away, nor will the owner of capital apply it to the improvement of cultivation, when one half of all the product is taken by the State. He will not apply it to the purchase of machinery to aid the exertions of the manufacturer, when every such machine is taxed in the same proportion.† It would be better for him to give for land in Bengal, free from this tax, 70, 80, or even 100 years' purchase, than to invest it in the presidencies of Madras and Bombay, subject to the claims. of the government. In the one,case he would purchase a property, subject to the payment of a ground rent, upon which he might make future investments of capital, free from taxation; while in the other every new machine would be subject to the same claim as the first. The effect must be to drive all capital to Bengal, and the owners will pay a high price for the privi lege of taxing their labourers at the same rate as the Company taxes them elsewhere. Their capital will increase, and with it the demand for labourers; wages will continue to rise as they have risen; labourers will come from other parts of India; the demand for land elsewhere will be diminished, and the Company will find increased difficulty in obtaining from the ryots so large a proportion as is now demanded; wages will there rise also, and capital will begin to accumulate, tending to produce a further rise of wages and diminution of the Company's share, together with an increase in the amount of revenue.

The system of monopolies exists in full force. Opium, tobacco,

+ See page 96,

ante.

* See page 93, ante. If the government of the United States, in place of selling its western lands, were to offer to rent them, reserving the right of increasing the rent every year, or every five years, at the discretion of its agents, no man would cultivate an acre of them so long as he could obtain land in the older States, in fee, at prices treble, or quadruple what are now paid. There would be no emigration of either labour or capital to the west under such a system, but, on the contrary, what was already there would be likely to return.

§ The adoption, by the United States, of such a system as that we have suggested, would be followed by a rise of rents in the older States. The owners would demand an increased proportion, as the great landholder had already done. Production would be diminished, and the growth of capital would be slow, enabling its owners to demand an increased proportion of the product of all, whether applied to manufactures or to agriculture.

and salt, are monopolized, and yield to the Company a revenue of about £3,850,000, or about 18 millions of dollars. The labourer is deprived of the right of applying himself to the production of those commodities, and the capitalist will not apply his capital to improvements in the mode of producing them, while he is liable at any moment to have them taken from him at an arbitrary price fixed by the agents of the government.* He feels no security, and the natural consequence of insecurity is diminished production, low wages, and unproductiveness of capital.

In addition to these taxes are others upon exchanges, upon shops, &c.; in fact, upon almost every operation of life. The tendency of the revenue system of India is to throw the whole burthen of the government upon the labourer, and here we find the disadvantageous effects that we have indicated as resulting from such a system. The people are in a low state of civilizationproperty is insecure—and the great capitalist is compelled to expend nearly the whole of its income in maintaining order. The whole revenue of the landlord of all India is but 23 millions of pounds sterling, or about 110 millions of dollars, nearly all of which is expended in the maintenance of governors, of armies, judges, &c., and the landlord is not unfrequently compelled to borrow largely for the purpose of meeting the expenses. Between the years 1793 and 1828, the amount thus borrowed was nearly forty millions of pounds sterling, or 192 millions of dollars. Thus the great owner of this immense territory has, almost literally, no income from it, while the owners of the city of London have a clear rental of seven millions of pounds sterling. The owners of land held under the permanent settlement have been admitted its partners in extracting from the labourer the proceeds of his toil, under a contract by which they are relieved from the liability to pay their share of the expenses. Therefore their land sells at 69 years' purchase, whilst that of the Company yields no net revenue whatever. If the whole of India were granted to its occupants with a provision for the payment of a fixed contribution, the effect would be that capital would accumulate every where, because every man would feel an inducement to exertion; property would become more secure; the necessity for maintaining large armies would be diminished; the great proprietor would no longer be compelled to expend the whole of his income in keep

* The average gross receipts from the sale of opium, for fourteen years, ending with 1821-2, were 9,382,263 rupees, and the cost and charges 990,738 rupees, giving a profit of 850 per cent.