What, however, might fairly be placed to the account of the Secretary of State and his Indian Finance Minister, is any accession of revenue due to the increase of taxation, or to its better adjustment. And on this head very little has been done. There have been a few trifling additions and reductions of the customs duties; and the income-tax, which at most never produced two millions a-year, was imposed with Sir C. Wood's sanction, and taken off with his sanction. The licence-tax (of 1860), though passed into law, was never imposed; and the general result is, that the Indian tariff and sources of revenue are very much the same now that they were in 1859.

The really important reform effected by the introduction of a financial member into the Governor-General's Council has been the establishment of a proper system of account, which, as we have said, if it had been established before, would have prevented the misconception and groundless panics about the financial collapse of India that took place in 1860. A better man than Mr Wilson for introducing such a reform could not have been found, but unfortunately his early death came before he had been able to do more than lay its foundation. The work begun by him was, however, carried forward with vigour by his successors, Mr Laing and Sir C. Trevelyan, by whom great progress was made towards a sound system of public account. But all this work has been done in India; and when Mr West says that "the financial measures of Sir Charles Wood's administration have been numerous and successful beyond all reasonable expectation," although the statement may be verbally accurate, since these measures were carried out during the time Sir Charles Wood presided at the India Office, the inference to be drawn from it, that the measures emanated from Sir C. Wood, appears to us to be in no way sub

stantiated. The hall-porter at the India Office might in truth claim the credit with as much justice. The share of the Secretary of State in these, as it properly is in all detailed measures of Indian administration, was confined to selecting the instruments for effecting them, and conveying formal approval from time to time to the proceedings of the Government in India.

We now come to the other great financial question referred to by Mr West-the Indian currency. Here also his book gives us a clear and accurate resumé of the course of the currency measures adopted during the last seven years; but we think a very slight acquaintance with the matter will dispose of the conclusion he seeks to establish, that the guiding influence of Sir Charles Wood may be discerned throughout them. We need hardly remind those of our readers who are familiar with the currency question, that Mr Wilson belonged to the small but able school of economists which is opposed to the principles of the Bank Charter Act, of which Sir C. Wood has always been a stanch supporter. When, therefore, we find that Mr Wilson, on his arrival in India, immediately announced his intention of introducing a paper currency, of which onethird was to be covered by a reserve in gold and silver, and the remaining two-thirds by Government securities, we at once recognise the scheme which he had advocated so ably during a long period in the Economist,' and afterwards in his well-known work on currency, and we may be sure that Sir C. Wood had no claim to paternity of the measure. We may observe, by the way, that Mr Wilson had no intention of pressing his principle to a conclusion at the beginning. He meant to proceed cautiously, and in the first instance to protect the paper issues by a metal reserve of nearly the whole; so that the practical result would

not have differed appreciably from that attained on the approved plan of issuing all paper in excess of a certain fixed minimum only against coin and bullion. Mr Wilson, however, could not reasonably have expected that his plan would be allowed; and it was, of course, vetoed by Sir Charles Wood. His successor, Mr Laing, who assumed office before the measure had come into operation, adopted the orthodox plan, and his Bill provided that all paper issues in excess of four millions sterling should be covered by metal reserves. But he went astray from the Secretary of State's views, in proposing to hand over the management of the paper currency to the chartered State banks, and it was not till after long discussion, extending beyond the date of Mr Laing's resignation of office, that the measure, as it was finally enacted, at all harmonised with the Secretary of State's views. Even now, as Mr West informs us, the Government of India have deviated from his wishes in fixing the lowest denomination of note at ten rupees (about £1) instead of five rupees, as he desired—a very material alteration, as we shall presently

see.

So much for the history of the case. As regards the merits of the controversy, we conceive it would not be difficult to show that the peculiar conditions of India, with its large agricultural population and stable trade, render it especially suitable for the application of Mr Wilson's theory, of issuing a proportion of the paper currency against Government securities; and that such a scheme, cautiously and gradually carried out, might end in the establishment of a paper currency on a perfectly safe basis, exceeding in amount the largest estimates ever hazarded, and constituting a source of large profit to the Government, and benefit to the country. This, however, is not the place for pursuing that idea; what we have

now to point out is, that the history of the currency question, as told by Mr West, merely confirms our proposition that the Secretary of State can in practice only exercise a veto over the proceedings of the Indian Government. He cannot initiate measures, or take an active part in carrying them out. In certain cases, no doubt, his judgment is the better of the two, and this of the currency is in some respects one. The non-introduction of a five-rupee note especially, we conceive to have been an unwise departure from his views. But principles of government are not to be inferred from particular instances; and there is nothing in the history of this case to justify the inference, either that the attempt had been made to administer India directly from the India Office, or that it would be desirable to do so.

As to the result of the measure, Mr West admits that it has not been thoroughly successful, since comparatively few notes have been taken out for local use; and we conceive that this partial failure is due to a feature in the currency measure which both the Secretary of State and the Indian Government have agreed in introducing, while we may observe that Mr West seems to overestimate the virtual extent of the operation of the measure. The former paper currency of the three Presidency banks, now superseded by Government notes, reached to about £3,200,000, while the circulation of the latter nearly a year ago had attained to the sum of £10,160,959; hence the latter appears to be more than threefold the former. But, in the first place, the comparison is not made between like things. The paper circulation of the Presidency State Banks was the amount of their notes held by the public: the paper circulation of the Government is the amount of Government notes held by the public, including the amount held by the

State banks and the different Government treasuries. A very large deduction has therefore to be made from the nominal, to arrive at the virtual paper circulation.

In the next place, the introduction of this paper currency took place simultaneously with an extraordinary development of Indian commerce. We believe that the increase of paper circulation has been mainly due to this cause alone, and that it would have taken place to quite the same extent had the currency continued to belong to the State banks. This view is supported by the fact that the principal increase has occurred at Bombay, the great centre of the Indian

cotton trade.

As to the almost total failure to introduce the paper currency into the interior of India, the cause is not farto look for. That currency is practically inconvertible. At the very time when the attention of European economists is directed towards introducing uniformity of currency among different nations, the British territories in India have been mapped out into a number of " circles," each of which has been endowed with a separate paper currency of its own. The traveller proceeding from Calcutta to Lahore finds himself after the first day's journey in a country where the notes he had provided himself with are not a legal tender. And if, at considerable loss, he exchanges them for notes of the "circle" where he has arrived, a precisely similar inconvenience occurs on arriving at his destination. Is it wonderful if under these conditions the Government notes should be depreciated, and fail to prove an attractive form of investment?

The reason which determined the formation of these circles is, of course, readily apparent. If a universal note had been issued by the Government, convertible on demand at various offices of issue, the notes would have been largely

employed by traders for remittances to buy the produce of the country; and the cost of sending specie from the presidency towns to the interior, to meet the notes presented at the branch offices, would have fallen on the Government. Hence the device of these circles of issue. The circle office, say at Lahore or Nagpoor, is bound by this means to cash only the notes issued from it; and the practical result is that the operations of these branch issue offices are kept down to a perfectly insignificant scale.

But the danger which it is thus sought to avert, arises from the measure having been dealt with in an incomplete, half-hearted fashion. The danger to be guarded against, it is said, is of this kind, that the trader wanting to buy cotton, for example, will procure notes at the Bombay office, and present them at the Nagpoor office, to be exchanged for the silver rupees which he desires to distribute among the cultivators about Nagpoor, in the purchase of cotton.

Therefore, it is said, Government would not only have to bear the cost of sending silver up from Bombay to Nagpoor to meet the notes, but large reserves of coin would have to be kept at the latter place to meet the chances of a sudden run on it. Even with this precaution, there would always be the danger, it is argued, of the reserves of a branch currency-office proving insufficient to meet the demand. Bombay notes should therefore be kept from use in this way. Hence the establishment of currency circles. The knot has been severed, not untied.

But it will be obvious on consideration that the difficulty to be provided against will arise on the supposition that the capitalist will demand to have his notes changed, and will conduct all his operations with the owners of the raw produce by means of specie payments. And no doubt he will do so. But why? Simply because the currency note

is not current among the people of the country. And it is not current, because it is practically not convertible. There are ten offices of issue in India; but it needs hardly be said that the tenth part of that vast country is a large tract. Within that tract the note is payable only at the office of issue, and although a legal tender, it only circulates freely within the immediate neighbourhood of that office. The denomination is too large for the bulk of transactions occurring; the holder of a note is therefore usually obliged to seek the intervention of a money-changer; and the notes in consequence are usually at a discount. If, however, a note of smaller denomination were introduced, of five or even two rupees, and if it were cashed freely at every district treasury, this depreciation would disappear, and the note would circulate with perfect confidence. There would no doubt be difficulties to be overcome, and precautions to be taken at first; but we conceive such a measure would be found quite practicable and eminently successful. It may especially be pointed out, that precisely in proportion as the notes are readily cashed, will the demand for cashing them be reduced.

This is, however, not the place to discuss the details of the measure; we have no space to enlarge on the enormous benefits that might be derived from the introduction of a sound paper currency, freely circulating among all classes throughout the breadth of the land. But we think enough has been said to show that what has as yet been done in this way is not much for either the Government of India or the Secretary of State to be proud of.

This device of circle issues seems to have from the first been accepted by both as a necessary feature of the plan.

Mr Laing, indeed, would have done away with them; but his scheme was mixed up with a plan for employing the banks as cur

rency agents, and was disallowed on that ground. With respect to a gold currency, the Secretary of State has expressed himself opposed in opinion to those who, without any evidence in favour of the assumption, have urged that a gold currency would be more suitable to the wants of a poor people like the natives of India than the existing silver coins, and it perhaps hardly requires acquaintance with M. Chevalier's great work to perceive that the presumption lies the other way. However, no practicable scheme has yet been submitted for his approval. The only definite one was that preferred by Sir Charles Trevelyan, who, having written a minute which shows conclusively that the sovereign always passes current in India at considerably more than ten rupees, proposed that it should be received in the Government treasuries in lieu of that sum. Sir Charles Wood agreed to the proposal, which it need hardly be said has proved quite inoperative.

Let us now pass on to the subject of public works, to which Mr West devotes a short chapter. Here also our criticism must be of the same kind as before. That great progress has been made in this direction during the last few years is undoubtedly the case. Not only have the sums annually devoted to the purpose out of the ways and means of the year largely increased year by year, from four millions in 1859-60 to seven millions in 1866-67, but the principle has now at last been fairly recognised that expenditure on public works is not to be regarded as a temporary obligation, to be wiped off by a brief spasmodic effort, but that a vast and protracted undertaking lies before the Government, extending over an indefinite period into the future, and only to be carried out successfully by sustained, continuous labour. Public works outlay has therefore come at last

to be regarded as a necessary burden, to be provided for as a certain annual charge, provided beforehand just in the same way as the cost of the army and the civil establishments of the State, and not determined simply by the fluctuating amount of the surplus revenue. More has been done in India in the way of material progress during the last six years than was done in the previous quarter of a century, and threefold as much again will be effected during the next six years, if the arrangements now set on foot be persisted in. But that the credit for this vigour and foresight is to be fairly assigned to Sir Charles Wood we deny. In this, as in the other matters of administration already referred to, his part has been limited to the passive one of non-interference with the arrangements made by the Government of India. The sums devoted by that Government to public works are distributed annually among the different local Governments long before a report reaches the Secretary of State; and although of late years the sums thus devoted have been so large as to create a deficit in the budget account, and the Secretary of State has thus been called on in effect to obtain the amount from the London market, practically there was no option in the matter. It would have been quite impossible for any Minisster, in face of the demand raised at Manchester for Indian cotton, to cut down the estimates of the Indian Government for expenditure on roads and canals. Mr West says, indeed, that Sir C. Wood in 1862 sanctioned "the employment of a sum amounting to £3,000,000 from the cash balances for the further prosetion of reproductive works;" but the local Government were quite at liberty to employ their cash balances as they think proper, without asking the leave of the India Office. As a matter of fact, the idea of and sanction to this mode of employing them came to nought. As

we said before, spasmodic efforts of this kind are of no real service; material progress, if it is not to be attended with waste and extravagance, must be gradual and steadily prosecuted.

There are indeed two ways in which the Secretary of State can actively co-operate in extending public works in India. It rests with him to raise loans in England for reproductive works of irrigation, should such a course be desirable; this might even be done without waiting for an application from India. And in all matters relating to the extension of railways it has been usual to take the initiative quite as much in England as in India, while the negotiation with the railway company is always conducted by the Secretary of State. But with respect to neither of these matters do we find in Sir Charles Wood's administration any cause for eulogy. It is not, indeed, very long since the discovery was first made of the truth, that a great estate like India cannot be brought rapidly up to the required state of improvement by merely spending on it the surplus income that may remain after every other demand has been satisfied, and that if reproductive canals and tanks for irrigation are to be constructed throughout the breadth of the land on a comprehensive scale, and within a reasonable time, capital must be appropriated to the purpose, i.e., that loans must be raised. But at any rate the perception of this truth reached the Governor General and his Council long before it penetrated to the recesses of the India Office. From correspondence published in the newspapers a short time back, it appears that the Indian Government have been since 1864 urging on the Secretary of State the necessity for at once commencing a comprehensive system of irrigation works by means of loans, but that until Lord Cranborne came into office no reply was vouchsafed, and