Tuesday, July 31 1804

The house met at about half past two o'clock; about a quarter before three, the yeoman usher of the black rod came down and informed the Speaker, that his Majesty commanded the attendance of that hon. house in the House of Peers. The Speaker, and all the members present, immediately went to the House of Peers. Upon their return, the Speaker desired the members to come round the table, when he read to them his Majesty's speech. After which the members retired, and the session concluded.

Since our Report of the "Speech of Lord Castlereagh on the 19th of July, previously to his moving for several Accounts relative to the Finances of the East India Company in India and Europe for the last Ten Years" (see page 1073), was put to press, we have been favoured with the following correct Copy of his Lordship's Speech, published by Authority.

Before, sir, I proceed to move for the papers, of which I gave notice on a former day, as I shall not deem it necessary to found any motion upon them when laid upon the table, I feel it my duty, at present, shortly to state to the house, the object with which this information is called for, and the conclusions which, I apprehend, will be deducible from it.—In the successive debates which have annually taken place on Indian Finance, however complicated and extensive in its nature the subject is, I have observed, that so long as the discussion confined itself to the particular accounts of the year then under consideration, whatever difference arose was easily reconciled, by a reference to the accounts themselves: but, so often as the discussion has taken a wider range (as it has frequently very naturally and very properly done, with reference to the results and statements of former years), a great want of precision has been observable, from the difficulty of referring back, with accuracy, to the voluminous accounts of preceding years, not at the moment either in the hands, or in the recollection, of those who took a part in the debate.—One of my objects, and indeed the principal one, at present is, to bring before the house, in the compass of a single and intelligible account, the substance of the last ten years' accounts, commencing with the renewal of the charter; so that gent. hereafter, having before them, in one point of view, the estimate of each year, under the several heads of revenue, charge, interest of debts, surplus revenue, or deficit, and increase or diminution of debt, they may, at one glance of their eye, compare the same with the actual result, as furnished in the accounts of the subsequent year.—I am the more desirous of putting parliament in possession of this information, from the perseverance with which gent. on the other side of the house, have asserted, year after year, that all the estimates, from time to time laid before parliament, with reference to Indian finance, and all the predictions of my noble friend (Lord Melville) and myself, have been completely falsified by the event. They have not, certainly, charged either with wilful or deliberate misrepresentation; but they impute to us the having relied for our conclusions upon estimates; formed upon a confined and inadequate view of the probable expenditure for the succeeding year. and that, under the deception of our own over-sanguine feelings, we have given to parliament, and to the public positive assurances of results which have never taken place.—If, sir, my noble friend and myself have been in the habit of annually misleading parliament on this important subject, we certainly have taken all due pains to supply the means of detecting our own errors. The detailed report, which is annually published, of the sentiments and opinions stated by the person who fills the situation I have now the honour to hold, furnishes more ample and authentic materials, than are to be found in the administration of any other branch of the public affairs, for convicting him of any inaccuracy into which he may have fallen, or any mistatement he may have ventured to hazard; and with such means, it is a little surprising, if they are borne out by facts; and a just subject of complaint, if they are not, that instead of bringing the question to this distinct test, they have confined their attack to general imputations.—Wishing to bring the question, once for all, to a distinct issue, I shall endeavour to state, as precisely as I can, the two charges, which, I conceive, comprehend the substance of every thing that has been alleged upon this subject. 1st, That the annual estimates themselves were founded in error, and disproved by the expenditure at the end of the year; and that while the estimates gave no reason to apprehend an increase of debt, an accumulation, to a large amount, has taken place annually abroad. 2d, That a positive assurance was given by my noble friend to the public, in the year 1793, of the participation or 500,000l. being regularly paid, and that his lordship had often declared, the finances of the empire would derive aid from the resources of India, before India became a charge on the mother country.—And, first, as to the latter charge, which is of a more general nature, I have only to meet the assertions of gent. who state, that these assurances were given absolutely and without qualification, by asserting they never were; referring, for the truth of my denial, to the recorded sentiments of my noble friend, as published at the time. They were, no doubt, made absolutely, with reference to a state of peace; but, so far from being equally applied to a state of war, parliament was distinctly apprised by my noble friend, at the time, that war, in proportion to the extent of its operation, and more particularly war on the continent of India, must wholly alter the calculations then made. A hope was entertained by my noble friend, at the commencement of the late war, that in the then crippled state of the enemy, our expense abroad might not be such, as to disturb materially our financial prospects; but he pointedly guarded himself against causes of expense, distinct from the probable direct efforts of France in India. Since that time, we have had two Indian wars, one with Tippet, the other with the Mahrattas. We have had rebellions, little inferior to wars, in the expenditure connected with their suppression: and we have, in that time, fitted out from India various expeditions, and prominently that to Egypt, not immediately connected with the Company's service, the charges of which, with interest since accrued (in whatever proportion they may ultimately fall on the public or on the Company), stand recorded in the accounts to the amount of about 7,000,000l. Could my noble friend's statements, even had they been unaccompanied by the express qualifications which made a part of them at the time, be in fairness considered as applying to such a state of things as I have described? or is it wonderful, under such an accumulation of expense, incurred not merely on account of the Company but of the public, that the result, which my noble friend was justified in opening to parliament in the year 1793, should stand suspended, in whatever degree those causes have continued to operate? This house will recollect, when my noble friend stated his conviction, that the empire was likely to derive aid from India, before the defence of India would become chargeable upon the mother country; that this statement was made to meet the then gloomy predictions of gent. on the other side of the house, who asserted, such was the deplorable state of the Company's finances, that the empire must soon be drained at home, for the defence of our possessions in India. The truth of these predictions has been now pretty fairly tried, by ten years of the most expensive war, during which time India (an important exception to all our other foreign dependencies) has sustained its own expense, and is, at the present day, more equal than ever to continue so to do. What would have been its ability to fulfil the other and more flattering part of my noble friend's prediction, that of affording an efficient resource to the finances of the empire, had we enjoyed peace, I leave to the house, from its having thus supported itself in war, to judge; only adding, by way of explanation, one observation, namely, that the increased annual expenditure arising from the war, eventful as it has been, may be taken, on the average of ten years, at a sum considerably exceeding a million a year. Having thus taken notice of the more general charge which gent. have been in the habit of urging, I have the satisfaction of coming to that, which, from its being precise and specific in its nature, can at once be decided by a reference to the accounts themselves; and here, little more remains for me to do, than to read to the house the leading results of the accounts for ten years, which I now hold in my hand, comparing the estimate under the head of revenue and charge, with the result, as established by the actual accounts of the succeeding year.

It is here material to observe, that an increase on each side of the account is not necessarily a proof of inaccuracy of estimate, as in the course of several of the years after the estimates were transmitted home, new territories were annexed, which brought with them an addition, both to the revenue and charge side of the account. The best criterion to try the accuracy of the estimates upon, is, to take the result upon the net revenue,

so that, in an expenditure of above 80,000,000l. and during a period nearly of uninterrupted war, the error in the final result, upon the comparison of revenue and charge, did not much exceed three millions; an instance of precision and accuracy of estimate, not, I will venture to say, to be paralleled, in the financial proceedings of any other govt.; and which becomes the more surprising, when even this excess of charge is to be accounted for, by the military expenditure, both for the Mysore and Mahratta wars, becoming a charge in the course of their respective years, when at the outset, and at the moment the estimates were framed, neither events could possibly have been in the contemplation of the officers preparing the same. Upon a review of the ten years, it appears, that the final net surplus revenue, after payment of all charges abroad, including interest of debt, was

The house will consider it a most conclusive and satisfactory proof of the territorial resources of our Indian empire to observe, that the produce of the revenue was sufficient to cover the expenditure connected with its maintenance and defence, during a period often years war, realising, at the same time, a surplus of 1,981,000l.; whilst the progressive increase of the debt from 8,074,000l. at which amount it stood in 1793, to 19,869,000l. its present amount, has swelled the charge for annual interest from 517,000l. to 1,457,000l. the addition made to the Indian debt in this period being 11,794,000l. which will be observed upon hereafter.—Having noticed the productive powers of the territories in supplying a surplus, under all the pressure of war, it may not be unsatisfactory to present this subject to the house in a different, and perhaps, in principle, a more accurate point of view, not varying materially in the result, but embracing, the territorial charge at home, as well as abroad, in the mode of stating the account.

^* It is apprehended that when the articles of territorial charge, paid at home, are minutely examined, that the amount will not be found so large as the sum here stated.

† The interest charged against the territories is taken at the amount it stood at in the year 1793, assuming, that, communibus annis, no loans were requisite for defraying territorial charge. It might admit of question, whether, upon a more extended analysis of the debt prior to 1793, it was chargeable to the territories.

It is not here meant to be contended, that the commerce of the Company derived aid from the above surplus. There were other demands, which more properly belong to the territories, which required and absorbed funds, nearly to an equal amount, though not falling strictly within the annual territorial expenditure. They are as follows:

Of the above 4,520,000l. the increased cash balance and floating advances must still be considered as available funds, in the strictest sense: the net available resource, therefore, from the territories, in ten years of war, after liquidating an old incumbrance on the Carnatic, and making a payment of 500,000l. to the public, may be stated at 2,333,000l.—The attention of the house will naturally be attracted to an increase of debt having taken place in India, to the amount of 11,794,000l. whilst the territories appear, upon an average of years, fully to have supported their own expense. So large an incumbrance is certainly to be regretted, and calls for explanation; but it does not, when examined, prove a deterioration in the general concern.—Whilst the Indian debt, including China, has increased 12,055,000l. the debt in Europe has been reduced 2,218,000l. The actual increase of debt upon the whole does not exceed 9,837,000l.—The house will not be surprised, in a growing and extended commercial concern of this nature, mixed with the govt. of a great empire, that in proportion as funds realise themselves into assets of a less convertible nature, as the machine itself increases in size, and as services press for supplies, where the necessary funds may not at the moment be within reach, that new loans must, from time to time, be made. The effect of such debts being contracted, as bearing upon the value

‡ This is taken, very moderately, at 2,500,000l.—1,500,000l. having already been repaid by the public, nearly the whole falling under this class of expenditure, and which must be credited to the territories, as originally disbursed under the head of charge. The charges for the Egyptian expedition still remaining unsettled, in themselves amounting to 2,000,000l.

of the concern at large, can alone be measured, by examining, whether they have been applied to unproductive expenses, or whether you find, upon the whole, a correspondent value realised in another description of property, which may fairly he considered as a counterpoise to such debt.—In looking to the question in this point of view, whilst we find the debts increased since 1793,

subject to adjustment, in whatever sum may ultimately be disallowed of the claims on govt. amounting to 4,018,126l.—Whilst the necessity of new loans must be admitted, for carrying on the joint operations of commerce and govt. during the period in question, I cannot avoid calling the attention of parliament to the fact of the debt having decreased at home, whilst it increased so largely abroad. I am aware, that in a period of war, when it may be impossible in each year to transmit funds abroad, to the amount which, upon general principles, it is desirable should be done; or where, in any particular year, the expense, from unforeseen events, may have gone beyond the scale provided for from home, that new loans abroad may have become expedient and necessary, rather than suffer the investment suddenly to decline, to the prejudice of the industry of India, and to the derangement of the regular supply of the market at home: but the procuring funds in India, at the high rate of interest payable on money there borrowed, is, as a general practise, so injurious, that I cannot permit this circumstance to pass without some remark, trusting that the policy of borrowing in Europe will always be kept steadily in view: and that every effort will be made on the first favourable occasion, to convert a considerable proportion of the Indian, into a European debt, which cannot fail in itself, by the mere reduction of interest, rapidly to accelerate the ultimate extinction of the capital of the debt itself.—I shall not, upon the present occasion, delay the house, by minutely tracing the appropriation and distribution of the Company's funds in each year, between the home and foreign concern; between the management of their trade, and the administration of their territorial dominions. The accounts which I shall now call for, will lay the ground for such an investigation. I shall content myself, at present, with observing, that as we find, upon a balance of debts and assets, that the Company's affairs, taken in the aggregate, have not been deteriorated in the last ten years, whilst the British empire in India has been largely extended and secured; and as I have, I trust, satisfactorily shewn, that the territories have, during this period, fully defrayed their own expense, it seems to follow as a necessary consequence, that the commerce of the Company (conducted as it has been, and ought always to be, on enlarged principles of steady encouragement to the manufacturing interests both at home and abroad, rather than on the confined scale of mercantile profit and exclusive advantage) has also, from its own profits, upheld itself, paying to the proprietors the dividend of ten per cent. upon their capital stock. If such has been the result, when both interests had to contend with all the pressure of war, and loans made at high interest abroad, how great would have been the resources derivable from them, had peace left the Company in possession abroad of a large surplus revenue, and had the money-market at home (from which they have been excluded for the last ten years, in a great measure, from deference and consideration for the interest of the state) being open to the Company, so as to admit of their raising, at a moderate rate of interest, by an increase of their capital, the additional funds which their growing concerns have, from time to time, required.—Whilst I am upon the subject of the Company's debt abroad, I wish to notice an observation that fell from an hon. gent. on the other side of the house (Mr. Johnston) that when, in the month of March 1803, I stated to parliament the plan which was then in contemplation, for the reduction of the Company's debt abroad, to the extent of two millions in peace, and possibly to the extent even of one million in time of war, that I held forth an expectation, that such plan could be in operation in the year 1802–3 in India. A reference to dates is sufficient to prove, that a plan, not stated till March 1803, not sent out in orders to India till June 1803, and the execution of which depended upon the extent of supplies to be sent from Europe, in the end of the last, and beginning of the present season, which supplies could not reach India till late in the year 1803–4, could not have any connection whatever with the accounts of 1802–3. It is equally clear, had peace continued, and had all the materials, which were then stated as essential to the plan of paying off 2,000,000 of the Indian debt within the year, remained undisturbed, that the plan itself could not have had its commencement abroad, till late in the year 1803–4, or more probably the commencement of 1804–5.—It is true, I stated that a net revenue of one million would remain disposable abroad in the year 1802–3, upon the supposition of peace continuing; but I then also stated, that as the law had decided, that the surplus revenue should be applicable, in the first instance, to the purchase of investment, it was not till that investment reached Europe and was realised, that the surplus, so to exist, could be applied, either to the reduction of debt, or the payment of the participation to the public. The month of July 1804 was then mentioned, as the period when the Company would be prepared, if war did not intervene, to account with the public for that sum. It was explained, in a former debate, why, on the balance of last year's account, no such payment is now due; and it also was shewn, that the net surplus abroad in that year, after payment of all charges, interest of debt included, would not have fallen short of 1,300,000l. had peace continued. It appears, therefore, that parliament was distinctly apprised from the first, of the circumstances on which this payment must depend; and I am by no means answerable, in consequence of any thing I then said, for a temporary interruption of this resource, which has been subsequently occasioned by the war, and by the unfavourable sales at home.—With these materials, viz. a clear surplus of 1,000,000l. in peace, and 500,000l. in war, applicable to the reduction of debt, the plan proposed to liquidate debt abroad, to the annual amount of 2,000,000l. in peace, and in war to an amount not exceeding 1,000,000l. The practicability of executing the plan in peace (these materials being forthcoming) depended further on the Company being enabled, by gradually adding to their capital, to raise annually in Europe such a sum, as, with the progressive savings of interest, would complete the sinking fund, in each year, to the required amount.—No difficulty could have occurred in doing so, to the proposed extent, had peace continued. In war it was presumed, in addition to the 500,000l. applicable from the net proceeds, that partly from repayments from the public, and partly from an increased issue of bonds, the fund, for the redact on of debt, might have been carried beyond the half million.—If, from the recurrence of war in Europe, coupled with the heavy pressure of a contest with the Mahatmas, the surplus net proceeds have been in a greater degree absorbed, than there was reason to apprehend at the time: if, from the war bearing upon the price of all descriptions of public securities in the market at home, it has become disadvantageous to add to the Company's capital, whilst the price of their stock, in common with all others, is so much depressed; and, if, from our communication with the continent, at the outset of the war, being materially embarrassed, if not interrupted, and also, from the first effects of the high duties, imposed on the Company's imports in the course of the last session, their sales at home, in amount, as well as in price, have been considerably affected: the house will not be surprised, if the concurrence of all these on favourable causes should impede, if not suspend, the operation of the plan in question. I trust, however, that as far as the sales at home, and the peculiarly heavy expenses of the war abroad, are concerned, that we may from the present moment, indulge better hopes, peace having been actually concluded with the Mahatmas, and the impediments to our sales not being, it is to be presumed, in their nature permanent; but having recalled to the recollection of the house the principal points on which this important question must hinge, gent. will feel, that the detail will be more sat sfactorily discussed in a future year, when advices shall have been received of the orders having reached India, and of the proceedings of the supreme govt. thereupon.—Upon the whole, I trust, the several accounts, I shall now move for, accompanied by the explanations I have thus had an opportunity of submitting to the house, will satisfy parliament and the public: 1st, Of the peculiar and highly commendable accuracy, observable in the estimates prepared by the officers of the East-India Company, both under the heads of revenue and charge, trying them by the test of the actual accounts for the same year, after the whole receipt and expenditure had been precisely ascertained, and only making a reasonable allowance for extraordinary expence, occasioned by events which, from their nature, could not have been either foreseen or calculated upon, when the estimates were prepared. 2d, That none of the assurances given to parliament on the subject of Indian finance, if fairly stated and correctly understood, have been disproved by the event; on the contrary, that it is manifest, from the revenues having more than covered the territorial expenditure, during ten years of the most expensive war, that every expectation of aid to the public finances from India would have been fulfilled to the utmost, had we remained at peace, or even had the scale of our war expenditure not been aggravated, far beyond what the European war alone, at its outset, gave us reason to apprehend, by expensive expeditions, fitted out in India on the public account, and by wars with the native powers. 3d, That, notwith- standing the period now under consideration has been one of heavy pressure, upon the commercial and territorial interests of the Company, both being exposed to all the in creased embarrassment and expense inseparably connected with war, the general state of their affairs, upon a comparison of debts and assets, is, upon the whole, not impaired, whilst their empire has been carried to an extent, which leaves them nothing to fear from any enemy on the continent of India, and ends to them new sources of prosperity, which cannot fail largely to operate on the return of peace.—That the resources of India should be such, as to enable it, whilst there yet remained formidable coinheritors for military dominion in that part of the world, to support its own wars, upon an average of years, out of its own revenues, is a triumphant fact to be enabled to state on the part of a dependant branch of this empire. I doubt whether the financial means of any other govt. could under similar circumstances of pressure, present a similar result for an equal number of years of extended warfare.—Parliament, from the means of information it possesses, will justly discriminate between the expectations it may safely form, with respect to the resources of India in a period of peace, as contrasted with one of war; they will have now before them a faithful Statement of the Estimates and the Result of the last ten years; and, I trust, these documents are not less calculated to justify the official statements which have been annually submitted to their notice, than to inspire the empire at home with a just confidence, in the extent and stability of our Indian resources.—I shall now, Sir, conclude with moving that there be laid before the house: 1. "An Account, showing the estimated and actual revenues and chares in India, with the results for ten years, charges1793–4 to 1802–3, after deducting, payments on account of interest on debts and supply to Bencoolen, &c. exhibiting likewise the decrease or the increase of the debts; distinguishing each year."—2. "An Estimate of profit and loss on the Company's sales in England and other profits for ten years, ending 1st March 1804, with other payments in England deducted there-from; distinguishing each year, and distinguishing, as far as may be, such charges as are of a political, from those that are of a commercial nature; and also distinguishing the India from the China account."—3. "An Account of the total amount of the Company's debts and asset, abroad and at home, including China; the former from April 1793, to April 1803; and the latter from March 1794 to March 180 both inclusive; distinguishing each year."

APPENDIX, No. III.—An ACCOUNT of the Total Amount of the Company's DEBTS and ASSETS, Abroad and at Home, including CHINA; the former from April, 1793, to April, 1803, and the latter from March, 1794, to March, 1804, both inclusive; distinguishing each Year.

Mem.—The Debts and Assets in India are stated, exclusive of the Securities in the Hands of the Commissioners of the Sinking Funds, from April, 1800. They are also stated conformably to the Accounts presented to Parliament in each Year, except in 1793 and 1794; the Accounts for April in each of these Years not having been received when the Statements were laid before Parliament.

(A) This differs from the Account formerly presented, it having been found that Part of the Cargoes afloat are included in the Assets in India, 1803.

(Errors excepted.)

CHAS CARTWRIGHT,

Accountant-General.

WM. WRIGHT,

Auditor of India Accounts.

East-India House,

July 30,1804.

APPENDIX, No. IV.—An ACCOUNT, shewing the Operation of a SINKING FUND, in the REDUCTION of the INDIAN DEBT, at Two Millions annually, viz. One Million from the Surplus Revenue, and One Million from the Saving on Interest, and from a Loan, &c.