Vol. 6 · pages 81–85
The Evolution of Provincial Finance in British India; The Problem of the Rupee; other economic writings
This text was extracted automatically from the official PDF of Dr. Babasaheb Ambedkar: Writings and Speeches, so it may contain small errors. Always check the original page before quoting.
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66 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
in office at home, not even the Law Officers, can be
expected to have so comprehensive and clear a view of the
Indian system of law, as to know readily and familiarly
the bearings of each part of it on the rest.” 1
The other motive was to create a strong central government
to deal effectively with the European settlers in the country.
It is to be noted that if the native population suffered under
the uncertainties of law, the British population lived under
the most galling restrictions. The revelations of oppressions
by Englishmen practised, in the early days of British Rule,
contained in the report of the Secret Committee of the House
of Commons appointed in 1771 to inquire into the affairs of
the East India Company, were followed by very stringent
laws governing the entry and residence of private British
subjects in India. No British subject of European birth was
allowed to reside in India beyond 10 miles from any one of
the principal settlements without having previously obtained
a special license from the Company or the Governor-General
of India or the Governor of the principal settlement in
question.2 The Court of Directors of the Company, subject to
revision of the Board of Control, 3 were empowered to refuse
such licenses 4 and the Governments in India were strictly
enjoined not to sanction the residence of British subjects on
their own authorities except under special circumstances 5
and were authorized, in cases they deemed proper, to declare
licenses otherwise valid as void. 6 Counterfeiting licenses7 and
unlicensed residence8 were made crimes punishable with fine
or imprisonment; and persons who were dismissed from, and
who had resigned service, were declared guilty of illicit trade
if they lingered beyond the 10-mile limit after their time
had expired. 9 Unlicensed British subjects were made liable
to be deported, 10 and such as were licensed were required to
register themselves in the court of the district in which they
resided.11 Subjected as they were to the regulations of the Local
Government12 they were made amenable to justice in India
as well as in Great Britain for all illegal acts done in British
1 Quoted in Herbert Cowell’s The History of the Constitution of Courts and
Legislative Authorities in India, Calcutta.
2 33 Geo III, c. 52, s. 98. 7 Ibid., s. 120.
3 Ibid, s. 38. 8 33 Geo. III, c. 52, s. 131.
4 Ibid, s. 33. 9 Ibid., s. 134.
5 Ibid., s. 37. 10 53 Geo III, c. 155, s. 104.
6 53 Geo. III, c. 155, s. 36. 11 Ibid., s. 108.
12 Ibid., s. 35.
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67THE IMPERIAL SYSTEM
India,1 or in Native States. 2 To render them impotent to cause
complications, they were not allowed to lend money to or be
concerned in raising any for native princes3 or foreign companies
or foreign European merchants. Similarly to protect the natives
from their oppression they were forbiden to lend money to the
latter at a rate of interest exceeding 12 per cent. per annum
on penalty of forfeiting for every offence treble the value, 4 and
they were placed under the jurisdiction of the Justices of the
Peace in all cases involving assault or trespass 5 on, and small
debts6 due to, the natives of India. Moreover, every British
subject of European birth was required to register in the office
of his district the name, etc., of his native stewards, agents, and
partners,7 on penalty of being disentitled to recover or receive
any sum or sums of money by reason of the joint concern or
to compel an account thereof by any suit in law or equity in
any court within the provinces. 8
The ruling race had long chafed at these restrictions, under
which it was placed, without much avail. They were evidently
aimed at keeping out an element dangerous to the stability of
the Indian Empire, but, as time went on, and as the Indian
Empire was consolidated by successive victories over the native
princes, there was raised against these restrictions such a storm
of indignant criticism that even those who had acquiesced in
their virtue were forced to admit that they had outlived their
purpose. While the British Parliament could not help abiding
by the sentiments of the time, it refused to disregard the
consequences which it thought would inevitably attend upon the
free ingress of British subjects of European birth under the then
existing system of government. It realized that a harmonious
treatment of the immigrants and an effective control over
them was absolutely essential. Parliament was afraid that
the different governments armed as they were with co-equal
and independent powers of legislation and administration by
exercising these powers with regard to the immigrants entering
their respective territories, with different views and according to
inconsistent principles might integrate the whole mass of them
into a disaffected body difficult to be dealt with. Besides the
1 24 Geo, III, c. 25, s. 44. 5 53 Geo. Ill, c. 155, s. 105.
2 26 Geo. Ill, c. 57, s. 67. 6 ‘Ibid., s. 106.
3 37 Geo. Ill, c. 142, s. 28. 7 21 Geo. ill, c. 70, s. 13.
4 13 Geo. Ill, c. 63, s. 30. 8 Ibid., s. 16
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68 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
necessity of a harmonious treatment based on uniform
principles, the fears of Parliament that the ingress of British
immigrants would result in the revival of oppression on the
natives were not completely allayed. As its recrudescence was
felt to be a likely event, Parliament desired to subject them
to a strong and uniform central control, so that the offender
in one jurisdiction might not be able to find an asylum in
another. Thus, whether considered from the standpoint of
bringing about uniformity of laws or securing stringency of
control over elements subversive of order, the then existing
system of government with its divided jurisdiction was illsuited for the purpose held in view. An all-powerful Central
Government legislating for and controlling the affairs of
India as a whole was deemed to be the only solution for the
emergency. Accordingly there came to be enacted in 1833 that
“the Governor-General in Council (at Fort William in
Bengal) shall have power to make laws and regulations for
repealing, amending, or altering any laws or regulations,
whatever, now in force or hereafter to be in force in the
said territories or any part thereof, and to make laws
and regulations for all persons, whether British or native,
foreigners or others, and for all Courts of Justice, whether
established by His Majesty’s Charters or otherwise and
the jurisdictions thereof, and for all places and every
part of the said territory, and for all servants of the said
Company within the dominions of princes and states in
alliance with the said Company. . . . ;” 1
A Central government was thus created by vesting the
legislative power exclusively in the Governor-General of India
in Council. But it could not have been all-powerful had the two
Presidencies of Madras and Bombay remained as heretofore
invested, by law, with the civil and military government of
their respective territories. On the other hand, if Parliament
had stopped short of divesting them, there would have ensued
the possibility of a conflict between these governing authorities
and the sole legislative authority newly created. Being
responsible for peace, order and good government, the former
could have refused to govern according to laws made by the
latter, and all the gain expected to arise from the institution
of a central and strong government would have been lost.
To eliminate this element of weakness in the Indian polity
1 Sec. 43 of 3 and 4 Will. IV, c. 85, an Act for effecting an arrangement with
the East India Company, and for the better government of His Majesty’s Indian
territories.
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69THE IMPERIAL SYSTEM
newly established, Parliament proceeded to divest the
presidencies of Bombay and Madras of the high status which
they hitherto occupied as responsible governments, so that
according to the new Constitution
“......the Executive Government of each of the several
Presidencies ...... (was to be) administered by (not vested
in as heretofore) a Governor and three Councillors” 1
While
“......the Superintendence, Direction, and Control of the
whole civil and military government of all the......territories
and Revenues in India (was) vested in a Governor General
and councillors styled the Governor-General of India in
Council.” 2
Thus came to be established in India the Imperial system
of government. It is true that long before its establishment
the Government of Bengal 3 had the supreme power, not
only of superintending and controlling the government and
management of the Presidencies of Madras and Bombay in
the matter of commencing hostilities, or declaring or making
war against any Indian prince or power, or for negotiating
or concluding any treaty of peace or other treaty with them,
except in case of emergency, but it also possessed by a later
enactment the power of superintendence in all such points
as related to the collection or application of revenues, or to
the forces employed, or to the civil or military government
of the said presidencies. 4 But it must not be supposed, as
is often done, that before 1833 the two Presidencies were
in any real sense subordinate to Bengal in their domestic
affairs. The fact that Madras and Bombay were required
constantly and diligently to transmit to the Government of
Bengal true and exact copies of all orders and resolutions
and their acts in Council, and were enjoined to pay due
obedience to the orders of the Government of Bengal, must
not be construed to mean any subordination in their internal
affairs. For, barring the extra territorial authority vested in
the Government of Bengal, it must be borne in mind that,
1 Sec. 43 of 3 and 4 Will. IV, c. 85, an Act for effecting an arrangement with
the East India Company, and for the better government of His Majesty’s Indian
territories.
2 Ibid., s. 56. By sec. 57 power was given to reduce the number of councillors
at the Presidencies or suspend them altogether, leaving the Executive Government
at the Presidency to be carried on by a Governor alone. This power was exercised
in 1833 by reducing the executive councillors at Bombay and Madras from three
to two respectively.
3 and 4 Will. IV, c. 85, s. 39 4 13 Geo. III, c. 52, s. 40.
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70 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
equally with Bengal,1 the Governments of Madras and Bombay
were vested each 2 with the civil and military government
and also with the ordering and management of all territorial
acquisitions and their revenues. Along with the Government
of Bengal they possessed as stated before co-equal and
independent powers of legislation within their respective
jurisdictions. A truer view therefore seems to be that they
forwarded the copies of their proceedings to the Government
of Bengal for information rather than for orders. At any rate,
such seems to have been the view taken by the Government
of Bengal itself, for, though it had the power to issue orders
and compel obedience to them it had in practice confined its
supervision and control “to pointing out an irregularity and
requesting that it be not repeated.” More than this was thought
inadvisable3 and it is doubtful 4 whether it would have been
constitutional.
The Imperial system of Government was necessarily
accompanied by the Imperial system of Finance. Before the
inauguration of the Imperial system of Administration the
several Presidencies were like separate clocks each with its own
mainspring in itself. Each possessed the powers of sovereignty,
such as the legislative, the penal, and the taxing powers. They
were independent in their finance. Each was responsible for
the maintenance of services essential for peace, order and
good government within its jurisdiction and was free to find
money by altering or levying taxation or borrowing on credit
to meet its obligations. For their ways and means they often
drew upon the resources of one another, not, however, because
their exchequers were not distinct, but because they were parts
of a common exchequer belonging to the East India Company.
All this was changed by the Act of 1833, which vested the
revenues and the government of the different territories in
the Governor-General of India in Council. The revenues and
the services became by law the revenues and the services of
the Government of India. The provinces became the collecting
and the spending agencies of the Government of India.
They ceased to levy any new taxes or to collect the old ones
1 13 Geo. III, c. 63, s. 7.
2 33 Geo. III, c. 52, s. 24.
3 Of. Min. on the Constitution of the Indian Government by the GovernorGeneral, Lord William Bentinck, dated September 14, 1831. Also Memorandum
re the same by the Secretary to the Government of Bengal accompanying the
despatch of Lord Canning dated December 9, 1859, published in H. of C. Return
307 of 1861.
4 Cf. the despatch of the Court of Directors to the Government of Bengal No.
44 dated December 10, 1834, original draft in the India Office Records.