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Vol. 6 · pages 81–85

The Evolution of Provincial Finance in British India; The Problem of the Rupee; other economic writings

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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.