Punjab settlements, is also perfectly correct, "that it would be premature to regard them otherwise at present than as in a state of transition and progressive adjustment." 5. Moreover, it may be observed that the course of assessment in the Punjab has been the opposite of that in the North West Provinces; for, from various causes, frequent reductions of the revenue fixed at the time of the settlement, instead of an increasing demand, have been sanctioned. 6. But, besides these differences in the current of revenue affairs in the Punjab, there are some physical distinctions of importance. The Punjab is not half cultivated; there are immense waste tracts almost unpopulated; the communications are incomplete; and the resources generally but partially developed. Hence, even admitting that it were wise to abandon the prospective right of Government to a share of the increased rent, in a province which had attained to an average degree of agricultural advancement, it might still be prudent to maintain it in one which remained in a backward stage. 7. It will be gathered, therefore, that the Lieutenant Governor is opposed to making the existing settlement in the Punjab perpetual. 8. It may next be considered if there are any tracts to which such a settlement may advantageously be conceded. There are undoubtedly several districts which have arrived at a fair state of agricultural improvement; but except in the divisions of Delhi and Hissar, transferred from the North West Provinces, our experience has not been long enough to show first, whether the assessment fixed is, as a whole, really moderate; and, secondly, whether its distribution in detail is really equable. We know that the price of grain is subject, from the uncertainty of the seasons, to extraordinary fluctuations, which, continuing in their effects for several years, materially affect the character of the land revenue demand, and the ability of the agriculturists to satisfy it. Until we have passed through a large cycle, it is impossible to pronounce with any confidence that the demand is perfectly moderate. Up to this time our procedure has been tentative. We found the land revenue, after a series of dear years, at a very high figure. We reduced it largely, and, to the best of our judgment, sufficiently. In many places time evinced the necessity for still further reductious, which have been invariably granted. If the original assessment had been fixed in perpetuity; if it had been assumed that the first demand had been infallibly fixed; that the agriculturist must take the consequences of his engagements; then the quantity of land sold for arrears of revenue would have been very extensive, and the political effects much to be lamented. Happily a different policy prevailed. Errors of assessment were recognized and admitted, and the assessment decreased. In this way much of the disorganization recorded in the annals of the North West Provinces has been averted. But the Lieutenant Governor thinks that even now our experience is not sufficient to enable us to declare the assessment, even in flourishing tracts, to be so unquestionably moderate as declared perpetual. 9. Still less can the equability of the distribution be finally affirmed. Passing as the country did from native to English rule, many causes of inequality existed at the time of the first settlement, besides such as may be traced to error or ignorance. Many villages were in temporary distress, and depressed below the average of cultivation; others, in temporary prosperity, may have been too highly assessed. These inequalities would probably be rendered more marked by the continuance of the settlement, at the end of which they would be corrected, but which, if made permanent, would perpetuate them. 10. One standing cause of inequality has been, it will be observed, prominently mentioned by Mr. McLeod, the Financial Commissioner. In a striking passage in Colonel Baird Smith's Report are described" those unseen reservoirs formed by the broad expanses of water-bearing strata" which rank with the greatest rivers in their influence, and the irrigation from which is both vastly more extensive and more fertilizing than that from canals. The multiplication of wells is a sure sign in the Punjab of the expenditure of private capital on the land, and of an advancing agriculture. The Asiatic theory of land revenue is, that the Government is entitled to a certain share of the gross produce. This was frequently commuted to a money demand under the Seikh administration, and our our own revenue assessment was partly founded on this commutation. The theory of our assessment is that it is a tax on the rent of land. But inasmuch as in many cases a large portion of the produce is reared by the aid of irrigation from wells, and those wells are sometimes constructed and always worked at private expense, our tax is in reality often a tax on capital. And in calculating the demand, well-irrigated land is always rated higher and often at double the rate on unirrigated land. No alternative is left to the people but to follow the same practice; they have been accustomed to the hardship from time immemorial, and in the Punjab at least, there is also this to be said, that the great majority of the wells were found ready built by the immigrant forefathers of the present occupiers of the soil. Nevertheless, carefully scrutinized, the extra assessment put upon well-irrigated land, must tend directly to prevent capital being invested in land, and consequently to keep the agriculturists in a state of poverty, without incentive to the best improvement of their holdings, and incapable of bearing up under periodical drought. If so, the policy of imposing this extra assessment may well be questioned. 11. So long as the additional revenue accrued to Government, the inequality of taxation involved, and its obstructive consequences might, in the absence of all complaint on the part of the people, pass unnoticed; but now when it is proposed, with the view of developing the wealth of the country, to limit the land. tax for ever, it would certainly appear to be worthy of consideration, whether some adjustment of the liabilities of lands irrigated from wells ought not first to be made. 12. For otherwise we may be placed in this predicament. We declare the present assessment perpetual. In due course, large tracts now uncultivated will be reclaimed, and wells will be sunk in them. Such irrigated lands will then be exempt from land tax. But in those tracts which have long been cultivated, well-lands will continue to pay their present high assessment. The contrast will be glaring. For a long time to come, the irrigated lands of our richest districts would be depreciated as valuable property, and an undue stimulus would be given to the transfer of the labour and capital employed upon them, to tracts now sterile and unoccupied. Or the disparity may be seen on a smaller scale, and the founders of wells before and after the perpetual settlement, having lands in juxtaposition, may be found paying at rates quite unequal, and, in their opinion, unjust. 13. In a country completely cultivated, it might be financially impossible to forego the revenue fixed upon well-irrigated lands. But provided that it is once admitted that it is politically expedient that a limit be placed for ever to the revenue derivable from the land, there are, in the state of the Punjab, evident facilities for remitting the claim of Government to share in profits accruing from well-irrigation. The vast extent of uncultivated lands affords an immediate outlet to agricultural industry. No more congenial incentive to enterprise could be held out than the remission of the demand on account of irrigation. And the increase of the land revenue at unirrigated rates would suffice, as Mr. McLeod has proposed, gradually to extinguish the revenue assessed upon wells without loss to the State. 14. The Government would then give to the owners of wells the same advantages which it secures to itself when constructing canals, namely, the whole profits of capital expended. Such liberality would speedily reap its due reward in an improved and spreading agriculture, and in an increasing population. 15. It might also, in many localities, be relieved from the duty now frequently forced upon it, of constructing costly works of irrigation, which are confessedly less efficacious than the scanty but better husbanded waters from wells. 16. On a view of the whole subject, as it affects the Punjab, the Lieutenant Governor considers that if it be prudent in a country like the Punjab, which is still in a backward stage of cultivation, which cannot be said to pay its entire military expenses, and the civil institutions of which are not adapted to the most advanced state of society, to declare the land tax liable to no future increase, still the existing and prospective inequalities of distribution are so many and great, as to render its perpetuation very unadvisable. your 17. With advertence to the concluding clause of the third paragraph of letter under reply, I am to state that the Lieutenant Governor is of opinion that the concession of a legislative sanction to the current settlements would have no practical effect, as the people have been accustomed to regard the acts of the executive as conclusive, and experience has shown them that there is no danger of the imposition of demands not provided for under the settlement agreement. (No. 31.) COPY of a Letter from Financial Commissioner, Punjab, to the Secretary to the 1. Extract of a letter from Government of India (No. 2034), dated 7th October 1861. | 2. Printed copy of Section 11 of Colonel Baird Smith's Report on the late Famine. I HAVE the honour to acknowledge the receipt of your letter, No. 1918, dated 7th ultimo, with its enclosures noted in the margin, calling for my opinion as to the expediency of introducing a permanent settlement into this province, with reference more especially to paragraphs 62 to 82 of Colonel Baird Smith's Report. 2. I may state, at the outset, that I consider the great bulk of the Punjab to be at present essentially what Colonel Smith terms "a transition state" as regards assessment, and therefore unfitted for any such experiment. Apart from this, however, I am opposed to the measure on abstract grounds, though in tracts, where estates generally are fully cultivated, or where the amount of waste existing has been reserved, not in consequence of want of cultivators, but to suit the convenience of the community; there, I am entirely in favour of an assurance being given, that there shall be no future enhancement. 3. Where there exists an undue extent of waste land, I am wholly opposed to perpetuating existing assessments. 1st. Because to do so, would be in contravention of what I believe to be a primary duty of all Governments in respect to taxation, viz., to equalize its pressure as much as possible, laying the heaviest burden on those most able to bear it. 2d. Because we should be thus circumscribing the resources of those who come after us, to an extent which can be justified only by adducing the most indisputable and sufficient grounds for such a measure. 3d. Because I believe it to be wholly unnecessary for securing all the progressive improvement, and breaking up of waste, which can be attained without prejudice to the interests of those who deserve most consideration at our hands. 4. That such a measure must ultimately beget great inequality of assessment is inevitable, and it appears to me equally certain that the effect of this must be exceedingly injurious. Every settlement officer of experience will admit, that inequality of assessment is an evil only second to over-assessment; and when this inequality is rendered permanent, the evil must be aggravated. Those who may be said heretofore to have borne the burden and heat of the day, who have brought their lands into a high state of cultivation, and have created the means of irrigation, drainage, or other fructifying processes, will find themselves permanently taxed at a much higher rate than their less industrious neighbours, who have kept a large portion of their lands waste or unimproved, and it is not to be conceived that they should not, under these circumstances, consider themselves, and be considered by the community, to have been hardly dealt with. 5. It is unnecessary to dwell upon the necessity of adducing very sufficient arguments to justify the legislature in imposing limits on the action of all future Governments in the matter of taxation; very strong arguments may, I think be adduced, why a larger amount of revenue than at present should not, in future, be derived from a land tax, but the perpetuation of existing inequalities is a very different question, and, in my opinion, those arguments by no means suffice to justify the measure in this shape. 6. I have remarked above, that I consider such a measure unnecessary for securing the object in view, that of promoting agriculture and reclaiming of wastes. The several causes to which Colonel Smith has very justly attributed the progressive improvement in some parts of the North West Provinces are, "protracted fixity of the public demand, the security of titles, the general moderation of the assessment, the recognition and careful record of rights, and the reasonably equable distribution of the burden of land taxation," (vide para. 62); and of these, I regard moderation of assessment, and equality of distribution to be so much the most important, that I am convinced cultivation would rapidly extend under their operation, though assessments were constantly revised, and but little regard paid to the recording of rights, as indeed we find to be the case under well-ordered Native Governments. 7. I have further expressed above, the opinion which I entertain very strongly, that to give an undue or artificial stimulus to the breaking up of waste lands, must act with an immediate injurious effect on cultivated lands adjoining. This is keenly felt in all parts of the the Punjab, in which the existing population and agricultural capital are insufficient to bring the entire area under the plough, and must be felt in like manner in all the tracts similarly circumstanced, in which, by leasing new or deserted wells on plots of uncultivated land, on exceptionally favourable terms, a factitious stimulus is given to the breaking up of waste. 8. It is true, there are parts of India which might, with advantage, contribute a portion of their surplus population to supply the deficiencies of other parts which are under-populated; but even to secure this object, I do not think that exceptional action on the part of Government is desirable, unless for the attainment of some special administrative object, such as that of locating our discharged soldiery, as now in progress in Candeish. 9. I believe that the day is approaching when the strong convictions which led to the abolition of the corn-laws, will lead to the abolition likewise, amongst enlightened races everywhere, of all exceptional legislation whatever in the matter of taxation. The evils which it begets, I believe to be much greater than those which it can possibly remedy, and I consider the only safe principle of progress to be, to allow the action of self-interest to proceed unfettered, Government scrupulously refraining from affording to one section of the community greater advantages than to another. 10. The above are all the remarks which I wish to offer in connexion with tracts possessing waste land in excess. As regards tracts fully cultivated, I have expressed (in paragraph 2) the opinion, that it will be well for Government to give an assurance that the assessment shall not, hereafter, be enhanced, and (in paragraph 5) I have admitted that the renunciation by Government of all future increase of income, in the aggregate, derived from land, may be advisable; but I have refrained from advocating perpetuity of the demand at present, from any lands whatever. 11. My reason for this is, that in my opinion, all fully cultivated lands, almost without exception, pay in India a higher rate of revenue than is justly demandable from them, owing to a principle of assessment heretofore recognised and acted upon throughout the East, which I believe to be fundamentally erroneous; and I consider, therefore, that this demand should nowhere be irrevocably fixed, until whatever is in excess has been remitted, and our past error corrected. 12. The principle to which I refer, and which I believe to be still adhered to by us in all parts of India, where the demand is not permanently fixed, is this, that Government is entitled to a certain proportion of all that is produced from the soil, and hence our land tax, instead of being, as is often urged by its defenders, a tax upon rent proper, only includes a tax on capital, and thus becomes virtually a tax upon raw produce, a description of tax which I believe all political economists are now agreed in condemning. It is owing to this view of the matter, that all Governments in the East have, from time immemorial, levied a heavier assessment on irrigated land than upon unirrigated; upon improved lands, than on unimproved ones; although this irrigation or improvement has been effected, not by outlay from the public treasury, but by expenditure of the capital, skill, and labour of the occupants of the land; and this principle, inherited from the rude Governments which have preceded us, and acted upon, in imitation of those Governments, by the people themselves when distributing the Government demand, we have continued to follow up to the present time. 13. That the owner of land should, at the close of a lease, appropriate the advantages prospectively accruing from the outlay of his tenant is, no doubt, admissible. It is the result of mutual agreement; and must, in fact, in the long run, be unavoidable. But that Government should thus usurp the privilege of the proprietor, I believe to be indefensible on any just theory of taxation. It is to this that all the difficulty and derangement so largely dwelt on by Colonel Baird Smith, as resulting from the opening of canals, is attributable; and I am quite convinced that the adoption of this principle has done more to check the improvement of land, and the advancement of agriculture in India, than any other cause whatever. 14. I think, therefore, that it is one from which our Government ought to recede as soon as may be practicable, and the most legitimate mode, it seems to me, by which this may be effected, is by appropriating to this purpose all enhancement of land revenue derived from other sources. Let Government determine that all future additions to its land revenue accruing from increase of cultivation shall be progressively surrendered, and applied in such a manner as may be agreed on, to the gradual reduction and ultimate remission of irrigated rates on well lands, or other enhancements of demand attained by private outlay or application of skill; and I entertain no sort of doubt that it would thus afford a much greater as well as a more legitimate stimulus to agricultural progress than can ever be secured by simply fixing for ever its demand, without regard to the mode in which that demand is distributed. 15. Colonel Smith admits, in the second clause of paragraph 20, that to fix the demand permanently, where there is any ground to apprehend it may prove oppressive, would be very inexpedient; and in the first clause of paragraph 167, in like manner, he urges that this measure be adopted only "where there is reason to be confident that these settlements are fair and equitable." What I have urged above is but an enlargement of this view, to meet what I consider to be a master evil in our present land revenue administration; and 164. A perpetual settlement undesirable for any portion of the Punjab, including Delhi and Hissar divisions. The bearing of present settlement to be first considered. Present position and prospects of agricultural produce and of commerce of the country. Data for a perpetual settlement quite imperfect; and the result would probably be undue exemptions, undue burdens, and loss to the State. Measures that must be taken to arrive at exceed the advantage, if any exist. I trust it will not be gathered from anything which I have said in the foregoing paragraphs, that I do not fully appreciate the value, and admit the expediency of our fixing the demand, so soon as we can satisfy ourselves that that demand is really just. 16. The Supreme Government have further inquired whether it would be expedient to give the impress of legislative sanction to our existing temporary settlements. I regard it as quite immaterial whether this sanction be given or not. The people have the most implicit confidence in the good faith of the Local Government and its officers, and entertain no fears whatever, that the engagements entered into with them at the commencement of the settlement will not be rigidly adhered to up to its close; so that I do not think their confidence could be increased, or any useful object gained, by the addition of any legis lative sanction. COPY of a Letter from Officiating Judicial Commissioner, Punjab, to the Secretary to In reply to your letter, No. 1919, dated 7th December last, I beg to state that I have perused the report of Colonel Baird Smith on the famine of 1861, which extended only on the tracts east of the Sutlej; and yet, on the strength of a mere theory, it is proposed to make an organic change in the revenue system of a great province neither affected by the famine, nor visited by the reporter. 2. The position of the Delhi, Hissar, and Cis-Sutlej divisions differ materially from that of the Punjab Proper and the Trans-Sutlej States; but in neither case, in my opinion, is a perpetual settlement desirable. I really am surprised to find such a proposition brought forward by an officer for whom I have so great a respect as Colonel Baird Smith. However, we may leave the Delhi and Hissar Divisions to follow the policy adopted by the Supreme Government for the Agra, Muttra, and Meerut Districts, and confine our arguments to the Punjab Proper and the Cis and Trans-Sutlej States. 3. To make a perpetual settlement worth anything, we must first ascertain whether the present settlement is fair and light. I am not prepared to say that it is so, for a term of five or ten years, far less for perpetuity; but I can say, that the revenue is collected without duress, without sale of land, with as little annoyance to the people as possible ; and that on the first indication of pressure, relief is, and will ever be given. 4. The country is settling down after a century of tumult. Means of export are increasing; both agricultural and commercial classes are thriving. The price currents of cereals fell after our occupation; they have now risen again; who can say how long they will remain at the present figure? On them depends the relative fairness of our assessment. Make a perpetual settlement of the price current, and I will agree to the same measure for the land. 5. To plunge hastily and darkly into this great measure to fix for ever the assessment of each village with our imperfect data, would be an act which, but for the respectable quarter from which the scheme emanates, I should describe as very rash and not very wise. The lightly assessed villages, with vast areas, would gain, and a lucky chance would relieve them from their fair share of the burden of taxation. Heavily assessed or suffering villages would, as now, demand and receive relief, and thus the State would lose. 6. If it be feared that there is a tendency to over-assess, that the people would gain by a limit being fixed on the Collector's demand, there must be a great misconception of our correct data would far system. If the Governor General in Council were pleased by legislative enactment to fix the total land revenue of the Punjab, collectively, or of each district separately, I should have no objection; but the assessed area must be previously ascertained, the hundreds of revenue-free acres in jagheers, and the thousands of revenue-free acres in maafee, must be deducted; the large tracts of land liable to fluvial action must be excepted; all the village cesses must be carefully separated from the land tax; in fact a very lengthened investigation must take place, creating an excitement, and entailing an expense far exceeding the very slight advantage. A thirty years' settle ment. As to what might exempt from enhanced the grounds and objects assessment, and as to of enhanced assessment. 7. A settlement for (30) thirty years lasts for a generation, a re-settlement is a re-adjustment only; there is no screwing higher up year after year; all these things belong to a period long since passed away, and to a different province. 8. Perhaps the Government might promulgate with greater distinctness and clearness that no enhanced assessment is to be made on bona fide improvements. Some rules might be laid down as to what constitutes an improvement, such as a well sunk, a canal cut, &c.; but Government have a right to increased assessment on the general improvement of the country, arising from peace, protection, good roads, &c.; from the surplus thus gained, relief is granted in quarters where the soil has deteriorated, the population diminished, the cattle have died, and the wells fallen in. If the power of thus adjusting unequal assessment be arbitrarily taken away, it will come to this, that relief will not be readily given to suffering villages. 9. I can see no more reason for a perpetual settlement of the land tax in India than of the income tax in a city in England, or of the rents of the Crown lands or the Duchy of Cornwall. |