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PUBLIC RECORD OFFICE

Reference:

C.O. 882

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

4PUBLIC RECORD OFFICE, LONDON

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either to protect the interests of the Government, or privately to further their own. Between these demoralising influences the character and industry of the rural population are equally deteriorated and destroyed, and the extension of cultivation by the re- claiming a portion of waste land only exposes the harassed proprietor to fresh visits from the headmen and to new valuation by the Government assessors, and, where annoyance is not the leading object, corruption resorted to to keep down the valuation. sooner has the cultivator got rid of the assessors than he falls into the hands of the renters, who, under the protection which the law (properly, I admit) extends to a party who has an unpopular duty to perform of recovering the tax, finds himself vested with an unusual power of vexation and annoyance; he may be designedly out of the way when the cultivator sends notice of his intention to cut; and if the latter, to save his harvest from perishing on the stalk, ventures to reap it in his absence, the penalties of the law are instantly enforced against him through the district court. Under the pressure of this formidable control the agricultural proprietor, rather than lose his time and his in dancing attendance on the renter, or submitting to the multiform annoyance of his subordinates, is driven to purchase forbearance by additional payments; and it is generally understood that the share of the tax which eventually reaches the Treasury does not form one half of the amount which is thus extorted by oppressive devices from the helpless proprietors."

Sir H. Robin son to Duke of Buckingham, No. 114, 23rd May 1868.

No. 121, May

1870. Lord Granville to

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6. Although I concur entirely with Sir Emerson Tennent that the system of renting is vicious both in theory and in practice, yet it seems to me astounding that he could have written the remarks which I have underlined, considering that only seven years before these remarks were written an Ordinance was passed (14 of 1840) providing a remedy for the abuses which he conceived to be still in existence. At the close of this despatch

I will refer to the provisions of that Ordinance. I can only account for this statement of Sir Emerson Tennent by the fact that he had been but a very short time in Ceylon when he wrote it.

7. The despatch of Sir Colin Campbell and Sir Emerson Tennent's report, were considered of such importance by the home authorities that a Commission was appointed by Lord Grey to inquire into the financial position and prospects of Ceylon. They reported in May 1847. The names of the members of the Commission, B. Hawes, H. Tuffaell, J. G. Lefevre, R. Bird, are a guarantee that the subject submitted to them would be thoroughly and ably investigated, and that the conclusions at which they arrived would be deserving of the fullest consideration. I refrain from noticing any of their other recommendations, the chief one, that of the remission of the export duty on cinnamon, having been carried out, but I desire to draw your Lordship's attention to the views they expressed on the subject of taxes on food. They state that they have no doubt "as to the oppression and extortion committed under the system of farming out "the annual assessment on paddy lands, the discouragement which it causes to the "cultivation of that description of produce, and the demoralisation which tyranny and "avarice on the one side, and cunning and deception on the other, necessarily create

among all who are connected with it." They then proceed to say:

"We

agree with "Sir Emerson Tennent in thinking that the tax on rice and paddy lands, so far as that "tax depends on an annual assessment of the growing crop, is most objectionable in principle, and ought to be abolished as soon as it may be possible to substitute for it a general land tax based on a mixed calculation of the amount now paid for paddy and เ rice lands and the amount to be paid for other lands in this Colony." They also proposed that the import duty on rice should be reduced from 7d. to 4d. a bushel, and that on paddy from 3d. to 2d., which if not recouped by increase of consumption and consequently of importation, would have involved a loss of 25,000, or one third of the whole revenue, 75,000l., derived at the time from that source.

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8. The subject of the abolition or reduction of taxes on food seems to have been in abeyance till 1868, when the Duke of Buckingham recommended that there should be a reduction in the import duty on rice. Sir H. Robinson, in reply, pointed out that the state of the revenue would not admit of the loss, and he referred to the substitution of a land tax with disfavour chiefly on the ground of the cost of the necessary surveys, and the long period which must clapse before their completion. The Surveyor General, himself an advocate for a land tax, reported a few months later that it would take 80 years with his then staff to complete the surveys which were considered requisite by the Government, and that 120 additional surveyors would be wanted, at a cost of 42,000l. per annum, to complete them in seven years. In 1870, Lord Granville, being under the impression that there was a surplus of 100,000l., suggested a reduction in the import duty on rice and paddy. Sir Hercules Robinson laid a minute before the Executive Council, in which he showed that no such surplus revenue really existed, but

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that it was due solely to exceptional circumstances, and he pointed out that the Govern- ment was pledged to various measures which forbade the hope of any remission of taxation, irrigation works, hospitals, prisons, roads, bridges, &c. Sir Hercules invited the members of the Executive Council to state their views in writing, and they unanimously declared against any reduction in taxation. Mr. Irving, the Colonial Secretary, showed how light was taxation in Ceylon, and that the Sinhalese were the least taxed of any people in the world living under a civilized Government; he also proved that the ordinary taxation was not sufficient to meet annual expenditure, and that it had to be supplemented by what must be termed extraordinary sources, such as land sales, railway receipts, &c. Mr. Douglas, the Auditor General, very clearly pointed out that the expenditure of existing balances on useful and reproductive works would be a far greater boon to the natives than the reduction recommended, and Mr. Vane, the Treasurer, stated

"that he should welcome the day when rice duties might be entirely repealed, but a reduction to half would hardly reach the consumer at all. Rice must "be relieved of all duty aud from customs regulations, and the charges consequent "thereupon, to ensure that competition in the trade which will give the consumer the "absolute benefit in price which is desired to be afforded." In these opinions of Mr. Vane I entirely concur. The whole weight of local authority bas ever been adverse to a reduction of the duties on rice and paddy. The Committee of the Legislative Council which sat in 1841 reported against it as involving a loss to the revenue without any advantage. They pointed out, as did Sir Hercules Robinson and the Executive Council in 1870, that the expense of carriage into the interior was a much heavier item in the cost of rice than the import duty, and therefore that the population would be benefited to a greater extent if the money raised by the rice duty were laid out in improvement of means of communication than by the abolition of the These views were strongly expressed by the Honourable George Turnour, then Colonial Treasurer, whose great ability, knowledge of the country, and the deep interest he took in the natives, entitle them to much respect. This subject, however, assumes a different aspect if it be looked on as a question of total abolition. A reduction would leave all restrictions unchanged, and the trade in precisely the same hands as at present, and there is no reason to suppose that a reduction would benefit the consumer. The difference of duty would go into the pocket of the Indian importer. If all rice entering Ceylon were freed from duty, I think it possible there might be an increase in the trade, and that as men of amall capital would embark in the business, a brisker competition might be the result. I am bound, however, to add that I make these remarks with much hesitation. The rice trade is so entirely in the bands of a particular class of Indian traders, called Chetties, that it is very doubtful if they would lower the price of rice in case the duty were removed. They are all-powerful in the market, and would act as best suits their advantage or supposed advantage, and though European merchants might step in at times and import, they would have to contend with the widespread ramifications and influence of the Chetties. Occurrences which have taken place within the last few days corroborate this opinion. In Jaffna all the available rice was recently held by a small number of these Chetties. They raised the price at once to an exorbitant extent, and in order to force the people to their terms they closed their establishments and refused to sell. They literally for the time almost held the lives of the inhabitants in their hands. Food riots were the result, and the matter ended by the Chetties reducing their prices. Until the Colony becomes more self-supporting than it is by the increase of rice cultivation, we may, whether the rice duty be abolished, reduced, or retained, always expect to be subjected to similar combinations.

tax.

9. But it would be manifestly unfair to let foreign rice enter free and to retain in the case of the home producer of rice a tax from which the foreigner is exempt.

The import duty was calculated as an equivalent to the tax on the home cultivator, not as "' an encouragement to native industry," according to protectionist phraseology, but as a matter of fairness. Moreover, if a readjustment of taxation be resolved on, it would be most injudicious to abolish the import duty without at the same time abolishing the tax on home-raised grain. The most powerful and wealthy interest in the island is the planting. It is possible that when the planters thoroughly understood the subject, they would accept a 5s, or a 5s. 6d. land tax per acre, in lieu of the present rice duties, and that in the case of good and prosperous estates they would not be losers by so doing. That they would be heavy losers if the price of coffee fell largely, in which case they would not be able to employ as many hands as at present, or if labour failed them, is obvious, as it is by the reduction in the price of the rice which they supply to their

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