THE COMPROMISE 111
unusual procedure of addition to taxation and the reduction of expenditure in the midst of the fiscal year.
The following is a synopsis of the measures he adopted :—
£
I. Additional Taxation
(1) Income Tax raised from 1 to 2½ 320,000 per cent
(2) Enhanced Salt Duty (in Madras 180,000 and Bombay)
Total ... 500,000
II. Reduction of Expenditure—
(1) Education ... 350,000
(2) Public Works ... 800,000
Total ... 1,150,000
Estimated Deficit ... 1,650,000
So grave was the crisis that with all these measures he could do nothing more than close his budget with an estimated deficit of £1,650,000 which would have been inevitable had it not been for certain windfalls such as the recovery of the value of supplies in the Abyssinian War and the adjustment of other large outstanding accounts which enabled him to convert his large deficit into a small surplus. Happy as he was over the immediate results of his efforts, Lord Mayo was convinced that there was something rotten in the system of Imperial Finance and, while anxious not to end it, he courageously set forth to mend it by inaugurating the scheme of Provincial Finance represented by the compromise the growth of which will be the subject-matter of Part II of this study.
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