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146 ending with 1868-69 have amounted to 5¾ millions, the cash balances in our Indian treasuries have fallen from £13,770,000 at the close of 1865-66 to £10,360,000 at the close of 1868-69, and, notwithstanding our recent loan of £2,400,000, are at this moment lower than they have been at this season for many years. During the same period our debt has been increased by 6½ millions, of which not more than 3 millions have been spent on reproductive works. Your Grace has reminded us that successive Secretaries of State have enjoined us so to frame our estimates as to show a probable surplus of from half a million to a million sterling. We entirely agree with your Grace in acknowledging the soundness of this policy. We have no doubt that, excluding charges for Extraordinary Works provided for by loan, our expenditure in time of peace ought to be so adjusted to our income as to leave an annual surplus of not less than one million. The necessary conclusion to which we are thus led is, that nothing short of a permanent improvement in the balance now subsisting between our annual income and expenditure of at least three millions sterling will suffice to place our finances in a really satisfactory condition. How, by reducing our expenditure and increasing our income, we can best obtain such a result, is the problem that we have now to solve.

'We are satisfied that there is only one course