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Has seen papers from India about the European troops, the position remains unaltered. Cannot believe that the men will forget their grievances, they would be better discharged than discontented. The mutiny will be used against the establishment of a local army. Evidently the officers knew as little of their Europeans as they did of their native troops, for the trouble went so long unsuspected. Is uneasy about military affairs in India, especially with regard to Indian finances. Bankruptcy is near, and that would mean the loss of India. The new taxes will pay only the interest on the new debt. Does not think civil administration can be carried on more cheaply, but military expenditure must be reduced. The people of India are lightly taxed, but there seems to be the greatest difficulty in extracting anything from the wealthier classes in India. Discusses various projected taxes. Asks for more financial information. Has an idea of sending out a Chancellor of the Exchequer. Canning must continue with provisional Councillors, because if a radical change is to be made, it will be easier if there are few Councillors. Stanley's idea is to have a Council of the Secretaries or Heads of Departments, Wood favours this idea, asks for Canning's opinion. Under Wood's education Despatch of 1854, education in Government schools was made perfectly secular, with grants-in-aid to schools of all religions. Now there is an agitation for a Bible class in school hours, attendance to be voluntary. Regrets this, but it is encouraged by Sir John Lawrence. Asks for Canning's opinion.