a flourishing power

8/2/2019 A Flourishing Power

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A flourishing power

The long 18th century, from the Glorious Revolution until Waterloo, was the period in which

Britain rose to a dominant position among European trading empires, and became the first

western nation to industrialise.

The extent of economic change between 1688 and 1815 can be discerned through a glimpse

at the state of economic and social conditions at home, and the growth of trade and empire

at the beginning and end of that period.

In 1688 England and Wales had a population of 4.9 million, and the internal economy was

still largely based on agricultural work and production.

Domestic industry flourished, with many workers pursuing dual occupations on a seasonal

basis in industry and agriculture. English society contained a flourishing and more extensive

middling sector than any other western country, including the Dutch Republic. This provided

a strong platform for commerce with, and settlement in, far-flung territories.

The long 18th century was the period in which Britain rose to a dominant position

among European trading empires...

Merchants sent out ships to trade with North America and the West Indies, where England

had established a network of colonies, following on from the permanent settlement of

Virginia in 1607 and the acquisition of Barbados in 1625. Some 350,000 people had

emigrated from England across the Atlantic by the end of the 17th century.

In 1686 alone these colonies shipped goods worth over 1 million to London. Exports to thecolonies consisted mainly of woollen textiles; imports included sugar, tobacco and other

tropical groceries for which there was a growing consumer demand.

The triangular slave trade had begun to supply these Atlantic colonies with unfree African

labour, for work on tobacco, rice and sugar plantations. It was based around the activities of

the Royal African Company, with headquarters in London.

Trade and settlement also occurred in Asian waters. This was mainly based around the

activities of the East India Company, a large joint-stock company based in London. The

ships of the East India Company fleet traded mainly in bullion, textiles and tea with Bengal.

Overseas commerce was conducted within the mercantilist framework of the Navigation

Acts, which stipulated that all commodity trade should take place in British ships, manned

by British seamen, trading between British ports and those within the empire.


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Despite these developments, in 1688 Britain was still a vulnerable competitor for stakes in

overseas colonies and trade - her rivals were the trading empires of France and the

Netherlands, as well as Spain and her client state, Portugal.

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Growth of Empire

A sugar cane field and windmill in Barbados By the end of the

Napoleonic wars, this scenario had been transformed. Population growth increased rapidly

after c.1770, and by 1815 the British population totalled 12 million.Agricultural productivity, proto-industrialisation, the growth of manufacturing and new

mineral technologies, along with the arrival of factories, had helped the economy to

industrialise. Dual occupations had largely been superseded by specialised, regular working

conditions.

Trade and colonisation had also proceeded apace. In 1700 most foreign commerce, by

volume and value, was still conducted with Europe, but during the 18th century British

overseas trade became 'Americanised'. By 1797-8, North America and the West Indies

received 57 per cent of British exports, and supplied 32 per cent of imports.

...the British became the largest and most efficient carriers of slaves to the New

World...

After the Royal African Company's monopoly was rescinded in 1698, the British became the

largest and most efficient carriers of slaves to the New World. Private merchant houses

provided the capital for this business activity, and Jamaica, the largest British slave colony,

was also the wealthiest colony in the British Empire.

By 1775 Britain possessed far more land and people in the Americas than either the Dutch

or the French - who were the two main northern European rivals for international power and

prestige. The East India Company's trade also still flourished at this time, and greater

settlement by the British in Bengal occurred after c.1765.

The loss of the thirteen mainland American colonies in the War of Independence was a

major blow to British imperial strength, but Britain recovered swiftly from this disaster, and

acquired additional territories during the long war years with France from 1793 to 1815. The
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new colonies included Trinidad, Tobago, St Lucia, Guyana, the Cape Colony, Mauritius and

Ceylon. Various Indian states were also subjugated.

By 1815, Britain possessed a global empire that was hugely impressive in scale, and

stronger in both the Atlantic and Indian Oceans, and around their shores, than that of any

other European state. All of this had occurred within basically the same protectionist trade

network as in 1688: free trade, much discussed by Adam Smith and Josiah Tucker, had

failed yet to make much inroad into British economic policies.

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Which came first?

To what extent were these changes between 1688 and 1815 a case of trade stimulating

empire, or of empire stimulating trade? The answer is that trade and empire went hand in

hand, with a symbiotic relationship to each other.

Growing overseas commerce with colonies stimulated merchants to provide ships, as well as

goods for expanding settler societies. The slave trade also became a vehicle for establishing

an empire of slavery in the Caribbean and southern American colonies, and emigrants sailed

to the colonies in search of better material conditions. They also, in some cases, had to

emigrate to escape religious persecution.

Rapid population growth in 18th-century North America provided a large market for British

exports. In the quarter century before the American Revolution, British foreign trade

changed its commodity composition to provide a wider range of textiles, notably linen and

cotton fabrics.

This was in addition to a range of metalware and hardware, fabricated to meet the demands

of a burgeoning colonial population with less advanced industrial processes than were

current in the home country, and with some restrictions on their own manufacturing.

The answer is that trade and empire went hand in hand...

The slave trade stimulated British manufacturing production by the derived demand for

goods such as plantation utensils, and clothing needed for slaves and estates. Colonies

became linked to the metropolis by complex bilateral and multilateral shipping routes.

An integrated Atlantic economy came into being after the mid-18th century, in which

merchants in British, American, West Indian and Iberian ports established firm commercial

ties and a modern, enterprising outlook with regard to making money through imperial

trade.
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To what extent was British hegemony in empire, trade and industry based on the growth of

imperial commerce? Many historians have discussed this basic question, and disputed the

level of stimulus to the domestic British economy, and hence to industrialisation, that was

provided by the growth of empire.

A negative assessment would emphasise that the profits of slavery and the slave trade were

more modest than the bonanza that was once thought to have taken place, and that the

contribution of slavery and the slave trade to national income was marginal at best.

Sceptics would also argue that British manufacturing production owed more to demand from

the domestic market than from overseas customers; they would stress agricultural

productivity and other supply-side factors as the vital components of British economic

growth.

Others would suggest that the protectionist trade network led to the Caribbean colonies

becoming a burden on the mother country, once defence and administration costs areconsidered, and that trade with India, with an imbalance between imports and exports, was

a similar drain on British capital.

Those wishing to downgrade the role of overseas trade in industrialisation also argue that

gains by British financial services, both from trade and empire, were essentially derivative

and parasitical.

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The impact of imperial trade

Although there is no space in this article to cite detailed data, a more positive assessment of

the impact of trade and colonies on British development can, however, be made.

Revenue from slavery and the slave trade filtered back into the British economy in indirect

ways, with bankers, insurance specialists and country gentlemen all participating as active

investors. Some historians think that the profits of slavery and the slave trade, as a

proportion of national income, were impressive.

British manufacturing production, it has been argued, received the additional stimulus of a

large overseas trading bowl, that induced producers to increase productivity and introducenew technologies to meet this additional demand.

Modern studies have shown that the net drain to the British economy from protecting the

British Caribbean colonies, or from participating in the East India trade, have been

exaggerated. There can be little doubt that trade and empire gave a significant boost to the

proliferation and sophistication of financial services, and that this was of considerable

benefit to the long-term development of the British economy.
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British hegemony in empire and trade by 1815 was such that Britannia did rule the

waves......

No historian would argue that trade and empire had a minimal impact on emerging British

industrialisation; the question is, rather, exactly how important was that impact?

The current consensus is that trade and empire were significant for British economic growth

in the Hanoverian period, even if they were not decisively important. British hegemony in

empire and trade by 1815 was such that Britannia did rule the waves; but this would not

have been achieved without the strong support provided by the 'military-fiscal' state and

the Royal Navy.

The expansion of British imperial endeavours was accompanied by many years of warfare:

over half of the 18th century saw the British at war, principally against France.

The ability of the British government to raise taxes and loans to support aggressive military

policies by Hanoverian governments, and the superiority of the Royal Navy over other

European navies, both played a large part in creating the conditions through which trade

and empire could flourish.

A number of historians both India and foreign writers and historians have started justifying the empire andeven asking USA to take up the White Mans Burden to bring civilizations and justice to the dark world ofthe dark skinned people. The views of the Western historians like Neil Ferguson or Michael Ignatief are

being reflected by their Indian counterparts like Triankar Roy, Dipak Lal, or even Man Mohan Singh in hislecture in Oxford University recently. The surprising matter is that even the Sangha Parivar writers likeM.S.Menon, and Priyadarshi Dutta are also propagating the benefits that the British rule has broughtto India.

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Before the British came, India was one of the richest countries in the world. In 1800, India, China andEgypt (and probably many of the kingdoms of central Africa) were economically more developed thanBritain. Indeed the British had nothing for sale that was of interest to the Indians or Chinese. When theBritish left in 1947, India was poor and industrially backward.

Britain did bring free trade to India and China. Britain had extracted large surpluses from India, and forcedit into a free-trade pattern, which obliged India to export commodities and become a dumping ground forBritish manufactures. Historians estimate that the net transfer of capital from India to Britain averaged 1.5percent of GNP in the late nineteenth century. The wealth transfer was financed by a persistent tradesurplus of India, which was sent back to Britain or spend to expand the British Empire. Indias export-import ratio was 172.5 percent in 1840-69, 148 percent in 1870-1912, and 133.4 percent in 1913-38. Thisexport orientation was a tool of colonial exploitation, and free trade a British ploy to force its manufactureson India and crush domestic industry.


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Instead of enriching the world, the British Empire impoverished it. The empire was run on the cheap.Instead of investing in the development of the countries they ruled, the British survived by doing dealswith indigenous elites to sustain their rule to extract maximum amount of revenues for Britain itself, whichthe British historians now deny.

Whether in 18th-century India, 19th-century Egypt or 20th-century Iraq, the story is the same. As long as

taxes were paid, the British cared little about "the rule of law". They turned a blind eye to Indian landlordswho extracted rent by coercion or indigo and opium - planters who had forced Indian farmers to cultivateand their products were forced upon the Chinese. Unable to sell anything to the Chinese, Britain sent inits gunboats, seizing Hong Kong and opening up a market for opium grown in India. Despotic repressionwas fostered where it protected British interests.

India is the prime example. Ruled by Muslims before the British, India was a prosperous, rapidlycommercializing society. The Jagat Seth, India's biggest banking network and financier of the East IndiaCompany, rivaled the Bank of England in size. British rule pauperized India. The British restricted Indianweavers' ability to trade freely and the result was a drastic drop in living standards. Dhaka, now thecapital of impoverished Bangladesh, was once a state-of-the-art industrial city. Its population fell by halfduring the first century of British rule. Now, average Indian incomes are barely a tenth of the British levelin terms of real purchasing power. It is no coincidence that 200 years of British rule occurred in the

intervening time.

Rabindranath Tagore wrote The chronic want of food and water, the lack of sanitation and medical help,the neglect of means of communication, the poverty of educational provision, the all pervading spirit ofdepression that I have myself seen to prevail in our villages after over a hundred years of British rulemake me despair of its beneficence.

The impact of British rule in India:

As Davis concludes: "If the history of British rule in India were to be condensed to a single fact, it is this:there was no increase in Indias per-capita income from 1757 to 1947." (in Late Victorian Holocausts: ElNino famines and the making of the Third World by M. Davis, London, Verso Books, 2001 ) In fact,incomes may have declined by 50 percent in the last half of the 19th century.

Shares of world GDP (percent)

1700 1820 1890 1952China 23.1 32.4 13.2 5.2India 22.6 15.7 11 3.8Europe 23.3 26.6 40.3 29.7

Source: Davis, 2001

Destruction of agriculture:

Karl Marx wrote in Consequences of British Rule in India,

England has broken down the entire framework of Indian society, without any symptoms of reconstitutionyet appearing. The British in East India accepted from their predecessors the department of finance andof war, but they have neglected entirely that of public work s.

There have been in Asia, generally, from immemorial times, but three departments of Government; thatof Finance, or the plunder of the interior; that of War, or the plunder of the exterior; and, finally, the


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department of public works. Climate and territorial conditions, especially the vast tracts of desert,extending from theSahara, through Arabia, Persia, India, and Tartary, to the most elevated Asiatichighlands, constituted artificial irrigation by canals and water-works the basis of Oriental agriculture.Hence an economical function devolved upon all Asiatic Governments, the function of providing publicworks. This artificial fertilization of the soil, dependent on a Central Government, and immediatelydecaying with the neglect of irrigation and drainage, explains the otherwise strange fact that we now findwhole territories barren and desert that were once brilliantly cultivated, as Palmyra, Petra, the ruins inYemen, and large provinces of Egypt, Persia, and Hindostan; it also explains how a single war ofdevastation has been able to depopulate a country for centuries, and to strip it of all its civilization.

Destruction of self-sufficient rural economy:

British steam and science uprooted, over the whole surface of Hindostan, the union between agricultureand manufacturing industry.

The form of destruction was the destruction of the self-sufficient village society of India. Under this simpleform of municipal government, the inhabitants of the country have lived from time immemorial. Thesesmall stereotype forms of social organism have been to the greater part dissolved, and are disappearing,not so much through the brutal interference of the British tax-gatherer and the British soldier, as to the

working of English steam and English free trade.

Those family-communities were based on domestic industry, in that peculiar combination of hand-weaving, hands-spinning and hand-tilling agriculture, which gave them self-supporting power. Englishinterference having placed the spinner in Lancashire and the weaver in Bengal, or sweeping away bothHindoo spinner and weaver, dissolved these small communities, by blowing up their economical basis

De-industrialization of India under the British:

After destroying its agriculture British had embarked upon the destruction of Indian industry. SeveralIndian historians have argued that British rule led to a de-industrialization of India. By the Act 11 and 12William III, cap. 10, it was enacted that the wearing of wrought silks and of printed or dyed calicoes fromIndia, Persia and China should be prohibited, and a penalty of 200 imposed on all persons having or

selling the same. Similar laws were enacted under George I, II and III, in consequence of the repeatedlamentations of the afterward so enlightened British manufacturers. And thus, during the grea ter part ofthe 18th century, Indian manufactures were generally imported into England in order to he sold on theContinent, and to remain excluded from the English market itself.

Ramesh Chandra Dutt argued (in Economic History of India, London, 1987):

India in the eighteenth century was a great manufacturing as well as a great agricultural country, and theproducts of the Indian loom supplied the markets of Asia and Europe. It is, unfortunately, true that theEast India Company and the British Parliament, following the selfish commercial policy of a hundredyears ago, discouraged Indian manufacturers in the early years of British rule in order to encourage therising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenthcentury and the first decades of the nineteenth, was to make India subservient to the industries of GreatBritain, and to make the Indian people grow raw produce only, in order to supply material for the loomsand manufactories of Great Britain.

According to Karl Marx, However changing the political aspect of Indias past must appear, its socialcondition has remained unaltered since its remotest antiquity, until the first decennium of the 19thcentury. The handloom and the spinning wheel, producing their regular myriads of spinners and weavers,were the pivots of the structure of that society.


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It was the British intruder who broke up the Indian handloom and destroyed the spinningwheel. Englandbegan with driving the Indian cottons from the European market; it then introduced twistinto Hindostan, and in the end inundated the very mother country of cotton with cottons.

From 1818 to 1836 the export of twist from Great Britain to India rose in the proportion of 1 to 5,200. In1824 the export of British muslins to India hardly amounted to 1,000,000 yards, while in 1837 it surpassed

64,000,000 of yards. But at the same time the population of Dacca decreased from 150,000 inhabitants to20,000. This decline of Indian towns celebrated for their fabrics was by no means the worst consequence.

There is a good deal of truth in the deindustrialization argument. Moghul India did have

a bigger industry than any other country, which became a European colony, and was unique in being anindustrial exporter in pre-colonial times. A large part of the Moghul industry was destroyed in the courseof British rule.

The second blow to Indian industry came from massive imports of cheap textiles from

England after the Napoleonic wars. In the period 1896-1913, imported piece goods supplied about 60 per

cent of Indian cloth consumption, 45 and the proportion was probably higher for most of the nineteenthcentury. Home spinning, which was a spare-time activity of village women, was greatly reduced.

It took India 130 years to manufacture textiles and to eliminate British textile imports. India could probablyhave copied Lancashire's technology more quickly if she had been allowed to impose a protective tariff inthe way that was done in the USA and France in the first few decades of the nineteenth century, but theBritishimposed a policy of free trade. British imports entered India duty free, and when a small tariff wasrequired for revenue purposes Lancashire pressure led to the imposition of a corresponding excise dutyon Indian products to prevent them gaining a competitive advantage. This undoubtedly handicappedindustrial development. If India had been politically independent, her tax structure would probably havebeen different. In the 1880s, Indian customs revenues were only 2.2 per cent of the trade turnover, i.e.the lowest ratio in any country. In Brazil, by contrast, import duties at that period were 21 per cent of tradeturnover.

British rule had not promoted industrialization in India either. Japan and China were not colonized by theBritish; they remained independent. The Indian steel industry started fifteen years later than in China,where the first steel mill was built at Hangyang in 1896. The first Japanese mill was built in 1898. In bothChina and Japan the first steel mills (and the first textile mills) were government enterprises, whereas inIndia the government did its best to promote imports from Britain.

Until the end of the Napoleonic wars, cotton manufactures had been Indias main

export. They reached their peak in 1798, and in 1813 they still amounted to 2 million, but thereafter theyfell rapidly. Thirty years later, half of Indian imports were cotton textiles from Manchester. This collapse inIndias main export caused a problem for the Company, which had to find ways to convert its rupee

revenue into resources transferable to the UK. The Company therefore promoted exports of raw materialson a larger scale, including indigo, and opium, which were traded against Chinese tea. These dope-peddling efforts provoked the Anglo-Chinese war of 1842 in which the British drug-pushers won andforced China to accept more and more opium.

Financial Exploitation of India:

Until 1898 India, like most Asian countries, was on the silver standard. In 1898, India under British rule,had to adopt a gold exchange standard which tied the Rupee to Pound at a fixed value of 15 to 1, thus


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forcing India to export more for smaller amount of British goods. This was another kind of exploitation ofthe Indian people making them poorer and poorer.

Another important effect of foreign rule on the long-run growth potential of the

economy was the fact that a large part of its potential savings was siphoned abroad. There can be no

denial that there was a substantial outflow, which lasted for 190 years. If

these funds had been invested in India they could have made a significant contribution to raising incomelevels.

The first generation of British rulers was rapacious. Clive took quarter of a million

Pounds for himself as well as a jagir worth 27,000 a year, the Viceroy received 25,000 a year, andgovernors 10,000. The starting salary in the engineering service was 420 a year or about sixty-timesthe average income of the Indian labor force. From 1757 to 1919, India also had to meet administrativeexpenses in London, first of the East India Company, and then of the India Office, as well as other minorbut irritatingly extraneous charges. The cost of British staff was raised by long home leave in the UK,early retirement and lavish amenities in the form of subsidized housing, utilities, rest houses, etc. Under

the rule of the East India Company, official transfers to the UK rose gradually until they reached about3.5 million in 1856, the year before the mutiny.

In addition, there were private remittances.

D. Naoroji, (in Poverty and Un-British Rule in India, London, 1901) suggests that the annual remittancesincluding business profits from mainly India and to a limited extent from China were already 6 million in1838. R.P. Dutt argues that 'the spoliation of India was the hidden source of accumulation which playedan all important role in helping to make possible the Industrial Revolution in England' (in Economic Historyof India, London, 1897)

In the twenty years 1835-54, Indias average annual balance on trade and bullion was favorable by about

4.5 million a year. During the period of direct British rule from 1858 to 1947, official transfers of funds tothe UK by the colonial government were called the Home Charges. They mainly represented debtservice, pensions, India Office expenses in the UK, purchases of military items and railway equipment.Government procurement of civilian goods, armaments and shipping was carried out almost exclusively inthe UK. By the 1930s these home charges were in the range of 40 to 50 million a year. Some of theseflows would have occurred in a non-colonial economy, e.g. debt service on loans used to finance railwaydevelopment, but a large part of the debt was incurred as a result of colonial wars. Some governmentexpenditure was on imports, which an independent government would have bought from localmanufacturers. Of these official payments, we can legitimately consider service charges on non-productive debt, pensions and furlough payments as a balance of payment drain due to colonialism.

There were also substantial private remittances by British officials in India either as

savings or to meet educational and other family charges in the UK. In the inter-war period, theseamounted to about 10 million a year, and Naoroji estimated that they were running at the same level in1887. These items were clearly the result of colonial rule.

In addition, there were dividend and interest remittances by shipping and banking interests, plantations,and other British investors. The total drain due to government pensions and leave payments, interest onnon-railway official debt, private remittances for education and savings, and a third commercial profitsamounted to about 1.5 per cent of national income of undivided India from 1921 to 1938 and wasprobably a little larger before that. Net investment was about 5 per cent of national income at the end of


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British rule, so about a quarter of Indian savings were transferred out of the economy, and foreignexchange was lost which could have paid for imports of capital goods.

As a consequence of this foreign drain the Indian balance of trade and bullion was always positive. Inspite of its constant favorable balance of trade, India acquired substantial debts. By1939 foreign assetsin Indiaamounted to $2.8 billion, of which about $1.5 billion was government-bonded debt and the rest

represented direct investment (mainly tea, other plantations and the jute industry).

India did not reduce its foreign debt during the First World War as many other

developing countries did. Instead, there were two voluntary war gifts to the UK amounting to 150 million($730 million). India also contributed one-and-a-quarter million troops, which were financed from theIndian budget. The 'drain' of funds to England continued in the interwar years because of home chargesand profit remittances.

There was also a small outflow of British capital. In the depression of 1929-33, many developing countriesdefaulted on foreign debt or froze dividend transfers, but this was not possible for India. The currency waskept at par with sterling and devalued in 1931, but the decisions were based on British rather than Indianneeds. Furthermore, the salaries of civil servants remained at high level, and the burden of official

transfers increased in a period of falling prices.

During the Second World War, India's international financial position was transformed.

Indian war finance was much more inflationary than in the UK and prices rose threefold, so these localcosts of troop support were extremely high in terms of Pound, as the exchange rate remainedunchanged.

For the last fifty years of British rule there is no increase in per capita income. The most noticeablechange in the economy was the rise in population from about 170 million to 420 million from 1757 to1947. Very little incentive was provided for investment and almost nothing was done to promote technicalchange in agriculture. At the bottom of society the position of sharecropping tenant and landless laborersremained wretched.

Meanwhile Indian taxes funded Britain's Indian army, which was used to expand the empire into Africaand Asia and which made a major contribution to defending the same empire in two world wars--all at nocost to the 'home' country! Lord Salisbury said India 'was an English barrack in the Oriental seas fromwhich we may draw any number of troops without paying for them'.

Man-Made Famines in British India:

The British brought an unsympathetic and ruthless economic agenda to India" and that "the creation offamine" was brought about by British "sequestration and export of food for enhanced commercial gain."Three important factors caused devastating famines in India under British rule. First, Indias indigenoustextile industries were destroyed by Londons high tariffs and the import of cheap British manufactured

products, impoverishing millions of town dwellers, who were forced into the countryside to compete fordwindling land. Second, Indias traditional granary reserve system, designed to offset the impact of badharvests, was dismantled. Third, Indias peasants were pressured into growing crops for export, makingthem dependent on fluctuating world market prices for their means of subsistence. As a result, tensof millionsof people died of starvation. These famines were not caused by shortages of food. They tookplace at the very same time that annual grain exports from India were increasing.

One third of the population of the then province of Bengal, which includes todays Bangladesh, WestBengal, Orissa, Bihar and South Assam, were wiped out in the famine of 1770, immediately


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after Bengal was occupied by the British Easy India Company, due to their inhuman tax system.According to author Mike Davis, during the famine of 1876, "the newly constructed railroads, lauded asinstitutional safeguards against famine, were instead used by merchants to ship grain inventories fromoutlying drought stricken districts to central depots for hoarding...In Madras city, overwhelmed by 100,000drought refugees, famished peasants dropped dead in front of the troops guarding pyramids of importedrice."

The British refused to provide adequate relief for famine victims on the grounds that this would encourageindolence. Sir Richard Temple, who was selected to organize famine relief efforts in 1877, set the foodallotment for starving Indians at 16 ounces of rice per day--less than the diet for inmates at theBuchenwald concentration camp for the Jews in Hitlers Germany. British disinclination to respond withurgency and vigor to food deficits resulted in a succession of about two dozen appalling famines duringthe British occupation of India. These swept away tens of millions of people. The frequency of famineshowed a disconcerting increase in the nineteenth century, under the British rule

(in Famines in India, Asia Publishing House, Bombay, 1963).

Very few would be aware of the horrendous calamities inflicted on Indians by the British. The annualdeath rate in 1877 in British labor camps during the Deccan famine was about 94%. Extraordinarily low

population growth between 1870 and 1930 (due to famine, malnourishment-exacerbated disease andcholera, plague and influenza epidemics) was due to this exploitative policy. In 1943 Bengal Famine inBritish-ruled Indiaabout 5 million people were perished, but it was never mentioned in the British historybooks, because it was caused by a deliberate British scorched earth policy to deprive the Azad HindArmy and the Japanese to receive any support from the local people.

The annual death rate in India before 1920 was about 4.8% but this declined to 3.5% by 1947 and ispresently about 0.9%( http://countrystudies.us/india/32.htm). Using a baseline expected annual deathrate value of 1.0% and assuming an actual pre -1920 value of 4.8% one can estimated that theavoidable (excess) mortality was about 0.6 billion during 1757-1837, 0.5 billion during 1837-1901 and 0.4billion during 1901-1947. Thus the British rule of India was associated with an excess (i.e. avoidable)mortality totaling 1.5 billion surely one of the greatest crimes in all of human history.

An extraordinary feature of the appalling record of British imperialism with respect to genocide and mass,worldwide killing of huge numbers of people (by war disease and famine) is its absence from publicperception. There is no mention of famine in India or Bengal in the British textbooks of history. Newhistorians in India are now putting the blame on the victims. Meghnad Desai in his article in CambridgeHistory of India puts the blame on the Indian speculators; Amartya Sen suggested (in Ingredients ofFamine Analysis, Quarterly Journal of Economics, Vol XCVI, 1981) that people in that area had eaten toomuch to create the famine.

Conclusion:

The progress made in India under British Rule like the coming of railways, Postal System, Telegraphiccommunications, etc., were all undertaken by the British Administration to facilitate their rule. The aim ofBritish policy was to integrate the Indian economy with that of the British in way such that India supplied

Great Britain with cheap raw material for being manufactured into valued-added (costly) finishedproducts. It is not true that if India remained independent it could not have developed railways ortelegraphic system; Japan or Thailand was never colonized but they have today much betterinfrastructure than that in India.

India during the British rule was to provide a ready captive market for British goods made from Indian rawmaterials. The resultant enrichment and industrial development was to take place in Britain and not inIndia. Thus at the dawn of independence, India inherited an economy that had the worstfeatures of boththe feudal and the industrial ages without the advantages of either. As Rabindranath Tagore wrote in
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1941, in his letter from the deathbed to British member of parliament Mrs.Rothbone, that in the SovietUnion illiteracy was eradicated with two decades but in India even after two centuries of British rule only15 percent of the Indians were literate.

Priyadarsi Dutta, parliamentary secretary to Balbir Punj, the chairman of the BJPs think -tank, wrote inThe Organizer, the organ of the R.S.S on 28 May 2006, that the British rule was only a learning process

emphasizing the positive aspects of the British empire as written in the history text books in Britain. Thus,they are suggesting that thousands of our heroes and heroines of the freedom struggle who hadsacrificed their lives to liberate India were all very stupid. This is the indication of cultural imperialism,which is bound to take place in India along with the globalization, and the economic reforms put forwardby no other than the Anglo-American economists and policy-makers.

MONOPOLY & UNFAIR TRADE PRACTICES

To comprehend the extent of unfair trade norms, just one example would suffice (excerpted from thisexcellent essay: The Colonial Legacy - Myths and Popular Beliefs[iv]

)

As early as 1812, an East India Company Report had stated "The importance of that immense empire tothis country is rather to be estimated by the great annual addition it makes to the wealth and capital of theKingdom....."

Few would doubt that Indo-British trade may have been unfair - but it may be noteworthy to see howunfair. In the early 1800s imports of Indian cotton and silk goods faced duties of 70-80%. British importsfaced duties of 2-4%!

As a result, British imports of cotton manufactures into India increased by a factor of 50, and Indianexports dropped to one-fourth! A similar trend was noted in silk goods, woollens, iron, pottery, glassware

and papermillions of ruined artisans and craftsmen, spinners, weavers, potters, smelters and smithswere rendered jobless and had to become landless agricultural workers.

The monopoly on trade in salt and opium was an important mainstay of the Companys finances. Prof.Richards notes that Together opium and salt produced on average 18.9 percent of gross revenues. Inlast fifteen years of Company rule their share climbed to 25.1 percent, as opium became one of the mostvaluable commodities sold in world commerce.

Prof. Richards has noted Edmund Burkes report that accompanied the Select Committee of Parliamentmeetings in 1782-1783 to investigate the Companys affairs. To quote Edmund Burke:

But at, or very soon after, the Acquisition of the Territorial Revenues to the English Companya verygreat Revolution took place in Commerce as well as in Dominion;.From that Time Bullion was no longer

regularly exported by the English East India Company to Bengal, or any part of Hindustan;. A new Wayof supplying the Market of Europe by means of the British Power and Influence, was invented; a Speciesof Trade (if such it may be called) by which it is absolutely impossible that India should not be radicallyand irretrievably ruined.

This is how the pernicious system worked: A certain Portion of the Revenues of Bengal has been formany Years set apart, to be employed in the Purchase of Good for Exportation to England, and this iscalled The Investment, The Greatness of this investment has been the standard by which the merit of the
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Companys Principal Servants has been generally estimated; and this main Cause of the Impoverishmentof India has generally been taken as a Measure of its Wealth and Prosperity.

This Export from India seemed to imply also a reciprocal Supply, which the Trading Capital employed inthese Productions was continually strengthened and enlarged. But the Payment of a Tribute, and not abeneficial Commerce to that Country, wore this specious and delusive Appearance.

********

THE DRAIN OF WEALTH

However, the high taxes, the heavy burden of state, the neglect of education and public works and unfairtrade practices these were only the tip of the iceberg.

The most damning evidence of British exploitation was the irrefutable drain of wealth that took placeover the period of two centuries.

Prof. Williamson and Clingingsmith have noted that between 1772 and 1815 there was a huge netfinancial transfer fromIndia to Britain in the form of Indian goods. The drain resulting from contact withthe West was the excess of exports from India for which there was no equivalent importincludedabewildering variety of cotton goods for re-export or domestic [consumption], and the superior grade ofsaltpeter that gave British cannon an edge

Javier Cuenca Esteban estimates these net financial transfers from India to Britain reached a peak of1,014,000 annually in 1784-1792 before declining to 477,000 in 1808-1815 (Pg 9).

However even this high figures are significantly lower than the estimates by Prof John Richards (citedlater in this essay).

Like all other commentators, Maddison too has mentioned the debilitating effect of the drain of funds fromIndia: Another important effect of foreign rule on the long-run growth potential of the economy was the

fact that a large part of its potential savings were siphoned abroad.

This 'drain' of funds from India to the UK has been a point of major controversy between Indian nationalisthistorians and defenders of the British raj. However, the only real grounds for controversy are statistical.There can be no denial that there was a substantial outflow which lasted for 190 years. If these funds hadbeen invested in India they could have made a significant contribution to raising income levels. (Pg 20)

The total drain due to government pensions and leave payments, interest on nonrailway official debt,private remittances for education and savings, and a third commercial profits amounted to about 1.5 percent of national income of undivided India from 1921 to 1938 and was probably a little larger before thatabout a quarter of Indian savings were transferred out of the economy, and foreign exchange was lostwhich could have paid for imports of capital goods.

Separately, Dadabhai Naoroji estimated the economic costs and drain of resources from India to be atleast at 12m per annum. Here is an extract from one of his essays, The Benefits of British Rule

[v], 1871

Financially: All attention is engrossed in devising new modes of taxation, without any adequateeffort to increase the means of the people to pay; and the consequent vexation andoppressiveness of the taxes imposed, imperial and local. Inequitable financial relationsbetween England and India, i.e., the political debt of ,100,000,000 clapped on India's shoulders,and all home charges also
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Materially: The political drain, up to this time, from India to England, of above ,500,000,000, at thelowest computation, in principal aloneThe further continuation of this drain at the rate, atpresent, of above ,12,000,000 per annum, with a tendency to increase.

Prof. Richards mentions in his research that: Between 1757 and 1859 .Officials of the East IndiaCompany tapped the productive people and resources ofBengal and the eastern Gangetic valley to

fund the protracted military campaigns necessary to conquer India. Over the same century, these sameresources also supplied the wherewithal for a century-long transfer of wealth from India to GreatBritain.

Burke estimated that in the four years ending in 1780 the investment averaged no less than one millionsterling and commonly Nearer Twelve hundred thousand pounds. This was the value of the goods sentto Europe for which no Satisfaction is made. The transfer continued without interruption and with forma lapproval from Parliament.

In 1793, this devious system of extortion was given official sanction and thus was paved the path tofinancial ruin: By this 1793 Parliamentary directive, the Company was enjoined to take ten million currentrupees (1 million sterling) each year for the investment from the territorial revenues of colonialIndia.After 1793, the Company zealously maintained its annual investments. Between 1794 and 1810,

the average annual cost of the investment was 1.4 million sterling.

Ina recent contribution, Javier Cuenca Esteban puts the arguably minimum transfers from India toBritain between 1757 and 1815, Plassey and Waterloo, at 30.2 million sterling. This figure is the estimateof exports from which there was no compensating import for India.

Post 1833, when the Companys commercial operations ceased, the drain took the form of HomeCharges which represented the expenses in Britain borne by the Indian treasury.

These Home Charges were a huge burden on the finances and contributed to a sustained andcontinuous deficit in the budget throughout the 19

thcentury.

As Prof Richards notes,(pg 17) there were few years in which the Indian budget was not in deficit. Forthe entire period (1815 1859), deficits reached a cumulative total of 76.9 million sterling or an annualaverage of 1.7 million sterling.

This systematic drain was nothing short of a loot albeit carried over 200 years and under the cover ofcolonial trade. It left the economy in shambles and reduce this great country from one of thepowerhouses of the world economy to a laggard which was barely able to sustain itself.

********

THE IMPACT

The collective impact of these policies and system of exploitation was severe.

In their prefaceto the research, Profs. Clingingsmith and Williamson have this to say: India was a majorplayer in the world export market for textiles in the early 18th century, but by the middle of the 19thcentury it had lost all of its export market and much of its domestic marketWhile India produced about25 percent of world industrial output in 1750, this figure had fallen to only 2 percent by 1900.

This table eloquently depicts the impact of almost two centuries of British colonial rule over India
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List of items that were exported and imported in india during

british rule?

5 years ago Report Abuse

vk2peq

Best Answer - Chosen by Voters

Exported: gold, silver, any kind of precious stones, Indians to fight wars for the British, tea, opium, anything the British could use.Imported: British officials of the East India Company which ran India for private profit although the royalsdid not miss out, canons so that Indians whose religion banned them from eating meat especially porkcould be tied against the barrel and then the canon was fired, some European knowledge, railways which

the British say was a legacy for the natives, and ignorance. When the British had to leave India there wasnot one Indian with a local University degree.

Introduction to India's Foreign Trade

Foreign Trade is one of the significant macro fundamental variable of an economy. India till recently was

predominantly a primary goods exporting and mainly an industrial goods importing country.

In 1950s, India's share in the world trade was 1.78% which was decline to 0.59% in 1990 and continues to remain

around 0.60% till now. India's share in world exports was 0.8% in 2006.

A. Composition of India's Exports

Britishers strongly believed that India was a country well suited to supply raw materials and other primary goods and

a good market place for British manufacturers. So at the time of our independence our exports were predominantly of

primary goods and imports were of manufacturers. At the time of independence agricultural commodities and light

manufactured consumer goods dominated India's export basket. During the post independence period India's

composition of exports changed.

Now exports of India's are broadly classified into following four categories.
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Table below shows composition of India's export from 1990-91 to 2005-06.

The composition of India's export can be summarised as follows :-

1. Agricultural and Allied Products

The share of agriculture items in the total exports of India has declined between 1990-91 to 2005-06. The share of

agriculture exports was 19.5% in 1990-91. It came down to about 10.2% in 2005-06.

The top items of agriculture exports include :-

1. Fish Products,

2. Rice,

3. Oil Cakes,

4. Fruits and Vegetables

The most important export item in 'Agriculture and Allied products' group over the period 1991-92 to 2005-06 has

been 'Fish and Fish Preparations'. From $ 585 millions in 1991-92 export earnings from fish and fish preparations

rose to $ 1,589 millions in 2005-06. However, in percentage terms, their share fell slightly from 3.3 percent in 1991-92

to 1.5 percent in 2005-06.

As far as agricultural exports are concerned, a significant development during the period since 1991 has been the

considerable exports of rice in certain year. In fact, exports of rice were as high as $ 1,366 millions in 1995-96 which

was 4.3 percent of total export earning in that year. In 2005-06, exports of rice were worth $ 1,405 millions which was

1.4 percent of total export earning in that year.

2. Ores and Minerals

The overall export performance of ores and minerals is not satisfactory. In percentage terms, the export performance

of ores and mineral has increased from 4.4% in 199091 to 5.2% in 2005-06.

A major share of ores and minerals exports comes from the export of iron ore.

3. Manufactured Goods
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The share of manufactured items in the total export earnings of India is on the increase. In 1990-91, the share of

manufactured items in the total export earnings was about 73% of the total export earnings.

In 2005-06, the share of manufactured items in the total export earnings of India remained stagnant at 72%.

The top manufactured export items include :-1. Engineering Goods,

2. Gems and Jewellery,

3. Chemicals and Allied products, and

4. Readymade Garments

The export of engineering goods increased from $ 2,234 millions in 1991-92 to $ 21,315 million in 2005-06. In

percentage terms the share of engineering goods rose from 12.5% in 1991-92 to 20.7% in 2005-06. Over the period

1991-92 to 2002-03, engineering goods occupied the second position in India's export earnings after gems and

jewellery. However, thereafter engineering goods have occupied the first place. In 2005-06 they contributed 20.7%

(i.e. one-fifth) of total export earnings.

For most of the period since 1991, largest export earnings came from the exports of gems and jewellery. The share ofgems and jewellery in India's total export was 15.3% in 1991-92 and 15.1% in 2005-06. However, gems and jewellery

industry is a highly import intensive industry requiring large amount of imports of pearls and precious stones.

Exports of chemicals and allied products rose significantly from $ 1,583 millions in 1991-92 to $ 11,935 millions in

2005-06. In percentage terms, their share stood at 11.6% in 2005-06 and they occupied the third place in India's

export earnings in this year.

In percentage terms, readymade garments maintained an almost constant share all through the period since 1991.

They contributed 12.3% of export earnings in 1991-92 and 12.5% of export earnings in 2000-01. In 2003-04, their

share fell to 9.8% and in 2005-06 to 8.3%.

4. Mineral Fuel and Lubricants

There has been an improvement in the export of mineral fuels and lubricants both in terms of value and in terms of

percentage. In percentage terms, its share has increased from less than 2.9% in 1990-91 to 11.5% in 2005-06.

Some other facts regarding structural change in India's export since 1991 are as follows :-

1. There are indication that during 1990s, some of Indian exports have moved upwards in value addition chain

whereby instead of exporting raw materials, the country has switched over to export of processed goods.

2. There were significant compositional shift within the major manufactured product groups such as engineering.

goods, chemicals and allied products, etc.

B. Composition of India's Imports


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In 1947-48 the main items of India's imports were machineries, oil, grains, cotton, cutlery, hardware implements,

chemicals, etc. They constituted 70% of India's imports. After that due to the emphasis on industrialisation during the

second 5-Year plan necessitated the imports of capital goods.

Now imports of India's are broadly classified into following four categories.

Table below shows composition of India's import from 1990-91 to 2005-06.

The composition of India's imports can be summarised as follows :-

1. Petroleum Products

Imports of petroleum oil and lubricants rose significantly from $ 5364 millions in 199192 to $ 43,963 millions i.e. more

than eight times.

Due to high price of crude oil, the POL imports jumped to $ 15,650 millions in 2000-01. In 1990-91, petroleum

products accounted for nearly 25% of total imports of India. In 2005-06, it has further increased to nearly 31% of the

total import bill of India.

2. Capital Goods

The imports of capital goods was $ 3,610 millions in 1991-92. In 1995-96 due to sharp rise in non-electrical

machinery imports, the imports of capital goods jumped upto $ 8,458 millions. However due to slowing domestic
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demand imports of capital goods fell subsequently. The capital goods and related items were 24.1% of the total

imports of India in 1990-91, which has come down slightly in 2005-06 to about 22.3%.

3. Pearls and Precious Stones

To meet the requirements of the gems & jewellery industry pearls and precious stones are imported in large

quantities. In 1990-91, the share of pearls and precibus stones was 8.7% which has reduced in percentage terms to

6.4% in 2005-06.

4. Iron and Steel

The imports of iron and steel have declined over the years in percentage terms. In 1990-91, the share of iron and

steel imports was 5%, which has come down to 3% in 2005-06. This is because, a good amount of iron ore is now

extracted in India which has reduced imports.

5. Fertilizers

Import of fertilizers in 1991-92 stood at $ 954 millions. In 2003-04 expenditure on import of fertilizers was $ 635

millions.

The import of fertilizers have declined, which indicates less dependence of India on imported fertilizers. The share in

total imports of fertilizers was 4.1% in 1990-91, which came down to 1.5% in 2005-06.

Conclusion on India's Foreign Trade

Composition of India's foreign trade has undergone a positive change. It is a remarkable achievement that India have

transformed itself from a predominantly primary goods exporting country into a non-primary goods exporting country.

Under import too India's dependence on food grains and capital goods has declined.

The trend indicates structural transformation of Indian economy.

a flourishing power

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