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British India Economy
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Throughout the late eighteenth century, imperialist ventures based on the establishment of extractive colonies which supplied Britain with cheap raw materials and export markets were used in order to combat declining economic growth and social discontent (see Chapter 2). However, official British enterprises in South Africa, Australia, Canada, India and the West Indies had proven extremely costly. <b>The British state was under such severe financial constraint it could no longer afford to get embroiled in another official colonial venture which required increased taxation of the British ruling class. </b>This, in part, explains why the official British policy towards New Zealand until the late 1830s was characterised by a general reluctance to intervene formally (Adams, 1977, p. 52). <b>Indeed, for the British state, it was far more preferable to see British interests advanced through non-official agents, such as traders, missionaries and explorers who moved beyond the empire’s frontiers at their own risk and at no expense to the British government</b> (Orange, 1987, p. 8).  link<!--QuoteEnd--><!--QuoteEEnd-->
x-post (acharya in 1857 thread):

The Moving Finger Writes

1857: And the government is frightened to tell the whole truth

The Government of India seems frightened to tell the whole truth about what happened to India after the British—at first just the East India Company—came to our country first to trade and then to loot, lest it embarrass our former rulers. We haven’t got out of our colonial mindset yet—sixty years after Independence. What we are presently indulging in, is entertainment, like holding marches of thousands of men from Meerut to Delhi, to commemorate the 1857 War of Independence. Even this was limited to the capital as if the rest of the country did not matter. There was revolt not just in north India but in south India as well.

Nothing of any substance concerning 1857 has been promoted in other parts of the country as if what Savarkar very aptly called the First War of Independence is of no particular importance. Why is the UPA government scared? Not that plenty of information on the subject is unavailable. One of the most damning indictments of British reign in India is Will Durant’s book Case for India, published in 1930 by Simon and Shuster, New York, which was proscribed by the British Government. Durant does not need any special introduction. In his time he was an acknowledged American intellectual of high standing. As he saw it—and he spoke for the entire West— “India was the motherland of our race, and Sanskrit the mother of Europe’s languages, the mother of our philosophy, mother, through the Arabs, of much of our mathematics, mother, through Buddha, of the ideals embodied in Christianity, mother, through the village community of self-government and democracy.” He summarised the role of Mother India as “in many ways the mother of us all”.

As Durant saw it, “the British conquest of India was the invasion and destruction of a high civilisation by a trading company utterly without scruple or principle, careless of art and greedy for gain, over-running with fire and word a country temporarily disordered and helpless, bribing and murdering, annexing and stealing and beginning that career of illegal and ‘legal’ plunder which has now gone on ruthlessly for one hundred and seventy three years... .” He was writing then, of 1930. How did this happen? According to Durant “it was a simple matter for a group of English buccaneers, armed with the latest European artillery and mortars, to defeat the bows and arrows, the elephants and primitive musketry of the rajahs…”

India, before the arrival of the British, was a wealthy nation. The wealth, Durant wrote, was created by Hindus through “nearly every kind of manufacture of product known to the civilised world—nearly every creation of man’s brain and hand and prized either for its utility or beauty”. India was a far greater industrial and manufacturing nation than any in Europe or than any other in Asia. India had great engineering works. She had great merchants, great bankers and financiers and “not only was she the greatest shipbuilding nation, but she had great commerce and trade by land and sea which extended to all known civilised countries”.

It was that wealth that the British sought to appropriate—in other words, steal. The story as told by Durant is painful to read. It begins with Robert Clive—the greatest brigand of them all—who bribed Mir Jaffer, his opponent at Plassey, forged and violated treaties, accepted ‘presents’ given him by whining Indian rulers to the tune of $ 1,170,000 and what the East India Company did was nothing short of rape of Indian industry and wealth. Goods bought in India were sold in England else where at five times the original price, the British traders refused to pay the normal tells levied by local rulers, forged documents and even restored Mir Jaffer as ruler in Bengal for $ 2,500, 825. Hypocrisy was added to brutality, Durant writes and the cost of wars waged by the British was recovered to the last penny out of taxing the very Indian people. Every penny the British spent on conquest was billed to the conquered Indian people themselves as national debt.

In 1792 this amounted to $ 35 million—a huge sum for those days. It became $ 150 million in 1829, rose to $ 215 million in 1845, to $ 500 million in 1860 and finally to $ 3,500 million in 1929. During the First World War, India coughed up $ 500 million to the British war effort, contributed $ 700 million in subscriptions to war loans and products worth $ 1,250 million were dispatched abroad to keep Britain and its allies fed. Besides, India provided 1,338,620 soldiers to fight Britain’s war, though not one Indian was granted a Commission. Indian soldiers outnumbered soldiers provided by the combined White Dominions of Canada, Australia, New Zealand and South Africa.

It was the Indian troops who first turned back the Germans at the Marne. “Never” wrote Durant, “had a colony or a possession made so great a sacrifice for the master country.” How was that possible? Noted Durant: “Until England came to her, India did not exist; there was no political entity called India but only a congeries to independent states”—a point to be remembered even now. And these congeries of states would not unite. The British swallowed them up, one by one. But it was what Britain plundered from India that made it possible for Britain to rise from the gutter and become and industrialised state. India became the market for British goods. The conditions of the uprooted Indian craftsmen and artisans became unbearable. Some of them had their hands cut. We have this from Lord Willian Bentinck who wrote to the East India Company’s Court of Directors that “the bones of the cotton weavers are bleaching the plains of India”.

The Company’s armies fought twenty wars between the ‘Battle’ of Plassey and 1857. In the five years preceding 1857, more than 21,000 estates of zamindars of a total of 35,000 were confiscated. In 1818 Sir Thomas Munro wrote: “Foreign conquerors had treated the natives with violence and often with great cruelty. But none of them has treated them with so much scorn as we; none have stigmatised the whole people as unworthy of trust, as incapable of honesty…. It seems to me not only ungenerous, but impolitic to debase the character of a people fallen under our domination.”

The British went about systematically draining India of her wealth. According to a British historian, Monthomery Martin, writing in 1838, the annual drain of £ 3 million amounted in 30 years at 12 per cent compound interest to the enormous sum of £ 723,997,917 sterling. As Karl Max, of all people, commenting on this, wrote: “There cannot, however, remain any doubt but that the misery inflicted by the British on Hindustan is of essentially different and infinitely more intensive kind than Hindustan had to suffer before.”

The total tribute which was drained from India in the form of “Home Charges” and “Excess of Indian exports” amounted to the colossal figure of £ 151, 830,989 or about £ 152 million. Half the annual land revenue paid by the Indians to the British Government went back to Britain. Chengiz Khan and Ghazni Mohammad would have been jealous of the British.

(This is the first of the three articles on a hitherto forgotten subject.)

(To be continued)
[url="http://www.monbiot.com/2009/06/17/outsourcing-unrest/"]Outsourcing Unrest[/url]

June 17, 2009

The 300 year colonial adventure is over at last, which is why Britain is in political crisis.

By George Monbiot. Published in the Guardian 9th June 2009

Why now? It’s not as if this is the first time our representatives have been caught out. The history of governments in all countries is the history of scandal, as those who rise to the top are generally the most ambitious, ruthless and unscrupulous people politics can produce. Pushing their own interests to the limit, they teeter perennially on the brink of disgrace, except when they fly clean over the edge. So why does the current ballyhoo threaten to destroy not only the government but also our antediluvian political system?

The past 15 years have produced the cash-for-questions racket, the Hinduja and Ecclestone affairs, the lies and fabrications which led to the invasion of Iraq, the forced abandonment of the BAE corruption probe, the cash-for-honours caper and the cash-for-amendments scandal. By comparison to the outright subversion of the functions of government in some of these cases, the expenses scandal is small beer. Any one of them should have prompted the sweeping political reforms we are now debating. But they didn’t.

The expenses scandal, by contrast, could kill the Labour party. It might also force politicians of all parties to address our injust voting system, the unelected House of Lords, the excessive power of the executive, the legalised blackmail used by the whips and a score of further anachronisms and injustices. Why is it different?

I believe that the current political crisis has little to do with the expenses scandal, still less to do with Gordon Brown’s leadership. It arises because our economic system can no longer extract wealth from other nations. For the past 300 years, the revolutions and reforms experienced by almost all other developed countries have been averted in Britain by foreign remittances.

The social unrest which might have transformed our politics was instead outsourced to our colonies and unwilling trading partners. The rebellions in Ireland, India, China, the Caribbean, Egypt, South Africa, Malaya, Kenya, Iran and other places we subjugated were the price of political peace in Britain. Following decolonisation, our plunder of other nations was sustained by the banks. Now, for the first time in three centuries, they can no longer deliver, and we must at last confront our problems.

There will probably never be a full account of the robbery this country organised, but there are a few snapshots. In his book Capitalism and Colonial Production, Hamza Alavi estimates that the resource flow from India to Britain between 1793 and 1803 was in the order of £2m a year, the equivalent of many billions today. The economic drain from India, he notes, “has not only been a major factor in India’s impoverishment … it has also been a very significant factor in the Industrial Revolution in Britain.”(1) As Ralph Davis observes in The Industrial Revolution and British Overseas Trade, from the 1760s onwards India’s wealth “bought the national debt back from the Dutch and others … leaving Britain nearly free from overseas indebtedness when it came to face the great French wars from 1793.”(2)

In France, by contrast, as Eric Hobsbawn notes in The Age of Revolution, “the financial troubles of the monarchy brought matters to a head.” In 1788, half of France’s national expenditure was used to service its debt: “the American War and its debt broke the back of the monarchy”(3).

Even as the French were overthrowing the ancien regime, Britain’s landed classes were able to strengthen their economic power, seizing common property from the country’s poor by means of enclosure. Partly as a result of remittances from India and the Caribbean, the economy was booming and the state had the funds to ride out political crises. Later, after smashing India’s own industrial capacity, Britain forced that country to become a major export market for our manufactured goods, sustaining industrial employment here (and avoiding social unrest) long after our products and processes became uncompetitive.

Colonial plunder permitted the British state to balance its resource deficits as well. For some 200 years a river of food flowed into this country from places like Ireland, India and the Caribbean. In The Blood Never Dried, John Newsinger reveals that in 1748 Jamaica alone sent 17,400 tons of sugar to Britain; by 1815 this had risen to 73,800 tons(4). It was all produced by stolen labour.

Just as grain was sucked out of Ireland at the height of its great famine, so Britain continued to drain India of food during its catastrophic hungers. In Late Victorian Holocausts, Mike Davis shows that Indian wheat exports to the UK doubled between 1876 and 1877 as subsistence there collapsed(5). Several million Indians died of starvation. In the North Western provinces the famine was wholly engineered by British policy, as their surplus production was exported to offset poor English harvests in 1876 and 1877(6).

Britain, in other words, outsourced famine as well as social unrest. There was terrible poverty in this country in the second half of the 19th Century, but not mass starvation. The bad harvest of 1788 helped precipitate the French Revolution, but the British state avoided such hazards. Others died on our behalf.

In the late 19th Century, Davis shows, Britain’s vast deficits with the United States, Germany and its white Dominions were balanced by huge annual surpluses with India and (as a result of the opium trade) China. For a generation “the starving Indian and Chinese peasantries … braced the entire system of international settlements, allowing England’s continued financial supremacy to temporarily co-exist with its relative industrial decline.”(7) Britain’s trade surpluses with India allowed the City to become the world’s financial capital.

Its role in British colonisation was not a passive one. The bankruptcy and subsequent British takeover of Egypt in 1882 was hastened by a loan from Rothschild’s bank whose execution, Newsinger records, amounted to “fraud on a massive scale”(8). Jardine Matheson, once the biggest narco-trafficking outfit in world history (it dominated the Chinese opium trade), later formed a major investment bank, Jardine Fleming. It was taken over by JP Morgan Chase in 2000.

We lost our colonies, but the plunder has continued by other means. As Joseph Stiglitz shows in Globalisation and its Discontents, the capital liberalisation forced on Asian economies by the IMF permitted northern traders to loot hundreds of billions of dollars, precipitating the Asian financial crisis of 1997-98(9). Poorer nations have also been strong-armed into a series of amazingly one-sided treaties and commitments, such as Trade Related Investment Measures, bilateral investment agreements and the EU’s Economic Partnership Agreements(10). If you have ever wondered how a small, densely-populated country which produces very little supports itself, I would urge you to study these asymmetric arrangements.

But now, as John Lanchester demonstrates in his fascinating essay in the London Review of Books, the City could be fatally wounded(11). The nation which relied on financial services may take generations to recover from their collapse. The great British adventure – three centuries spent pillaging the labour, wealth and resources of other countries – is over. We cannot accept this, and seek gleeful revenge on a government which can no longer insulate us from reality.


1. Hamza Alavi, 1982. Capitalism and Colonial Production, pp 62-63. Croom Helm, London.

2. Ralph Davis, 1979. The Industrial Revolution and British Overseas Trade, pp55-56. Leicester University Press.

3. Eric Hobsbawm, 1962. The Age of Revolution, p78. Abacus, London.

4. John Newsinger, 2006. The Blood Never Dried, p14. Bookmarks, London.

5. Mike Davis, 2001. Late Victorian Holocausts, p27. Verso, London.

6. ibid, p51.

7. ibid, p297

8. John Newsinger, ibid, p86.

9. Joseph Stiglitz, 2002. Globalization and its Discontents. Allen Lane, London. First published in 2002 by W.W. Norton, New York.

10. See for example Myriam Vander Stichele, 24th October 2008. The facilitating framework for free investment and capital. Draft Briefing Paper. The Corner House. http://www.thecornerhouse.org.uk/pdf/doc...litate.pdf

11. John Lanchester, 28th May 2009. It’s Finished. London Review of Books. http://www.lrb.co.uk/v31/n10/lanc01_.html

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