The Economic History of India (Set of 2 Volumes)

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Volume I-8123014015

Volume II-8123013744

About the Book

Romesh Chunder Dutl was undoubtedly-one of the great figures of his generation in India. His the Economic History of India appeared in two volumes, the first in 1902 and the second in 1904 and was immediately recognized as a lucid account of the history of industries, trades, and manufactures of India, aimed at underlining the fact that the cooperation of the people is essential to successful administration in every civilized country. The Two Volumes have already passed through several editions and have been studied by every Indian desirous of knowing the economic condition of India during the British rule.

About the Author

Romesh Chunder Dutt, ICS was one of the first Indians to get into the Indian Civil Service, and his career as a civil servant was uniformly successful. He held high administrative offices and when he retired voluntarily after 26 years of service, he had already held acting charge as commissioner of a division.

He is reported to have held literary fame as his first love and he cultivated literary pursuits all his life. His historic novels, his history of civilization and his translation of the epics was motivated by the idea of acquainting Indians and foreigners with what was noblest in the heritage of India. He translated the Rigveda into Bengali and did valuable organizational work as President of the Bengali Literary Academy.

Volume I

Preface

Excellent works on the military and political transactions of the British in India have been written by eminent historians. No history of the people of India, of their trades, industries, and agriculture, and of their economic condition under British administration, has yet been compiled.

Recent famines in India have attracted attention to this very important subject, and there is a general and widespread desire to understand the condition of the Indian People-the sources of their wealth and the causes of their poverty. A brief Economic History of British India is therefore needed at the present time.

Englishmen can look back on their work in India, if not with unalloyed satisfaction, at least with some legitimate pride. They have conferred on the people of India what is the greatest human blessing-Peace. They have introduced Western Education, bringing an ancient and civilised nation in touch with modern thought, modern sciences, modern institutions .and life. They have built up an administration which, though it requires reform with the progress of the times, is yet strong and efficacious. They have framed wise laws, and have established Courts of Justice, the purity of which is as absolute as in any country on the face of the earth. These are results which no honest critic of British work in India regards without high admiration.

On the other hand, no open-minded Englishman contemplates the material condition of the people of India under British rule with equal satisfaction. The poverty of the Indian population at the present day is unparalleled in any civilised country; the famines which have desolated India within the last quarter of the nineteenth century are unexampled in their extent and intensity in the history of ancient or modern times. By a moderate calculation the famines of 1877 and 1878, of 1889 and 1892, of 1897 and 1900, have carried off fifteen millions of people. The population of a fair-sized European country has been swept away from India within twenty-five years. A population equal to half of that of England has perished in India within a period which men and women, still in middle age, can remember.

What are the causes of this intense poverty and these repeated famines in - India? Superficial explanations have been offered one after another, and have been rejected on close examination. It was said that the population increased rapidly in India, and that such increase must necessarily lead to famines; it is found 00 inquiry that the population has, never increased in India at the rate of England, and that during the last ten years it has altogether ceased to increase. It was said that the Indian cultivators were careless and improvident, and that those who did not know how to save when there was plenty, must perish when there was want; but it is known to men who have lived all their lives among these cultivators, that there is not a more abstemious, a more thrifty, a more frugal race of peasantry on earth. It was said that the Indian money-lender was the bane of India, and by his fraud and extortion kept the tillers of the soil in a chronic state of indebtedness; but the inquiries of the latest Famine Commission have revealed that the cultivators of India are forced under the thraldom on money-lenders by the rigidity of the Government revenue demand. It was said that in a country where the people depended almost entirely on their crops, they must starve when the crops failed in years of drought; but the crops in India, as a whole, have never failed, there has never been a single year when the food supply of the country was insufficient for the people, and there must be something wrong, when failure in a single province brings on a famine, and the people are unable to buy their supplies from neighbouring provinces rich in harvests.

Deep down under all these superficial explanations we must seek for the true causes of Indian poverty and Indian famines. The economic laws which operate in India are the same as in other countries of the world; the causes which lead to wealth among other nations lead to prosperity in India; the causes which impoverish other nations impoverish the people of India. Therefore, the line of inquiry which the economist will pursue in respect of India is the same which he adopts in inquiring into the wealth or poverty of other nations. Does agriculture flourish? Are industries and manufactures in a prosperous condition? Are the finances properly administered, so as to bring back to the people an adequate return for the taxes paid by them? Are the sources of national wealth widened by a Government anxious for the material welfare of the people? These are questions which the average Englishman asks himself when inquiring into the economic condition of any country in the world; these are questions which he will ask himself in order to ascertain the truth about India.

It is, unfortunately, a fact which no well-informed Indian official will ignore, that, in many ways, the sources of national wealth in India have been narrowed under British rule. India in the eighteenth century was a great manufacturing as well as a great agricultural country, and the products of the Indian loom supplied the markets of Asia and of Europe. It is, unfortunately, true that the East India Company and the British Parliament, following the selfish commercial policy of a hundred years ago, discouraged Indian manufactures in the early years of British rule in order to encourage the rising manufactures of England. Their fixed policy, pursued during the last decades of the eighteenth century and the first decades of the nineteenth, was to make India subservient to the industries of Great Britain, and to make the Indian people grow raw produce only, in order to supply material for the looms and manufactories of Great Britain. This policy was pursued with unwavering resolution and with fatal success; orders were sent out, to force Indian artisans to work in the Company's factories; commercial residents were legally vested with extensive powers over villages and communities of Indian weavers; prohibitive tariffs excluded Indian silk and cotton goods from England; English goods were admitted into India free of duty or on payment of a nominal duty.

The British manufacturer, in the words of the historian, H.H. Wilson, “employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not have contended on equal terms;” millions of Indian artisans lost their earnings; the population of India lost one great source of their wealth. It is a painful episode in the history of British rule in India; but it is a story which has to be told to explain the economic condition of the Indian people, and their present helpless dependence on agriculture. The invention of the power-loom in Europe completed the decline of the Indian industries; and when in recent years the power-loom was set up in India, England once more acted towards India with unfair jealousy. An excise duty has been imposed on the production of cotton fabrics in India which disables the Indian manufacturer from competing with the manufacturer of Japan and China, and which stifles the new steam-mills of India.

Agriculture is now virtually the only remaining source of national wealth in India, and four-fifths of the Indian people depend on agriculture. But the Land Tax levied by the British Government is not only excessive, but, what it worse, it is fluctuating and uncertain in many provinces. In England, the Land Tax was between one shilling and four shillings in the pound, i.e., between 5 and 20 percent of the rental, during a hundred years before 1798, when it was made perpetual and redeemable by William Pitt. In Bengal the Land Tax was fixed at over 90 percent of the rental and in Northern India at over 80 per cent of the rental between 1793 and 1882. It is true that the British Government only followed the precedent of the previous Mahomedan rulers, who also claimed an enormous Land Tax. But the difference was this, that what the Mahomedan rulers claimed they could never fully realise; what the British rulers claimed they realised with rigour. The last Mahomedan ruler of Bengal, in the last year of his administration (1764), realised a land revenue of £817,553; within thirty years the British rulers realised a land revenue of £2,680,000 in the same Province. In 1802, the Nawab of Oudh ceded Allahabad and some other rich districts in Northern India to the British Government. The land revenue which had been claimed by the Nawab in these ceded districts was £1,352,347; the land revenue which was claimed by the British rulers within three years of the cession was £ 1,682,306. In Madras, the Land Tax first imposed by the East India Company was one-half the gross produce of the land! In Bombay, the land revenue of the territory conquered from the Mahrattas in 1817 was £800,000 in the year of the conquest; it was raised to £1,500,000 within a few years of British rule; and it has been continuously raised since. “No Native Prince demands the rent which we do”, wrote Bishop Heber in 1826, after travelling all through India, and visiting British and Native States. “A Land Tax like that which now exists in India,” wrote Colonel Briggs in 1830, “professing to absorb the whole of the landlord's rent, was never known under any Government in Europe or Asia.”

The people of Bengal and of Northern India gradually obtained some relief from the heavy land assessment of the early years of British rule. In Bengal, the assessment was made permanent; and as it has not been raised with the extension of cultivation, it now bears (including Road and Public Work cesses, which have been since imposed on the rental) a ratio of about 35 per cent, on the rental. In Northern India, the assessment was not made permanent, but it was reduced to slightly over 50 per cent, including all cesses, in 1855. But new cesses were added; calculations were made, not on the current, but on the prospective rental, until the tax rose to close upon 60 per cent on the rental.

In Madras and Bombay, things are worse. There the Land Tax is paid generally by the cultivators of the soil, there being, in most parts of those provinces, no intervening landlords. The British Government declared its intention in 1864 of realising as Land Tax about one-half of the economic rent. But what the British Government does take as Land Tax at the persent day sometimes approximates to the whole of the economic rent, leaving the cultivators little beyond the wages of their labour and the profits of their agricultural stock. The Land Tax is revised once every thirty years; the cultivator does not know on what grounds it is enhanced; he has to submit to each renewed assessment, or to leave his ancestral fields and perish. This uncertainty of the Land Tax paralyses agriculture, prevents saving, and keeps the tiller of the soil in a state of poverty and indebtedness.

Introduction

Romesh Chunder Dutt was undoubtedly one of the great figures of his generation in India. In everything he did, he seems to have struck a new path and achieved immediate success. He was one of the first Indians to get into the Indian Civil Service, and his career as a Civil Servant was uniformly successful. He held high administrative offices and, when he retired voluntarily after twenty- six years of service, he had already held acting charge as commissioner of a division.

He is reported to have held literary fame as his first love and he cultivated literary pursuits all his life. Throughout his period of active service, a large variety of literary effort occupied the bulk of his spare time. One of his early publications was a history of Bengali literature in English and he also produced original literary works in Bengali. First came a series of historical novels, followed by fiction dealing with contemporary social life. He translated the RIGVEDA into Bengali and did valuable organisational work as President of the Bengali Literary Academy. He next undertook the important and taxing work of writing in English a history of civilisation in ancient India. This required of the author a thorough knowledge of Sanskrit literature together with full acquaintance with results of Western scholarship. Dutt showed that he possessed both qualifications in an eminent degree and his work was immediately recognised as a highly competent performance which made available to the general reader a full and interesting picture of ancient India based on the latest scientific researches.

His career as an official was marked by the great care and thought which he bestowed on all that he undertook. The results of this are in evidence in official and other writings. One of his earliest writings was a series of articles on the Bengal peasantry which were published in book form in 1874. His official reports on Bengal tenancy, when the Tenancy Bill of 1884 was under consideration, gave evidence of both wide knowledge and sympathy and were recognised as valuable contributions. And in the early nineties, he elaborated in a pamphlet his views relating to village self-government and the village police in connection with the Chaukidari Act.

The driving force behind all his varied activity was 'service to the motherland'. Dutt recognised this as the cardinal idea running through the activities of the memorable literary figures of nineteenth century Bengal and it dominated his own life. His historical novels, his history of civilisation and his translation of the epics were motivated by the idea of acquainting Indians and foreigners with what was noblest in the heritage of India. His deep sympathy for the people of the country and his solicitude for their welfare are reflected in BENGAL PEASANTRY and in the ECONOMIC HISTORY as well as in his political work in England after retirement.

It is clear that, among the reasons for his relatively early retirement from service, opportunity to take effective public part in political and economic discussions must have been the most important. The years succeeding retirement were more largely occupied with political work and economic writings than with literary pursuits. It was in the years after retirement that he presided over the Indian National Congress, conducted the land revenue settlement and famine controversy with Lord Curzon, wrote two volumes of the ECONOMIC HISTORY, did important political work on behalf of India in England, at one stage, in collaboration with Dadabhai Naoroji, W.C. Bonnerjea and others, and, at a later stage, in collaboration with Gokhale. It was after retirement that he served the Gaikwads and contributed greatly towards reforms and progress in the Baroda administration and also served as a member of the Royal Commission on Decentralisation. His was a very busy life, a life of varied activities, and greatly fruitful. Its keynote was profound seriousness of purpose; he combined acute intelligence with great industry, wide scholarship with a sense of reality, and wide sympathies and earnest feelings with tact and moderation.

II

Dutt retired from the Civil Service in 1896 after twenty-six years of service. It would have been possible for him to continue in service for many more years and his decision to retire was unexpected and unusual. It is generally agreed that there were two motives which led Dutt to take this step-his literary ambition and the desire to have greater independence for political work. He felt that he could achieve both these objectives by work in England, and settled in that country immediately after retirement. His biographer considers the main objects of his mission in England to have been the following:

“1. To form and organise an Indian party of sympathetic English men in England.

2. To influence the British Parliament through prominent members of the House of Commons.

3. To educate the British public in general; and democracy in particular” in Indian subjects, and to win their sympathy and support.

4. To appeal to the wider world of Europe through literature and history.”)

He spent the greater part of the seven years from early 1897 to the middle of 1904, when he was invited to office in Baroda State, in England. In 1898, he was appointed lecturer in Indian history at the University College, London, and thus had a platform from which to lecture and an incentive to pursue scholarly historical studies. During 1898 and 1899, Dutt was chiefly engaged in his translations of the MAHABHARATA and the RAMA Y ANA, and in December 1899, he presided over the session of the Indian National Congress at Lucknow. In 1897, he had already presaged his future work by an article on famines in India appearing in the Fortnightly Review and by a historical sketch “England and India” published with the sub-title, “a record of the progress during hundred years 1785 to 1885”. This short work contains many of the essential elements of the later ECONOMIC HISTORY and also, in part, sets its pattern, though there is no writing on economic history directly' in it. The work relates, in an interesting manner, British policy in India with developments in British internal politics. In tracing the development of British policy, Dutt emphasises Indian poverty and Indian famines, links them to inordinate British expenditure which impoverishes people, and suggests, as the main remedy, that administration should be brought into touch with the people, should represent their wishes and feelings and enlist their co-operation and sympathy.

Early in 1900, Dutt wrote a series of open letters to Lord Curzon about land revenue settlements in various Indian provinces. These, together with other essays on famines and land assessments in India, were included in a publication which was brought out later in the same year. In December 1900, he associated himself with a number of retired Anglo-Indian administrators and submitted a joint memorial to the Secretary of State for India demanding reasonable restrictions on land assessments in India. To this weighty representation by ex-officials, the Government of India had to make a reply and this was embodied in Lord Curzon's famous Resolution on Land Revenue Policy of India published in 1902. The ECONOMIC HISTORY was produced in the context of these events. All through his stay in England Dutt was engaged in delivering speeches and reading papers on Indian affairs and the subjects of these reflect his main interests and the trend of his thinking. The speeches and papers of 1901 and 1902 deal, for the most part with subjects like economic conditions in India, famines and the land question and with agriculture and manufactures.

In many of these, one sees preliminary versions of the finished material later incorporated into the Economic History.

Contents

Volume II

Preface

Six years ago, there was a celebration in London which was like a scenic representation of the Unity of the British Empire. Men from all British Colonies and Dependencies came together to take part in the Diamond Jubilee of a Great Queen's reign. Indian Princes stood by” the side of loyal Canadians and hardy Australians. The demonstration called forth an outburst of enthusiasm seldom witnessed in these islands. And to thoughtful minds it recalled a long history of bold enterprises, arduous struggles, and a wise conciliation, which had cemented a world-wide Empire. Nations, living in different latitudes and under different skies, joined in a celebration worthy of the occasion.

One painful thought, however, disturbed the minds of the people. Amidst signs of progress and prosperity from all parts of the Empire, India alone presented a scene of poverty and distress. A famine, the most intense and the most widely extended yet known, desolated the country in 1897. The most populous portion of the Empire had not shared its prosperity. Increasing wealth, prospering industries and flourishing agriculture had not followed the flag of England in her greatest dependency.

The famine was not over ti111898. There was a pause in 1899. A fresh famine broke out in 1900 over a larger area, and continued for a longer period. The terrible calamity lasted for three years, and millions of men perished. Tens of thousands were still in relief camps when the Delhi Darbar was held in January 1903.

The economic gulf which separates India from other parts of the Empire has widened in the course of recent years. In Canada and other Colonies, the income per head of the population is £48 per year. In Great Britain it is £42. In India it is officially estimated at £2. At the last meeting of the British Association, one of the greatest of British Economists, Sir Robert Giffin, pointed out that this was “a permanent and formidable difficulty in the British Empire, to which more thought must be given by our public men, the more the idea of Imperial Unity becomes a working force”. Imperial Unity cannot be built on the growing poverty and decadence of five-sixths of the population of the Empire.

For the famines, though terrible in their death-roll, are only an indication of a greater evil-the permanent poverty of the Indian population in ordinary years. The food supply of India, as a whole, has never failed. Enough food was grown in India, even in 1897 and 1900, to feed the entire population. But the people are so resource less, so absolutely without any savings, that when crops fail within anyone area, they are unable to buy food from neighbouring provinces rich in harvests. The failure of rains destroys crops in particular areas, it is the poverty of the people which brings on severe famines.

Many facts, within the experience of Indian Administrators, could be cited to illustrate this: I will content myself with one. Twenty-seven years ago, Eastern Bengal was visited by a severe calamity. A cyclone and storm-wave from the sea swept over large tracts of the country and destroyed the homes and crops of cultivation in 1876. I was sent, as a young officer, to reorganise administration and to give relief to the people in some of the tracts most severely affected. The peasantry in those parts paid light rents, and were therefore prosperous in ordinary times. With the providence and frugality which are habitual to the Indian cultivator, they had saved in previous years. In the year of distress they bought shiploads of rice out of their own savings. There was no general famine, and no large relief operations were needed. I watched with satisfaction the resourcefulness and the self-help of a prosperous peasantry. If the cultivators of India generally were as prosperous as in Eastern Bengal, famines would be rare in India, even in years of bad harvests. But rents in Western Bengal are higher, in proportion to the produce, than in Eastern Bengal; and the Land Tax in Madras, Bombay, and elsewhere is higher than in Bengal. The people are therefore less resourceful, and famines are more frequent and more fatal. The poverty of the people adds to the severity of famines.

The sources of a nation's wealth are Agriculture, Commerce and Manu- factures, and sound Financial Administration. British rule has given India peace; but British Administration has not promoted or widened these sources of National Wealth in India.

Of Commerce and Manufactures I need say little in this place. I have in another work traced the commercial policy of Great Britain towards India in the eighteenth and the earlier years of the nineteenth century. The policy was the same which Great Britain then pursued towards Ireland and her Colonies -. Endeavours were made, which were fatally successful, to repress Indian manufactures and to extend British manufactures. The import of Indian goods to Europe was repressed by prohibitive duties; the export of British goods to India was encouraged by almost nominal duties. The production of raw material in India for British industries and the consumption of British manufactures in India were the twofold objects of the early commercial policy of England. The British manufacturer, in the words of the historian Horace Hayman Wilson, “employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not have contended on equal terms”.

When Queen Victoria ascended the throne in 1837, the evil had been done. But nevertheless there was no relaxation in the policy pursued before. Indian silk handkerchiefs still had a sale in Europe; and a high duty on manufactured Indian silk was maintained. Parliament inquired how cotton could be grown in India for British looms, not how Indian looms could be improved. Select Committees tried to find out how British manufactures could find a sale in India, not how Indian manufactures could be revived. Long before 1858, when the East India Company's rule ended, India had ceased to be a great manufacturing country. Agriculture had virtually become the one remaining source of the nation's subsistence.

British merchants still watched and controlled the Indian tariff after 1858. The import of British goods into India was facilitated by the reduction of import duties. The growth of looms and factories in Bombay aroused jealousy. In 1879, a year of famine, war, and deficit in India, a further sacrifice of import duties was demanded by Parliament. And in 1882 all import duties were abolished, except on salt and liquor.

But the sacrifices told on the Indian revenues, In spite of new taxes on the peasantry, and new burdens on agriculture, India could not pay her way. In 1894 the old import duties were revived with slight modifications. A 5 percent, duty was imposed on cotton goods and yams imported into India, and a countervailing duty of 5per cent, was imposed on such Indian cotton fabrics as competed with the imported goods. In 1896 cotton yams were freed from duty; but a duty of 31/2 percent, was imposed on all goods manufactured at Indian mills. Coarse Indian goods, which did not in any way compete with Lancashire goods, were taxed, as well as finer fabrics. The miserable clothing of the miserable Indian labourer, earning less than 21/2d, a day was taxed by a jealous Government. The infant mill industry of Bombay, instead of receiving help and encouragement, was repressed by an excise duty unknown in any other part of the civilised world. During a century and a half the commercial policy of the British rulers of India has been determined, not by the interests of Indian manufacturers, but by those of British manufactures. The vast quantities of manufactured goods which were exported from India by the Portuguese and the Dutch, by Arab and British merchants in the seventeenth and eighteenth centuries have disappeared. India's exports now are mostly raw produce-largely the food of the people. Manufacturing industry as a source of national income has been narrowed.

There remains Agiculture. Cultivation has largely extended under the peace and security assured by the British Rule. But no man familiar with the inner life of the cultivators will say that the extension of cultivation has made the nation more prosperous, more resourceful, more secure against famines.

Contents